SAP MM Simple Procurement Cycle

The Materials Management Module (MM) of SAP is completely integrated with other modules such as (SD, FICO, PP, WM, PM). Procurement in SAP MM comprises of following.

  • Determination of Requirements
  • Source Determination
  • Vendor Selection
  • Purchase Order Processing
  • Purchase Order Follow-up
  • Goods Receiving and Inventory Management
  • Invoice Verification

SAP MM Simple Procurement Cycle

Determination of Requirements:  This phase comprises of identification of Material Requirements. This can be based on the user or MRP proper/Demand based approach to inventory control. Purchase Requisitions can be created manually (ME51N) Release (ME54) or can be generated using the System.

Source Determination: This Phase comprises of identification of potential sources of supply. This can be based on past orders, and existing agreements.

Vendor Selection: This Phase comprises of comparison of quotations received from Vendors. The system can check different quotations received from vendors.


Purchase Order Processing: In this phase information is acquired from the Requisition and the Quotation. Purchase Orders can be generated by the system or they can be created manually (ME21N).

Goods Receiving and Inventory Management: When you enter incoming deliveries (by looking at the delivery order provided by vendor), you will be referring to the Purchase Order, therefore, entry work is minimized. SAP is also able to check how much quantity is still open for receiving, and it is also possible to set tolerance levels. For example, If your Purchase Order quantity is 100, you can set a over delivery and/or under delivery tolerance. Therefore, system will check against the tolerance % that you have set, and if you enter a quantity that exceeds this, SAP will throw you an error message.

The goods receipts number can be obtained by entering the Purchase Order number.

Invoice Verification: Here Invoices are matched,

Payment Processing: This is the final step where the payment program authorizes payment to the creditor liabilities.

This covers the Standard External Procurement Cycle. Apart from the above, there are other special procurement processes such as Vendor Consignment, Subcontracting, Stock Transfer, etc. They will be explained later. For now, we should all be clear of the Standard cycle because the whole of MM evolves around it.

Also See: How to configure Sales Document Item Category

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