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Material Type configuration

When creating a material, you need to specify the material type.

The Material type is the highest level of categorization of material masters.


Material Types defined in configuration and below is a summary of main areas that
material type influence:

• Number range of material master and if it is internal (system allocated) or external


(user allocate number)
• Which fields in material are mandatory / read only / optional
• User departments (Views in material)
• Purchase Orders allowed
• Valid valuation classes
• Quantity and Value update (does it update stock qty and value)
• Is it a pipeline material or not
• …. and many more

Standard SAP Material Types include:

ABF - Waste
CH00 - CH Contract Handling
CONT - Kanban Container
COUP - Coupons
DIEN - Service
ERSA - Spare Parts
FERT - Finished Product
FGTR - Beverages
FHMI - Production Resource/Tool
FOOD - Foods (excl. perishables)
FRIP - Perishables
HALB - Semifinished Product
HAWA - Trading Goods
HERS - Manufacturer Part
HIBE - Operating supplies
IBAU - Maintenance assemblies
INTR - Intra materials
KMAT - Configurable materials
LEER - Empties
LEIH - Returnable packaging
LGUT - Empties (retail)
MODE - Apparel (seasonal)
NLAG - Non-stock materials
NOF1 - Nonfoods
PIPE - Pipeline materials
PLAN - Trading goods (planned)
PROC - Process materials
PROD - Product groups
ROH - Raw materials
UNBW - Nonvaluated materials
VERP - Packaging
VKHM - Additionals
VOLL - Full products
WERB - Product catalogs
WERT - Value-only materials
WETT - Competitor products

The main configuration of material type is in transaction OMS2


IMG: Logistics > Material Master > Basic Settings > Material Type > Define Attributes
(OMS2)
Some settings can be done per plant

This information resides in:


T134 - Material Type
T134T - Material Type: Text
T134M - Material Type: Valuation area data

For number range configuration, the transaction is:


IMG: Logistics > Material Master > Basic Settings > Material Type > Define Number
range (MMNR)
First create a Group
Then link the material type to it

This is the main settings of material type. In later articles, we will address other
configuration that can be be done per material type.
SRM-INTRODUCTION
Supplier Relationship Management

Supplier relationship management is a comprehensive approach to managing an


enterprise’s interactions with the organizations that supply the goods and services it uses.
The goal of supplier relationship management (SRM) is to streamline and make more
effective the processes between an enterprise and its suppliers just as customer
relationship management (CRM) is intended to streamline and make more effective the
processes between an enterprise and its customers.

SRM includes both business practices and software and is part of the information flow
component of supply chain management (SCM). SRM practices create a common frame
of reference to enable effective communication between an enterprise and suppliers who
may use quite different business practices and terminology. As a result, SRM increases
the efficiency of processes associated with acquiring goods and services, managing
inventory, and processing materials.

According to proponents, the use of SRM software can lead to lower production costs
and a higher quality, but lower priced end product. SRM products are available from a
number of vendors, including 12 Technologies, Manugistics, PeopleSoft, and SAP.

Subcategories

* Strategic Sourcing

* Catalog Management

SRM Solution Map

SRM-GENERAL
The supply management function of an organization is responsible for various aspects of
acquiring goods and services for the organization. In many organizations, acquisition or
buying of services is called contracting, while that of goods is called purchasing or
procurement.

Tasks associated with supply management include:

* Analyzing spending
* Strategic sourcing
* Obtaining and evaluating quotes from suppliers
* Negotiating
* Managing supplier performance
* Implementing technologies, processes, policies, and procedures to support the
purchasing process (Supplier Relationship Management or SRM) - There are several
companies have the software to implement SRM. Take a look at these SAP links:

* Economic theories of supply and demand

Supply management is generally regarded as a systematic business process that includes


more functions than traditional buying, such as coordinating inbound and internal pre-
production logistics and managing inventory.

Supply management deals primarily with the oversight and management of materials and
services inputs, management of the suppliers who provide those inputs, and support of
the process of acquiring those inputs. The performance of supply management
departments and supply management professionals is commonly measured in terms of
amount of money saved for the organization. However, managing risk is one of the other
critical aspects of supply management; especially the risk of non-availability at the
required time of quality goods and services critical for an organization’s survival and
growth.

The increased importance of supply management in today’s dynamic global business


environment has brought a need for higher levels of skill and expertise on the part of
supply management professionals. Throughout the years, many professional
organizations have been formed to address these needs and improve the field of supply
management. One of the largest of these associations is the Institute for Supply
Management™ (ISM)[1]. Founded in the U.S. in 1915, ISM’s membership base includes
more than 40,000 supply management professionals with a network of domestic and
international affiliated associations. ISM is a not-for-profit association whose mission is
to lead the supply management profession through its standards of excellence, research,
promotional activities, and education. It is affiliated with the International Federation of
Purchasing and Supply Management (IFPSM) [2], a union of local and national
purchasing associations worldwide which encompasses approximately 200,000 members.

