MM Version It All Basics PDF

SAP-MM (Material Management)
SAP-MM
Material
Management
Version IT
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Table of Contents
1. Enterprise Structure……………………………………………………………
1.1. Defining Organizational Units……………………………………………………09
1.1.1. Define Company ………………………………………………………….10
1.1.2. Define Company Code…………………………………………………….11
1.1.3. Define Controlling Area…………………………………………………...12
1.1.4. Define Plant……………………………………………………………… 13
1.1.5. Valuation Area: …………………………………………………………...14
1.1.6. Define Storage Location:…………………………………………………..15
1.1.6.1.Storage Location……………………………………………………….15
1.1.7. Define Purchasing Organization…………………………………………...16
1.1.8. Purchasing organization types: ……………………………………………16
1.1.8.1.Centralized Purchasing………………………………………………...16
1.1.8.1.1. Corporate Group-wide purchasing…………………………….16
1.1.8.1.2. Company specific Purchasing ………………………………...16
1.1.8.2.Distributed Purchasing………………………………………………...16
1.1.8.3.Reference Purchase Organization: ……………………………………17
1.1.8.4.Standard Purchase Organization: ……………………………………..17
1.2. Assigning Organizational Units………………
1.2.1. Assign company code to company ……………………………………….18
1.2.2. Assign company code to controlling area…………………………………18
1.2.3. Assign plant to company code…………………………………………….18
1.2.4. Assign purchasing organization to co-code……………………………….18
1.2.5. Assign purchasing organization to plant…………………………………..18
2. Master Data-Material Master data…………………………………………………19
2.1. Sub Modules of Material Management. …………………………………………20
2.2. Master Data………………………………………………………………………20
2.3. Transaction Data…………………………………………………………………20
2.4. Material Master Data…………………………………………………………….20
2.4.1. Material……………………………………………………………………20
2.4.2. Material Master……………………………………………………………20
2.4.3. Material Type: …………………………………………………………….21
2.4.4. Material Group: …………………………………………………………...21
2.4.5. Material Class: ……………………………………………………………21
2.4.6. Material Type Controls……………………………………………………22
2.4.7. Material Types in standard SAP: …………………………………………22
2.4.8. Material Views: …………………………………………………………...23
2.4.9. Material Master IMG settings……………………………………………..24
3. Master Data: Vendor ………………………………………………………………..25
3.1. Vendor …………………………………………………………………………...26
3.2. Vendor Master: …………………………………………………………………..26
3.3. Vendor Master Record: …………………………………………………………..26
3.4. Type of Vendors: …………………………………………………………………27
3.4.1. Internal Vendors……………………………………………………………27
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3.4.2. External Vendors…………………………………………………………..27
