Lesson 1 of 5
The procure-to-pay chain
9 min
Procure-to-pay (P2P) is how a company gets what it needs from suppliers and pays for it. At Contoso Motor Co., the alternator line in plant 1710 Detroit uses rotors (CMC-RTR-200) bought from Lakeside Components. Every time stock runs low, the same chain runs: someone asks for rotors, purchasing orders them, the warehouse receives them, accounts payable checks the invoice, and finance pays. In SAP S/4HANA each of those steps creates a document, and the documents link to each other.
- Purchase requisitionAn internal request: 500 rotors for plant 1710 by the 20th (created by MRP or a person)
- Purchase orderThe external commitment to Lakeside Components: quantity, price, delivery date
- Goods receiptThe warehouse posts receipt of the rotors into storage location 171A
- Supplier invoiceAccounts payable posts Lakeside's invoice after it matches PO and receipt
- PaymentThe payment run pays the open supplier item on its due date
What each document does
| Document | Who creates it | Typical transaction / app | What it records |
|---|---|---|---|
| Purchase requisition | MRP, a planner or a requester | ME51N; Create Purchase Requisition; Manage Purchase Requisitions | What is needed, how much, by when, for which plant |
| Purchase order | Purchaser (purchasing group 001) | ME21N; Manage Purchase Orders | Supplier, price, quantity, delivery date, account assignment |
| Goods receipt | Warehouse clerk | MIGO (movement type 101); Post Goods Receipt for Purchasing Document | A material document plus, for valuated stock, a journal entry |
| Supplier invoice | Accounts payable | MIRO; Create Supplier Invoice | The supplier's claim, matched to the PO and receipt, plus a journal entry |
| Payment | Accounts payable / treasury | F110; Manage Automatic Payments | The outgoing payment that clears the supplier item |
P2P documents at a glance. App names can vary by release.
The requisition is internal and has no legal effect: Lakeside never sees it. The purchase order is the first external document and the anchor for everything after it. The goods receipt and the invoice are both posted with reference to the purchase order, which is what makes the later checks possible.
Not every purchase follows exactly this path. Office supplies bought for a cost center skip the stock part: the goods receipt posts straight to expense. Services are confirmed with a service entry instead of a goods receipt. Some suppliers send confirmations before they ship, and some invoices arrive electronically. These are variants of the same chain, and later courses in this track cover them. This course stays with the core case: a stock material, bought from one supplier, received into one plant.
Organizational units in the chain
Every P2P document carries organizational data. Contoso buys through purchasing organization 1710, purchasing group 001 is the buyer team, plant 1710 Detroit receives the goods into storage location 171A, and the invoice and payment post in company code 1710. If any of these is wrong on the PO, it flows downstream: a PO for the wrong plant gets received in the wrong place.
Reading the chain: purchase order history
The single most useful screen in P2P is the purchase order history. Open the PO in ME23N, select the item, and the Purchase Order History tab lists every goods receipt and invoice posted against it, with quantities, amounts and document numbers. In the Fiori world, the purchase order apps show the same flow as a process view. If you want to know where a purchase stands, start here.
What would you do?
A production planner at Contoso calls: "Lakeside says they shipped the rotors last week, but we can't see them." What do you check first?
- P2P runs requisition, purchase order, goods receipt, supplier invoice, payment.
- The PO is the first external document and the reference for receipt and invoice.
- Organizational units on the PO (purchasing org, group, plant, storage location, company code) flow downstream.
- The purchase order history shows every receipt and invoice against a PO item.
Check your understanding · not graded
Lesson check
1. Which P2P document is the first one the supplier sees?
2. Which movement type is typically used for a goods receipt against a purchase order?
3. Where do you see all goods receipts and invoices posted against a PO item?
4. Which organizational unit owns purchasing conditions negotiated with suppliers?