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SAP- Material Management (MM) Notes

Module Functions:

(MM) Materials Management – the module where (finished goods, raw materials and consumables) are managed for both quantity, price, month end inventory cutoffs and balance. Materials Management is inventory management, purchasing, invoice verification, warehouse valuation, Material master and materials planning.

Organizational Elements (Structures) – Materials Management
1. Company Code
2. Plant
3. Storage Location
4. Material / Product Grouping

Organizational Elements (Structures) – Procurement
1. Company Code:
Represents an independent accounting unit with Balance Sheets and P&L Statements
2. Plant:
An organizational element within a company. A plant produces goods and/or services. A plant can be a manufacturing for a distribution facility.
3. Storage Location:
Unit that allow the differentiation of material stocks within a plant
4. Purchasing Organization:
Unit structured to negotiate the general conditions of purchase for one or more plants or companies. Pricing conditions are set at this level
5. Purchasing Group key for a buyer or buyer group responsible for certain purchasing activities. Note: this element cannot be assigned to a purchasing organization.

Documents and Transactions
1. Purchase Requisitions
2. Purchase Orders
3. Goods Receipts Postings
4. Vendor invoice Posting
5. Other

Procurement Master Data
1. Material Master:
Contains and defines all data to manage materials. Used as a source of purchasing information and inventory valuation.
2. Vendor Master:
General, Accounting and Purchasing data necessary for processing business transactions and corresponding with vendors

Purchasing Management

SAP Purchase Management

This Article provides you with a lot of insight in SAP Purchase Management and provides you with step by step instructions to get a lot of things working.

Download from rapidshare or mediafire.

Purchase Requisition… How to?

Quick How to tips on Purchase Requisition

Creating A Purchase Requisition Use Transaction ME51N
Searching for “des vendor” in Item Overview portion of screen
Finding Vendor Address
Ordering for grant or project accounts
Creating purchase requisitions with more than 1 line item
Saving Your Purchase Requisition
Using Document Overview (Transaction ME53N)
Ensuring Correct Settings to Use Document Overview
Adding Additional Data Fields To Your Document Overview
Duplicating A Purchase Requisition
Checking the Status of a Purchase Requisition using Document Overview
To View History of All Your Purchase Requisitions
Viewing Purchase Order History for Specific Cost Center or WBS Element

Here is the PDF Document on Purchase Requisition.

Purchase Order…How to?

After learning Purchase Requisition, now it’s time to learn the work with Purchase Order Processing.

Create Purchase Order
Create Request for Quotation
Create Purchase Order with Reference to RFQ
Change Purchase Order
Approve Purchase Order
Display Purchase Order – Number Unknown
Display Purchase Order
Display RFQ
Faxing A Purchase Order
General Analyses
List of Changes of Purchase Orders
Purchasing Documents per Account Assignment
Release (Approve) Purchasing Documents
Transmit Purchase Order to Vendor
Re-Transmit Purchase Order to Vendor

SAP Integration with FI, MM & SD

This article will take you to the sequence of steps involved in Integration on Finance, Material management and Sales and disribution. It covers also on Movement Type and GL Account Determination.

100 SAP MM FAQ’s

Here is the 100 most commonly asked SAP Material Management FAQs.

Material Master Training Reference

The material master contains all the information on all materials that a company procures, produces, stores, and sells. It is the company’s central source for retrieving material data.

The integration of all material data in a single database object eliminates redundant data storage. Areas such as purchasing, inventory management, material requirements planning (MRP), invoice verification, and so on, can all use the same data.
The data in the material master is used to perform the following functions in the SAP Logistics system:

Purchasing for purchase order processing
Inventory management for goods movement postings and physical inventory management
Invoice verification for posting invoices
Sales for order processing
Production planning and control for material requirements planning, scheduling, and work scheduling

Download the Manual on Material Master Training Reference.

This Document on Material Master Processing will cover the following topics.

