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How to configure SAP MM
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CONTENTSMM - Overview
MM - Purchasing
MM - Purchase Order
MM - Inventory Management
MM - Invoice Verification
Overview of
MATERIALS MANAGEMENT
Course Objectives
Visualize the MM functionalities
Understand MM related views of Material Master and Vendor master records
Create other master records or changing the existing master records
On conclusion of this course, you should be able to:
Introduction
Contents
MM overview
Organizational Structure
Material master
Vendor master
Other master recordsExercises
Solutions
MM - Overview
Major components of MM- Module materials planning and control (MRP)
procurement
inventory management
invoice verification.
Integration with other Modules
Finance / Asset ManagementFinance / Asset Management
ProcurementProcurement
Logistics PlanningLogistics Planning
Sales LogisticsSales Logistics
ProductionProduction
SDSD
FIFI
Integrated Business Process Overview
Requirement for Goods /
Services
Requirement for Goods /
Services
Purchase
Order
Purchase
Order
Invoice
Verification
Invoice
Verification
Financial and Managerial Reporting and AnalysisFinancial and Managerial Reporting and Analysis
G/L Inventory /
GRIR
G/L Inventory /
GRIR
G/L GRIR/ Expense
AP Invoice
G/L GRIR/ Expense
AP Invoice
Vendor
Payment
Vendor
Payment
MM Organization Structure
ClientClient
Storage location 1Storage
location 1Storage
location 2Storage
location 2WHWH WHWH Plant 3Plant 3 Plant 4Plant 4
Plant 1Plant 1 Plant 2Plant 2 Purchasing
Organization
Purchasing
Organization
Company code 1Company code 1 Company code 2Company code 2
Organizational Elements - Client
Highest Hierarchical Level in SAP(e.g. a corporation)
Can be Used to Differentiate between a Development, Quality Assurance, and Production System within R/3
All Areas of an Organization that are to be Integrated into the SAP R/3 Production System should be Included Under one Client
Client Characteristics Client Characteristics
Organizational Elements - MM
Responsible for Procurement for One or More Plants
Responsible for Negotiating Pricing and Delivery Terms with Vendors
Purchasing Organization is Assigned to A Company where Inventory is Legally Tracked or Costs are Legally Incurred.
Purchasing OrganizationPurchasing Organization
Organizational Elements - MM
Usually a Manufacturing Facility, Warehouse, or a Location that Stocks , Manages, and Valuates Inventory
May be a Physical Site with Multiple Manufacturing/Production Lines
May be Multiple Manufacturing/Production Lines at One Physical Site
Can be a Physical Location(cost centers may or may not be associated to a plant i.e. administrative Vs. manufacturing cost centers)
SD Availability Checking is Normally Done at the Plant Level
PlantPlant
Organizational Elements - MM
Links to Production (PP), Materials Management (MM), and Sales and Distribution (SD)
A Plant is Assigned to A Company code
Purchasing Organization are Assigned to Plants
Plant (Cont.)Plant (Cont.)
Organizational Elements - MM
A Location within a Plant where Inventory is Stored
Storage LocationStorage Location
Master data in MM
Material Master
Vendor Master
Service Master
Purchasing info record
Source List
Material master in SAP.
The material master contains information on all the materials that a company procures, produces, stores, and sells.
The material master is used by all components in the SAP Logistics System
Different departments in a company work with the same material, so data in a material master record is subdivided in the form of user departments.
Material description and Base unit of measure appear in all user departments.
Use of material master in SAP logistics system functions.
In Purchasing for ordering materials.
In Inventory Management for goods movement postings and physical inventory
In Invoice Verification for posting invoices
In FI for maintaining value of material.
In Production Planning and Control for material requirements planning, scheduling, and work scheduling
User departments using same material master
Material Numbers
Definition
Number uniquely identifying a material master record, and thus a material.
Use
For every material that your company uses, you must create a material master record in the material master. This record is uniquely identified by a material number.
Internal and External number assignment.
Industry sector
It determines type of industry .
Eg. mechanical industry,chemical industry,pharmaceutical etc.
The industry sector you specify determines
Which screens appear and in what sequence
Which industry-specific fields appear on the individual screens
Material Types
Materials with the same basic attributes are grouped together and assigned to a material type.
When creating a material master record, you must assign the material to a material type. The material type determines certain attributes of the material and has important control functions.
Some of the standard material types are
ROH: Raw materials which are bought from outside and goes into production.
HALB :Semi-finished material which are bought externally and manufactured inside. They can be sold individually as well.
FERT:Finished materials are final products of the company
Views relevant to MM
Basic data1/data2
Purchasing
Purchase order text
Storage 1
Storage 2
Accounting
CREATING MATERIAL MASTER IN SAP
From logistics screen click
Logistics Materials Management material master, to bring up material master screen.
Click material create(general) immediately
Organizational levels.
