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CHAPTER 4 The Procurement Process 83
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CHAPTER
CHAPTER

The Procurement Process

LEARNING OBJECTIVES
After completing this chapter you will be able to:
1. Describe the major organizational levels associated with the
procurement process.
2. Discuss the four basic categories of master data that are utilized
during the procurement process.
3. Explain the key concepts associated with the procurement
process.

4. Identify the key steps in the procurement process and the data,
documents, and information associated with these steps.
®
5. Effectively use SAP ERP to execute the key steps in the pro-
curement process.
6. Utilize SAP ERP to extract meaningful information about the
procurement process.

n Chapter 1 we presented a simple procurement process, which is repro-
duced in Figure 4-1. This diagram indicates that the initial step in this
I process is to create a requisition, which is then converted to a purchase
order and sent to a vendor. When the vendor receives the purchase order, it
ships the materials, which the ordering party receives in the receive materials
step. The ordering party also receives an invoice from the vendor, and it then
makes a payment to the vendor.
This simple process has served GBI well until now due to its small size
and closely connected operations. However, as GBI has grown and its opera-
tions have become more dispersed and complex, GBI’s management has come
to realize that it needs to reevaluate how GBI procures materials so that the
company can take advantage of the most effective and effi cient processes. To
accomplish this objective, management needs to familiarize itself with the vari-
ous options available to GBI for executing the procurement process. In addi-
tion, it wants to analyze the process steps and their impact in greater depth.
Once management has attained a thorough understanding of the tactical and

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