SA

System
Applications
Products
in
Data processing

About

SAP

1. Founded By FIVE IBM EMPLOYEES IN

1972 and head quartered in
WALLDORF GERMANY.
2. Number one VENDOR of standard
business application software with a
worldwide market share of 30%.
3. Fourth largest independent software
supplier in the world.

MATERIAL
MANAGEMENT(MM)
Material Management Overview
Organizational Elements
Master Data
Procurement Cycle
Inventory Management
Invoice Verification
Price Control

Materials Management
Overview

What is Materials Management ?

MM
MM
Procurement
Master
Procurement Master
Data
Data

Requisition Planning
Purchase Requisitions
RFQ s
Contracts
Purchase Orders

Materials
Vendors
Information
Records

Inventory
Inventory
Management
Management
Receiving
Disbursement
Physical Inventory (Raw
Material, Semi Finished Goods,
Finished Goods)

The Material Management module comprises of procurement

and the inventory management functions

Materials Management Overview

The processes of Material Management are based on

various types of Master Data which are stored in Master
Records
MASTER
DATA

Vendor

Materials

Master Records

Purchasing
Info Records

Materials Management
Overview
This diagram illustrates a typical SAP-supported
procurement cycle.

1. Determination of Requirements : The material requirements are identified by the user departments or
material
requirement planning.
Requirements will be passed manually to the purchase department.
In case of Material requirement planning system generate the
Purchase requisition
automatically against demand or Consumption based planning.
2. Source Determination : Identify the potential source for the supply.
This is based on the past orders, existing information, other
communication methods
like internet, paper, etc.
3. Vendor Selection: Selection of vendors by comparing the prices, delivery date and credit
period of
various quotations.
Sending the rejection letters for non selected vendors.
4. Purchase order Processing :Create the purchase order for the selected vendors against the purchase
order
requisition or manual purchase order.
Purchase order contains required material qty, delivery date, shipping
Purchasing Document

6. Goods Receipts : Confirming the receipts of the goods.

Compare the goods receipts quantities with the vendor invoice
quantities.
Inform the limit over or under deliveries of order goods.
7. Invoice Verification : Invoices are checked for accuracy of prices and content.
Verifying the quantities against the GR and price against purchase
order.
8. Payment Processing : Processing of vendor payment against the vendor invoice.

MATERIAL
MANAGEMENT(MM)
Material Management Overview
Organizational Elements
Master Data
Procurement Cycle
Inventory Management
Invoice Verification
Price Control

Organizational Elements
in MM
Organizational Levels in the Procurement Process

In the SAP R/3 System,

organizational levels
are structures that
represent the legal or
organizational views
of a company.
n A client is the
highest organizational
level, representing, for
example, a corporate
group.

Client
Company Code
Plant
Storage Location

Purchasing Organization/
Purchasing Group
SAP AG 1999

Balance sheets and Profit and Loss statements, required by law, are created
at company code level.
n You can set up several company codes in one client in order to manage
various separate legal entities simultaneously, each with their own balance
sheet of financial books.

Materials Management
Organizational Elements
Group

Compan
y

Client

Subsidiar
y

Purchasing
Organization

Purchasing
Org.

Plant
Storag
e
locatio
n

Plant
Storag
Storag
e
e
locatio
locatio
Purchasing n
n
Group

Company Code

Plant
Storag
e
locatio
n

Storage
Location
Purchasing
Group

Plant

Plant is an organizational unit that structures the enterprise

from the perspective of production, procurement, plant
maintenance, and materials planning.

Plant can be for example

Regional sales office

Manufacturing facility

Corporate headquarters

Central distribution center

Maintenance plant

Plant is assigned to a company.

Material is usually valuated at plant level.

A physical location within a company, where materials are stored,

manufactured, purchased or sold.

Storage Location

Storage location is an
organizational unit that allows
differentiation of material
stocks within a plant.

Physical inventory is carried

out at storage location level in
the plant.

A subdivision of a plant
representing locations where
materials are physically stored.

Purchasing Organization and

Group

Purchasing organization subdivides an enterprise according to the

requirements of Purchasing.

Purchasing organization procures materials and services, negotiates

conditions of purchase with vendors, and bears legal responsibility for
such transactions.

Purchasing group is the key for a buyer or group of buyers responsible

for certain purchasing activities.

Usually the principal channel for a company's dealings with its

vendors

Organisational Elements in MM Purchasing:

Purchasing Organization:
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.

Centralized Vs Decentralized
Purchasing

You can organize your purchasing function in the following ways:

Centralized purchasing, with just one purchasing organization
Distributed purchasing, with a number of different purchasing
organizations each responsible for different plants

Purchasing Group
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. It
is internally responsible for the purchase of a material or a class of
materials.
SAP Characteristics
Key for a buyer of group of buyers responsible for certain
purchasing activities Usage
Purchasing groups can represent the buying responsibility groups
such as:
Raw Materials, Packing Materials, Capital Goods, A&SP
procurement, Services - Admin, Finished Goods, Indirect
Material- Plant, Indirect Material- HO
Advantages
Reporting can be consolidated at Purchasing group level.
Purchase document release procedures based on value limits can
be implemented.

MATERIAL
MANAGEMENT(MM)
Material Management Overview
Organizational Elements
Master Data
Procurement Cycle
Inventory Management
Invoice Verification
Price Control

Material Management :
Master Data
Objectives

Understand the concept of Master

Data as it relates to the Materials
Management module in SAP
Be able to identify the different
types of Master Data used in
Materials Management
Create and display Master Data in
an SAP system

MASTER DATA

1.
2.
3.
4.
5.
6.
7.
8.

Material Master
Vendor Master
Service masters
Purchasing Info
Records
Source Lists
Price Conditions
Vendor Evaluation
Bills of Materials
(BOM s)

MASTER DATA

The processes of Material Management are based on

various types of Master Data which are stored in Master
Records
MASTER
DATA

Vendor

Materials

Master Records

Purchasing
Info Records

Material Master Data

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
Foreign Trade: Import Data
Purchase Order Text
MRP 1
MRP 2
MRP 3
MRP 4
Forecasting
General Plant Data /
Storage 1
Warehouse
Management
1
General Plant
Data /
Warehouse
Storage 2 Management 2
Quality Management
Accounting 1
Accounting 2
Costing 1
Costing 2

Material
Master

Material Type
Material Group

Purchase Requisition : A purchase requisition is a request or instruction to Purchasing to

procure a certain
quantity of a material or a service
so that it is available at a certain point in time.
T CODE : ME59N
TABLES : EKBN
EBKN
Purchase order : It is a legal document that is issued by an organization to a vendor .
It contains all the details of the required material or service , such as
the description, delivery date, agreed price , terms of delivery , and
terms of payment.
T CODE : ME21N
TABLES : EKKO
EKPO
Purchase info record : A standard info record contains information for standard purchase
orders. The info
records can be created for materials and services with and without
master records.
T CODE : ME11
TABLES : EINA
EINE
Source list :-

SPECIAL PROCUREMENT
PROCESES

1. Vendor
Consignment
2. Sub Contracting
3. Third Party
4. STO (stock
transport order)

Vendor Consignment :The Vendor provides the materials and stores

them on your premises.
The Vendor remains legal owner of the materials, until
you withdraw materials
from consignment stores. Only then does the Vendor
require payment.
The invoice is due at set period of time, for exp, monthly .
Configuration :

1. Maintain INFO record for consignment

vendor & material and Tax code.
2. Check the item category K.
3. Maintain CONDITION record for out put
(KONS) . (Through NACE )
4. Maintain St.loc for Consignment goods.
Step by step Process :

5. ME21N
6. MIGO
7. MB1B with moment type 411k.

Sub contracting:The Raw components are sent to Sub

contractor (Vendor) for manufacturing purposes and
the finished or semi-finished materials are returned
into inventory of enterprise.

Step by step Process :

1. Create finished product in material

master (MM01)
2. Create BOM (CS01)

ME21N ( Item category L )

4. MB1B with moment type (541)
5. MIGO w.r.to [101] moment type
6. MIRO post the invoice.
3.

Third party:In this process , Customer raise the order to

Company there is no material
In our company now, Company raise the P.O to Third Party
Vendor , The Vendor
directly sends the material to customer and customer
raise the Billing to Company , then Company Pay the
Bill to Third Party Vendor .

Step by step Process :

1. In MM01 material type Trading goods.
2. Item category group BANS (in sales org .2
tab in MM01).
3. In VOV4 assign TAS to order type .
4. A sales order is created and when saved a
PR is generated
at back ground - (VA01) To create
customer through XD01.
5. ME21N To create PO

STO(stock transport order):These are TWO types

C.C) stock transfer

1)

INTER company (C.C to

2)

INTRA company (PLANT

to PLANT) stock transfer

INTRA company :
Intra company means plant to plant with in the
Company.
Configuration :
Path: SPRO- SAP REF IMG-M.M-PURCHASING-P.O-SETUP
S.T.O
Step by step Process :
1. Document type [UB]
2. Material should exist in both plants
3. Maintain Source List (Supply plant to Receiving
plant)
4. Maintain Info record ME11
5. Delivery type NL (with out billing)
Process :
6. ME21N (Doc type UB)
7.
VL10B (create delivery w.r.to s t . P o)