For any company the 2 processes of “procurement to pay” and “order to cash” are very important. Using order to cash process, the company sells its goods to its customers and realizes cash. Using procure to pay, the company purchases goods or raw materials from vendors and pays them for the purchases made.
SAP MM is all about procurement and inventory management. SAP MM has all the functionalities which any company can use to procure materials and services. The most common ways of purchasing like Request for Quotation (RFQ), purchase orders (PO), long term agreements, scheduling agreements, consignment purchases, third party purchases etc. are all covered in SP MM. In the standard system itself many variations of these procurement types can easily be maintained. Through customization, it is possible to alter these procurement types to suit almost any possible scenario of purchasing.
To take care of modern practices, SAP provides a very flexible and versatile solution for procurement. you can have optimized procurement where any purchase requisition (PR) will find available sources of supply automatically. For distributed contracts, SAP has elaborate mechanism through which even largest of companies can have this facility working through all their legal entities located on many continents. For companies who have many legal entities and do internal procurement, SAP has good facilities in form of stock transport order.
To control budget for procurement, SAP has release procedure which determines if a purchase order can be released for any purchase or not.
In fact SAP is very strong on procurement to pay business processes and SAP MM covers most of prevalent practices which companies use today. This is the reason SAP is the most preferred ERP.