Pei Ling Hoo - Fotolia
Procurement planners seeking better checks and controls in the procurement process can use the Release Strategy feature in SAP MM. Release Strategy provides a series of electronic approval capabilities available for different procurement elements such as purchase requisitions, requests for quotation, purchase orders, quantity or value contracts, or scheduling agreements.
Setting up a release strategy in the SAP MM module establishes the business rules that the company must follow to approve purchase of a material or service. For example, a maintenance engineer creates a purchase requisition for spare parts that are needed to keep equipment functioning properly. The estimated purchase value of these spare parts is $25,000. The company's procurement policy specifies that the purchase requisition will need to be successively approved by three authorities, such as maintenance supervisors or maintenance managers, before the procurement manager is able to convert it into a purchase order to formally begin the procurement process. Only after the final maintenance manager's approval will the purchase requisition be available for approval by the general manager.
With the release strategy in place, each approving supervisor or manager is assigned a release code, which is an ID that helps control the flow of procurement elements to the relevant releasing authorities. The release strategy can be set up in the configuration that best suits the business needs of the company. While the above example would require release or approval by three authorities based on an estimated purchase value of $25,000, it would also be possible to set up a release strategy in which only two people need to approve if the estimated purchase value of items is less than $15,000. Similarly, it is possible to create a release strategy that differentiates procurement of maintenance spares from procurement of critical raw or packing materials required for production processes.
It is also possible to integrate the release strategy with SAP Business Workflow to further optimize the entire procurement process. Without the SAP Business Workflow in place, the approving authority with the relevant release code needs to run a report in the system that brings up a list of all procurement elements that are awaiting approvals.
Materials management tools that help fine-tune procurement
How to use SAP MM Quota Arrangement
Dig Deeper on SAP manufacturing
Related Q&A from Jawad Akhtar
Replenishment strategies, lot sizes, safety stock, reorder point planning and replenishment lead time are five factors in ERP that can ensure ... Continue Reading
S/4HANA public cloud provides a less disruptive route to digital transformation than some options -- including the on-premises S/4 -- and smoother ... Continue Reading
These nine key components of SAP MDG help ensure regulatory, legal, environmental and financial compliance of your master data and improve ... Continue Reading