3.4.3. Regular Vendors…………………………………………………………...27
3.4.4. Fixed Vendor………………………………………………………………27
3.4.5. One time Vendors………………………………………………………….27
3.5. Vendor Account …………………………………………………………………..27
3.6. Vendor Account Group: …………………………………………………………..27
3.7. SAP standard Vendor Groups are: ………………………………………………..27
4. Procurement Cycle……………………………………………………………………29
4.1. Document Concept in SAP………………………………………………………30
4.1.1. Purchasing Document………………………………………………………30
4.1.2. Structure of the Purchasing Document……………………………………..30
4.1.3. Types of Purchasing Documents: ………………………………………….30
4.2. Purchase Requisition……………………………………………………………. 31
4.2.1. IMG setting for Purchasing Requisition…………………………………...32
5. Request For Quotation (RFQ): ……………………………………………………...33
5.1. RFQ can be entered ……………………………………………………………….34
5.2. When RFQ required? ……………………………………………………………..34
5.3. RFQ Consists of: ……………………………………………………………….…35
5.4. IMG setting for Request for Quotation (RFQ) ……………………………………35
6. Quotation Maintenance………………………………………………………………37
7. Purchasing Info Record………………………………………………………………38
7.1. Purchase Info Record – IMG settings……………………………………………..39
8. Source List…………………………………………………………………………….40
8.1.1. Source List IMG settings…………………………………………………..41
9. Outline Agreements - contracts……………………………………………………...42
9.1.1. Types of Outline Agreements. ………………………………………….…44
9.1.1.1.Contracts. ……………………………………………………………...43
9.1.1.1.1. How it works? …………………………………………………43
9.1.1.1.2. Types of Contract: …………………………………………….44
9.1.1.1.2.1.Quantity Contract (MK) ……………………………….….44
9.1.1.1.2.2.Value Contract (WK) …………………………………..….44
9.1.1.1.2.3.Distributed Contract (DC): ……………………………..…44
9.1.1.1.3. Contract – IMG Settings…………………………………….…44
10. Out Line Agreements - Schedule Agreement (SA): ………………………………..45
10.1.1.1. Schedule Agreements (SA) – IMG settings………………………..45
11. Creation of Cost Center………………………………………………………………47
11.1. Cost Center…………………………………………………………………48
11.2. Cost Element……………………………………………………………….48
11.3. Cost center IMG settings…………………………………………………..48
11.4. Creation of Std. Hierarchy for Cost center…………………………………48
11.5. Creation of Cost center…………………………………………………….48
11.6. Creation of Cost Element………………………………………………….48
12. Purchase order………………………………………………………………………..49
12.1. IMG settings - Purchase Orders …………………………………………..50
12.2. Automatic Creation of Purchase order…………………………………….51
12.3. Tcodes in Purchasing………………………………………………………52
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13. Shipping Instructions & Purchase Value Key…………………………..…………53

