Jaures Magloire N. A.

A product hierarchy models any number of strictly hierarchical product groups in a tree structure

In SAP F& R a product hierarchy is either a “true’’ product hierarchy ( analogous to the article hierarchy in an SAP Retail system) or a merchandise category hierarchy. In the latter case , the merchandise categories form the lowest level of the hierarchy.

Example; products could have the following hierarchical relationship: Foods- Frozen Foods- Pizza

Status information tells you whether a material is subject to restrictions and what they are. For example a material may not be procurable, it may be a part under development or one to be discontinued.

The material may be blocked for use in certain business activities by assigning one or both of the following material statuses to it:-Plant specific material status and/or ;-Cross plant material status.

The material can be blocked for use in certain sales activities by assigning one or both of the following statuses to it:-Distribution-chain specific material status and/or ;

-Cross distribution-chain material status. The material can be flagged for deletion.

General item category group is used in sales processes like BOM , where we have higher item category (ERLA) and default or lower item category (NORM).

General item category group would refer to a higher level item category and item category group would refer to a default item category.

This field can be maintained in Basic Data View of the material master.

Item category group drives the processing of the material type in the sales order.

The combination of item category group and order type determines the item category defined for a sales order line item .

Item category group is defined in the sales org 2 view of the material master.

A Purchasing group is a unit in charge of purchasing in a purchasing organisation.

It can be made up of one or more persons.

It is attached to a Purchasing organisation.

A material group is a grouping of materials and services according to their characteristics. This allows for easier management and better evaluation of materials with similar characteristics

The materials can be grouped by the company to meet their specific demands . It is defined by a nine digits alphanumeric key.

E.g. electrical appliances.

Materials with the same basic attributes are grouped together and assigned to a material type.

The material type determines certain basic attributes of the material and has important control functions. For eg it is a factor determining the screen sequence and field selection in a material master record.

Examples of material types are: raw materials and semi-finished products.

MRP groups is used if and when planning per plant is too superficial for business needs and you want to assign control parameters that deviate from the plant definition to specific material groups.

For example the creation indicator for purchase requisitions , schedule lines, etc.

You assign different groups according to the requirements to run MRP.

These settings will be taken into account when you run MRP for single item or total planning.

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The MRP controller is the person in charge of the MRP run for the materials. It is still a further division on the MRP and it is work load related.

You can have one MRP controller for materials with different MRP groups.

When determining the procurement element, the systems finds out how procurement is to be carried out-either as in house production or as external procurement.

Materials planned using consumption based planning arte usually externally procured.

You must define whether in house or external procurement or both is allowed for the material in the material master record (MRP 2 view ).

In the Special procurement key tab,Enter “F ‘’for external procurement and;

“X’’ for both in house and external procurement.

Valuation class is the main link between Material Master and Finance. This valuation class along with the combination of the transaction keys (BSX,WRX,GBB and PRD) determine the GL Account during posting.

Valuation class is the stock account of a material. It is the grouping of materials having similar properties , i.e. Material types and assignment of these materials to a group of GL Accounts.

Valuation class along with the following components form the valuation structure of a material;-valuation area

-Valuation category-Valuation type-Material type and,-Movement type.

It is a method of inventory valuation and product costing (Price control “S’’).

If a material is assigned a standard price “S’’, the value of the material is always calculated at that price. With standard price:

-All inventory postings are carried out at the standard price.

-Variances are posted to price difference accounts.

-Variances are updated and,

-Price changes can be monitored.

It is generally used for semi-finished and finished products.

It is a method of inventory valuation and product costing (Price control “V’’).

It is typically only used on purchased materials. It may be appropriate where the item is an easily obtained commodity, with small fluctuations in cost. This is due to the fact that the decision to use moving average for certain items should reflect the approach used to analyse contribution margins and variances in manufacturing and purchasing. As such the impact on margins is minimized, reducing the need for formal variance analysis.

