central purchasing contral

[Former Member]

Hello all,

I have a question about setting up centrally purchasing contract as I have not done this before, hope you can provide a clue if you have experience on this.

Background:
Looking at Figure below, one of our entity in Korea has been setup as a global purchasing hub. This entity is going to act like a main sourcing entity to procure items from Korean-based suppliers for all whole company groups. For example, a UK-based trading company, an AU-based trading company, and a Korea manufacturing plant (all three of them under same family group company with this Korea entity) issue a purchasing order to this Korea entity, and this Korea entity, will in turn, source from local Korea suppliers for the items they want. This Korea entity will inform the supplier to drop ship to their ordering plant at UK, AU, and KR manufacturing plant. Hence, this regional purchasing org charge other entity for such purchasing service.

Question A (entity setup):
Please let me know if the entity setup method steps below are correct to achieve above process.

Step 1 – Create the reference purchasing org (AP00)?

Step 2 – I ONLY assign this reference purchasing org to the company code KR02, and do not require to assign this reference POrg to other company codes?

Step 3 - I ONLY assign this reference purchasing org to the plant 4000, and do not require to assign this reference POrg to other plants (i.e. 1000 to 3000)?

Step 4 – I can Ignore about the standard purchasing org assignment to any plant, correct?

Step 5 - Assign the UK, AU, and KR manufacturing’s  purchasing organizations (AU00, KR00, UK00) to this Reference Purchasing Org (AP00)?

Question B (partner function):

As I am not quite familiar with the partner function, please see if following setup is correct.

1 – If I decide to assign the partner function in the contract, may I know if the plants that I should entered to in the able should be 1000, 2000, 3000, and 4000 for this process example?

2 – If the contract created is for supplier 1994773, then the Number column should be all filled-up with this 1994773 in the partner entry screen for all the function?

Question C (during Central contract creation):

1 – Hence, when I create this centrally contract, I leave the plant value out, and maintain the contract using this “reference purchasing organization” (i.e. AP00) object in ME31K?

Question D (during actual PO creation):
1 – Hence base on above setup from A to C, that means business users in the UK/AU/KR-Manufacturing can create a Purchasing order directly from their SAP screen with reference this contract document and the PO will send to the supplier instead of the Regional Purchasing Organization (i.e. company KR02), is this correct? If this is correct, then I am afraid, this model does not help because our process is that that other plants buy from this Regional Purchasing Org (i.e. charge the regional purchasing org), and this regional purchasing org will in turn create a PO to buy from local KR suppler and charge them. Further, this will means a loss of operation revenue for this Regional Purchasing Organization. What do you think?

Know it is a long writing but I try to make it clear to the reader.

Regards,

Daniel

[Prasoon · Accepted solution]

Hi,

    If you want to use a centrally agreed contract across plants, you should keep in mind the following points. The centrally agreed contract is valid for:

1. All plants assigned to the purchase organization (for which the contract is created)

2. All plants of other purchasing organizations for which the responsible purchasing organization has been defined as reference purchasing organization.

   Now, lets discuss about our questions:

Question A (entity setup):

Step 1 – Create the reference purchasing org (AP00)? : You may create a ref purchase org and assign all the plant specific purchase org to this ref purchase org. Or create a central purchase org and assign the same to all the plants.

Step 2 – I ONLY assign this reference purchasing org to the company code KR02, and do not require to assign this reference POrg to other company codes? : Not required to assign to other company codes, since all the plants involved are under the same company code. Otherwise also, its not required as of my knowledge.

Step 3 - I ONLY assign this reference purchasing org to the plant 4000, and do not require to assign this reference POrg to other plants (i.e. 1000 to 3000)? : If you want to create release orders against this contract created for the reference purchase org in each plant, either the ref purchase org to be assigned to each of the plants or the purchase org assigned to each of the plants to be assigned to this ref purchase org.

Step 4 – I can Ignore about the standard purchasing org assignment to any plant, correct? :YES

Step 5 - Assign the UK, AU, and KR manufacturing’s  purchasing organizations (AU00, KR00, UK00) to this Reference Purchasing Org (AP00)? : YES, you should (please see the general idea given in the first paragraph)

Question B (partner function):

1 – If I decide to assign the partner function in the contract, may I know if the plants that I should entered to in the able should be 1000, 2000, 3000, and 4000 for this process example? : Partner function is at vendor/purchase organization level, not at plant level.

2 – If the contract created is for supplier 1994773, then the Number column should be all filled-up with this 1994773 in the partner entry screen for all the function? : You can fill based on the vendor role defined for the partner function. If the vendor, ordering party, goods supplier etc all are same vendor, you can fill the same in all, otherwise enter the corresponding vendor in these fields. you can define the same in vendor master also.

Question C (during Central contract creation):

1 – Hence, when I create this centrally contract, I leave the plant value out, and maintain the contract using this “reference purchasing organization” (i.e. AP00) object in ME31K? : While creating contract, you have to create the contract for the reference purchase org with the plant field blank, so that all the plants / purchase org assigned to the ref purchase org can create release orders against the same contract.

Question D (during actual PO creation):

1 – Hence base on above setup from A to C, that means business users in the UK/AU/KR-Manufacturing can create a Purchasing order directly from their SAP screen with reference this contract document and the PO will send to the supplier instead of the Regional Purchasing Organization (i.e. company KR02), is this correct?: While creating release orders or Po against the central contract, each of the plants can create PO with the corresponding local purchase organization, not the ref purchase org.

Regards,

AKPT