Introduction
Material master database
1. Function and use of the material master
2. Data structure
  1. Client
  2. Company code
  3. Plant
  4. Storage location
Material master records
1. Departmental data
  1. Work scheduling
  2. Accounting
  3. Mrp (material requirements planning)
  4. Purchasing
  5. Production resources/tools
  6. Costing
  7. Classification
  8. Basic data
  9. Storage
  10. Warehouse management
  11. Forecasting
  12. Quality management
  13. Sales
2. Interdependency of user department and organizational levels
3. Material number
4. Industry sector
  1. Function of industry sector:
  2. Available industry sectors:
5. Material types
  1. Function of material type:
  2. Available material types:
6. Screen sequence and field selection
Create a material master record
1. Checklist
2. When do you create a material master record
3. Creating a material master record
  1. Menu path
  2. initial screen
  3. Select views
  4. Organizational levels
  5. Basic data view
  6. Class type
  7. General classification
  8. General purchasing data
  9. General purchase order text
  10. Mrp
  11. Forecasting
  12. Storage view
  13. Warehouse management: this is not in use at company
  14. Quality management
  15. Accounting view

Setting for FI MM account determination

FI MM settings are maintained in transaction code OBYC. Within these there are various transaction keys to be maintained like BSX, WRX, GBB, PRD etc. In each of these transaction keys you specify the GL accounts which gets automatically passed at the time of entry.

Few examples could be:

BSX- Stands for Inventory Posting Debit
GBB-Standsfor Goods Issue/Scrapping/delivery of goods etc
PRD- Stands for Price Differences.

Allocation Run (ARUN) – What is it?

Sophisticated rule based tool to improve customer service and insure you only deliver according to business or customer rules.

Allocate (reserve) unrestricted stock to sales orders.
Allocate (reserve) future receipts to sales orders.
Prioritize sales orders
Decide how you allocate stock in short stock situations
Substitute materials, plants and dimensions
Only release orders to delivery that pass business or customer rules.

So, what are the benefits on this. This provides improved customer service ensuring your best customers get stock first and helps in reducing charge backs and also helps in increase of receivables.

Know more in this manual on SAP AFS 5.0 Allocation Run, get it from rapidshare or mediafire.

Purchase Order Procedure

The purchase order can be used for a variety of procurement purposes. Materials can be procured externally for direct consumption or for stock. It is also possible to procure services externally. Furthermore, the special procurement types “subcontracting”; “third party” (involving triangular business deals and direct-to-customer shipments) and “consignment” are possible.

Purchase orders can be used to cover the enterprise’s requirements using external sources (i.e. a vendor supplies a material or performs a service). A purchase order can also be used to procure a material that is needed in one of the enterprise’s physical plants from an internal source, i.e. from another plant. Such transactions involve longer-distance stock transfers. The activities following on from purchase orders (such as the receipt of goods and services) are logged, enabling an effective and efficient monitoring of the whole procurement process.

Purchase orders can be used for once-only procurement transactions. If, for example, it is wished to procure a certain material from a particular vendor only once, a purchase order is created. However, if the enterprise is thinking of entering into a longer-term supply relationships with this vendor, it is advisable to set up a so-called outline agreement, since this usually results in more favorable conditions of purchase.

In the interests of optimized purchasing, the purchase order quantity can be rounded in the course of purchase order processing to allow full advantage to be taken of negotiated conditions or for the optimal utilization of existing transport capacities.

Because not all materials or services to be procured justify the effort involved in individual monitoring, it is also possible to create a purchase order with an extended, predefined validity period and a value limit. (This may be done when procuring office supplies, for example). This type of purchase order is similar in nature to the “contract”.

In this case, it is not necessary to specify the individual materials or expend any effort with respect to goods receiving activities. In addition, employing automatic process can also help reduce the amount of work involved in invoice verification to a minimum.

Read more about it in this manual on purchase order procedure training document.

