MATERIAL MANAGEMENT

Contents

Overview & Org Structure Material Master Vendor Master Procurement cycle Invoice Verification Inventory Management MM Transaction MM Reports MM Z Reports
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Components of Materials Management

Valuatio n Logistic s Invoice Verifica tion Purchasi ng Material Master Inventor y Mgmt. Physical Inventor y MRP Service Entry Sheet Service Master

Foreign Trade/ Customs

Materials Management (MM)

Product Catalog

Organization Structure

Overview & Organizational Structure

Organization Structure
q q q q q

Purchasing Organization. Valuation Area Plant Storage Location Purchasing Groups

Plant

q Lowest valuation area q Organizational level where Material Requirement Planning (MRP) runs q Generally used to describe a production site. q May be a physical or logical unit

Valuation Area

q The valuation area determines at which level a material to be valuated (inventory value is established). q SAP R/3 allows valuation at the Company Code level or Plant level, but recommends valuation area to be set at the plant level

Storage Location
q Subdivision of a plant. q Materials are managed (inventory management) Raw Materials Maintenance, Repair and Other Finished Products q May be a Physical or Logical unit

Purchasing Organization
q Organizational unit responsible for the procurement of materials and services.

q SAP requires that purchasing organizations to be assigned at the plant level. q A purchasing organization can be assigned to more than one plant. q A purchasing organization can be assigned to a company code.
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Organization Structure
Organizational units Company Controlling areas Sales organizations Purchasing organizations Company codes Valuation areas Plants Storage locations/batches/special stocks

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Inventory Valuation

Company (Group)

CMIFPE

Company codes

3000

4000

Plants

3100

3200

3300

3400

4100

4200

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Inventory Valuation
Client CMIFPE

Company codes

3000

4000

Plants

3100

3200

3300

3400

4100

4200

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Inventory Management
Company Code 3000

Plants

3100

3200

3300

3400 3300

Storage locations

3101 3102 3103 ---

3201 3202 3203 ---

3301 3302 3303 ---

3401 3402 3403 ---

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Purchasing Organization

Company (Group)

CMIFPE

Company codes

3000

4000

Purchasing organizations

3000

4000

Plants

3100

3200

3300

3400

4100

4200

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Organization Entities in Purchasing

Purchasing group 1
Purchasing organization 2 4000

Purchasing organization 1 3000

Purchasing organization

Purchasing group 2

Plant 3100

Plant 3200

Plant 3300

Plant 3400

Plant 4100 Plant 4200

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Material Master

MATERIAL MASTER

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Material Master
Material Master
Contains all the information a company needs to manage about a material It is used by most components within the SAP system
Sales and Distribution Materials Management Production Plant Maintenance Accounting/Controlling Quality Management

Material master data is stored in functional segments called Views

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Material Master
An advantage of the SAP system is that it maintains one set of data in real
time. Material data is used by many functional areas. In the SAP system, there is one set of related data for each material. With nonintegrated systems, each system may contain material data, and this data is not always consistent. In the SAP system, the data is consistently correct or incorrect.

Material Master data is organized by Views. Depending on the type of

material, only certain views need to be used. As the system is configured, additional views can be added as necessary.

Many Material Master views are plant-specific

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Material Master
Material Master Views
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Basic Data 1 Basic Data 2 Classification Purchasing Foreign Trade- Import Purchase order Text Sales: Sales Org Data 1 Sales: Sales Org Data 2 Sales: General /Plant Data Foreign Trade- Export Data Sales and Distribution Text MRP 1 MRP 2 MRP 3

15.MRP 4 16.Production Resource Tools 17.Work Scheduling 18.Forecast 19.Quality Management 20.General Plant Data/Storage 1 21.General Plant Data/Storage 2 22.Warehouse Management 1 23.Warehouse Management 2 24.Accounting 1 25.Accounting 2 26.Costing 1 27.Costing 2
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Material Master
Basic Data 1 Basic Data 2 Classification Sales: Sales Org Data 1 Sales: Sales Org Data 2 Sales: General/Plant Data Foreign Trade: Export Data Sales Text Purchasing Purchase Order Text Foreign Trade- Import Data MRP 1 MRP 2 MRP 3 MRP 4 Forecasting Work Scheduling Production Resource Tool
General Plant Data/Storage 1 General Plant Data/Storage 2 Warehouse Management 1 Warehouse Management 2 Quality Management Accounting 1 Accounting 2 Costing 1 Costing 2