Plant
Storage location
Material master
In Purchasing screen you can enter
Purchasing group
purchasing value key
Set indicator for automatic PO
Material master
In purchase order text screen,
you can enter the text , which will be defaulted in PO every time when you create a PO for this material.
In Storage 1 you can enter,
Storage bin
Unit of issue
Shelf life data
Batch management
Concept of vendor master in SAP.
vendor master record is maintained by both Accounting and Purchasing.
A vendor can be a one time vendor or regular vendor
A vendor master record contains the vendor’s name and address, as well as data such as:
the currency used for ordering from the vendor
terms of payment
names of important contact persons (sales staff)
Organization of vendor master records
A vendor master record is subdivided into three different data areas:
General Data
Company code data
Purchasing organization data
Creating vendor master record.
Menu Path
Logistics -> Material management -> purchasing ->master data vendor ->purchasing ->create
In the initial screen you can enter,
Vendor number (For External number assignment )
Vendor account group
Purchasing organization
Creating vendor master record.
In general data you can maintain,
Address
Control
Payment transactions
In Purchasing organization data you can maintain,
Purchasing Data
Partner functions
Changing vendor master record
You cannot change Vendor account group (One time vendor cannot be converted in to a regular vendor)
Blocking a vendor
Flag for deletion
Changing other options
Automatic PO
Vendor schema group
Payment terms
Discount
Service Master Records
Descriptions of all services that may need to be procured can be stored.
The organizational level at which services are procured is the purchasing organization.
In addition to a unique description of the service, a service master record contains further information that is necessary for procurement purposes (such as texts or units of measure).
Creating a service master record
In the initial screen you can enter
Service number (if external number assignment)
Service category
In the Basic data screen enter,
Base unit of measure
Description of services
Valuation class (3200 for services)
In the classification screen enter,
The class for classifying the services
Concept of Purchasing info rec in SAP.
An info record represents a material-vendor relationship.
The info record contains concise information about a vendor and a material that you already procure from that vendor.
Info records are created automatically when you order a material. You can also create, change, and delete info records.
Purchasing info rec (Contd…)
Use of Purchasing info rec in PO creation
Net price for the item will be defaulted in PO
All the pricing conditions will be defaulted
other uses include
Delivery tolerance
Shelf life
Purchase order text
Purchasing info rec (Contd…)
Use of info rec in Vendor evaluation
Order price history
Quotation price history
Delivery reliability
Quantity reliability
Concept of source list in SAP
A source list specifies the possible sources of supply for a material over a given period of time
It shows the time period in which a material may be ordered from a given vendor
Source list can be created automatically using generate source list option
Source list can also be maintained manually.
Source List (Contd…)
Uses of source list
Fixed vendor
Vendor blocking
Auto PO creation
Source list requirement at plant level
Can be made mandatory
MM - Purchasing
Course Objectives
Understand the concepts in SAP - Purchasing component
Create or change PRs
Create, change or compare RFQs
Create contracts
On conclusion of this course you should be able to
Introduction
Contents
Purchasing overview
Purchase requisitions
Request for quotations
Outline agreements
Exercises
Solutions
Purchasing - overview
The Purchasing component has the following tasks: external procurement of materials and services
determination of possible sources of supply for a requirement identified by the materials planning and control system
determination of possible sources of supply for a requirement arising directly within a user department
monitoring of deliveries and payments to vendors
Purchasing - integration with other modules
Integration
Controlling (CO)
Purchase orders for materials intended for direct consumption
They can be directly assigned to a cost center or a production order.
Financial Accounting (FI)
Vendor master is maintained by both accounting and purchasing departments.
Through PO account assignment, Purchasing can also specify which G/L accounts are to be charged in the financial accounting system.
Purchasing - integration with other modules
Sales and Distribution (SD)
Within the framework of materials planning and control, a requirement that has arisen in the Sales area can be passed on to Purchasing.
When a requisition is created, it can be directly assigned to a sales order.
Process flow in purchasing
Determination of Requirements
Materials requirements are identified either in the user departments or via materials planning and control.
It includes both MRP proper and the demand-based approach to inventory control.
The regular checking of stock levels of materials defined by master records, use of the order-point method, and forecasting on the basis of past usage are important aspects of the demand management.
You can enter purchase requisitions yourself, or they can be generated automatically by the materials planning and control system.
Process flow in purchasing
Source Determination
The Purchasing component helps in identifying potential sources of supply based on past orders and existing longer-term purchase agreements.
This speeds the process of creating requests for quotation (RFQs)
Vendor Selection and Comparison of Quotations
The system is capable of simulating pricing scenarios, allowing you to compare a number of different quotations.
Rejection letters can be sent automatically.
Process flow in purchasing
Purchase Order Processing
The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order.
You can generate Pos yourself or have the system generate them automatically.
Vendor scheduling agreements and contracts are also supported.
Purchase Order Follow-Up
The system checks the reminder periods you have specified
System automatically prints reminders or expediters at the predefined intervals.
