Purchasing Discount in Kind

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1 Applies to: SAP ECC 6.0. For more information, visit the Enterprise Resource Planning homepage. Summary: This document helps the P2P consultants to understand the free goods / bonus goods scenario in SAP Purchasing in terms of discount in kind. How the configuration and the master data to be maintained for their business requirement, has been explained in a simple way. Any suggestions and improvements towards this document will be always welcome. Author: Mohamed Hasan Rifaie.M Company: Larsen & Toubro Infotech Ltd., Created on: 26 March 2010 Author Bio: M. Mohamed Hasan Rifaie, a SAP certified Procurement consultant, is now an employee of Larsen & Toubro Infotech Ltd. He has total 9 years of experience, out of which more than 2 ½ years experience in the area of SAP Consulting in Procure to pay (P2P) process and Supplier Relationship Management (SRM). He has worked various industries like Electro mechanical construction, Automobile, Refrigeration industry as a Procurement Executive. He has secured University Rank in Engineering degree SAP AG 1

2 Table of Contents Discount in Kind... 3 Types of Free Goods... 3 Inclusive Bonus Quantity... 3 Exclusive Bonus Quantity... 3 Master Data Setup... 4 Material Master... 4 Vendor Master... 6 Create Condition Record for Free Goods Determination... 7 Create Info Record for Free Goods Configuration Overview Define Field Catalog Create Free Goods Tables Define Access Sequence and Discount-in-Kind Types Maintain Access Sequence Define Free Goods Types Define and Assign Discount-in-Kind Schema Maintain Free Goods Schema Determine Free Goods Schema Define Condition Types Define Calculation Schema Related Content Disclaimer and Liability Notice SAP AG 2

3 Discount in Kind Many times business transaction needs and oblige to give certain type of discount or offers in order to drive the business in the same zeal. In sales point of view, we can say it as a grant and in purchase perspective it can be termed as a demand. Nevertheless, this will drive the business and yield a win-win situation on either side. This function allows the purchaser to get a product free of charge in the form of free goods when a certain quantity of product is ordered. Otherwise, free goods are a kind of quantity discount, and are granted in the form of a goods delivery that is free of charge when a certain quantity is purchased. In the following section explains the settings (both in Master data and the configuration level) that are necessary for the use of the free goods functionality in SAP. Discount in kind can be in the form of free or bonus goods. Types of Free Goods The following types of free goods are available in SAP in terms of business, - Inclusive bonus quantity - Exclusive bonus quantity Inclusive Bonus Quantity The buyer needs to pay only for a part of the goods required. The rest of the goods are for free. This is called inclusive free goods which mean that part of the purchased quantity is designated as free and not billed providing the unit of measure should be same for the free goods and the billed goods. When ten chairs are ordered, out of which one is designated as free goods. If we order ten chairs then one chair is delivered to us as ordered but we will be billed only for the nine chairs and one chair is given as free. With this, we have received inclusive free goods. Exclusive Bonus Quantity The buyer needs to pay for the goods ordered and receives some additional goods as free goods. This is known as exclusive free goods and means that free goods is granted for an additional quantity to that in the purchase order. More is delivered than was ordered and the additional quantity will not be billed. The goods delivered as free do not have to be the same as the material ordered. When five tables are ordered, the vendor supplies one chair as free goods. Therefore, if we order five tables, we receive a chair as free goods. Please note, with this exclusive bonus quantity functionality, we can get free goods different than the billable material SAP AG 3

4 Master Data Setup Material Master In material master, under purchasing data, select the Material qualifies for discount in kind indicator. If the material subject to discount in kind for only purchasing, then select the key 2 for this purpose. Otherwise, select other options available (such as key 1 for purchasing & sales, key 3 for only sales) SAP AG 4

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6 Vendor Master In vendor master, under purchasing data, mark the Grant discount in kind field SAP AG 6

7 Create Condition Record for Free Goods Determination We need to create condition record for free goods for the combination of vendor, material, plant and the purchase organization with the corresponding validity period. Use t code, MBN1 for the creation of condition record. The same can be created while info record creation also. T code: MBN1 Select the standard condition type NR00 or any customized condition type of your requirement. SAP providing standard condition type as NR00. Enter it, 2010 SAP AG 7

8 Select Info record: Plant-specific per order unit Enter vendor, material number, purchase organization, plant and the validity period. At item level maintain the item category type, order unit SAP AG 8

9 Here, enter the minimum quantity to be ordered in order to avail the free goods / bonus goods and the ratio of the quantity, free goods in the respective field. If it is Inclusive rebate, enter the key value 1 in the free goods category. In the case of exclusive bonus quantity enter the value 2 in the free goods category field and the free goods material number in the Additional material for free goods field as per below. You can use calculation types to define that certain free goods are granted when a particular quantity of products is ordered. If, however, a buyer orders a lesser or greater quantity than the defined quantity, you can determine which free goods should be granted by selecting from the types provided by default. The following types, which you can define in the master data, are provided by default: Key 1: Proportionate, that is, percentage calculation of free goods Key 2: Unit-related Key 3: Only for whole units 2010 SAP AG 9