13.1.1. Shipping Instructions…………………………………………..………..54
13.1.2. Customization: ……………………………………………….…………54
13.1.3. Purchase Value Keys……………………………………………………54
13.1.4. Customization: …………………………………………………….……54
14. Pricing Procedure…………………………………………………………….……55
14.1. Pricing……………………………………………………………….…..56
14.1.1. Types of prices in purchasing. ……………………………………….…56
14.1.1.1. Gross price: ……………………………………………….….…56
14.1.1.2. Net Price: …………………………………………………….…56
14.1.1.3. Effective price: ……………………………………………….…56
14.2. Condition Technique: ………………………………………………..…56
14.3. Elements in price determination: …………………………………….…57
14.3.1. Access Sequence………………………………….……………………..57
14.3.2. Condition Record…………………………………..……………………57
14.3.3. Condition Record…………………………………..……………………57
14.3.4. Condition Table……………………………………..…………………..58
14.3.5. Calculation Schema…………………………………..…………………58
15. Output and Printer Determination for PO……………………..………………..60
15.1.1. Output and Printer Determination for PO……………..……………….61
16. Release Procedure………………………………………………..……………….62
16.1. Release Strategy: ………………………………………..……………...63
16.2. Release Condition: ………………………………………..……………63
16.3. Release Group: ………………………………………….……..……….63
16.4. Release Code/Point: …………………………………….………..…….63
16.5. Release Pre-requisite: ………………………………….…………..…..63
16.6. Release Indicator: …………………………………….……………..…64
16.7. IMG Settings: Release Procedure………………………………………64
17. Partner Functions…………………………………………………………………65
17.1. Partner functions………………………………………………………..66
17.2. Customization Settings: ………………………………………………..66
18. Valuation and Account Assignment………………………………………….… 67
18.1. Material Valuation…………………….………………………………..68
18.2. Material Valuation features: …………………………………………...68
18.3. Material Valuation control: ……………………………………………68
18.4. Valuation Structure…………………………………………………….68
18.4.1. Valuation Area: ………………………………………………………..68
18.4.2. Valuation class: ………………………….……..…………………..…68
18.4.3. Valuation category: ……………………………………………………68
18.4.4. Valuation type: ……………………………………………….………..69
18.4.5. Material type…………………………………………………….……..69
18.4.6. Account category reference: …………………………………………..69
18.4.7. Grouping of valuation classes …………………………………………69
18.4.8. Movement type: which material movement …………………………..69
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18.4.9. Valuation grouping code………………………………………………….69
18.4.10. Transaction/Event Key: ………………………………………….69
18.4.11. Account modifier: ………………………………………………..69
18.4.12. Customization steps………………………………………………70
19. Inventory Management Overview………………………………………………….76
19.1. Goods movement…………………………………………………………78
19.1.1. Goods Receipt (GR) ……………………………………………………..78
19.1.2. Goods Issue (GI) …………………………………………………………78
19.1.3. Stock Transfer…………………………………………………………….78
19.1.4. Transfer Posting………………………………………………………. …78
19.2. Result of Goods movement. ……………………………………………..79
19.3. Document concept: …………………………………………………….…79
19.4. Document type in Inventory management: ………………………………80
19.5. Movement Type…………………………………………………………..80
19.5.1. Some Important Movement types: ……………………………………….81
19.6. Tcodes in Inventory Management………………………………………..82
19.7. MIGO Transaction code …………………………………………………82
19.8. Inventory Management IMG settings…………………………………….82
20. Inventory Management: Goods Receipt……………………………………………83
20.1. Steps during GR: …………………………………………………………84
20.2. Result of the goods receipts posting………………………………………86
20.3. Effects of GR on PO and Material Master. ………………………………87
21. Inventory Management: Goods Issue: …………………………………………….88
21.1. Types of Goods Issue……………………………………………………..89
21.2. Entering the good issue: ………………………………………………….89
21.3. Goods issue two ways…………………………………………………….90
21.4. Goods issues are either Planned or Unplanned…………………………..90
22. Inventory Management: Stock Transfer………………………………………….91
22.1. Types of Stock Transfer………………………………………………….92
22.1.1. Intra Company Stock Transfer……………………………………………92
22.1.2. Inter Company Stock Transfer……………………………………………92
22.2. Intra Company Stock Transfer……………………………………………92
22.2.1. Storage Location-to-Storage Location…………………………………….92
22.2.2. Plant-to-Plant……………………………………………………………...92
22.2.3. Types of Stock transfers (Str. Loc-to-Str.Loc)……………………………92
22.2.3.1. One-Step Process………………………………………………….92
22.2.3.2. Two-Step Process…………………………………………………93
22.2.3.2.1. Remove from Str. Loc…………………………………………93
22.2.3.2.2. Placing into Str. Loc. …………………………………………94
22.3. Types of Stock transfers Plant-to-Plant……………………………………94
22.3.1.1. One-Step Process………………………………………………….94
22.3.1.2. Two-Step Process (Plant-to-Plant)………………………………..95
22.3.1.2.1. Remove from Str. Loc (Plant-to-Plant) ………………………95
22.3.1.2.2. Placing into Str. Loc. (Plant-to-Plant) ………………………..96
22.4. A consolidate Statement of A/c triggered during various goods movmts.. 97
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23. Inventory Management: Transfer Posting……………………………………..……98