Basic Data, Classification are not plant-specific (Client Level) Other views are plant-specific
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Material Types
Material Types Used FERT HALB ROH HIBE UNBW VERP ERSA Finished Goods Semi Finished Goods Raw Material Operating Supplies Non Valuated Goods Packaging Material Spare Parts

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Vendor Master

Vendor Master Data

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Vendor Master
The vendor
Pu rch asi ng

purch ase order

Bank
Payme nt
DEUTSCHE MARK DEUTSCHE MARK DEUTSCHE MARK

M at er ial

Vend or

Invoice

order

account

Goods receipt

Invoice verification

? =

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Organization Levels for Vendor Master

General data

Purchasing organization data

Company code data 001

Company code

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Vendor Master Record

General data Address Communication Valid for the whole group

Purchasing data Order currency Inco terms Minimum order

Valid for one purchasing organization

value

Accounting data Bank data Payment transactions Account management

Valid for the whole group or for one company code

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Vendor Master

General Data:

Company code data Purchasing data

Client-level data: Applies to all company codes and purchasing organizations Name, address, phone numbers, language Accounting data: Currency used, payment terms, reconciliation account (a vendor is a creditor of the enterprise) Data important for purchasing (contact persons, delivery terms) Maintained at purchasing organization level

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Purchasing Info Record

Purchasing Master Data

Info Record

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Purchasing Info Record

Piece Piece % %
Conditions Conditions

Material

Vendor A

US US Info record D D
Info record

Info record

Stock material M1

Consumable material M2 Info record Vendor B Info record Service S1

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Data in the purchasing info record

General data Vendor data Origin data Order unit

Texts

Control data Delivery time Minimum quantity Tolerances

Prices and conditions Gross price Discounts Freight

Price history Purchasing statistics Changes

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Purchasing Info Record

Provides continuously updated information
about the relationship of a specific material with a specific vendor Provides default information for purchase orders

Material
Purchasi ng Info Record

Vendor

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Purchasing Info Record

Purchasing info records can be created directly,

as we will do in this class, or can be created automatically when a purchasing document (e.g. purchase order) is created or changed. The Purchasing Info Record can be created automatically from a purchase order if the Info Update indicator is set. Conditions is SAPs term for pricing, which can include discounts, freight costs, surcharges, etc.

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Procurement

Procurement

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Procurement
Source list Requirements determination

External procurement environment

RFQs

Purchase Quota arrangement requisition Quotations

Outline agreement

Source determination Vendor selection Purchase order history

Piece Piece % % Conditions Conditions USD USD Info record

Purchase order

Invoice receipt

Goods receipt
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Procurement Process
.

Purchase Requisition

Vendor Selection Purchase Order

Payment to Vendor Invoice Receipt Goods Receipt

Notify Vendor

Vendor Shipment

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Procurement Process
(Procure-to-Pay)

Purchase Requisition

Purcha se Order
3Way Mat ch

Payment to Vendor Invoice Receipt

Notif y Vendo r Vendor Shipment Goods Receipt

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Purchase Requisition
.

Internal Document instructing the purchasing

department to request a specific good or service for a specified time.

Requisitions can be created in two ways:

Directly - Manually
person creating determines: what, how much, and when

Indirectly - Automatically
MRP, Production Orders, Maintenance Orders, Sales Orders
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Purchase requisition processing

MRP

Direct entry

Purchase requisition Determine source of supply Release

Vendor

o.k.
Allocate and process
RFQ Purchase order

Release Release order order

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Request For Quotation

.

An RFQ is an invitation to a vendor by a

Purchasing Organization to submit a bid for the supply of materials or services
The accepted quotations will generate Purchasing Information Records Perform Quotation Price Comparisons Finally Select a Quotation
4512

Vendor 1

Vendor 3

Reject Letter

Quote Quote

RFQ

generate

Vendor 2

Eval.

P.O.
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Quote Pur Req.

Request for Quotation

RFQ 1 RFQ 2

Requirements known. Procure from which source?