It provides you with an up-to-date status of all purchase requisitions, quotations, and purchase orders.
Process flow in purchasing
Goods Receiving and Inventory Management
Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number.
By specifying permissible tolerances, buyers can limit over- and underdeliveries of ordered goods.
Invoice Verification
The system supports the checking and matching of invoices.
Invoice verification can be based on purchase orders or GR documents or directly to a vendor without any document reference.
Std. Menu options in Purchasing
Create
Use this option to create a purchasing document .
Enter the required information and save the document .
The document is then stored under a unique number.
Change
Use this option to change a purchasing document .
You need the document number in order to access the document.
Std. Menu options in Purchasing
Display
Use this option to display a purchasing document .
You cannot change or add any information to the document that is displayed .
You need the document number in order to access the document.
List displays/reporting
You can use these options to generate reports analyzing purchasing documents
Example
List of all purchase orders for Vendor ABC
Std. Menu options in Purchasing
Follow-on functions
This option allows you to perform tasks related to (following on from) but not included in the purchasing functionality.
Example
Entering a goods receipt or an invoice in the system.
Messages
This option enables you to print or transmit documents in message form
Example
Transmission via fax, Printouts etc
Purchasing Documents
Definition
A purchasing document is an instrument used by Purchasing to procure materials or services.
Types of purchasing documents
Request for quotation (RFQ)
Transmits a requirement defined in a requisition for a material or service to potential vendors .
Quotation
Contains a vendor's prices and conditions
It is the basis for vendor selection.
Purchasing Documents
Purchase order (PO)
The buying entity’s request or instruction to a vendor (external supplier) to supply certain materials or render/perform certain services/works,
It formalises a purchase transaction .
Contract
In the SAP Purchasing component, a type of "outline agreement", or longer-term buying arrangement .
The contract is a binding commitment to procure a certain material or service from a vendor over a certain period of time.
Purchasing documents
Structure
Each purchasing document is subdivided into two main areas:
The header
The header contains information relevant to the whole document .
Example, information about the vendor and the document number is contained in the document header
The individual items .
The items specify the materials or services to be procured .
Example, The material description and the order quantity are specified in each item.
Purchasing documents
The additional data
It provides extra information about the item, and has no direct connection with the item procurement data.
Example,
account assignment data
PO history for an item, which contains information on already recorded goods and invoice receipts relating to the item.
Classification of Purchasing Documents
Purchasing documents are differentiated in the SAP system via the document type .
Example, relevant number range depends on document types
Purchasing documents
Document types are defined for RFQs, purchase orders, and contracts
Numbering of purchasing documents
Each document is assigned a unique number .
This number can be assigned internally or externally , depending on the policy .
Internal number assignment means that the system assigns the number.
External number assignment means that the person creating the document must supply it.
Alphanumeric assignment is only possible in the latter case.
Purchase requisitions
Definition
A purchase requisition is a request or instruction to Purchasing to procure a certain quantity of a material so that it is available at a certain point in time.
It is an internal document.
Requisitions can be created in the following ways:
Directly: Someone from the requesting department enters a purchase requisition manually.
Indirectly: The purchase requisition is created via another SAP component.
Purchase requisitions can be subject to a release procedure.
Purchase requisitions - integration
Requisitions can be created indirectly in the following ways:
via materials planning and control
The component Consumption-Based Planning suggests materials that need to be ordered on the basis of past consumption or usage figures and existing stock levels.
The order quantity and the delivery date are determined automatically.
Materials planning and control can stipulate that a purchase requisition is to be resubmitted to the purchasing department if it has not been processed after a predefined period of time.
Purchase requisitions - integration
Requisitions are generated automatically from production orders if
They contain an external processing operation (e.g. subcontracting work)
A precondition is that the control key for the operation allows or prescribes external processing.
they contain non-stock components
Purchase requisitions
Procurement types
Standard
Subcontracting
Components to be provided can be entered.
Consignment
Stock transfer
External service
Service specifications can be entered
Manual creation of PR
Things to remember
Item category
Account assignment category
Purchasing organization
Purchasing group
Requirement tracking number
Delivery date
Item with or with out material master record
Order quantity
Creating Request For Quotation
Automatically from PR
Manually
With reference to PR
With out reference to PR
Delivery address
Address of the company asking for quotation, by default it is the address of E+L. But it can be changed.
vendor address
Just enter the codes of the vendor, System will take other details from vendor master.
Quotation dead line
Delivery date
RFQ (contd…)
Printing RFQ
Send the Printed RFQ to the vendors
Receive the quotation from the vendor
Maintain the RFQ
Enter the net price quoted by the vendor
Enter the pricing conditions
Terms of payment
Update the info record if reqd
Quotations
Compare the quotations
Maintain the collective number in the RFQs
Quotations can be compared based on price
Discounts and delivery costs can be included
Comparison can be based on effective price also
System compares and gives the ranking list
Percentage basis for comparing quotations
Mean value equals 100%
Maximum value equals 100%
Minimum value equals 100%
Outline agreements with the vendor
To Setup longer-term purchasing arrangements with vendors regarding the supply of materials or the performance of services.