23.1. Stock Types: …………………………………………………………..……99
23.1.1. Unrestricted-use stock: ………………………………………………..……99
23.1.2. Quality inspection stock: …………………………………………………..99
23.1.3. Blocked stock: ………………………………………………………..……99
23.1.4. Transfer Postings: ………………………………………….………..……100
24. Physical Inventory…………………………………………………….………..……101
24.1. What is Physical Inventory? ……………………………….……………..102
24.2. Which stocks can be inventoried? ………………………….…………..…102
24.3. Physical inventory procedure: …………………………………...……..…102
24.3.1. Periodic Inventory: ……………………………………………………..…103
24.3.2. Continuous Inventory: ……………………………………………….……103
24.3.3. Cycle Counting: ………………………………………..…………….……103
24.3.4. Inventory Sampling: ………………………………………………………103
24.4. Physical Inventory process: …………………………………………..……103
24.4.1. Physical Inventory Preparation……………………………………..………103
24.4.2. Physical Inventory count…………………………………………..……….103
24.4.3. Physical Inventory check………………………………………..…………103
25. Reservation………………………………………………………………..…………..105
25.1. What is Reservation? …………………………………………...………….106
25.2. What information is in a reservation? ……………………………………...106
25.3. Structure of the Reservation: ………………………………………………106
25.4. Reservation level: ………………………………………………………..…106
25.5. Manual/Automatic reservations: …………………………………………...106
25.5.1. Results of the reservation…………………………………………………...106
25.5.2. When a reservation is entered………………………………………………107
25.5.3. Displaying the reserved stock: …………………………………………..…108
25.5.4. Settings for reservation: ……………………………………………………108
26. Logistic Invoice Verification: Over View……………………………………………110
26.1. Types of Invoice Verifications: ……………………………………………111
26.1.1. Invoice verification online (Enter Invoice) …………………………...……111
26.1.2. Invoice Parking: ……………………………………………………………111
26.1.3. Invoice verification in background: ……………………………………….111
26.1.4. Automatic Invoice verification: ……………………………………………111
26.1.4.1. Evaluated Receipt Settlement (ERS) ………………………………111
26.1.4.2. Consignment and Pipeline Settlement…………………………...…111
26.1.4.3. Invoicing plan………………………………………………………111
26.1.4.4. Revaluation…………………………………………………………111
26.1.4.5. Invoices Received via EDI: ……………………………………..…112
26.2. Invoice verification process: …………………………………………….…112
26.3. Important a/c in LIV………………………………………………………..114
26.4. Tcodes in LIV………………………………………………………………115
26.5. ERS – Evaluated Receipt Settlement. ……………………………………...115
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26.6. Invoice Verification: IMG Settings………………………………………116
26.7. TAX Settings: ……………………………………………………………116
26.8. Invoice Verification ……………………………………………………...116
26.8.1. Entering of Invoice (in MIRO) …………………………………………..116
26.8.2. Parking of Invoice………………………………………………………...116
26.8.3. Holding of Invoice………………………………………………………..116
26.8.4. Releasing of Parked and hold invoices……………………………………116
27. Special Procurements: Sub-Contract Scenario: ………………………………..…117
28. Special Procurements: Stock Transport Order Scenario…………………………119
29. Special Procurements: Vendor Consignment…………………………………...…122
30. Special Procurements Third Party Scenario………………………………………125
31. Consumption Based Planning………………………………………………………128
31.1. MRP: Material Requirement Planning………………………………..…129
31.2. MPS: Master production schedules are …………………………………129
31.3. CBP: Consumption Based Planning………………………………..129
