Project procurement & sales

[Former Member]

Hi All,

I have a typical scenario here at our client. Requesting your suggestions.

We procure the materials for projects & sell the same items immediately to my customers where we constructing the building by adding certain profit margin.

What we did is as below,

Creating PR,PO,GR and IV for Vendor

Then create S.O and Billing.

When we create PR,PO there is commitment

Upon GR cost is posting on my project as actual.

When we create Billing wrt S.O to my customer , we will be able to see the revenue also.

When we create Billing, parallelly we are consuming the project stock on WBS by doing 221. So actual cost will remains the same.

My problem is my SD consultant is telling that, hence we are not doing PGI, S.O will remain open and which is not the right way. If i issue the material by PGI to customer, i will not be able to see actual cost on my project. Hence Budget check will not happen further.

Please suggest the ways to overcome this issue.

Best rgds,

Chanabasappa

[Former Member · Accepted solution]

Hi,

As per your business requirement ,material has been procurred for the project , but it has not been consumed for the project and directly it has been sold to customer for revenue.

And asper the procedure  PR,PO & GR was created, Since PR and PO will consume the Committment budget , and with the referance to GR actual postings will be captured to the respective WBS element.

Since SO Order is used only to determine the revenue for the project , but not for expenditure /actual cost booking against WBS .

The following are the effects of PGI:

1. Quantity in the inventory management and the delivery requirements in the material planning are updated.

2. Values of the stocks in the corresponding balance sheet accounts are updated.

3. All the relevant accounting documents are generated.

4. Billing due list is updated

5. Status in all the sales document are updated.

So if there is no PGI , It will not have any impact on WBS actual budget  , but accounting & Inventory updattion & documents will not be generated.

Regards,

vrkumar

[Former Member]

Hi Channabasappa,

You need to clear few things about your business process first.

1. Are you doing project specific procurement or at plant level?

2. Are you building up the inventory initially and later consuming it on the project? ,

See, if you are doing project specific procurement and building up the project inventory as well, then at the time of PR/PO you will have the commitment for the projects but GR will not give the actual cost on the project logically, actual cost will come when you will do the PGI, but still if you want to have the actual cost come on the project at the time of GR you can have it by making your inventory GL account as statistical cost element. Secondly, if you are doing procurement at plant level (general stock) and also delevering the material(PGI) to the customer site from general stock , then PGI will not give the acyual cost on the project.