Display Parked Documents

There are two possible transactions to use here. They are FB03 and FBV3. The first shows all posted document types. This is the best choice if you think the document has been posted to you actual balance. The later shows only parked documents that have not yet posted to your expenditure balance. These documents are still encumbrances. It is the best choice if you are trying to find which documents are still awaiting completion or approval.

This transaction is very similar to the FBV2 transaction used with P-Card reconciliation and marking parked documents complete.

Perform Invoice Verification

If the Invoice refers to an existing document (PO, etc.), then the system pulls up all of the relevant information like Vendor, Material, Quantity, Terms of Delivery, and Payment Terms etc. When the Invoice is entered, the system will find the relevant account. Automatic posting for Sales Tax, Cash Discount, Corrections etc. When the Invoice is posted, certain data such as Average Price of Material and Price History are updated. Use Transaction MIRO.

Perform Goods Issue

Archive for the ‘Material Management (MM)’ Category

Time Phased Planning Procedure

Written by admin on Nov 20th, 2008 | Filed under: Material Management (MM)

Time-phased planning is a MRP procedure where the materials are planned in a particular time interval. If, for example, a vendor always delivers a material on a certain weekday, then it makes sense to plan this material according to the same cycle, adjusted to the delivery date.

To plan a material with time-phased planning, it is a must that the MRP Type shall be entered in the material master record for time-phased planning and the planning cycle. The latter is defined in the form of a planning calendar in the Planning Cycle field.

For time-phased planning materials, the planning file entries NETCH and NETPL in the planning file are not important, so are not set for MRP changes. Materials that are planned according to a time-phase are provided with an MRP date in the planning file. This date is reset on the creation of a new material master data, and then after every planning run. This date corresponds to the day that the material will next be planned; it is calculated on the basis of the planning cycle specified in the material master. The material will only be planned on the days that have been specified by the planning cycle. Noted that to have control of this procedure and plan a material before the intended MRP date, it is possible to specify a MRP date in the planning run. For example, if the MRP run is planned for Monday, it is probable to execute the run for Monday on Saturday.

The lot-sizing procedure for a time-phased planning material is the exact lot size, so optimizing lot-sizing procedures can also be applicable for time-phased planning.

When the planning run is triggered, the system uses the MRP date in the planning file to check whether the materials are to be planned. The MRP date is calculated from the planning cycle. The system calculates the requirement. It also determines a time interval according to the following algorithm:
MRP date + planning cycle + purchasing processing time + planned delivery time + goods receipt processing time.

The system compares the forecast requirement in this time interval with the stock and both the fixed and firm receipts in this time interval. It then calculates the quantity to be ordered. During calculation, the system assumes that the fixed receipts lie at certain intervals. It does not matter whether the fixed receipts are available at the start or at the end of the interval. This means that there may be a temporary shortage.

Read more on TIme Based Planning, Download the Training Document (PDF).

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Perform Goods Issue

Written by rajivsharma.sap on Nov 12th, 2008 | Filed under: Material Management (MM)

Use Transaction MIGO. On the initial screen, enter the header data (you need not enter the Movement Type or the Plant as these are automatically copied from the order).

Choose Goods Issue
Create with Reference
To Order…

If you know the order number, enter it directly. Using the By-products Indicator, you can simultaneously post the Goods Receipt of planned by-products. Using the Choose transaction/events indicator, you can display all transactions/events for an order and choose the transaction/events for which you want to post a Goods Issue. Copy the desired item(s). Check data on the overview screen. Post the document.

It is possible that when MIGO is accessed that a different document screen appears than the one required. This occurs because SAP remembers the last Goods Movement transaction accessed per user login. To reach the Goods Issue Purchase Order screen, click the Dropdown Icon in the transaction field and select “Goods Issue”.

Time Phased Planning Procedure

The lot-sizing procedure for a time-phased planning material is the exact lot size, so optimizing lot-sizing procedures can also be applicable for time-phased planning.

Read more on TIme Based Planning, Download the Training Document (PDF).

