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ERP PRACTITIONER SESSION LEARNINGS

MATERIALS MANAGEMENT: Materials Management is a management function which is

concerned with procurement, storage & usage of materials so as to keep the wastage & losses of materials to a minimum.

It is an important function of every organization.

SESSION 1: Material Management -The Need Profitability: Equation of Business can be determined by the following: Selling Price = Manufacturing Cost + Profit For Current Competitive Measures of the Market: Selling Price - Manufacturing Cost = Profit Market forces determine the present selling price of the todays world. As Profits increases, Manufacturing Costs decreases. Manufacturing Cost= Labor +Materials +Overheads

Reduction in manufacturing cost gives the highest impact on the profit. Organizations earn or loose large sums depending on how effectively they control their material cost and hence the need for proper management d control of materials. A marginal decrease in manufacturing cost gives such an impact on profit a substantial increase in sales is required to achieve the same. In a competitive market, the increase in selling price becomes extremely difficult.

Materials Management Objectives: There are 5RS of Purchasing: To Procure and (or) Provide materials of right Quality in right Quantity, At the right Time, right Location and at the right Cost. Materials Cost can be divided into the following:
Unit price of the Materials Consumption for Production

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So the reduction in Material Cost can be achieved by:

Reducing the cost at which materials are procured. Having an effective control on consumption.

MATERIALS MANAGEMENT FUNCTIONS:

1)Material Planning: of determining the requirements starting with raw materials, consumables, spare parts and all other materials that are required to meet the given production plan for a certain period. 2) Procurement or purchasing of materials: Accrual and purchase of materials from internal or external sources. 3) Storage and Warehousing: Effective storage of the material that has been procured. 4) Inventory Control: is the supervision of supply, storage and accessibility of items in order to
ensure an adequate supply without excessive oversupply. 5) Variety Reduction through Standardization, Simplification & Specialization 6) Value Analysis: An approach to improving the value of an item or process by understanding

its constituent components and their associated costs. 7) Transportation: Effective control of the movement of inventories. External Transportation (i.e., traffic, shipping, etc) and materials handling (i.e., internal transportation). 8) Disposal of scrap, surplus and obsolete materials 9) Supplier Partnering: Bringing the vendor under the common roof, building up long term relations and strategic planning with the vendor.

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PROCUREMENT OR PURCHASING OF MATERIALS: The procurement of raw materials involves the following activities: 1) Determination of Requirements 2) Source Determination 3) Making Request for Quotation (RFQ) 4) Receipt and Analysis of Quotations 5) Negotiation and Vendor Selection 6) Purchase Order Processing 7) PO Monitoring 8) Goods Receipt 9) Invoice Verification 10) Payment Processing SAP MM: 1. Master data Material, Service, Vendor, Source List, Info Record. 2. MM Organization Structure Company, Company Code, Plant, Purchase Organization, Purchase Group. 3. Sub-modules Purchasing, Inventory Management, Logistics Invoice Verification, Physical Inventory. PURCHASE ORDER REQUESTS: MRP / Requests PR RFQ

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SECTION -C Quotation Maintain Quotation Comparison PO GR IR

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SAP CONCEPTS: 1) MASTER DATA UPLOAD: 1. LSMW (text file) Legacy System Migration Workbench Two methods - Batch Input Recording, Direct Input Method 2. Batch Data Communication (programming) LSMW It is basically for standard sap application. It is designed for Functional consultants who dont do coding. There are different techniques for migrating data say: Direct input, Batch input recording , BAPI , IDOC. It uses more preferable method as it uses the standard programs for data upload. BDC: BDC is basically for customized applications It is used by technical consultants, who dont do coding. There are two methods to implement BDC: (a) Call Transaction Method (b) Session Method. If screen design changes tomorrow, program will not work(need to do the recording again). REG NO: 13A1HP009