Outline agreements can be subject to a release (approval or clearance) procedure.
Agreement types
Quantity contract
Value contract
Outline agreements
Structure
Document header: containing information relating to the entire agreement. For example, the vendor information and header conditions are in the document header
Items: containing the information specific to the relevant material or service.
statistics on ordering activities for the item
quantity or price of the item
conditions, such as quantity discounts and surcharges
Outline agreements
Texts in Outline Agreements
Header texts
Item texts
You can create your own text types
Creating a outline agreement
Outline agreement can be created with reference to a RFQ or without any reference
Important terms
Purchasing organization
Purchase group
Outline agreements
Target quantity
Target Value
Pricing conditions
Validity starting and ending date
Vendor address
Delivery address
Remainders
Introduction
Contents
Creating POs
Printing of POs
Printing Remainders
Changing or canceling POs
Purchasing information
Exercises
Solutions
Purchase order
Definition
Formal request or instruction from a purchasing organization to a vendor or a plant to supply or provide a certain quantity of goods or services at or by a certain point in time.
Structure
Header
items
Additional data
Creating a Purchase order
Automatically from PR
Set automatic PO indicator for material and vendor
Maintain Purchasing info record
Maintain source list
Fixed vendor
PR from MRP or Manually created PR
Assign manually or automatically
Process the assigned PR to create PO
Create PO - Manually
Manually creating a PO
With reference to PR
Select the PRs
Select the items from PR
Copy the items in to PO
Enter the vendor
Enter the prices and pricing conditions
Requirement tracking number
Update the info record if reqd
Create PO
With reference to RFQ
Select RFQ
Select the items
Copy the selected items in to PO
Enter the Price and pricing conditions
Update the info record if reqd.
Acknowledgement and confirmations
Create PO
With out any reference
In this case you need to enter
Vendor code
Delivery date
Item category
Account assignment category (if reqd)
Requirement tracking number
Order type ( NB For std purchase order)
Plant ( 4000 - default plant )
Storage location
Creating a PO (contd…)
Important terms in PO
Vendor
For creating a PO you need to enter vendor code
Vendor master should exist for this purpose
if you don’t want to maintain all the details for a vendor you can create a one time vendor
Item category
Standard
Subcontracting
service
Create PO (Contd…)
Account assignment category
Specification of the account assignment objects that are charged in the case of a purchase order for a material that is intended for direct usage or consumption.
Examples
Asset
Sales order
Production order
Cost center
Types of account assignment
Single account assignment
Multiple account assignment
Create PO (contd…)
Delivery date
Date format
Day format
Week format
Month format
Delivery date entered here is only expected delivery date
You can also specify a statistical delivery date
Create PO (contd…)
Units of measure in PO
The order unit
This is the unit you specify in connection with the order quantity.
The order price unit
This is the unit that applies in connection with the net price and which is taken as the basis for invoice verification.
If the order price unit does not correspond to the order unit, and if no conversion factor is specified in the system, you must enter a conversion factor on the item detail screen.
Create PO (Contd…)
Example for units of measure in PO
Order quantity 24
Order unit Box
Gross price per unit $10
Order price unit (number) 1
Order price unit (of measure) kg
Conversion factor 24 boxes 1 kg
Create PO (Contd…)
Conditions
This component enables you to store pricing stipulations agreed with the vendor
Examples are applicable discounts or surcharges, or stipulations regarding the payment of freight costs in the system.
There are three kinds of price in Purchasing:
Gross price
Price without taking any possible discounts and surcharges into account
Create PO (Contd…)
Net price
Price taking any applicable discounts and surcharges into account
Effective price
Net price after deduction of cash discount, with allowance for any miscellaneous provisions, delivery costs, and non-deductible taxes.
Terms of Payment
Example
Within 14 days 2% discount
Within 30 days due net
Create PO (Contd…)
Inco terms
Incoterms are internationally-recognized terms of delivery reflecting the standards set by the International Chamber of Commerce (ICC).
Example
FOB - Free On Board. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point.
You can specify Incoterms for an order item that differ from those in the PO header.
Creating PO from outline agreement
In the initial screen for Create PO,
Select the Outline agreement and items
Copy the items in PO
In the item overview screen
Enter the quantity
If the quantity exceeds the target quantity system gives a warning
Texts in PO
Header texts
Header note
Pricing types
Dead lines
Terms of delivery
Shipping instructions
Terms of payments
warranties
Penalties for breach of contract
Confirmations
Purpose
This component can be used, if you wish to have your vendor provide you with various kinds of confirmation regarding delivery dates and quantities
It enables you to base your materials planning and control activities on more up-to-date data than that contained in purchase orders.
