Material Management - SAP - Presentation_ASE

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SAP MM

Materials Management

Date: 01 September 2011


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Introduction

Role of the MM Module

To provide the right material and quantity at the right time andlocation at the most competitive price

Three important flows in MM PP

© 2011 BearingPoint 2INDUSTRY

Material flow Information flow Financial flow

Integration with other core modules

PP via MRP, WM, SD, FI, CO

MM

…

SD

WM

CO

FI


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Introduction

Basic structure of the MM Module

Purchasing

Inventory Management


Logistics Invoice Verification

Physical Inventory

MRP

Service/Material Master


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Organizational Levels in Procurement


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Organizational Levels

Are structures that represent the legal or organizational views of acompany



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Client From the business point of view represents a corporate group

Company Code An independent accounting unit within a client

Plant

An organizational unit where materials are produced or goods andservices are rovided


Storage location

An organizational unit allowing the differentiation of materialstocks within a plant

Purchasing organization

An organizational unit subdividing an enterprise according to thepurchasing requirements

Purchasing group A key for a buyer or group of buyers who is/are responsible for

certain purchasing activities and act as contact for vendors


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Within a client you can define several company codes A company code may contain several plants and a plant can only

belong to a company code Several storage locations may be assigned to a plant, but certain

storage location can only belong to one plant



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The form of procurement is defined by the assignment of purchasing organizations to

company codes and plants.

Forms of purchasing

Corporate-group-wide (cross-company-code)- -


Plant-specific

Reference Purchasing Organizations Mixed forms are possible, which can be replicated in the system

by the use of reference purchasing organizations A purchasing organization can utilize the more favorable

conditions and contracts of the reference purchasing organizationthat has been assigned to it.


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Plant-Specific Purchasing Organization

A purchasing organization is assigned to each plant within acompany code



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Cross-Plant Purchasing Organization

A purchasing organization is assigned to more than one plantwithin a company code



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MM Master Data


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MM Master Data

Master Data

Information that remains unchanged in the system for a longperiod of time

Ex: description of a material, unit of measure, dimensions


Master Record

A data record containing data that remains unchanged in thesystem for a long period of time

Ex: material master record, vendor master record, user masterrecord


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MM Master Data

• Material Master Data


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Material Master Data

Material Specific Data

Data stored in the materialmaster record is requiredfor many purposes:

Purchasin


Inventory management

Accounting data

MRP

Sales


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Data Screens in Material Master Record

Main data

• Screens which are relevant for individual user departments


Ex: basic data, sales, purchasing, MRP…

Additional data

• Screens which contains additional information

Ex: material short descriptions, alternative units of measureand consumption values…


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Organizational Levels

General material data valid for whole the enterprise:description, units of measure, material group, ...


Specific data valid for a plant and whole the storagelocations belonging to it: purchasing data, MRP data...

Specific data valid for one storage location: storagebin, picking area, …


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Material Type:

Groups materials with similar attributes Together with the plant specifies:

If changes in quantity are updated in material master record

If changes in value are updated in the stock accounts Has control function



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Industry sector:

Has control function



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Creating a material record



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Transactions:

Create material – MM01

Create material with reference – MM01

–


Change material – MM02

You can only change data that has already been created

Display material – MM03


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Entry Aids

Settings Preset the views & Organizational Levels

Reference material

Adopt data from an existing master record


Set default MRP data and forecast data Collective entry of storage loc. Data

Manually – MMSC transaction rapid entry of specific data

Automatically – the system extends the material master with

the storage location data at the time of the first receipt Mass maintenance

MM17 transaction to change several material masterrecords data at the same time


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MM Master Data

• Vendor Master Data


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Vendor Master Data

General Data

valid for the whole client

Accounting Data

maintained at company


code level (reconciliationaccount, paymentmethod for automaticpayments)

Purchasing Data

maintained for eachpurchasing organization(purchase order currency,incoterms, control data)


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Vendor Master Data


Create/ Change/ Display:

XK01/ XK02/ XK03 – Maintain all data

MK01/ MK02/ MK03 – Purchasing specific data

FK01/ FK02/ FK03 – Accounting specific data


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Vendor Master Data

Accounting Group

Type of number assignment and the number area from which theaccount number that the system uses to identify the vendor is tobe assigned