10 You can switch over between Inclusive and Exclusive as per below screenshot SAP AG 10

11 Then finally save it. Thus condition record NR00 created for the material, vendor combination. Create Info Record for Free Goods In this step, we are creating info record for the free goods material and the vendor. This process is a normal info record creation process SAP AG 11

12 Select the condition tab, 2010 SAP AG 12

13 Then the sub screen appears and asks about which condition type you want to enter it. First select the Gross price condition type and enter the value and scales if required. Then select the free goods condition type, 2010 SAP AG 13

14 Select the free goods condition type and select the free goods icon, if required maintain scale here for free goods SAP AG 14

15 Execute it, Repeat the same step as in the case of condition type creation and save it. If required select the free goods type here (whether inclusive or exclusive). Depends on the setup we have made in the condition record and info record, the purchase order getting created as per below screenshot SAP AG 15

16 Exclusive scenario: 2010 SAP AG 16

17 Configuration Overview Define Field Catalog In this step, you define the field catalog for the allowed fields. The standard system contains order unit, purchasing organization, purchasing information category, vendor, material and plant fields. You can add additional field like material group to this table. IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Maintain Discount-in-Kind Dependencies (Cond. Table) Field Catalog 2010 SAP AG 17

18 Create Free Goods Tables In this step, you create free goods tables. Before you create a new free goods table, you should check whether the existing fields of the field catalog are sufficient for your requirements. If you want to use a field in discount determination that is not provided with this usage in the standard system, you must add it to the field catalog. You can only add fields which are contained in the tables KOMG, KOMK or KOMP. Enter the name of the table that you want to create. Note that you can only choose a name between 501 and 999. If you do not make an entry here, the system automatically assigns a sequential number. Specify whether you want to create the table with or without a validity period. Choose the fields that are required for the free goods table from the list of allowed fields that are contained in the field catalog and can also be extended there. Generate the new free goods table. IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Maintain Discount-in-Kind Dependencies (Cond. Table) Create Free Goods Tables Execute it, 2010 SAP AG 18

19 Enter it, Select Generate SAP AG 19

20 Define Access Sequence and Discount-in-Kind Types In this step, you define access sequences and types of free goods. The access sequence is a search strategy that the SAP System uses to find valid free goods records for a free goods type. You specify an access sequence in every type of free goods. This defines which fields the SAP System checks when searching for a valid free goods record. IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Define Access Sequence And Discount-in-Kind Types 2010 SAP AG 20

21 Maintain Access Sequence You group together all the free goods types that are to be taken into account by the system in determining a free goods discount for a business transaction in a pricing procedure/calculation schema. Please note that only the free goods types contained in the free goods schema can be entered manually. IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Define Access Sequence And Discount-in-Kind Types Maintain Access Sequence 2010 SAP AG 21

22 Define Free Goods Types In this step, you create new free goods types. If you define your own free goods types and access sequences, then the key should start with the letter Z because SAP does not use this name range in the standard system. You should not change the access sequences and free goods types that are contained in the standard SAP R/3 System. IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Define Access Sequence And Discount-in-Kind Types Define Free Goods Types 2010 SAP AG 22

23 Define and Assign Discount-in-Kind Schema In this step, you define the free goods schemas. You also assign the free goods schemas to the transactions by specifying the dependencies between the free goods schemas and the purchasing organization schema group the vendor schema group IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Define And Assign Discount-in-Kind Schema Maintain Free Goods Schema In this step, you define a free goods schema. In the free goods schema, you define which free goods types are to be taken into account and their sequence. When determining the free-goods discount, the SAP System automatically determines which freegoods schema is valid for a business transaction, and takes the types of free-goods contained in the schema into account one after the other. IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Define And Assign Discount-in-Kind Schema Maintain Free Goods Schema 2010 SAP AG 23

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25 Determine Free Goods Schema In this step, you set the determination of the free goods schema. IMG Materials Management Purchasing Discount in Kind (Discount in Form of Bonus Goods) Define And Assign Discount-in-Kind Schema Determine Free Goods Schema 2010 SAP AG 25

26 Define Condition Types This step you define condition types. The condition types are used to represent pricing elements such as prices, discounts, surcharges, taxes, or delivery costs in the SAP System. These are stored in the system in condition records. IMG Materials Management Purchasing Conditions Define Price Determination Process Define Condition Types 2010 SAP AG 26

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28 Define Calculation Schema In this step, you define the calculation schemas by including the condition type NR00 in to the calculation schema (pricing procedure). IMG Materials Management Purchasing Conditions Define Price Determination Process Define Calculation Schema 2010 SAP AG 28

29 Thus, the condition type NR00 has been added to the pricing procedure SAP AG 29

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31 Disclaimer and Liability Notice This document may discuss sample coding or other information that does not include SAP official interfaces and therefore is not supported by SAP. Changes made based on this information are not supported and can be overwritten during an upgrade. SAP will not be held liable for any damages caused by using or misusing the information, code or methods suggested in this document, and anyone using these methods does so at his/her own risk. SAP offers no guarantees and assumes no responsibility or liability of any type with respect to the content of this technical article or code sample, including any liability resulting from incompatibility between the content within this document and the materials and services offered by SAP. You agree that you will not hold, or seek to hold, SAP responsible or liable with respect to the content of this document SAP AG 31