Forecasting in Forecast-Based Planning

Forecast-based planning is oriented towards material consumption. Forecasting tools are used to determine forecast values for future requirements based on past values. These forecast values form the requirement values for the material requirements planning run.

The forecast calculation is executed at regular time intervals using the historical values for the forecast of the future requirement. This is advantageous because the automatically determined requirement is adjusted to the current consumption pattern. The forecast requirement is reduced by material withdrawal. This ensures that the part of the predicted requirement that has already been realized is not planned again.

The requirement values predicted by the system are copied in materials requirements planning and net requirements calculation is executed. In net requirements calculation, every period is checked to make sure that the forecast requirement is covered by the available warehouse stock or the fixed dispatched receipts. If forecast requirements cannot be covered due to a material shortage, the system will generate an order proposal.

The system uses the date of the forecast requirements as a basis for the requirement date. It is assumed that the forecast requirement is at the start of the period. This means that the requirement date is the first workday of the respective period.

It is enabled that the period pattern for the forecast can be specifically defined (day, week, month or posting period) and the number of forecast periods for each material. However, it is possible that the forecast’s period pattern is too vague for material requirements planning. In this case, the splitting indicator can be well used to define for each material that the forecast requirement values for the requirements planning are divided into a more precise period split. If the splitting indicator is being in use, all period splits are reduced proportionally during the reduction of the forecast requirements.

It is also possible to define how many forecast periods are to be considered in material requirements planning. The splitting indicator is defined in Customizing and assigned to the material in the material master record.

Read More on Forcast Based Planning from this Training Document (PDF).

Consignment Processing

n consignment processing, the vendor provides materials and stores them on the enterprise’s premises. The vendor remains the legal owner of the material until materials are withdrawn from the consignment stores. Only then does the vendor require payment. The invoice is due at set periods of time, for example, monthly. In addition, it can also be arranged with the vendor that the ownership of the remaining consignment material is taken over after a certain period of time.

Features:

The consignment stock is managed under the same number as the enterprise’s own stock. Consignment stock can, therefore, be transferred to the available stock.
It is possible to define consignment prices in foreign currency. The currency in which the order is placed with the vendor applies for consignment withdrawals.
It is possible to determine period-specific consignment prices.
The consignment price can be specified in any unit of measure. The conversion factor is stored in the info record.
Using consignment info records, the enterprise can make use of other condition functions used in Purchasing, such as discounts and price quantity scales.
Consignment stocks of the same material from different vendors can be managed independently from one another and at the price of the individual vendors.
Consignment stocks are not valuated. When the material is withdrawn, it is valuated at the price of the respective vendor.
A consignment material can be allocated to one of three stock types:
- Unrestricted-use stock
- Quality inspection stock
- Blocked stock

It can be possible to make transfer postings between these three stock types. Withdrawals can only be posted from unrestricted stock, however.

Read more about Consignmnet Procedure in this document on Consignment Procedure.

PR Document Type as per MRP Group Settings Procedure

You can use document types to specify and group purchase requisitions more exactly. The following document types are available for purchase requisitions:

Standard purchase order
Subcontracting
Stock transfer

Features

The document type is used

When generating purchase requisitions in the planning run
When converting planned orders into purchase requisitions

The system displays the document type from the MRP list or stock/requirements list in the detail screen of the purchase requisition. You have no control function in material requirements planning. The system only displays the information.
The system always generates purchase requisitions for direct procurement with the document type NB for standard purchase order.You do not normally have to make entries for the document types in Customizing. If you have not defined a document type, the system will always generate purchase requisitions with the document type NB.

Understand more about PR in this document (PDF).

Processing Assigned Purchase Requisitions

The following functions are available in SAP R/3 for the optimized conversion of requisitions into purchase orders:

Purchase requisition items with source of supply
If a source has already been assigned to the requisition, it is possible to choose between semiautomatic and fully automatic conversion into a purchase order. In the former case, an assignment list is referred. In this transaction, manual intervention is flexibly enabled. Yet, this option is not available in the fully automatic conversion process. A further difference between the two transactions is that scheduling agreement delivery schedule lines can only be generated via the semiautomatic transaction.