Field selection – which fields are ready for user input, which


,

Which partner schemas are valid

The status – whether the vendor is a one-time vendor

Customizing: Logistics-General -> Business Partner -> Vendor -> Control ->

Define Account Groups and Field Selection (Vendor)


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Vendor Master Data

Blocking Vendors

Vendors can be blocked for all or only selected purchasingorganizations

Block indicator set or not set


Transaction MK05

Block for quality reasons (QM active)


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Purchasing master data

• Purchasing Info Record


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Purchase Info Record

Procurement Types in Info Records

Standard

Contains information for standard purchase orders

Subcontracting

Ordering information for subcontract orders


Pipeline

Contains information on a vendor’s commodity that is suppliedthrough a pipeline or pipes(oil or water) or similar means

(electricity through the mains) Consignment

Contains information on a material that vendors keep available attheir own cost on the orderer’s premises


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Levels of maintenance

Client level

General data – vendor data, order unit, info record memo, …

Purchasing organization data


, , ,statistics(price history, PO statistics), Texts

Purchasing organization / plant data

Delivery time, minimum quantity, prices and conditions, statistics

(price history, PO statistics), Texts

Transaction

ME11


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Maintaining Info Records



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Updates of “Info Update” indicator

Depending on the document type the following updates are triggered

Quotation – time dependent conditions

PO/Contract release order/Scheduling agreement - lastdocument number


Contract – if info record exists:

o No updates

– if no info record

o An info record is created with the conditions from thecontract


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Price determination

The system searches from specific to general

Info record at purchasing organization/plant level

Info record at purchasing organization level

Manuall entr of rice



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Procurement of stock material


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Determination of requirements

Purchase requisition – ME51N

Are internal documents

Created manually or automatically


RFQ PO Outline agreement

Document format

Header Item overview Item detail


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Creating RFQ’s

ME41

1. Initial screen

Quotation deadline


2. Header detail screen

Collective number3. Item overview screen

Material

RFQ quantity Delivery date Deadline

4. Header: Vendor address Assign vendor numbers or one

time vendors to RFQ


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Quotation Processing

ME47

RFQ and Quotation are a single

document (in ECC 6.0 system)


quotation price comparison list

Quotation data can be saved ininfo records (manually orautomatically – info record

indicator update indicator set) The mean value of the quotation

can be saved as market price(can be used for vendorevaluation)


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Conditions

Stipulation agreed with vendors concerning prices, discounts,surcharges, …

Can be maintained for: quotations, info records, outline agreements

and purchase orders. In purchasing documents:


Header conditions: apply to all the items in a document

Time dependent conditions: in info records, contracts, extendedconditions and in quotations and scheduling agreements if timedependent conditions indicator is set for the document type in

customization Time independent conditions: specified in purchase orders Extended conditions: option of specifying time-dependent

conditions independently of outline agreements and info records Prices can be entered in the form of a price/quantity scale


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Condition types in Purchasing

Conditions in a contract – valid for all contract release orders Conditions in purchasing info records – valid to all purchase

orders that contain a vendor and material contained in a purchasing

info record Extended conditions are onl included if the met certain criteria


Calculation schema Provides a framework for price determination

Which conditions type are permitted

The order in which conditions types are taken into account The condition types for which subtotals are calculated

Access sequence Is a search strategy – defines the structure in which condition

records for a condition type are read


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Purchase Order

Request to a vendor to provide certain goods under the statedconditions

Can be created

Without reference With reference:


Purchase requisition Request for quotation Another purchase order

Forms

Purchase order sent to a vendor Carry out a stock transport order

to another plant


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Purchase Order Format

Header – contains information valid for all the purchase orderdocument: currency, vendor, terms of payment, etc.

Item – material, delivery date, plant, storage location, etc.



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Purchase order transactions: ME21N, ME22N, ME23N

Enjoy transactions – single-screen transaction divided in fourscreen areas:

Document overview

Personal settings


Header

Item overview

Item detail


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Purchase order issuing messages



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Goods receipt

A formal acceptance that materials or services were received froma vendor against a purchase order.

You can check whether:

The ri ht material has been


delivered

The right quantity has beendelivered

Perishable goods are withintheir minimum shelf life.


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Goods receipt against a purchase order

The system propose data from the PO during entry of the GR. The delivery is marked in the PO history. The GR is valuated on the basis of the PO price or the invoice price.