Confirmation control key
Shipping notification
Order acknowledgement
Shipping notification
Shipping Notification
Definition
A vendor’s confirmation to a purchasing organization of the delivery date for a certain quantity of ordered materials
It can be for the date of performance of ordered services also.
Structure
A shipping notification consists of several items in which the notified (confirmed) quantity of the material or service is specified.
Confirmations from the Viewpoint of IM
When you post goods receipts, there are several ways of finding the associated purchase orders.
Enter the PO number
Enter the shipping notification number
Enter the transport identification code
If you establish a link via the PO number itself, the relationship is unique
i.e. one goods receipt (GR) against one purchase order
Confirmations from the Viewpoint of IM
If you enter the number of the shipping notification
The system selects all purchase orders containing this number
System suggests the notified quantities for the GR document.
Prerequisites
If you wish to match up GRs against POs via the shipping notification number ,
shipping notification must exist as a separate document.
Releasing the PO
Release Procedure for External Purchasing Documents
External purchasing documents (i.e. purchasing documents other than requisitions) are released at header level.
Item-by-item release is not possible.
These documents can only be released using the release procedure with classification.
Release Conditions
The release conditions determine the release strategy in accordance with which a PO is to be released.
If a PO does not meet the conditions for a release strategy, it is automatically released for further processing.
Release procedure
Release Strategy
The release strategy defines the approval process for purchasing documents.
The strategy specifies the release codes necessary and the sequence in which releases have to be effected.
A maximum of eight release codes can be defined.
The assignment of the release strategy to a purchasing document is based on the release conditions.
Release procedure
Release Code
Definition
The release code is a two-character ID allowing a person to release (clear, or approve) an external purchasing document.
Who may work with which release codes is basically controlled via a system of authorizations.
Release Prerequisites
The release prerequisites indicate the sequence in which PO must be approved via the release codes.
Printing a PO
Menu path
Purchase order -> Header -> Messages
Data required
Output type
Medium
Communication method
Select the printer
Further Data
Repeat output
Change output
Printing the remainders
Types of expediting letters
Remainders
A negative number of days means that a reminder is to be issued to the vendor n days prior to the delivery date
Urging letters
A positive number of days means that a letter or message urging delivery is to be issued n days after the due date.
Message type - MAHN (Dunning letter)
Changing and blocking POs
If you change a PO after it has been sent to the vendor, a change document is generated that can be sent to the vendor.
This tells the vendor what you have changed.
If the goods have already been delivered, then the changes you can make to the PO are limited.
For example, you cannot change the quantity to one that is less than the quantity delivered.
If the invoice has been received or the goods have been paid for, and your intended change affects the price, the change will be ineffective.
You can display the PO history for an item to determine whether deliveries have been received or the item has been invoiced.
MM - Inventory management
Course Objectives
Do planned and unplanned goods receipts
Do Issue of Goods
Do transfer posting of goods
Manage stocks of the company on both quantity and value basis
On conclusion of this course, you should be able to
Introduction
Contents
Overview
Integration with other modules
Type of stocks
Concept of material documents
Goods movements
Movement type concept
Inventory management - overview
What is inventory management ?
SAP's Inventory Management system allows you to
manage your stocks on a quantity and value basis
The stocks are managed not only on a quantity basis but also by value - a prerequisite for cost accounting. With every goods movement, the following values are updated:
the stock value for inventory management
the account assignment for cost accounting
the corresponding G/L accounts for financial accounting via automatic account assignment
What is inventory management ?
Planning, Entry, and Proof of Goods Movements
Goods movements include
external movements (goods receipts from external procurement, goods issues for sales orders)
internal movements (goods receipts from production, withdrawals of material for internal purposes, stock transfers, and transfer postings).
For each goods movement a document is created which is used by the system to update quantities and values and serves as proof of goods movements.
Integration with other modules
Integration in Materials Management (MM)
As a component of Materials Management, Inventory Management is directly linked with Material Requirements Planning , Purchasing, and Invoice Verification.
Inventory Management forms the basis for material requirements planning, which takes into account not only physical stocks but also planned movements (requirements, receipts).
Quantities and values from the purchase order and the goods receipt document are checked to ensure conformity with those in the invoice.
Integration with other modules
Integration in Production Planning (PP)
Inventory Management is closely linked to the Production Planning module:
Inventory Management is responsible for staging of the components required for production orders
Goods issue against production orders
The receipt of the finished products into the warehouse is posted in Inventory Management.
Integration with other modules
Integration in Sales & Distribution (SD)
As soon as you enter a sales order, you can initiate a dynamic availability check of stocks on hand.
When the delivery is created, the quantity to be delivered is marked as "Scheduled for delivery."It is deducted from the total stock when the goods issue is posted.
It is also possible to create sales order stocks.
These SD transactions are depicted in the Sales & Distribution system.
Integration with other modules
Integration in Quality Management (QM)
In the case of a goods movement, the system determines whether the material is subject to an inspection operation.
