The procurement of services may involve the following steps:
Source: SAP Help Portal
The following sections describe these steps in more detail.
Determining Requirements and Service Specifications
The user department can prepare a purchase requisition, within the framework of a project or with regard to regular maintenance work (such as the outsourcing of routine maintenance jobs) for instance. The requisition is the trigger for procurement activities in MM Purchasing.
For PM Plant Management user, specifications for regular maintenance work or servicing will similarly be created outside the MM component and automatically forwarded to MM Purchasing for further processing. The purchase requisition is created without the need for any further entry of data by simply passing on the service specifications from an existing general maintenance task list.
In this phase, there are options of dispensing with service specifications altogether or only making rough provision for unplanned services by setting value limits when the precise nature and extent of the relevant services are unclear until the time they are actually performed.
For ensuring that the dual control principle applies to requisitions (and also purchase orders), these documents are subjected to a release (approval) procedure. This guarantees that the goods or services covered by a purchase requisition that exceeds a specified value may not be ordered without the approval of an appropriate technical expert and the responsible head of department/division.
Determination of Possible Sources
In the source determination facility, MM External Services Management (if effected with Service Master established) offers an instrument enabling to establish whether suitable potential bidders exist for the requested services and whether longer-term business relationships have already been set up with certain service providers in the form of contracts.
In this case, the requisition can then be converted directly into a standard purchase order (under direct appointment process) or a release order to be issued against a contract that already exists with the service provider. The system accelerates the award phase by automatically converting requisitions into standard POs or contract release orders. In the event that services are requested for which there has previously been no requirement, i.e. for which no source currently exists in the system, a bid invitation process must be carried out.
Bid Invitation Procedure
The bid invitation phase is divided into two parts. First, to create RFQs and then record the incoming quotation data.
Creating an RFQ
If a bid invitation process is to be initiated for services, an RFQ must be created. The data entry process can be done by referencing the preceding document, the purchase requisition. The system creates a separate RFQ for each bidder, each with a unique number. The RFQs are then transmitted to the bidders.
Entry of Data From Quotations Submitted by Bidders
When quotations (bids) are received from bidders, the prices and conditions are entered in the RFQs that already exist in the system.
Comparison of Quotations
When all quotations have been received and entered, the most favorable one is quickly determined using the price comparison list. The price comparison list evaluates the quotations at different levels. Recommendation can be made on the basis of list of all quotations ranked by total value or compare the quotations at individual outline levels. Once the most favorable quotation identified and required approval obtained, award to be made (issuance of a PO for Service) to the recommended bidder. Rejection letters can be sent to unsuccessful bidders automatically.
Award Phase (Order Placement)
The successful bidder receives either a standard purchase order or a release order issued against an existing contract, either of which is created by conversion of the relevant quotation.
Monitoring of Purchase Orders
During the phase of service performance, the cumulative "actual" values (for the services actually performed) are continually updated in the underlying purchase order (standard PO or contract release order) to monitor the progress of a procurement project on an ongoing basis.
Entry of Services Actually Performed
Services that have actually been performed entered by means of service entry sheets in reference to the PO. Each individual service is recorded together with quantities and values. The services are recorded with their precise value, and the system checks that the limit has not been exceeded.
Acceptance of Services Performed
After services that have been performed have been recorded in the service entry sheet, one or more responsible persons can check that the work is satisfactory and formally accept the services. The process of service acceptance is separated from that of service entry in order to maintain the dual control principle.
Verification of Invoices for Services
At the conclusion of the procurement process, the service provider’s invoices are checked for correctness. This involves comparing the value from the accepted entry sheet with that shown in the invoice and checking that the tax amounts are correct. If the value in the entry sheet is exceeded, the system issues a warning message. Invoices that have been verified and released to Financial Accounting are then paid automatically.
Source : SAP Help Portal
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