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Movement Type

Three digit-key used to differentiate between goods movements Types of goods movements:

Goods Receipt to the warehouse – 101 Return delivery to vendor – 122 Initial stock – 561


Consumption – 201

Has control function Has an important role in automatic account determination Determines the format of the screen and how the quantity fields

are updated


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Goods receipt transaction: MIGO

Enjoy transactions – single-screen transaction divided in fourscreen areas:

Document overview

Goods movement


Header

Item overview

Item detail


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Goods receipt – Effects

GR forms the basis for updating the AC modules and InventoryManagement, and can trigger WM and QM processes.



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Valuation area

Organizational level at which material is valuated

Materials can be valuated at: Company code level – valuation price of a material is the

same in all the lants of the com an code


Plant level – material can be valuated in different plants at

different prices (SAP recommends valuation at plant level and ismandatory if you use PP or Retail System)


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Valuation class

Used to combine several materials for assigning G/L accounts

It is specified in the material type

Automatic accounts determination works with valuation classes



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Material Valuation Procedures

Valuation of goods receipts depends on the price control procedures

Standard price – all stock postings are made at the pricedefined in the material master

Movin avera e rice – the s stem valuates the oods


receipts at with purchase order price and goods issues with thecurrent moving average price


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Valuation of goods receipts



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Transfer posting


Movement type + Stock type


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Checks incoming invoices for accuracy with regards to content,prices and accounting

Can process also invoices that do not originate in materialsprocurement

Two documents are created


MM invoice document FI invoice document

Can be posted with reference to a: Purchase order

Goods receipt Service

It updates: Purchase order history Material master if necessary


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Manually – the employee enters and posts it If the invoice is received via electronic transfer – the system

posts them automatically At regular time the system can post invoices using settlement

ro rams


Evaluated receipt settlement Invoicing plan Consignment settlement

Depending on the transaction type different kind of invoices can be

posted: Vendor invoice Credit memo Subsequent debit Subsequent credit


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Posting a vendor invoice – MIRO

Transaction

Header data

Allocation


Item data

Balance

Vendor data

Layout


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Delivery costs

Planned delivery costs – entered in purchase order Are part of the valuation of a material at goods receipt Are not binding to one specific vendor Divided into: freight costs and customs Can be invoiced:


Fixed amount Quantity dependent amount Percentage of the value of goods

Unplanned delivery costs – entered upon invoice receipt Automatically posted to

Individual items Separate G/L accounts


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Taxes, Cash discounts and Foreign Currency

Taxes Each tax-relevant item is allocated a tax code – the tax code

specifies how the system is to post the tax

Terms of a ment


Contains terms agreed with the vendor regarding financial

compensations due for deliveries and services rendered Can have three levels – ex. 5 days(3%discount)-within 10

days(2%discount)-within 20 days you pay the net price

Two way of posting cash discount Gross posting – is posted at the time of payment (FI) Net posting – the system posts the amount reduced to stock

account/costs account Foreign Currency – exchange rate fixed or not in the header of

PO


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Invoices for Blanket Purchase Orders

Blanket Purchase Order – used for the procurement of consumable materials or services that are required during thecourse of the year. Contains a: Validity period (instead of delivery date) Value limit


Document type FO and item category B must be selected

It doesn’t contain materials or services–only short text is permitted

You cannot enter goods receipt, services or accept services based onblanked purchase order

Tolerance limits can be set in Customizing for validity period andvalue limit


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Procurement of Consumable Material


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Consumable materials:

Are materials that are procured directly for an account assignmentobject

They are not managed on a value basis in Inventory Management(material accounts are not debited)



Account assignment object

Specifies the cost unit on whicha goods movement is to be posted

Account assignment category specifies whether the accountassignment object involves acost center, order, asset, project…


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Stock material vs. Consumable material



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Multiple Account Assignments

Distributes the costs for one purchase order item among severalaccount assignment objects (cost centers, etc.)

