SAP MM Process Flow Document

By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore
SAP MM Process Flow Document

Create Material: T Code MM01
Select Organizational Views The basic organization views are 1. Basic data 2. Sales organization data 1 /2 3. Purchasing 4. MRP 1/2/3/4 if required 5. Account data
Select organizational data Plant/Storage Location/sales Organization/Distributing channel
Basic data 1 screen
The above screen shows the mandatory field required to create material which is shown in Arrow Marks. Basic Data 2 screen
Sales organization data 1 screen
Sales organization data 2 screen
General Plant screen
Required Mandatory fields are shown in arrow mark Purchasing view screen
If Automatic PO required in Purchase then the parameter Auto PO marked as mandatory shown in arrow mark. MRP 1/2/3 views as shown in below screen shot. The arrow marks shows the mandatory fields. If materials is under planning these MRP views are mandatory for creating Material in SAP MM. MRP View 1
MRP View 2
MRP View 3
Plant data View
Plant data 2 view
Accounting data view screen
In accounting data view Valuation class is mandatory to create Material which is shown in above screen shot. Maintain Price like Standard Price or Moving Average for Material in this view as shown
SAP System will ask for saving the date for creating Material Finished Product say YES And save the document
CREATING VENDOR: T Code XK01 Vendor is mandatory for creating Purchase order in SAP MM. One who supplies the materials/goods to the company is called vendor. The below screen shots flow shows how to create vendor.
Marinating Vendor address
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore Reconciliation account is mandatory field in Vendor creation as shown in screen shot
Select the required order of currency for India it is INR in the mark as shown in screen shot.
After this screen entry you can able to create vendor with some number range The basic Purchasing documents are required to create Purchase order is as follows: 1. Material Master 2. Vendor Master 3. RFQ (Request for Quotation) 5. Info record
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore 6. Source List The Basic Flow of SAP MM Process One of the main areas covered by MM module is Purchasing/Procurement. The purchasing process is initially started when there is a requirement of material/service from a user. If the material/service can not be obtained from companys internal resource, the responsible person of that company must find the vendor/supplier which can provide it on the required date. The purchasing process is ended when the payment processing to the vendor that supply the material/service has been done. In this post, I will explain about the basic of the purchasing/procurement process, which usually known as Procurement Cycle as the following steps. 1. Determination of Requirements In this step, there is a requirement of material or service, which must be procured externally, from the user. The requirement must be recorded as Purchase Requisition (PR) document in SAPMM. Purchase Requisition (PR) is an internal purchasing document in SAP ERP that is used to give notification to responsible department about the requirement of material/service and to keep track of such requirement. PR must contain clear information about the description and quantity of the material/service, the required date, and other information. PR can be created directly in SAP MM module with ME51N t-code, or indirectly by another SAP component, such as: materials planning, maintenance order of PM module, production order of PP module, network activity of PS module, etc. We have explained this in the previous article about MM integration with other modules.
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore 2. We can set in SAP that the PR must be approved or released before it can be passed to the next step of purchasing processes. We have explained about the PR Release Strategy in the previous article. 3. Determination of the source of supply After the PR has been created (and released if needed) in the previous step, the responsible department (usually purchasing/procurement department of the company) must process it. The buyer of the procurement department must determine the possible sources of supply of the material/service specified in the PR. With ME57 t-code, the buyer can check in the SAP whether the material/service needed can be obtained from the existing outline agreement (contract or scheduling agreement) documents or not. If there is no existing outline agreement, the buyer can also check whether there is an existing info record documents (which contain information about the price and delivery conditions of the material/service agreed with vendor in the last Purchase Order/PO) that still can be used(valid) as a reference to create new PO to the same vendor. If there is no valid info record at that time, the buyer can create Request For Quotation (RFQ) documents to one or some prospective vendors. The buyer can access the procurement history of the material/service specified in the PR, so he can see which vendors that have provided it to the company before. He can also create the RFQ to the new prospective vendor that might have never provided the material/service to the company before.
Request for Quotation (RFQ) is an external purchasing document that usually used as bidding process invitation. RFQ is sent by a company