31.4. Procedures in CBP………………………………………………………..129
31.4.1. Re-order Point planning…………………………………………………..130
31.4.2. Forecast based planning………………………………………………..…130
31.4.3. Time phased planning…………………………………………………….130
31.4.4. Re-order Point planning…………………………………………………..130
31.4.4.1. Lot Size Procedure: ………………………………………………131
31.4.4.2. Static Lot Sizing Procedure………………………………………131
31.4.4.3. Periodic Lot sizing Procedure……………………………………131
31.4.4.4. Optimum lot sizing procedure……………………………………131
31.4.5. Forecast based planning………………………………………………….132
31.4.5.1. Constant Model…………………………………………………..132
31.4.5.2. Trend Model……………………………………………………...132
31.4.5.3. Seasonal Model…………………………………………………..133
31.4.5.4. Trend seasonal model……………………………………………133
31.4.6. Time phased planning……………………………………………………134
31.4.7. MRP Master Data………………………………………………………..134
31.4.8. MRP controller………………………………………………………..…134
31.4.9. MRP Group………………………………………………………………134
31.4.10. PPC calendar……………………………………………………..134
31.4.11. MRP Procedure………………………………………………..…134
31.4.12. Different Planning runs………………………………………..…134
32. Warehouse Management (WM)……………………………………………………136
32.1. Warehouse Structure Without WMS………………………………….…137
32.2. Warehouse Structure With WMS……………………………………..…137
32.3. The warehouse structure in Warehouse Management……………………138
32.4. Warehouse Number………………………………………………………138
32.5. Warehouse number uniquely identifies the warehouse in a plant………..138
32.6. Storage Type……………………………………………………………..138
32.7. Storage Section…………………………………………………………..139
32.8. Picking Area……………………………………………………………..139
32.9. Storage Bin………………………………………………………………139
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32.9.1. Creating Storage Bins…………………………………………………..139
32.9.2. Creating a single storage bin……………………………………………140
32.9.3. Creating several storage bins simultaneously…………………………..140
32.9.4. Example: Creating Several Storage Bins……………………………….140
32.9.5. Example: Creating Several Storage Bins…………………………….…140
32.9.6. Template……………………………………………………………..…141
32.9.7. Structure………………………………………………………………..141
32.9.8. Start value………………………………………………………………141
32.9.9. End value……………………………………………………………….141
32.9.10. Increment…………………………………………………….…141.
32.9.11. Quant…………………………………………………………....141
33. ASAP methodology………………………………………………………………..142
34. Important MM Tables……………………………………………………………143
35. SAP MM TCODES ………………………………………………………………147
36. Standard Reports in Material Management……………………………………153
37. Extra Topic: Blanket Purchase Orders…………………………………………155
38. Extra Topic How to attach a document to PO……………………………….…158
39. Lab Exercises: ……………………………………………………………………160
39.1. Creation of Organization Structure…………………………………….161
40. Lab Exercises: Material Master…………………………………………………..186
40.1.1. IMG settings & Creation……………………………………………….187
41. Errors List: Common Errors & Solutions…………………………………….. 200
42. SAP MM Question Bank-with Answers, and Explanations…………………...206
43. Data Uploading - TOOL: LSMW – Record Method……………………….…222
44. Release procedure for PR with classification…………………………………..232
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Enterprise Structure:
Defining Organizational Units
Assigning Organizational Units
01
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Define Company
Company:
It is an Organizational Unit for which financial statements can be drawn up according