If so, a corresponding activity is initiated for the movement in the Quality Management system.
Financial Accounting (FI)
Automatic account assignment, a procedure during which the system determines the accounts relevant for the given goods movements.
Integration with other modules
Controlling (CO)
The interface to the cost accounting system is activated in the case of material consumption
For example, when materials are issued for various account assignment objects such as orders or cost centers.
Cost accounting is also involved when goods receipts are assigned directly to cost centers or orders.
IM - Material Master
Relevant views
Accounting
Price and accounting information.
Examples:
type of price control
valuation class.
Materials Planning
Information for materials planning.
Examples:
safety stock, reorder level, availability check.
IM - Material Master
Purchasing
Procurement information for a material.
Examples:
overdelivery and underdelivery tolerances
purchasing order unit of measure (order unit).
Storage
Information for warehousing and storing the material.
Example:
unit of issue
storage conditions, fixed bin location
IM - Material Master
Quality Management
Information for sampling and inspecting a material.
Examples:
indicator for goods receipt via quality inspection
Work Scheduling
Information for producing the material.
Examples:
production unit
overdelivery and underdelivery tolerances allowed.
IM - Data Required
For Inventory Management, you must maintain the following data:
Plant data
This data can be maintained via different views (for example, via Purchasing, Storage, Work scheduling).
You have to maintain at least one view that requires the entry of the organizational level plant.
Valuation data
Valuation data is required for managing the stock by value.
You maintain this data via the Accounting view.
IM - Data Required
Storage location data
You maintain the storage location data via the Storage view.
If a material is located in a storage location, the storage data for that storage location must exist in the material master record, so that the system can manage the stock quantities at storage-location level.
Storage data can be manually entered when the material master record is created
It can be automatically created during the first goods movement in that storage location.
Types of stocks
Total valuated stock
Sum of all valuated stocks of a material.
It consists of all the types of stock your company owns.
Unrestricted-use stock
Company's own stock that is physically located in the warehouse, valuated, and not subject to any kind of usage restrictions.
quality inspection stock
Company's own stock that is in quality inspection.
Types of stocks
Stock in quality inspection is valuated but does not count as unrestricted-use stock.
For MRP, it is either available or not available, depending on how the system is set.
Blocked stock
Company's own stock that should not be used.
It does not count as unrestricted-use stock for Inventory Management
It is usually not available for MRP.
Types of stocks
Restricted-use stock
Valuated stock of a material managed in batches held by a company (and belonging to that company)
Usage of this stock is subject to certain restrictions. This category of stock is only used when batch status management is active.
Blocked stock returns
Stock that was returned by the customer and conditionally accepted.
It is neither valuated nor does it count as unrestricted-use stock.
Types of stocks
stock in transfer
Quantity that was already withdrawn from stock at the issuing location but that has not yet arrived at the receiving location
Stock in transfer is managed in the valuated stock of the receiving location, but it does not yet count as unrestricted-use stock.
Stock in transit
Stock in transfer that is created in the case of a stock transfer via a stock transport order.
Types of stocks
Available stock
Dynamic stock that is calculated by MRP taking any receipts, issues, the current available stocks into account.
Which requirements, receipts, and issues are included in the availability check is defined in the Customizing system.
Reserved stock
Sum of all quantities of a material that are reserved for withdrawal.
Reserved stock is usually not available from the point of view of MRP
For Inventory Management it still counts as unrestricted-use stock.
Types of stocks
Planned receipts
Sum of all quantities whose receipt has been planned with reservations.
Planned receipts are usually already available from the point of view of MRP
For Inventory Management they do not yet count as unrestricted-use stock.
Open PO quantity (total)
Sum of all outstanding PO quantities for a material.
The open PO quantity usually increases available stock in MRP
It does not increase unrestricted-use stock in Inventory Management.
Types of stocks
Open order quantity (total)
Sum of all outstanding order quantities for a material.
The open order quantity usually increases available stock in MRP
It does not increase unrestricted-use stock in Inventory Management
Goods receipt blocked stock
Sum of all quantities of a material that were delivered by vendors for purchase orders and that have been conditionally accepted.
GR blocked stock is neither valuated nor does it count as unrestricted-use
Types of stocks
Stock scheduled for delivery
Sum of all current deliveries to customers for which goods issues have not yet been posted.
Like reserved stock, stock scheduled for delivery is usually not available from the point of view of MRP
It counts as unrestricted-use stock for Inventory Management.
Negative stocks
Negative stocks are required if, for example, goods issues are entered before the corresponding goods receipts for organizational reasons and the material is already physically located in the warehouse.
Goods movements
Definition of Goods Movement
A goods movement is an event that causes a change in stock.
Good receipt
A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted.
Goods issue
A goods issue (GI) is a goods movement with which a material consumption, or a shipment of goods to a customer is posted.
Goods movements
Stock Transfer
Transfer of material from one plant to other plant or from one storage location to other storage location
Transfer Posting
changes in stock type or stock category of a material.