It should be used for raw materials and trading goods.

Terms of payment are conditions agreed between business partners for the payment of invoices. It enable the system to calculate cash discounts and due date for the payment of invoices.

Terms of payment are based on instalmentalpayments.

Terms of payments constitutes several payment terms.

Payment terms are the various instalmentalpayments that form terms of payment. It can determine the following:-The valid cash discount rate for an

individual payment with a minimum of 3 payment terms( first cash discount period, second cash discount period and due date for net payment) and also a baseline date for the payment or,-The payment terms for holdback/retainage.

For instance,

Price group is the grouping of products in a price group, so that a fixed price can be offered to customers for a package of the products if they subscribe to all the products in the group.

As a special case, you can also give discounts based on the number of products in the price group to which the customer subscribes.

The current price groups and level are recalculated dynamically each time pricing takes place.

You usually use dynamic price groups to offer your customers a rebate if they purchase all the products in the price group.

A delivery is the actual putting of the items ordered by the customer in the sales order, at the disposal of the customer.

Delivery priority is giving a preferential position to individual customers. The sales orders must be due for shipping.

Delivery priorities range from 1 – 99, 1 representing the highest priority.

Shipping points are independent organisational entities within which processing and monitoring of the deliveries as well as goods issue is carried out.

A shipping point can carry out shipping for several plants.

The shipping point is determined by the following factors:

-Delivery plant,

-Shipping conditions and,

-Loading group.

An Incoterm defines the terms of sales and the passing of risk for import and export of merchandise.

They include the following:

-EXW-Ex Works

-FCA – Free Carriage and Freight

-FOB – Free On Board

-CIF – Cost Insurance and Freight.

An organisation unit that represents an area responsible for granting and monitoring credit

It is either a single company code or, if a credit control is performed across several company codes, multiple company codes.

Credit information can be made available per customer with a credit control area.

In lead time scheduling the precise production times, that is, the target start date and the target finish date, are specified for materials that are produced in-house.

Capacity requirements are also created and the dates that the components must be provided are also determined.

Lead time scheduling is determined by the following:

- A routing has been created for the material,

- A scheduling margin key has been assigned in the material master record.

- You have maintained certain parameters for lead time scheduling in customizing for MRP by choosing define scheduling parameters for planned orders.

It is defined as one type of “outline purchase agreement’’ or long-term buying arrangement between purchasing and vendor or external supplier.

Scheduling agreements provide for the creation of delivery schedules specifying purchase quantities, delivery dates and possibly also precise times of delivery over a given period.

A scheduling agreement consist of a number of items for each of which a procurement type is defined.

In SAP SD a payer is one of four partner functions, namely:

- Sold to party

- Ship to party

- Bill to party and,

- Payer.

The payer is the partner who actually pays for the items delivered in the sales order.

The payer can also perform either the sold to party, ship to party and bill to party functions or all of them.

Ship to party is the partner to whom the delivery is done i.e. The delivery of the items in the sales order is done at the ship to party’s premises.

The ship to party can also perform either the sold to party, bill to party and payer functions or all of them.

In some countries a portion of the invoice amount must be withheld for certain vendors and paid or reported directly to the tax authorities.

SAP currently provides two functions for calculating withholding tax:

- Classic withholding tax and,

- Extended withholding tax

This indicator determines the special procurement type of a material which is either procured externally or produced in house.

The system determines the special procurement key from the procurement type and special procurement fields in the material master record(Detail screen: MRP 1) and display the value if the BOM is only allocated to the plant.

A work centre is a place where a certain operation is performed in a plant.

In Discrete manufacturing, in a process industry, a work centre can be a machine or a group of machines, employees or a group of employees .

In Repetitive manufacturing it is typically a production line or a group of lines.

An operation in SAP PP is a type of routing that comprises a series of operations that recur frequently.