?
Vendor 1 Vendor 2

Quotation 1

Quotation 2

Price comparison list

Purchase order

Rejection

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Entering an RFQ

1 1
Item list

2 2

Vendor 1

Inquiry 1

Vendor 2

Inquiry 2

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Processing Quotations: Example

1 Enter price and pricing conditions 1
Vendor A Quotation for RFQ 1 Item 10 Gross price: 400/t Discount: Rs50 Vendor B Quotation for RFQ 2 Item 10 Gross price: 400/t Surcharge: 50% Vendor C Quotation for RFQ 3 Item 10 Gross price: 400/t Fixed costs: $40

2 Compare quotations using price comparison 2 list

Steel 2 t 350/t 480/t 520/t 450/t

Price

Quotation 1

Quotation 2

Quotation 3

3 3 Create info record or reject quotation

Vendor A - Order Mat. Qty Price Steel 2t 350/t Vendor C, B -RejectionThank you for your offer. Unfortunately, we cannot place an order at this time .....

Mean value quotation

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Purchase Order

A purchase order is a formal request to a vendor

for a specific material or service under the stated conditions

Purchase Orders can be created manually

Reference a Purchase Order Reference a Purchase Requisition Reference a RFQ/Quotation Without Reference

Purchase Orders can be create automatically

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Processing Purchase Orders

Purchase requisition

RFQ

Reference document

Contract

?
Vendor
Purchase order Order history

Pcs Pcs

% %

Conditions Conditions

One-time vendor

Info record

$ $

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Contract

Contract request

Reference RFQ

Reference contract

Purchase requisition

Contract

Release order

1 1
Vendor

2 2

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Scheduling Agreements

Purchase requisition

RFQ

Reference scheduling agreement

Purchase requisition

Scheduling agreement

Einstellungen Einstellungen Schedule lines

1 1

Vendor

2 2

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Structure of a Purchasing document

Purchasing document

Document header ocument ocument

General data General data statistics statistics Messages Messages Conditions Conditions

Item 1
General data Conditions Texts Schedule line

Additional data for item 1

...
Purchase order history Additional

Item 2
...

...

data for item 2

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Account assignment type

Purchasing document
A B C

Item Account assign. category category

A C F K N P Q

Asset Sale Order Order Cost Center Network Project Project

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Account assignment type

Description
Asset

Required account assignment data

Main asset number and sub-number

Order

Order and G/L account number

Production order

Production order number

Cost center

Cost center and G/L account number

Sales order

Sales order and G/L account number

Individual customer requirement

Sales order and G/L account number

Project

Project /WBS Element

Unknown

None

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Item category
Purchasing document
A B C

Item Account assign. category category

None L U S

Standard Sub Contracting Stock Transfer Third Party

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PROCUREMENT OF EXTERNAL SERVICES

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Processing External Services

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Inventory Management

Inventory Management
Processing Goods Receipts with Purchase Order Reference

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Goods Receipt Process

Notify Vendor
Purchase Order 45......01

Vendor

Goods Receipt

Shipment

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Goods Receipt

Goods movement in which we accept goods into

our system.

If materials are delivered against a Purchase Order

we will reference that Order
Determine if we got what we ordered System can purpose data for us from the PO
Material, quantity

Purchase Order History is update with the receipt Updates Physical Inventory Updates Inventory G/L Account
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Stock Types for Goods Receipt

Goods receipt blocked stock

Unrestricted-use stock Warehouse Vendor

Co n su mp ti o

Stock in quality inspection Blocked stock

Account assignment object

Cost center Order

......
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Goods Receipt / Invoice Receipt Reconciliation Account

Purchase requisition Purchase order Goods receipt

No impact on Financial Accounting (FI) Materials Management (MM) and Financial Accounting (FI) via automatic account assignment GR / IR Dr Cr Rs100

Inventory Dr Rs100 Cr

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GR w/o Reference to a Purchase Order or Production Order

Preplanning
Goods receipt Initial entry of stock balance Without purchase order Without production order Goods receipt of by-products Delivery free of charge Returns from customer

without purchase order without production order

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Invoice Processing

Incoming Invoices are reference against a

Purchase Order to verify their content, prices, and arithmetic.

If discrepancies arise between the purchase order

or goods receipt and the invoice the system with generate a warning or an error
Depending on system configuration the difference could cause the system to Block the Invoice

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Invoice Processing

When an invoice is saved it applies the liability from

the Goods Receipt of our Purchase Order to a Vendor

Upon verification the:

Purchase Order is updated Material Master is Updated (MAP) Accounting Document is created

Once the Invoice has been posted the verification

process is completed and the payment process is initiated within Financial Accounting.
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Types of invoice verification

Purchase order Purchase order

or

or
Vendor invoice

Goods receipt

Invoice verification

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Invoice Verification Environment