Purchase requisition items without source of supply
If no source has been assigned to the purchase requisition, a transaction that enables the assignment in a first step is possibly used. In the second step, the assignments made then have to be processed. As a result of using this transaction, a purchase order item referencing a contract, an info record, a scheduling agreement, or an RFQ can be created.

Learn creating these with screenshots in this Training Document.

Processing Non-Assigned Purchase Requisitions

Once the Purchase Requisitions are generated, additional standard functions are provided by the SAP System for converting these requisitions into respective purchasing documents (purchase orders, contract release orders, scheduling agreement delivery schedules, RFQs) as well as the processing options available thereby in this document.

Assigning means defining the desired source for each purchase requisition item ie. this involves assigning source of supply to individual requisition items.
Further processing (of purchase requisitions via the assignment lists) involves generating lists of requisitions that have been assigned or flagged as outlined above, and the subsequent creation of RFQs, purchase orders, or lines of delivery schedule under scheduling agreements. This involves the manual creation of purchase orders or delivery schedule lines from a list of requisitions with assigned sources.

Alternatively, in the case of purchase requisition items that were not assigned to sources at the time of their creation, it is optional of carrying out the processes of source assignment and conversion collectively using a single transaction. This function is a combination of “Assign Purchase Requisitions” and “Further Processing of Purchase Requisitions via the Assignment List”. In this case, choose Purchase Requisition –> Follow-On Functions –>Assign and Process.
It is possible to trigger the automatic assignment of sources for all selected purchase requisition items from a list of open requisitions (Edit –>Source of Supply –>Assign Automatically). In this case, the system will help determines possible sources. If there are several possible sources of supply of a material, it is feasible to choose the desired one from a list of all possible sources in the ‘Dialog’ box.
If more than one requisition is selected for assignment, the box for the next requisition with more than one possible source appears. Repeat the process until all requisitions have been assigned to sources.
It is also probable to assign manually requisitions for which no source can be found to a vendor (Edit –> Source of Supply –> Assign Manually) or flag them for RFQ processing (Edit –> Flag for RFQ –>Without Vendor / With Vendor).
After such assignment phase, either these requisitions can be saved with assigned sources, or the assignment list is generated in the second step (Go to –>Assignment Overview), in order to convert the assigned items into Purchase Orders, Scheduling Agreement delivery schedule lines, or RFQs.
To confirm the assignment of selected items from within the basic list, choose Edit –> Change requisitions. The system will issue a message confirming that the requisition(s) has/have been changed. Noted that if requisitions that have already been assigned are selected, and the automatic source determination process identifies a different source than the one already entered, the previous source is overwritten without prior warning. However, if the original assignments are reinstated for the requisitions, then choose Edit –> Cancel assignment.

Understand more about this document, Download the Training Document (PDF).

Sapnotebook - Free SAP Resource Library

Pages

SAP tables MM

SAP Material Management (MM) Notes

Purchasing Management

SAP Purchase Management

Purchase Requisition… How to?

Quick How to tips on Purchase Requisition

Purchase Order…How to?

SAP Integration with FI, MM & SD

100 SAP MM FAQ’s

Material Master Training Reference

Setting for FI MM account determination

Allocation Run (ARUN) – What is it?

Purchase Order Procedure

Display Parked Documents

Perform Invoice Verification

Perform Goods Issue

Archive for the ‘Material Management (MM)’ Category

Time Phased Planning Procedure

Perform Goods Issue

Time Phased Planning Procedure

Forecasting in Forecast-Based Planning

Consignment Processing

PR Document Type as per MRP Group Settings Procedure

Processing Assigned Purchase Requisitions

Processing Non-Assigned Purchase Requisitions