Introduction SAP R/3 MM

Dr. Djamal Ziani King Saud University

ERP-Software: SAP R/3

Sales and Distribution Material Management
S D M M P P F I C O

Financial Accounting
A M

R / 3
CS l te i /r e v n e r A B A P / 4
I S

Controlling

Q A P M

P S O C

H R

Components of Materials Management

Foreign Trade/ Customs Service Master MRP Material Master Inventory Mgmt. Physical Inventory Product Catalog

Valuation Logistics Invoice Verification Purchasing

Materials Management (MM)

Service Entry Sheet

Organizational Data
A hierarchy in which the organizational units in an enterprise are arranged according to tasks and functions Are static data and are rarely changed The definition of organization units is a fundamental step, it is a critical factor in how the company will be structured

Organizational Structures

Organizational Structures
Client Company Plant Valuation Area Storage Locations Purchasing Organizations Purchasing Groups
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Organizational Structures: Client

The client is a unit within an SAP R/3 system that is self-contained both in legal and organizational terms and in terms of data, with separate master records and an independent set of tables. From a business viewpoint, the client represents a corporate group, for example. Client: 3 numerical digits

Organizational Structures: Company

The company is the smallest organizational unit of external accounting for which a complete, self-contained bookkeeping system can be replicated. A company code represents an independent unit producing its own balance sheet, for example, a company within a corporate group (client). Company code = 4 characters

Organizational Structures: Plant

Lowest valuation area Organizational level where Material Requirements (MRP) runs Generally used to describe a production site, a distribution center or centralized warehouse May be a physical or logical unit

Organizational Structures: Valuation Area

The valuation area determines at which level a material is valuated (inventory value is established) SAP R/3 allows valuation at the company code or plant level, but recommends valuation area be set at the plant level. Means each plant can have its own material prices and account determination
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Organizational Structures: Storage Location

Subdivision of a plant Where materials are managed (inventory management)
Raw Materials Maintenance, Repair, and Other (MRO) Finished Product

May be a physical or logical unit

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Organizational Structures: Purchasing Organizations

An organizational unit responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions.

Purchasing organization
material group

purchasing organization

purchasing group MG 0, 3

purchasing group MG 1, 4
purchasing group MG 2, 5 purchasing group MG 6 plant purchasing group MG 7, 8, 9

Organizational Structures: Purchasing Organization Groups

The purchasing organization is further subdivided into purchasing groups (buyer groups), which are responsible for day-to-day buying activities.
A purchasing group can also act for several purchasing organizations. A purchasing group can be defined by line products (Frame, Engine, Tires)

Inventory Management with a Warehouse Management System

client
company code 0001 ABC inc. 0001 Jones inc. 0001 0002 0003 0002 0004 0002 Model Ltd. 0003 0001

purchasing organization plant distrib.center 0001 0001

MM
factory

storage location

0002

0003

0004

warehouse number

001

storage type storage bin (physical stock)

001 05-04-03

002 05-04-04

WM

The Module MM Main Functions

MM interdependencies to other modules

Logistik
PP production planning MM material master purchasing requirements plan. SD sales and distrib.

QM quality management

inventory mgmt. invoice verification

PM plant maintenance

FI financial acc.

CO controlling

AM fixed assets mgmt.

Basic Data
Master records - include information about
1. vendors 2. material and services to be procured 3. the relation between 1. and 2. (purchasing info record) e.g. prices / terms and conditions

bills of material for

production planning purchasing sales and distribution withdrawal of Material

Structure of the Vendor Master Record

sections

utilization

area of validity

General data name address control data

purchasing terms and cond. partner functions currency

client wide

request for quotation quotation processing purch. order handling

for each purchasing organization

accounting data bank account acc. maintenance payment

invoice entry invoice verification payment handling

client wide or for each company code

Create a Vendor
Creating Your Own Vendor Master Record

Usage
We recommend that you create your own vendor master record for this scenario. If, however, you prefer to use the reference vendor instead, it could be that the order currency has already been changed and this IDES scenario may no longer work. You create a German vendor in company code 1000, IDES AG Germany, to create purchase orders and invoices denominated in euros.

Create a Vendor
Procedure
1.Call up the transaction as follows:

Menu Path

Logistics Materials Management Purchasing Master Data Vendor Central Create

Transaction Code

XK01

Create a vendor
On the Create Vendor: Initial Screen, enter the following data:
Field Vendor Data Your own vendor (choose a number between 1000 and 1999) 1000 1000 LIEF

Company code Purch. organization Account group

Reference vendor
Reference company code Reference purchasing organization

1080
1000 1000

Create a Vendor
On the Create Vendor: Address screen, enter the following data: Field Description Search term Street/House number Postal code/City Data Any Any, for example "euro" Any 5-figure, numerical (any)

Country
Language

DE
DE

Create a Vendor
1. Choose until you reach the Create Vendor: Accounting and make sure that 160000 appears in the Reconciliation Account 160000 field. 2. Choose appears. until the Create Vendor: Purchasing Data screen

3. On the Create Vendor: Purchasing Data screen, check that the order currency is EUR.
4. Choose appears. 5. Choose appears. 6. Choose appears. until the Create Vendor: Partner Functions screen until the Create Vendor: Partner Functions screen until the Create Vendor: Partner Functions screen