The value of the item is distributed: On uantit basis


As a percentage

For items with multiple account assignments, the systemautomatically sets the indicator for “non-valuated goods receipt”

If partial invoice exists, the invoice amount is distributed betweenthe account assignments in order (‘on a progressive fill-up basis’)


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Goods receipt and invoice verification



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Procurement of External Services


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Purchase order for Services

Item category D (service) must be maintained at item level

Account assignment category U is allowed for item category D

Onl the short text must be com leted for the brief descri tion of


the work

Individual services to be performed are specified in the servicespecifications (SS) – at item detail level

Value limit for unplanned services can be specified


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SS Outline

To structure the services into a hierarchy of outline levels

A maximum of four hierarchy levels is possible

To each outline level ou can assi ned


unlimited service lines


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Service entry

Two steps must be done:

Service entry sheet – entry of the material actuallyperformed (work actually done) – no accounting document


Service Acceptance – The service entry must be accepted inorder to make the relevant postings to Financial Accounting Can be entered and accepted in one or two steps

Release procedures can be set up for service entry sheets


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Service entry sheet: ML81N

Header



Service data

Accept collectively: ML85

Accept from entry sheet:


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Invoice verification for Entry Sheet

Carried out with reference to the purchase order

The prices from the invoice received are compared with the pricesfrom the entry sheets



If discrepancies are found the system blocks the invoice forpayment


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Goods Receipt without reference


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Initial entry of stock balances

Material stocks that are migrated from a legacy system to the newSAP system as initial stock. Three movement type exists:

561 – Unrestricted-use stock 563 – Stock in ualit ins ection

Goods Receipt without Reference


565 – Blocked stock

Valuation:

At the external amount if Ext.Amt. LocCurr field is completed At the valuation price from the material master if Ext.Amt.

LocCurr field is not completed


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Goods Receipt without Purchase Order or Production Order

Stock types and movement types for these goods receipt:

Unrestricted-use stock Without Purchase Order – movement type 501

Without Production Order – movement t e 521



Stock in quality inspection Without Purchase Order – movement type 503 Without Production Order – movement type 523

Blocked stock Without Purchase Order – movement type 505 Without Production Order – movement type 525


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Delivery free of charge

Post free delivery from the vendor as a goods receipt Movement type: 511

Valuation depending on the price control:



Moving average price: Updated only on a quantity basis not on a value basis Reduction in the moving average price

Standard price Updated on a quantity and value basis Receipt valuated at standard price Offsetting posting made o a revenue account for price diff.


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Goods Receipt to Quality Inspection or

Blocked stock

Goods Receipt to Quality Inspection or Blocked


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Goods receipt into stock in Quality Inspection

Post to inspection stock indicator – material master record(Purchasing or Work Scheduling data) stock type “Qualityinspection” adopted in PO or production order

Select stock type “Stock in Quality Inspection” in purchasing

documents

Goods Receipt to Quality Inspection or Blocked

Stock


Goods receipt to GR Blocked Stock

Conditional acceptance (ex: certificate is missing) – post to nonvaluated goods receipt blocked stock - movement type 103 Doesn’t yet form part of the regular inventory Is update in the PO history – the open PO quantity is not reduced When conditions accepted the blocked stocked can be transferred

to unrestricted-use, quality inspection or blocked stock Valuation and updating of stock data – movement type 105


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Automatic PO generation at goods receipt

Prerequisites:

Automatic PO Generation activated for the movement type Plant must be assigned to a standard purchasing

or anization

GR with Automatic PO Generation


Default document type for the PO must be specified for thegoods receipt (for transaction MB01 in Customizing)

The material must be valuated Purchasing info record must exist for the material, vendor and

standard purchasing organization of the plant

Cannot be used for:

For direct consumption purchasing Posting goods receipt in GR Blocked Stock


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Return delivery, Returns and

Cancellations


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Return delivery

Return can take place from unrestricted-use stock, quality inspectionstock, blocked stock or non-valuated blocked stock

PO or material documents can be referred

Return Delivery, Returns and Cancellations


Functions of Shippingcan be used

Reason for movement

can be entered


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Subsequent delivery

When the vendor sends a substitute delivery after the returndelivery

The original reference is copied to the new material document



return delivery

Particularly useful in gr-based invoice verification the new entrywill be a subsequent delivery for gr-based invoice verification


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Returns for Purchase Order

A reference to an existing purchase order or goods receipt it is notcreated

Returns items are created in purchase orders (Returns



Movement type 161

l d ll


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Cancellation

The material document can be cancelled if entry errors have beenmade

It is recommended to cancel material documents with reference to



MBSM – Cancelled Material Documents


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Stock Transfers/Transfer Postings