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore to the prospective vendor to request the vendor to provide a quotation which contains information about the price and delivery conditions, terms of payment, etc that the vendor formally agree in case it is appointed to provide the material/service to the company. In the RFQ, the buyer must include the information about the material/service needed from the vendors (can be copied from the PR), the latest submission date of the quotation, the preferred term of delivery, term of payment, currency, etc. 4. Vendor Selection If in the previous step, there are some outline agreement or info record documents that can be used as references to create a PO, the buyer can select or choose which vendor that will be appointed to provide the material/service at this time. If there is no outline agreement or info record documents that can be used as references to create PO, in the previous steps, the buyer will send the RFQ documents to one or some vendors. The vendors will send their quotations which include the information about the price, delivery terms, terms of payment, etc that they offered to the company. The buyer can input that information into SAP with ME47 t-code. With ME49 t-code, the buyer can compare the offering of all vendors that have sent their quotation. The comparison can be used to determine which vendor should be appointed to provide the material/service to the company. SAP ERP can also create rejection letters to the vendors that are not selected as the supplier of the material/service. 5. POProcessing In the previous step, the buyer has selected the vendor which will provide the material/service needed in PR. In this step, the buyer creates a Purchase Order (PO) based on the PR and the reference document
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore (that can be an outline agreement, an info record, or a quotation). Purchase Order (PO) is a legally binding document that issued by a company to a vendor which contains information about description, quantity, delivery date, agreed prices, terms of delivery, and terms of payment for material or service the vendor will provide to the company. 6. POMonitoring After the PO has been sent to the vendor, the buyer has the responsibility to monitor whether the vendor delivers the material/service at the right time on the right place. The buyer can monitor whether the material/service has been received by the person responsible (such as the warehouse man) online with PO history function in the PO document. If the warehouse man or anyone else has received the material/service and posted the Goods Receipt/Service acceptance document, the PO history will be updated in a real-time basis. SAP ERP can also has a functionality to give the reminder to the buyer if the PO item has not been GR in the specified period in respect of the delivery date agreed with vendors. 7. GoodsReceipt When the vendor delivers the material or perform the service, the responsible person of the company must perform the goods receipt (GR) or service acceptance (SA) transaction. The GR/SA will update the PO history. If the PO item is an inventory material, the GR will increase the stock level of the material. When we perform the GR for the PO item for the first time, SAP will propose the quantity to be GR as the PO order quantity. Depends on the delivery terms agreed with the vendor, the vendor might deliver the material partially. We can post the GR partially too, so when the next
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore material delivery is received, SAP will propose the quantity to be GR as the remaining quantity that has not been GR yet. 8. InvoiceVerification After the vendor delivered the material/service; it will send the invoice to the person responsible in the company. Invoice is a formal document issued by a vendor to the company to request the payment for the material or service that the vendor has already provide to the company according to the terms of payment agreed in the PO. An invoice is usually attached with the delivery note (goods receipt) document. The person responsible, usually an accounting staff, will perform the three way matches. He will check whether the invoice information (such as price, terms of payment, etc) is the same with the PO, and whether the PO item has been received (GR/SA). If yes, then he will post the Invoice Receipt (IR) transaction in MM module. The IR transaction will credit the account payable of the vendor which specified in the "pay to" partner function in the PO. 9. PaymentProcessing After the IR transaction has been posted, the vendors account payable will increase and the company must process the payment to that vendor as stated in the terms of payment of the PO. The payment transaction will be performed in FI module. After the payment has been posted, the vendors account payable will be debited and the cash or bank account will be credited. In the next article I will explain the 1st step of the procurement cycle in more details: The Determination of Requirement. You can get alert when I post new article if you subscribe Create Purchase order: T- Code ME21N
Maintain the basic parameters to create Purchase order like, Plant/Material/Vendor/Net Price/Organization data/ Invoice Tax code/PR
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore number/RFQ Number/ PO Document Type/Currency as shown in the arrow marks in screen shots.
Maintain the Tax Code in invoice at Item details.
Save the Purchase order. Goods Receipt: T Code MIGO
By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore Create Goods Receipt for the Purchase order and check by using tick mark button and save the document.
Check Item OK. And Post the GR
Enter the Purchase order number for Goods Receipt The Display of the Material document is shown in the below screen shot

SAP MM Process Flow Document

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By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore