Introduction SAP R/3 MM

ERP-Software: SAP R/3

Sales and
Distribution
Material
Management

SD

Financial
Accounting

FI
CO

MM

R/3

PP

AM

Client / Server
PS

ABAP/4

QA

OC

PM
HR

IS

Controlling

Components of Materials
Management

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
6

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 & Company code
The company code is the smallest
organizational unit of external
accounting for which a complete, selfcontained 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
10

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

11

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.

Inventory Management with a

Warehouse Management
System
0001
0001 ABC
ABC inc.
inc.

client

company code

0001 Jones inc.

purchasing organization
plant

distrib.0001
center 0001

storage location

0001
0001

0001
0001

0002
0002

0002
0002

0003
0003

0002
0002

warehouse number
storage type
storage bin (physical stock)

0002 Model Ltd.

0003
0003
0004
0004
0003
0003

0001
0001

MM
factory

0004
0004

001
001
001
001

WM

002
002
05-04-03
05-04-03

05-04-04
05-04-04

The Module MM Main

Functions

MM interdependencies to other
modules
Logistik
PP
production
planning

MM
material master

SD
sales and
distrib.

purchasing
requirements plan.
QM
quality
management

FI
financial acc.

inventory mgmt.
invoice verification

CO
controlling

PM
plant
maintenance

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

client wide

purchasing
terms and cond.
partner functions
currency

request for quotation

quotation processing
purch. order handling

accounting data
bank account
acc. maintenance
payment

invoice entry
invoice verification
payment handling

for each
purchasing
organization

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

Data

Vendor

Your own vendor (choose a

number between 1000 and
1999)

Company code

1000

Purch. organization

1000

Account group

LIEF

Reference vendor

1080

Reference company code

1000

Reference purchasing
organization

1000

Create a Vendor
On the Create Vendor: Address screen, enter the following data:
Field

Data

Description

Any

Search term

Any, for example "euro"

Street/House number

Any

Postal code/City

5-figure, numerical (any)

Country

DE

Language

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.

until the Create Vendor: Partner Functions screen

5. Choose
appears.

until the Create Vendor: Partner Functions screen

6. Choose
appears.

until the Create Vendor: Partner Functions screen

Create a Vendor

Create a Vendor

Create a Vendor

Views on the Material Master

each view is maintained by Record
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

outline
agreement
order

Purchasing Process
PO

?
=

invoice
X

X
X

invoice verification

X
X

determination: requirements
vendor
X

X
X

goods received &

inventory mgmt.

MM

outline agreem.

determination: source of supply

vendor
vendor22
vendor
vendor11

PO
PO
PO

PO monitoring
purchase order processing

vendor selection

Create Purchase Order (PO)

vendor
vendor22

purch. order

1
vendor known
terms & cond.

2
vendor not known

source list

purch. order

outline
agrement info record

vendor

3
assigned purchase
requisition exists
(from user department)

vendor
vendor22

purch. req.

purch. order

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

SD
sales and
distrib.

goods receipt
inventory mgmt.
goods issue.

QM
quality
management

FI
financial acc.

inventory
controlling

transfer
posting

invoice
verification

CO
controlling

PM
plant
maintenance

AM
fixed assets mgmt.

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
orders
goods receipt
master data:
material
vendors
accounts
terms & cond.

invoice verification

output
information

actions:

enter invoice
verify invoice
post invoice
update
relevant data
(re-edit
invoice)

financial
accounting
asset
management
cost accounting

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