St k T f /T f P ti


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Transfer postings

For changes in the stock category of a material or in the stock IDnumber

Stock to Stock Material to Material



St k T f /T f P ti


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Stock transfer

A physical movement of goods always exists

Stock transfer Between Storage Locations in a plant



One transfer posting Single transaction

Two step procedures

Two transfer postings Once the goods issue is postedthe stock is regarded asin transfer at the receiving point


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St k T f /T f P ti


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Plant to Plant: One step/ Two step procedures



St k T f /T f P ti


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Stock transport order Without delivery

Advantages:

Integrated with MRP Receipt can be planned at



Delivery costs and carriercan be specified

GR can be posted directly toconsumption

Post material to stock inqual. or blocked stock

Entire process can bemonitored via the PO history

Display stock in transit: MB5T


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Goods Issues


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Planned Goods Issues

For goods issues with reference to a reservation, production order,…

Goods issue with Reference to a Reservation

Goods Issues


It is not possible to reverse with MIGO

Goods issue with Reference to a Production Order

If a production order is created in SAP, the required quantitiesare reserved automatically

Backflush – with this type of withdrawal, the components arealready located at the place of production their consumptionis not reported until the quantity consumed is known


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MRP – Materials Requirement Planning

Automated Procurement: MRP


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Automated Procurement: MRP

MRP – Material Requirements Planning

Central function: to secure the material availability by generatingprocurement proposals when shortages are determined


Automated Procurement: Procurement


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Proposals

For in-house production Planned orders

to plan production quantities if planning is complete are converted into production orders


Planned orders Purchase requisitions Scheduling agreement schedule lines

only if a scheduling agreement exists for the material

Planned orders and purchase requisitions can be changed,rescheduled or deleted.

Scheduling agreement schedule lines are fixed elements.

Automated Procurement: Overview


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MRP area

Organizational unit for which the material requirements planningtakes place independently

Requirements planning takes place at plant level for each MRP area


Total planning – for all MRP relevant materials for a particularplant and includes BOM explosion for materials with BOMs. Canbe executed online or in background (once or periodically).

Single-item planning – for an individual material and can beexecuted for materials with BOMs at: Single-level – only BOM level of the material Multi-level – BOM level and all BOM levels beneath it



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Executing Material Requirements Planning



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Planning file entry

Contains the materials relevant to the planning run

Specific MRP master data must be maintained for a material inorder to be included in the planning file


Entries in planning file are automatically included in MRP relevanttransactions

Manually entries in planning file can be performed



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For planning a material automatically you must determine

MRP procedure

Consumption based – oriented to the past consumption ofthe material

–


and components. Sales orders, planned independentrequirements, reservations, dependent requirements that arecreated by BOM explosion are relevant.

Lot sizes procedures

Static lot-sizing Periodic lot-sizing Optimum lot-sizing



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Consumption based planning

Reorder point planning The system checks if the sum of plant stock and fixed

receipts (fixed planned orders+fixed PReq+POs) falls short ofthe reorder point


indicator) or automatically (with forecasting)

Forecast based planning Future requirements are calculated using the forecast on the

basis of consumption values Is executed at regular time intervals

Time phased material requirements planning Same as forecast planning with the difference that MRP is

executed only at determined points in time in a particularrhythm



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Consumption based planning

Reorder point planning




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Lot-Sizing Procedures

Static lot-sizing procedures

Fixed lot-sizing


Exact lot size



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Calculation of dates

The system must calculate the date on which the purchasemust be sent and the date on which the vendor is to deliverthe corresponding quantities.




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Time components

Purchasing processing time

Time period necessary for converting the Preq to PO and theissuing it (defined in the plant parameters )


Planned delivery time

Time period from the issue of purchase order to the receipt of goods from vendor (defined in material master, info-record orcontract)

GR processing time the time required from the time of goods receipt until the

material is available (defined in material master and/orcontract)



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Current stock/Requirements List

Transaction code: MD04

Dynamic list: current availability of the material


Header – material number, plant, MRP parameters MRP elements – planned orders, POs, reservations Material tree – shows the MRP Controller worklist

MRP list

Static list - shows the result of last planning run

Is created or not after the planning run


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