Examples of transfer postings are:
Transfer Postings From Material to Material
Release from quality inspection stock
Transfer of consignment material into company's own stock
The document concept
When posting a goods movement in the SAP System, the following documents are created:
Material document
a material document is generated that serves as proof of the movement
Accounting document
If the movement is relevant for Financial Accounting an accounting document is created
Cost accounting Document
Movement types
Movement Type
When you enter a goods movement in the system, you must enter a movement type to differentiate between the various goods movements.
A movement type is a three-digit identification key for a goods movement.
Examples
Goods receipt for a purchase order 101
Goods issue for a cost center 201
Release from quality inspection stock 321
Movement types
Control Functions of the Movement Type
The movement type has important control functions in Inventory Management.
For example, the movement type plays an important role in
updating of quantity fields
updating of stock and consumption accounts
determining which fields are displayed during entry of a document in the system
Material documents
Changing a Material Document
you can not change a document once it has been posted.
If you made a typing error when entering a goods movement you must reverse the movement with a reversal document
Although you cannot change a posted document, you can use the function "Change Material Document" to
enter additional information for the document.
print a goods receipt/issue slip for the document
Planning goods receipts
Referencing Document During Entry of Goods Movement
The documents used to plan goods receipts serve as reference documents for entering the goods movement
GR for purchase order
Return Deliveries
When you enter the return delivery, you should reference the purchase order or the material document, so that the system can
suggest data (for example, the storage location), to simplify data input
perform certain checks (the returned quantity must not exceed the delivered quantity)
reduce the quantity delivered to-date
reverse other updates that occurred (for example, for goods receipt into consumption) when the goods receipt was entered
Shelf Life Expiration Date Check
When you enter a goods receipt, it is possible to check the shelf life of a material.
Prerequisites
The shelf life is only checked if the following prerequisites are met:
The minimum remaining shelf life is maintained in the material master record or in the purchase order.
The minimum remaining shelf life is the minimum number of days for which the material must keep for the goods receipt to be accepted by the system.
.
Other goods receipts
initial entry of stock balances
external goods receipts without a purchase order
internal goods receipts without a production order
goods receipts of by-products
deliveries free of charge
returns from the customer
Reservations
Goods issue for an order
Results of a Goods Issue Posting
A goods issue has the following results in the system: material document is created
accounting document is created
Creation of a Goods Receipt/Issue Slip
Stock Update
Update of G/L Accounts
Consumption Update
Reservation Update
Order Update
Printing documents
MM - INVOICE VERIFICATION
Course Objectives
Enter and verify vendors invoice
Enter and verify vendor’s excise invoice
Devalue materials
Carry out physical inventory
On conclusion of this course, you should be able to
Introduction
Contents
Invoice entry and verification
Credit memo
Excise invoice
Material devaluation
Physical inventory
Inventory management information
Exercises
Solutions
MM - invoice verification
Invoice Verification in Materials Management serves the following purposes:
It completes the materials procurement process
It allows invoices that do not originate in materials procurement (for example, services, expenses, course costs, etc.) to be processed
It allows credit memos to be processed, either as invoice cancellations or discounts
Invoice Verification does not handle the payment or the analysis of invoices.
The information required for these processes is passed on to A/C department.
Invoice verification
Invoice Verification tasks include:
Entering invoices and credit memos that have been received
Checking the accuracy of invoices with respect to contents, prices, and arithmetic
Executing the account postings resulting from an invoice
Updating certain data in the SAP system, for example, open items and material prices
Checking invoices that were blocked because they varied too greatly from the purchase order
Types of Invoice Verification
As a rule, an invoice refers to a transaction for which the issuing party requests payment.
Invoice Verification differs depending on the type of invoice involved:
Invoices based on purchase orders
With purchase-order-based Invoice Verification, all the items of a purchase order can be settled together,
Invoices based on goods receipt
With goods-receipt-based Invoice Verification, each individual goods receipt is invoiced separately.
Types of Invoice Verification
Invoices without an order reference
When there is no reference to a purchase order, it is possible to post the transaction directly to
a material account
a G/L account
or an asset account.
Data required for invoice verification
The key data required for Invoice Verification is
Master data
Transaction data
Material data
Material data is information on the materials bought or produced in the company
Vendor data
Vendor data provides information on the suppliers a company deals with.
Data required for invoice verification
Accounting data
Accounting data is used to define G/L accounts
Transaction data
Transaction data records transactions or events in the SAP system.
Purchasing document
Material document
Accounting document
Invoice data
An invoice contains various information, such as: Who issued the invoice?
Which transaction does the invoice refer to?
How much tax do you have to pay?
If the invoice refers to a particular transaction, the system will automatically retrieve information pertaining to the transaction
Terms of payment
Quantities to be invoiced
The amounts the system expects per item
Screens for Invoice Verification
The initial screen
This contains general data such as
company code
currency
invoice reference.