For companies seeking to fulfill diversity supplier spend commitments, the National
Minority Supplier Development Council [3] with 39 affiliated nation-wide councils, was
established in 1972 to assist in promoting supplier diversity, and also provides
management training and access to viable minority business
enterprises.

Many certification programs are relevant to the supply managment profession. Some are
offered through non-profit associations, such as the Certified Purchasing Manager
(C.P.M.), and Certified Professional in Supply Management (CPSM) through the Institute
for Supply Management. There are also for-profit companies who offer certification
programs, such as Next Level Purchasing, Inc. who offers the Senior Professional in
Supply Management (SPSM) Certification.

1 2 3 Next

SUPPLY CHAIN MANAGEMENT


Supply management
is different than supply chain management, though it can be considered a component of
supply chain management. Supply chain management, which can be automated, generally
refers to:

* The oversight and management of materials and services inputs


* The production process in which those materials and services are used, and
* The provision of outputs that are generated through the use of the acquired materials
and services, which is analogous to the fulfillment of customer requirements.

Supply Management is a complementary discipline that encompasses the alignment of


organizations, processes, and systems for strategic sourcing, contract management,
supplier management, spending analysis to continuously improve global supply for best-
value performance in support of the strategic objectives of the business.

1 2 3
The following are the most common tables you can find the Procurement Documents related
data:

Header Data:
CRMD_ORDERADM_H
BBP_PDHGP

Item Data:
CRMD_ORDERADM_I
BBP_PDIGP
BBP_PDBEI

You can see by these following:

1. Activate the SQL Trace in ST05 transaction


2. Execute the function for reading the data appropiately
2.1 BBP_PD_SC_GETDETAIL - Shopping Cart
2.2 BBP_PD_PO_GETDETAIL - Purchase Order
2.3 BBP_PD_CONF_GETDETAIL - SRM Confirmations
2.4 BBP_PD_INV_GETDETAIL - Invoice and Credit Memo
3. Once the function modules have selected the data, deactivate the trace and display it

With the accounts and vendors configured, more configuration activities are required in
the Materials Management module before purchasing transactions can be completed.
First, default values and tolerance limits must be set.

7.1 Default Values for Inventory Management Reservations


To set up the default values for inventory management reservations, follow the menu
path:

Materials Management Inventory Management and Physical Inventory


Plant Parameters (click clock icon )

which will produce the following screen:


Click on the New entries icon ( ), which will produce the following
screen:

Enter plant ##CP


Check these items (including Movements
allowed
Enter 30 in both Reservations fields

Enter your plant (##CP), then enter/select the following:

Create Sloc. Automat.: Checked


This option allows automatic creation of the storage location data in the
material master record at the time of the first goods receipt.
Del. compl. Default: Checked
If this indicator is set, the system suggests the "delivery completed"
indicator as a default value when a goods receipt is posted with reference
to a purchase order or order (provided that the quantity delivered falls
within the under/over delivery tolerances). The “delivery completed”
indicator denotes a closed purchase order item for which no more goods
receipts are expected.

Reservations
Movement allowed: Checked
Days mvt. allowed: 30
Retention period: 30

A reservation is a request to the warehouse to keep a material ready for issue at a


future date for a certain purpose. The purpose of a reservation is to ensure that a
material is available when required. A material can be reserved for a cost center,
an asset, or an order for example. The Days mvt. allowed parameter sets the
number of days before the reservation data that material can be moved. If the
requirement date of a reservation item is further in the future than the number of
days specified here, no movements are yet allowed in respect of this item. For
example, if the current date is 6/1/2008 and the Days mvt. allowed is set to 30,
then material with a reservation date of 7/1/2008 or earlier can be moved. The
Retention period indicates the time in days during which a reservation item
resides in the system before being deleted by the reservation management
program. If the "date required" of a reservation item is older than the current date
minus the number of days specified here, the system sets the deletion indicator in
the reservation item.

When you have made the appropriate entries, click on save icon ( ), then click on
the back icon ( ) and verify that your plant is now listed, then click on the back icon (
) one more time to exit to the IMG.

