Using Special Procurement Types

Objectives

After completing this lesson, you will be able to:
  • Identify Special Procurement Types
  • Cost a phantom assembly

Special Procurement Types

This image outlines the purpose of special procurement within the material master, highlighting preferred typesof procurement including in-house, external, subcontracting, and stock transfer or production from another plant, along with the roles of logistical and accounting control.

Note

Special procurement keys are used to define specific procurement processes. They are maintained in the material master record and recognized during material requirements planning (MRP) and cost planning.

The special procurement indicator defines the selection. If no special procurement indicator is specified for the material and no bill of material (BOM), the material specifies internal production and is costed as a raw material. A price will be selected from the material master. If the special procurement indicator specifies internal procurement and a BOM does not exist, the system will include routing costs (if a routing is available).

If the special procurement key indicates external procurement, the internal BOM and routing are ignored, and a raw material cost estimate is prepared. Remember that the costing special procurement key overrides the production special procurement key only for cost estimates. If the costing special procurement key is blank, the production special procurement key is used for cost estimates.

Special procurement describes how a material is procured. This is defined in the special procurement key, which enables you to define a material for the type of procurement selected.

You can enter the special procurement key in the material master record in the MRP view and in the costing view. The entry in the costing view has a higher priority in the cost estimate. If there is no entry in the costing view, the setting in the MRP view is used. If not, the system proceeds as usual.

For example, if there is a sales plant and a production plant, the cost estimate of the production plant is used for the sales plant. In the material master records, set a special procurement key that refers to the production plant through the stock transfer.

When materials are transferred from one plant to another, the following functions can be executed:

  • The cost estimate is transferred from the supplying plant.

  • The quantity structure is exploded and costed.

  • The system can calculate a material master price if the plants belong to different company codes and cross-company costing is not enabled.

Types of Procurement

This image compares in-house and external special procurement scenarios without a valid BOM, showing the process flow and cost estimates for raw material or quantity structure determination.

If no special procurement is planned for a material and there is no valid BOM, the system creates a raw material for the cost estimate. It uses the material price according to the valuation variant and includes it in the cost component split.

Ensure that the routing data is included by selecting the type of procurement In-house production for the material.

If a product with the special procurement cost type is used, the quantity structure is ignored. Valuation is performed according to the material valuation strategy, and not the valid BOM and routing.

A table outlining procurement keys, correlating procurement type and special procurement with BOM, routing, and cost estimate criteria, highlighting internal and external considerations.

Phantom Assembly

A flowchart depicting a phantom assembly with components A, B, C, D, and E, illustrating special procurement for component C and presenting cost estimates for assemblies A and C.

Note

An assembly may be designated as a phantom assembly through the special procurement key. During costing, when the BOM explosion encounters a phantom assembly, it includes its components in the itemization of the next higher-level assembly. If necessary, an item designated as a phantom in the MRP view can be assigned an internal production special procurement key in the costing view. This allows the system to create a cost estimate for both assembly levels.

Phantom assemblies are not assembled in their header material (for example, a sound system for a car). They are exploded in requirements planning and installed directly in the higher-level assembly. They are logical groups of components that facilitate planning and maintenance of BOMs.

The phantom assembly displayed in the figure indicates the following:

  • The cost estimate for material A shows the material costs of the individual components in the phantom assembly instead of the material costs of the phantom assembly.
  • Cost estimate C is only manufactured in exceptional cases as a replacement part.

You can maintain phantom assemblies by entering the relevant special procurement key in the MRP screen of the assembly.

Create a Cost Estimate for Special Procurement Types

ExerciseStart Exercise

Summary

  • Special procurement keys define specific procurement processes and are maintained in the material master record.
  • The special procurement indicator determines whether materials are internally or externally procured, affecting cost estimates.
  • Phantom assemblies are logical groups of components that facilitate planning and are costed at the component level.
  • Costing view entries in the material master record have priority over MRP view entries for cost estimates.
  • Cross-plant material transfers can involve cost estimate transfers and quantity structure explosions.

Learning

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