Create a Vendor

Create a Vendor

Create a Vendor

Views on the Material Master Record

each view is maintained by a certain user department of the firm

accounting: valuation- und calculation-specific information requirements planning: information about material requirements
planning (e. g. reorder point) purchasing: e. g. responsible purchasing group, order unit engineering: technical information storage: information about warehousing, material movements, ... forecast: information about the forecasting of the material requirements S & D: informationen about sales orders and price determination

Demo: Create Material Master

Demo: Create Material Master

Select the views: Basic data 1, Purchasing, Purchase Order text, Gl. Plant Data/Storage 1, Accounting 1

Demo: Create Material Master

Demo: Create Material Master

Demo: Create Material Master

Demo: Create Material Master

Demo: Create Material Master

Demo: Create Material Master

SAVE

purchasing info record

info record prices terms & cond. PO statistics

tolerance levels

date quotation order outline agreement

Purchasing Process
PO

? =

invoice
X X X X X

invoice verification

determination: requirements vendor

X X X X X

outline agreem.

determination: source of supply

MM
goods received & inventory mgmt.
vendor 2 vendor 1

PO PO

vendor selection

PO

PO monitoring purchase order processing

Create Purchase Order (PO)

vendor 2

1 vendor known

purch. order

terms & cond.

2 vendor not known

outline agrement info record

source list

purch. order

vendor
vendor 2

purch. req.

purch. order

assigned purchase requisition exists (from user department)

Purchasing Process
Create a requisition First release of requisition Create RFQ (Request for Quotation) with reference to requisition Create PO (Purchase Order) with reference to RFQ Department receives material ordered (GR) Department pays invoice (MIRO).

Purchase Requisition
Document generated by a user department or storeroom-personnel to notify the purchasing department of items it needs to order, their quantity, and the timeframe. It may also contain the authorization to proceed with the purchase. Also called purchase request or requisition.

Request for Quotation

Is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RFQ generally means the same thing as IFB (Invitation For Bid)

Purchase Order

Buyer-generated document that authorizes a purchase transaction. It sets forth the descriptions, quantities, prices, discounts, payment terms, date of performance or shipment, other associated terms and conditions, and identifies a specific seller.

Create Purchase Requisition

Create Purchase Requisition

Create Purchase Requisition

In the item, enter your material, Plant= 1000, QT = 100

Create Purchase Requisition

Save your Purchase requisition Take note of Purchase requisition number

Demo: Create Purchase Order

Demo: Create Purchase Order

Open document overview: Click on document overview button Choose Selection variant list icon Then select My purchase requisition, you will get your purchase requisition listed Click on adopt icon, your purchase requisition will be copied to the purchase order (or you can drag and drop it into the shopping cart)

Demo: Create Purchase Order

Demo: Create Purchase Order

Enter your vendor, and price 30 euro and save

Posting an Order Entry (Goods Receipt)

Logistics
PP production planning MM purchasing req. planning goods receipt inventory mgmt.
goods issue.
transfer posting

SD sales and distrib.

QM quality management

inventory controlling

invoice verification

PM plant maintenance

FI financial acc.

CO controlling

AM fixed assets mgmt.

Goods Receipt: Transfer posting

Unrestricted stock: You can consume the material stock in unrestricted use. Quality inspection: Area controlled by QM to inspect the quality of material. Blocked stock: is a holding area for materials that have not been posted to a companys warehouse stock.

Demo: Posting Order Entry (Goods Received)

1. Use T_code : MIGO 2. Select Goods Receipt 3. Select Purchase Order 4. Enter PO number for goods to be received. 5. Hit "Enter"

Demo: Posting Order Entry (Goods Received)

6. Enter Document date & posting date 7. Enter Header text (comment) if necessary. 8. Close detail data.

Demo: Posting Order Entry (Goods Received)

9. Notice that movement data is "101" 10. If you only received first item, then Check the "OK" box for first line item.therefore, the second item need not be processed

Demo: Posting Order Entry (Goods Received)

11. If you only received 3 pcs out of 10 pcs of item one & 2 pcs out of 10 pcs of item two, then Check the "OK" box for both line item 12. Input actual quantity (3 & 2 pcs ). 13. Hit "Enter"

Demo: Posting Order Entry (Goods Received)

14. Click "Check" button to find out if there is any error. 15. Check the "status" column . . Green means OK . Yellow means Warning . Red means error

Invoice Verification
input information invoice verification actions: enter invoice verify invoice post invoice update relevant data (re-edit invoice) output information orders goods receipt

master data: material vendors accounts

terms & cond.

financial accounting asset management cost accounting

Invoice Verification

When you post an invoice, an accounting document is created:

Update Vendor account

Update the account GR/IR (Goods Receipt/Invoice Receive) Update master data: moving average price, value Update purchase order history

Create Invoice
Create Invoice using Tcode MIRO

Enter the Required details in all Tabs

Enter the Purchase order no. and click on Enter, to display the material details.

Create Invoice (contd..)

Click the check box, to calculate the Tax

Create Invoice (contd..)

Enter the Amount and click on save

Create Invoice (contd..)

Invoice is created

Demo: Invoice Verification

Using the tcode: MIRO"

Demo: Invoice Verification

Demo: Invoice Verification

net amount for positions