Maintenance Spares Procurement Process

Many times Maintenance Engineer requires spares for repairing of the machinery. These spares procurement request i.e. Purchase Indent is prepared by him.

Purchase Indent consist of Material Code or Item Code (Description of material linked with the code), Quantity, Required Date, Budget-Fund /cost centre, UOM, Indent nature- Revenue/Capital. Hence all the required terms in the purchase indenting mentioned below.

Also for electrical/electronics material templates added at the end. These material template gives each items quality attributes required in material code. So that material code will have proper required description of item.

Plant

A place where an industrial or manufacturing process takes place

Enterprise resource planning (ERP) is business process management software that allows an organization to use a system of integrated applications to manage the business and automate many back office functions related to technology, services and human resources

ERP nowadays are SAP, Oracle, Epicor, microsoft dynamics etc.

Fund or Cost Center

A cost centre is a department within a company that does not produce direct profit and adds to the cost of running a company, a part of an organization to which costs may be charged for accounting purposes

RFQ

A request for quotation (RFQ) is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services.

Purchase indent

An internal company document used in the purchasing process to authorize the requisition of materials prior to initiating a purchase order. Purchase indents are audit documents used to track the movement of materials prior to their receipt by the buyer

Units of Measure

UOMs is the Units of Measure  e.g kg, litre, meter, each, numbers etc.

Delivery period

Average or normal time between placing an order and receiving the delivery. Also called delivery time.

Capital expenditures

Amount of money spent on either buying fixed assets or improving the earning capacity of these assets

Therefore, all expenditures are capital expenditures if they are incurred in connection with:

•Purchasing a new fixed asset. 
                    OR

•Improving the earning capacity of existing fixed assets / Adding value to existing fixed assets

The cost of purchasing a new fixed asset includes not only the purchase price of fixed asset but also all costs necessary to bring a new fixed asset into business location and workable condition

Revenue expenditures

All expenditures other than capital expenditures are referred to as revenue expenditures and they are also known as expenses

Revenue expenditures are day to day expenses of a running business that don’t provide benefits for a long period of time, for example they benefit business financially for less than a year.

Maintaining existing value or earning capacity of fixed assets for example repair and maintenance cost of machinery, painting the existing factory building, repair expenses of vehicle etc.

Activity	Nature
Purchase of Plant and machinery	Capital Expenditure
Repair of plant and machinery (It is done every year or as and when required)	Revenue Expenditure
Fuel cost of plant and machinery (incurred frequently during the year)	Revenue Expenditure
Installing a new motor or drive in machinery (that will be used for more than a year)	Capital Expenditure
Painting the walls of factory building (That is done every year)	Revenue Expenditure

Purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services

Inventory

The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners.

Reservation/ Issue of material from Stores

Material collection by user departments

Material required for use in the department are collected from Stores by the user department against   an Issue note.   

Material / Item code

A way of identifying specific items and categorizing related inventory items. 

The SAP Material Number (8 or 10 digits) is the primary master data element of the SAP MM module. It is used to both describe and record history of purchases made. The Material numbers, for each unique material, is generated by the SAP system.

Materials are linked to an account code, vendor, price, description and other information needed for the execution of a structured PO using this number.

The material number uniquely identifies a material in the SAP System.

Following are related SAP  Transaction (T-codes)     

MB21 Create Reservation

MB22 Change Reservation

MB23 Display Reservation

ZMM_MRS     Print Reservation

ME51N Create Purchase Requisition

ME52N Change Purchase Requisition

ZMM_PR_FORM   PR  Printout