The generic indirect material procurement process involves the acquisition of goods and services that are not directly used in the production of a final product. These materials are typically used to support the operations of a business, such as office supplies, maintenance and repair items, IT equipment, and other non-production-related items.
The basic procurement process for indirect materials can be summarized in the following steps:
- Requirements Determination
- Source of Supply
- Purchase Order Processing
- Purchase Order Monitoring
- Goods Receipt
Stock Materials and Consumable Materials
Stock materials are the goods that a company holds in inventory for the purpose of production, sales, or other business activities. These materials are typically used in the manufacturing process or are sold as finished products. Stock materials are often considered as capital assets and are used to generate revenue for the company.
Consumable materials are goods that are used up in the production or operating processes of a company. These materials are not held in inventory for sale or production of finished goods, but are instead used up during the course of business operations. Consumable materials are typically expensed as they are used and do not contribute to the company's inventory value.
In S/4HANA, stock materials require a fully defined material master record. Normally you buy stock materials for stock. They are then later consumed by a cost center or a production order. If required, you can also order stock material directly for a cost center or production order for consumption. Hence, you need to assign an account assignment object in the purchase order or PR.
For consumable materials, like pens, you can create a reduced material master record. This speeds up the information entry process, as it doesn’t require providing all information manually, like in a text item that can be used for ordering as well. In both scenarios, you need to enter an account assignment object.
Note
Stock materials are always posted on stock accounts in finance, while consumable materials are posted to consumption accounts.Play the video to understand the difference between ordering stock material and consumable (indirect) material.