THE MATERIAL MANAGEMENT MODULE

Basic functions covered under the MM module are:

 Procurement
 Planning
 Indenting
 Purchasing
 Materials
 Services
 Budget Monitoring and Control
 Inventory Management
 Goods Receipt
 Stocking
 Goods Issue
 Material Transfers
 Warehouse Management
 Interfacing with bar-coding systems
 Materials Procurement Cycle
Material procurement Overview
-
Receipt of PR - User department
- PM Plant Maintenance
PaulConnelly
Transfer
Date
9,500 PS Project SystemRFQ

Invoice verification Bid invitation

(RFQ)
Invoice
PO

You?are Here
=
Goods Receipt

Price
Quality Inspection comparison

PO Monitoring Vendor selection

PO Release Issue LOI

Creation of PO

The various transactions in the MM module are clear from this figure:
 User department creates the PR (purchase requisition) for the material/service
required by the department. This PR is received by MM section for further
processing of the procurement of desired material
 MM section sends bids to various vendors and ask for quotations i:e RFQ
(request for quotations)
 These quotations are short listed as per BEC (bid evaluation criteria).
 The price quoted by various vendors is compared
 The most appropriate vendor is then selected accordingly
 The selected vendor is issued a LOI( letter of indent) informing the vendor
about the acceptance of his offer
 A detailed PO (purchase order) with specification of material and procurement
conditions is created.
 PO is released by the authorized personnel and sent to the selected vendor
 The material is supplied in specific time period and is inspected/monitored at
destination/source by quality management department.
  After the quality check goods receipt is maintained in system. The material is
received in the warehouse and in now ready for issue to the user.
 The invoice raised by the vendor is checked as per the PO and the payments
are made to the vendor

 The first step towards preparing the Request for Quotation (RFQ) is getting the
tender number or the collective number, as it is called in SAP, generated from the
system.
 The first three digits of the Tender number indicate the Purchase Group, the 4th
stands for the Dealing Officer Code, the 5th indicates type of tender, 6 & 7 are the
calendar year and the last three digits are a running serial number of the tender.
The next step in the procurement process is creation of RFQ/ tender document in
SAP.

Before creating RFQs, the user should ensure that vendor codes are existing in the
system for those vendors to whom tenders will be floated /sold. The vendor code can
be verified from the shown transaction

After getting the vendor codes for all the vendors, RFQs will be created as shown
 Once, the bids have been opened, it is time to enter them into the system. For
tenders of two bid system, the prices of only TA bids will be entered into the
system. For others the prices of all the bids will be entered. The process of
entering bids into the SAP system is called Quotation maintenance. The rates
have to be entered in the RFQ corresponding to the respective vendors.
From bid received price comparison charts are made in system and L1 ( lowest)
bidders for each item are listed

This screen shows the ways in which available materials can be searched. This can be
done in various ways as described above such as by giving the plant material by
description or by giving the MPN ( manufacturer part number) and so on.

In general the inventory of a company is divided into capital items, stores, spares,
indigenous items, imported and so on. When creating the PR the user specifies type of
material to be procured.
 This screen shows the purchase order generated for getting a three phase generator
The top screen shows the net price and quantity of the material and also the charges
allocated for any services required i:e line item costs
The bottom screen shows the description of the line item.

System allows to create LOI on the successful vendors. The pre-requisite for creation of LOI is
creation of Purchase Order in the system. LOI no. will be the same as PO No.