to relevant commercial law.
Note: A Company can have one or more company codes.
Customization Step:
SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Define company

(SPRO)
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Define Company Code
Company Code
• It is a smallest Organizational Unit

• Each company code has its own Balance sheet and P&L Account.
• Company Code is subsidiary of Company or a member of a corporate Group
Customization Step:
SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Edit, Copy,

Delete, Check Company Code (EC01)
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Define Controlling Area
Controlling Area:
• It is an Organizational Unit with in a company.

• It represents a closed system for the accounting purpose.
• Controlling area may be assigned to one or more company codes, but company code
must use the same operative Chart of Account.
Customization Step:
SPRO Æ Enterprise Structure Æ Definition Æ Controlling Æ Maintain Controlling Area

(OX06)
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Define Plant
Plant
• It is an Operational Unit with in a company code.
• It is a place where materials are produced or Goods/Services are provided.
• A Plant can be having
- Manufacturing facility - Regional Sales Office
- Central Delivery warehouse - Corporate HQ - Maintenance Plant
Note: A Plant must always be assigned to a company code.
Valuation Area:
• It is an organizational level at which material is valuated.

• Plant and company codes are two possible valuation areas in the R/3 System.
• Important Note: Defining the valuation level in Customizing is a fundamental
setting, and is very difficult to reverse.
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Valuation Area
Plant Level Company Code level
- You can valuate material at different - Valuation of price of material is

plants at different prices same in all of its company’s
- SAP Recommends Valuation at plants at this level
plant level
- If you use Production Planning (PP) or
Product Accounting components or if it
is a Retail system plant level is
mandatory
Customization Steps:
1. Enterprise Structure Æ Definition Æ Logistic-General Æ Define valuation level

(OX14)
Valuation Level
You define the valuation level by specifying the level at which material stocks are
valuated
You can valuate material stocks at the following levels:
a) Plant level
Note: Valuation must be at this level in the following cases:

If you want to use the application component Production Planning (PP) or
Costing or If your system is a SAP Retail system
b) Company code level
Note: SAP recommends setting material valuation at plant level.
2. Enterprise Structure Æ Definition Æ Logistic-General Æ Define, copy, delete, check

plant (EC02/OX10)
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Define Storage Location:
Storage Location:
• It is an Organizational unit, which allows the differentiation of Material Stock with in

a Plant. It holds the Goods.
• Under the plant there may be different storage locations. However the storage
location of one plant cannot be used for the other plant.
• Storage locations are not assigned to the plants separately, because at the time of
creation it self we create storage location with respect to plant.
Note: Physical inventory is carried out at storage location level.
SPRO Æ Enterprise Structure Æ Definition Æ Material Management Æ Maintain storage

location (OX09)
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Define Purchasing Organization
Purchasing Organization:
It procures the material and services.

It negotiates conditions of purchase with the vendors.
It is responsible for completing the procurement contracts
Purchasing organization types:
1. Centralized Purchasing
a) Corporate Group-wide purchasing
b) Company specific Purchasing
2. Distributed Purchasing
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So a Purchasing Organization Can be assigned to
- Several company Codes.

- One Company code
- One or More Plants
Note:
- Purchasing Organization can also exist with out assigning to a company code.
- Each Purchase organization has its own
o Info Record and Conditions for pricing.
o Own Vendor master Data.
- Vendor is assigned to only one purchase organization.
- Each Purchasing Organization evaluates its own vendors using MM Vendor Evaluation.
Reference Purchase Organization:
A purchase organization whose conditions and contracts other purchasing

organization linked to it may access and use.
Standard Purchase Organization:
If a several Purchase organizations procure for a plant, you can define one of them as
standard Purchase Organization. In Source determination for ‘Stock Transport’ and
‘Consignment’ and for good issue of ‘Pipeline material’ system utilizes the standard
purchase organization automatically.
SPRO Æ Enterprise Structure Æ Definition Æ Material Management Æ Maintain

purchasing organization (SPRO)
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Assigning of Organizational Units
SPRO Æ Enterprise Structure Æ Assignment Æ Financial Accounting Æ Assign company

code to company (SPRO)
SPRO Æ Enterprise Structure Æ Assignment Æ Controlling Æ Assign company code to

controlling area (OX19)
SPRO Æ Enterprise Structure Æ Assignment Æ Logistic-General ÆAssign plant to

company code (OX18)
SPRO Æ Enterprise Structure Æ Assignment Æ Material ManagementÆ Assign purchasing

organization to co-code (SPRO)
SPRO Æ Enterprise Structure Æ Assignment Æ Material Management Æ Assign purchasing

organization to plant (SPRO)
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Master Data:
Material Master Data
02
Sub Modules of Material Management.
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A) Purchasing Module
B) Inventory Management.
C) Logistic Invoice Verification.
Master Data
The data in consolidation system that remains unchanged over a long period of time called
master data.
Transaction Data
The Data uses Mater data while creating transactions.
Material
- Goods or objects that are used, consumed or created during the manufacturing
may be called materials.
- It is the smallest unit that cannot split into any smaller unit.
- Material can be traded, used in manufacture, consumed are produced.
- A Service may also be treated as material.
Material Master:
- It contains the description of all materials that an enterprise procures, produces or