The vendor screen
This contains data on the vendor
The terms of payment
taxes.
Screens for Invoice Verification
The selection screen
This lists the items of the transaction specified on the initial screen.
The layout of the selection screen depends on whether the invoice is based on a purchase order or a goods receipt.
Invoice Based on a Purchase Order
All the purchase order items are listed.
The quantity that is still to be billed (i.e. the difference between the quantity delivered and the quantity invoiced so far) appears as a default in the Quantity column.
Screens for Invoice Verification
Invoice Based on a Goods Receipt Goods-receipt-based invoice verification must have been defined in
the purchase order.
If the GR-IV field on the item screen in the purchase order is not selected, the goods receipt cannot be settled in this way.
There are two ways of finding the correct transaction in goods-receipt-based Invoice Verification:
You can enter a delivery note number or a GR document number and the system will list the items for the goods receipts on the selection screen;
you can enter a purchase order number and the system will list all the GR documents
Parking the invoice
Preliminary Posting
You can enter an invoice (or a credit memo) without posting it and simply "park" it.
If you park an invoice or a credit memo the system does not make any postings.
A parked document can be changed as often as you like.
When data is added or changed, the changes are noted by the system.
When no further changes are required, you can then post the parked document.
Parking the invoice
The preliminary posting function can be of great advantage if:
You are interrupted when entering an invoice. You can park the document and continue processing it later on. This saves you time having to enter the data twice.
You wish to clear up some questions before you post an invoice. You can park the document and continue processing it later on.
You wish to split the Invoice Verification process. One employee can, for example, park an invoice without checking it, while another carries out the actual checks and posts the document after making any necessary corrections.
Data Update When Posting an Invoice
When you post an invoice, the system carries out the account movements and updates the following
The system generates a Financial Accounting document that displays the accounts involved in the posting and the amounts posted to these accounts.
The system creates a purchase order statistic for each item in the purchase order.
The moving average price is updated in the material master record If the invoiced price differs from the price in the purchase order for a material with moving average price control
Blocking the invoice
When an invoice is blocked, Financial Accounting cannot pay the invoice.
The invoice must first be released in a separate step before it can be processed.
Variances in an Invoice Item
Quantity variance (M)
Price variance (P)
Variance in order price quantity (G)
Schedule variance (T)
Quality inspection (I)
Credit memos
The term credit memo always refers to a credit memo from the vendor.
Posting a credit memo always leads to a debit posting to the vendor account.
Two types of credit memos are possible:
Credit memos that refer to a purchase order or goods receipt
Credit memos that do not refer to a transaction.
Processing of credit memos is same as invoice verification
Types of Delivery Costs
In the SAP System, there are two types of delivery costs:
Planned delivery costs
They are entered in the purchase order. Provisions are set up for the relevant costs at goods receipt. The delivery costs posted at goods receipt can be referenced at invoice entry.
Unplanned delivery costs
They are only entered when the invoice is entered. No provision is made at goods receipt.
Physical inventory
Every company must carry out a physical inventory of its warehouse stocks at least once per fiscal year to balance its inventory
Stocks that can be inventoried
unrestricted-use stock in the warehouse
quality inspection stock
Blocked stock
Physical Inventory Process
The process of physical inventory can be divided into three phases:
Physical inventory preparation
Create a physical inventory document.
Block materials for posting.
Print and distribute the physical inventory document.
Physical inventory count
counting stocks
entering the result of the count on the physical inventory document printout
Physical inventory
Physical inventory analysis
entering the result of the count into the system
initiating a recount, if necessary
posting inventory differences
Processing Steps
Creating a physical inventory document
Entering the Physical Inventory Count
Post inventory differences
Physical inventory
posting the physical inventory count and inventory differences
If a physical inventory document exists, the following are combined in this step:
The count is posted.
Any inventory differences are posted.
Posting inventory differences without reference to the physical inventory document
A physical inventory document is created.
The count is posted.
Any inventory differences are posted.
Inventory management information
You can perform the following functions by selecting Environment from the Inventory Management menu.
List display
The List display function offers reports for documents posted in Inventory Management.
Example: material documents for a material.
Stock display
Example: Stock overview
Information
The Information function allows you to display data (master data, transaction/movement data) from other applications.
Example: displaying a purchase order.
Inventory management information
Balances display
The Balances display function offers analysis of the stock accounts and of the GR/IR clearing account.
Consignment
The Consignment option permits analysis of the consignment stocks from vendors as well as the consignment stocks and the returnable packaging stocks at the customer’s site.
Batch where-used list
Batch search strategy
Inventory management information
Material analysis
Stock values
Receipts and issues
Inventory turnover
Inventory turnover of the value of valuated stock is calculated as follows:
Value of total consumption / Value of average valuated stock
Range of coverage
The range of coverage of the value of valuated stock is calculated as follows:
Value of valuated stock / value of average total usage / day