The procurement of services may involve the following phases:
Creation of purchase requisition
Determination of possible sources
Invitation to potential service providers to submit bids (creation of RFQ)
Entry of quotations (bids)
Analysis and evaluation of quotations
Award of contract (order placement)
Entry of services actually performed
Acceptance of services performed
Checking and approving invoices submitted by vendors for services performed The following sections describe these steps in more detail:
Creating a purchase requisition
A purchase requisition is created in order to inform Purchasing that a certain service ist needed. You can specify which consumption account is to be charged. It is thus possible to make provision in the requisition for the costs of procurement to be assigned to a certain cost center or a sales order, for example (by specifying the relevant account assignment category). You can enter the account assignment category in the requisition or
in the purchase order.
If a possible source exists for the procurement of a certain service, you can · have the system automatically find the source and assign the requisition to it, or · choose the desired source from a list generated by the system You can adopt a potential source of a service suggested by the system, but you are not obliged to.
Source determination in the system
When determining possible sources of a requested service, the system refers to the following information in the sequence shown:
1. Vendor service conditions
The system first checks whether master conditions whose validity period covers the delivery date shown in the requisition exist for the service
If master conditions exist for one or more vendors, the system suggests this vendor as the source. The prices and conditions of the relevant master conditions are then suggested when you create a purchase order with reference to the assigned requisition.
2. Contracts
If contracts relating to either the material group or the service shown in the requisition exist, the system suggests these contracts as sources.
If a requisition has been assigned to a contract, the system can generate release orders against it.
Via the Customizing facility in Purchasing, you can define how the sources for services are to be determined. For example, you can specify that a contract is suggested as a source if it contains at least one service from the requisition. However, you can also specify that a contract is only to be suggested if it covers all the services set out in the requisition.
You can also enter the source of the services set out in a requisition directly. For example, with this function you can assign the requisition to a vendor from whom you have not yet procured any services to date.
Inviting bids (creating an RFQ)
If a bid invitation process is to be initiated for services, you must set out the service descriptions in a request for quotation (RFQ). In doing so, you can simplify and speed up the data entry process by using data from the service master record. "Planned" services can be entered with precise descriptions. Alternatively, it is equally possible to enter just a money value limit covering "unplanned" services. "Unplanned" services are services whose exact nature is not clear at the time of the bid invitation phase. Entering value
limits to cover such cases ensures that cost control can still be maintained. A bid invitation may involve planned services only, unplanned services only, or some combination of both. The RFQ is entered only once, and can then be assigned to any number of potential bidders. The system creates a separate RFQ with a unique number for
each bidder.
Entering quotations
When a quotation is received from a bidder, the latter's prices and conditions are entered in the RFQ that already exists in the system. The status of this RFQ is then changed: the RFQ in fact becomes a quotation. In the SAP System, the RFQ and the quotation are effectively one and the same document.
Analysis and evaluation of quotations
When all quotations have been received and entered, the most favorable one is determined using the price comparison list. Rejection letters can be sent to unsuccessful bidders.
Award of contract (order placement)
The successful bidder can be sent a purchase order as a document of contractual nature for a once-only transaction. To minimize the time and effort expended in entering data, purchase orders (POs) can be created by referencing a quotation. If a longer-term cooperation with a vendor is planned, a contract with quantities and values can be set up. You can then release certain services against this longer-term contract on the desired dates by issuing release orders from time to time. You also have the option of storing prices for certain services. That is to say, you can use the contract as a price list.
Entering services actually performed
You enter services that have actually been performed by means of service entry sheets. In doing so, you can reference the PO. This procedure is suitable for the entry of planned services. At the time of entry, each individual item of the entry sheet is recorded together with its actual value. Unplanned services can be precisely specified as individual items at the time they are entered as having been performed. They are recorded with their exact value and are checked with regard to adherence to the value limits specified in the PO. You can evaluate the quality and timeliness of the services provided by your vendors. Two semi-automatic criteria are available in MM Vendor Evaluation for this purpose. Releasing (approving) the service entry sheet
You can make service entry sheets subject to a release (approval) procedure. In the process, you can release each individual entry sheet (individual release) or several entry sheets at once (collective release). Assume an entry sheet to the value of $10,000 is
subject to release strategy S3, in which three different points (individuals or departments) in your company must give their approval. The entry sheet counts as having been accepted when the third release point has released (approved) it. If a release procedure has been defined, an individual entry sheet cannot be directly manually accepted. Accepting services performed
In the next step, the services listed in the entry sheet as having been performed are accepted. The acceptance and entry of services can be defined as separate steps. However, it is also possible to have entry and acceptance carried out by the same individual or department.
Checking invoices for services
The final phase of the service procurement cycle is verification that invoices submitted by vendors or subcontractors are correct. In the process, the highest-level value limit from the accepted entry sheet is taken and compared with the invoice. The taxes shown in the invoice are checked. If the value limit is exceeded, the system issues a warning message.