7.2 Maintain Purchase Price and Discount Tolerance Limits


These settings decide how much deviation from the data in the purchase order that will be
allowed. To set the purchasing tolerance limits, follow the menu path:

Materials Management Purchasing Purchase Order Set Tolerance


Limits for Price Variance (click clock icon )
which will produce the following screen:

Click on the New entries icon ( ), which will produce the following
screen:

Enter PE for Price Variance: Purchasing


##UC for company code
Check and enter 5 for percentage limits
Enter PE for the Tolerance key, ##UC for the Company code, check and enter 5% for the
percentage tolerance limits, then click on the next entry icon ( ) which will give you
an empty version of this screen:

Enter SE for Max. cash disc. Deduction: purchasing


##UC for company code
Check and enter 10 for percentage limits

Enter SE for the Tolerance key, ##UC for the Company code, check and enter 10% for
the tolerance limits, then click on the save icon ( ) followed by the back icon ( ).
Verify that both tolerance keys (PE and SE) are now listed for your company code, then
click on the back icon ( ) one more time to return to the IMG.

7.3 Maintain Goods Receipt Tolerance Limits


Next, we can set the Goods Receipt Tolerance Limits to decide how much variation from
the data in a purchase or production order will be allowed at goods receipt. To do this,
follow the menu path:

Materials Management Inventory Management and Physical Inventory


Goods Receipt Set Tolerance Limits (click clock icon )

which will produce the following screen:

Click on the New entries icon ( ), which will produce the following
screen:
Enter B1 for Tolerance key
##UC for Company Code
Enter 5 for lower and upper
limits

Enter B1 for the Tolerance key, ##UC for the Company code, check and enter 5% for the
tolerance limits. Tolerance key B1 determines the level where a warning message will be
displayed. A warning message merely informs—it will still let you complete the
transactions. Click on the next entry icon ( ), which will give you an empty version
of this screen:
Enter B2 for Tolerance key
##UC for Company Code
Enter 10 for lower and upper limits

Enter B2 for the Tolerance key, ##UC for the Company code, check and enter 10% for
the tolerance limits. Tolerance key B2 determines the level where an error message will
be displayed. An error message will not let you complete the transaction. Click on the
next entry icon ( ) which will give you another empty version of this screen:
Enter VP for Tolerance key
##UC for Company Code
Select Do not check for all options

Enter VP for the Tolerance key, ##UC for the Company code, select Do not check for all
entries. The VP tolerance key checks the moving average price in the material master to
the purchase order price. As the moving average valuation is a complicated process in
SAP, we will choose here to avoid problems by not checking for this variance. Click on
the save icon ( ) followed by the back icon ( ). Verify that three tolerance keys

(B1, B2 and VP) are now listed for your company code, then click on the back icon (
) one more time to return to the IMG.

7.4 Maintain Invoice Receipt Tolerance Limits


We also need to set tolerance limits for invoices to determine how much variation from
the purchase order will be allowed. To do this, follow the menu path:
Materials Management Logistics Invoice Verification Invoice Block
Set Tolerance Limits (click clock icon )

Click on the New entries icon ( ), which will produce the following
screen:
There are a number of tolerance keys that need to be set. Using the same procedure as
before, set the following tolerance keys for invoice receipts:

Lower Limit Upper Limit


Tolerance Comp.
Key Code Absolute Percentage Absolute Percentage
AN ##UC Do not check Check limit: 5% Do not check Check limit: 5%
AP ##UC Do not check Check limit: 5% Do not check Check limit: 5%
BD ##UC Do not check Do not check Do not check Do not check
BR ##UC Do not check Do not check Do not check Do not check
BW ##UC Do not check Do not check Do not check Do not check
DQ ##UC Do not check Do not check Do not check Do not check
KW ##UC Do not check Do not check Do not check Do not check
PP ##UC Do not check Check limit: 5% Do not check Check limit: 5%
PS ##UC Do not check Do not check Do not check Do not check
ST ##UC Do not check Do not check Do not check Do not check

After each tolerance key entry, use the next entry icon ( ) to get a blank screen.

When all tolerance keys are entered, click on the save icon ( ) to save the tolerance

keys followed by the back icon ( ). Verify that tolerance keys listed above are now
listed for your company code, then click on the back icon ( ) one more time to return
to the IMG.
.

7.5 Confirm Qty and Value Updating in Material Type for


Plant
In cost accounting, it is important to have a correct value for the cost of material used in
production. The R/3 system can be configured to collect information on material
movements (such as goods receipts and invoice receipts) in each period at historical
exchange rates. This data is used during material price determination to calculate new
valuation prices for the material. Then, the material stock account is reconciled in
multiple currencies with the accounts in Financial Accounting. To allow for automatic
updating of material values for the material types we are using, follow the menu path:

Logistics – General Material Master Basic Settings Material Types


Define attributes of material types
which will produce the following screen:

Select FERT, then double-click


on Quantity/value updating

Select material type FERT, then double-click on Quantity/value updating. This will
bring up the following screen:
Check Qty. updating and Value upd.
for your plant, then click on the save
icon

Check the Qty. updating and Value upd. options for your plant (##CP), then click on

the save icon ( ).

Click on the back icon ( ), then repeat the process for material

types HALB and ROH.

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