Purchase order G/L accounts

Assets

---Goods receipt Material master

Invoice verification

Invoice document

Cost centers

Purchase order

Vendor master

Material master

Conditions
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Posting an invoice
Invoice relating to purchase order Post
A XX B XX

GR/R account Vendor account

Doc. No. 51000123

Vendor GR/R 100100+

Material master
Moving average price Value

Purch. order history

Goods receipts Down payments Invoices

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Goods Receipt / Invoice Receipt Reconciliation Account

Invoice receipt

Amount owed is assigned and transferred to vendor account payable

GR / IR Dr Rs100 Cr

Vendor A/P Dr Cr Rs100

Goods Movement

When a goods movement takes place it is

represented by a Movement Type
Movement types are three-digit keys used to represent a movement of goods
101 103 122 231 561 goods receipt into warehouse goods receipt into GR blocked stock return delivery to vendor consumption for a sales order initial entry of stock

Destinations for Receipt of Goods

Warehouse Unrestricted, Quality, Blocked Quality Goods Receipt Blocked Stock
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Effects of Goods Movement

When a Goods Movement for the receipt of goods

takes place a series of events occur
Material Document is Created Accounting Document is Created Stock Quantities are Updated Stock Values are Updated Purchase Order is Updated Output can be generated (GR slip)

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Inventory Management Good Issue

Inventory Management
Processing Goods Issues

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Goods issues

Goods issue

From warehouse From consignment stores Issue

Consumpti on Cost center Asset Sales Order Sampling Scrap

67

Effects of goods issue

Material document Accounting document G/L account. Stock account Consumption account ... Reservation Order

Stock quantity Consumption statistics ... Point of consumption: Cost center Order ... Warehouse mgmt: Transfer order Quality management: Inspection lot
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Goods issue

Posting method for goods issue

Stock account Stock value

Consumption account

Update on goods issue

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Special Stocks and Special Procurement Types

Consignment Subcontracting Stock Transfer with Stock Transport Order Third party processing Sales order stock Project Stock

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Physical Inventory Procedures

Periodic inventory Continuous inventory Cycle counting Inventory sampling

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Physical Inventory

Can be carried out for Companys own stock and

Special Stock

Inventory for Companys own stock and Special

stock must be taken separately in different physical documents

Physical inventory can be taken for Unrestricted-use stock in the

warehouse Quality inspection stock Blocked stock
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Physical inventory procedure

Create physical 1 inventory document Set blocking indicator
Print physical inventory document

Batch-Input

Batch-Input

4 Physical inventory document 5

List of differences

Arrange recount Change count 6

5a

5b

Post differences

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MM Transaction Material Master MM01 MM02 MM03 MM06 MM60 Create Material Change Material Display Material Deletion Flag Material List

Vendor Master XK01 XK02 XK03 XK05 XK06 Create Vendor Change Vendor Display Vendor Block Vendor Deletion Flag

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MM Transaction Purchase Requisition ME51N ME52N ME53N ME54N ME55 Create Purchase Requisition Change Purchase Requisition Display Purchase Requisition Release Purchase Requisition Collective Release

Purchase Order ME21N ME22N ME23N ME29N ME28 Create Purchase Order Change Purchase Order Display Purchase Order Release Purchase Order Collective Release
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MM Transaction Inventory Management MIGO MB1B MB1A Good Movements Transfer posting Good Issue

Physical Inventory Management MI01 MI02 MI03 MI04 MI05 MI06 MI07 Create Physical Inventory Document Change Physical Inventory Document Display Physical Inventory Document Enter Count Change Count Display Count Post Difference
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MM Reports Purchase Requisition ME5A ME5K ME5J General Account Assignment wise - General Account Assignment By Project

Purchase Order ME2L ME2M ME2N ME2K ME2J By Vendor By Material By P.O Number Account Assignment General Account Assignment By Project

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MM Reports Inventory Management MB03 MB5B MB52 MB51 MB5T MBBS MBLB Display Material Document Stock on Posting Date Display Warehouse Stock Material Document List Stock in Transit Valuated Sale order/ Project Stock Stock with Sub Contractor

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MM Z -Reports ZITL Internal Lead Time ZEXTL External Lead Time ZPOSHORT Material Shortage Report ZPODEPT Department wise comments ZMKVZ Vendor Details ZMM_PEND_INDENT1 Pending P.R ZPOSC P.O Short Close ZPOSCLIST List of Short Closed P.O ZPRSC List of P.R to be short closed

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Thank You
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