It is used to create routings. The standard values/activities such as set up

time or duration or machine time , etc are assigned to operations in discrete manufacturing.

For example , casting of machine, post casting inspection, filling machine and packaging.

It is a different combination of materials combined together to form one single object. It consist of a combination of materials by having a structure like header and sub-items.The complete combination of materials only called as BOM item.

In the BOM pricing, delivery can be carried out at header level item(above structure) or sub item level (below structure).

Above structure is designated by item category ERLA and below structure by item category NORM.

Recipes are unique to process manufacturing (PPPI).It includes the steps to be executed and resources required for the production of a finished good.

A production version is used in the creation of a master recipe so as to identify the BOM for the material and pull the bill of materials details in the recipe.

The master recipe is also determined by:

- Operations and Phases and,

- Resources and Work centres.

It is the configuration object that determines which alternative BOM is used together with which Master Recipe to produce a material.

For one material several production versions frequently exist for various validity periods and lot size ranges.

Production versions is used in both discrete manufacturing and process manufacturing.

COGI is a transaction code which is used to clear the goods movements that has been recorded as errors.

Examples of COGI:

- When there is a Lock entry in the table.

- When there is insufficient stock for the issue material.

- If the master data is not setup correctly ( Missing storage location)

The COGI needs to be periodically cleared.

Make to stock production is when you produce according to a periodic forecasted demand and sell the product to any incoming customer who wants to buy them.For example Mass Clothing and steel production.

It is determined by planned independent requirements. It can be derived/copied from Sales and Operations Planning(SOP) systems which contains demands from previous periodic sales.

Each material produced to stock should have a strategy that is made to stock strategy=10 , set in the Material Master MRP 3 view, strategy group field.

This is also referred to as the Pull strategy (make to order).It is when you specially produce and deliver a product for a customer’s order. For example production of Haute couture and designed jewellery.

Every material that is produced should have a strategy that is made to order strategy= 20 , set in the Material Master MRP 3 view, strategy group field.

You can also set the individual and collective indicator in the MRP 4 view to= 1, individual requirement.

Material Requirement Planning (SAP MRP) is a tool which helps in planning the requirement quantities and schedules of a given material. It not only ensures availability of the material for which MRP is carried out, but also ensures availability of the components (of all the BOM levels) below in the BOM structure.

MRP uses real time manufacturing data to generate automated supply orders and maintain accurate product shipping schedules.

MRP systems contain embedded work process and procedure documentation to help employees perform day-to-day tasks.

Picking is the physical activity of moving goods from the warehouse for further processing.

It is part of the outbound delivery process Sales and Distribution and is carried out with Packing and Loading.

The transaction code for picking is LT03.

PIR stands for Purchasing information Record and it is source of information on the procurement of a specific material from a specific vendor.

The purchasing information record allows additional information to be held on a certain material that is purchased from a certain vendor

The information held in the Vendor Master allows the specification of parameters, such as terms of payment, that refer to the agreement between the vendor and the purchasing organization.

Activity types are used to describe the various forms of activity that are performed at a cost center.

Activity types are valuated for each cost center and period with a charge rate that consists of a fixed portion and a variable (work-related) portion. Thus the costs incurred at a cost center can be distributed to products, according to which activities have been performed.

Activity types are closely linked to cost centre, work centres and routings.

Typical examples of activity types for cost centers are machine hours, administrator hours, CPU minutes or units produced.

The purpose of cost rollup is to include the cost of goods manufactured of all the materials in a multilevel production structure within the costs of the material located at the top of the structure.

The costs are rolled up automatically using the costing levels.

The system first calculates the costs for the materials with the lowest costing level and assigns them to cost components. The materials in the next highest costing level (such as semifinished materials) are then costed. The costs for the materials costed first are rolled up and become part of the costs of goods sold in the next highest level

This process is continued until the costing results of the highest material in the structure (such as the finished product) contain the cost of goods manufactured for every material in the structure

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