keeps in stock.
- It represents the central source for the material specific data.
- Integration of all material data in a single material database eliminates the
problem of data redundancy and permits the data to be used not only purchasing
but other applications like inventory management, Material Planning & control,
Invoice Verification etc.
- The data mentioned in the Material Master is for more than one organizational
level
- How the information in the Material Master is organized in the Material Master
Data Base?
Data at Client level (data is valid for whole company)
Ex: Material No, Short Text, Material Group, Base and Alternate Unit
Of Measure.
Data at Plant level: All the data that is valid with in the plant and for all
storage locations in it store at plant level.
Ex: Purchasing data, MRP data, Forecasting data and work scheduling
data
Data at Storage Location Level: All the data that is valid for a particular
storage location is stored at this level.
Ex: Storage bin Description, picking area etc.
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Material Type:
Certain attributes of Material called Material Type or Grouping of materials with same
basic attributes/characteristics.
Ex: Raw Materials, Semi finished or finished products.
Material Group:
Similar properties of material grouped together called Material Group (Or) grouping of
materials according to their characteristics.
Ex: Ladies ware, Office supplies etc.
Material Class:
Material Classification is for easy and fast retrieval of (material) data.
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Notes on Material Type:
Material Types are used for the following areas

- Profit Center Accounting - Valuation & A/c Assignment (Valuation Class)
- Product Cost Planning - Production, BOM and Routings
- SD (Availability Check)
Material Type determines which accounts are to be posted when a material is posted or leaves
from the warehouse.
Together with plant the material type determines the materials Inventory Management
Requirements like
o Whether changes in Quantity are updated in Material Master record
o Whether Changes in Values are updated in the Stock A/c in Financial Accounting.
Material Type Controls
o Type of Number assignment
o Permitted Number range interval
o Which screens are to be displayed in which order?
o Which user department-specific data (view) is suggested for entry?
o Which procurement type is permitted for material i.e. whether the material is
procured externally, in-house or both allowed. Etc.
o Which G/L accounts are to be updated?
Material Types in standard SAP:
1. ABF - Waste 11. FRIP - Perishable

2. COMP- Prod.. Alloc. Purchases 12. HALB - Semi-finished prod.
3. CONT - Kanban Container 13. HAWA - Trading goods.
4. COUP - Coupons 14. HERS - Manufacturing Parts.
5. DIEN - Services 15. HIBE - Operating supplies
6. ERSA - Spare parts 16. IBAU - Maintenance Assy.
7. FERT - Finished Product 17. INTR - Intra material.
8. FGTR - Drinks 18. KMAT - Configurable Mat.
9. FHMI - Prod. Resource/ tools 19. KWFO - Own material.
10. FOOD - Food (excl: perishable) 20. LEER - Empties.
21. LEIH - Returnable-Packaging 31. UNBW - Non Valuated material
22. LGUT - empties (retail) 32. VERP - Packing material
23. MODE - Apparel (seasonal) 33. VKHM - Additionals
24. NLAG - Non Stock material 34. VOLL - Full product
25. NOFI - Non-Foods 35. WERB - Product Catalog
26. PIPE - Pipeline material 36. WERT - Value Only material
27. PLAN - Trading goods (planned) 37. WETT - Competitive product.
28. PROC - Process material
29. PROD - Product Group
30 ROH - Raw material
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Material Views:
1. Basic Data1 10. Quality management 19. Forecasting

2. Basic Data2 11. Warehouse Management1 20. Accounting 1
3. Classification 12. Warehouse Management2 21. Accounting 2
4. Purchasing Data 13. Plant / Storage 1 22. Costing 1
5. PO Text 14. Plant / Storage 2 23. Costing 2
6. Sales1 15. MRP 1 24. Plant Data
7. Sales2 16. MRP 2 25. Storage Loc. Data
8. Sales3 17. MRP 3 26. Production Resources
9. Sales Order Text 18. MRP 4 27. Work Schedule
28. Foreign Trade Import
29. Foreign Trade Export
T-codes Creation Change Display List of materials
For Material MM01 MM02 MM03 MM60
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IMG settings: Material Master

Define valuation level
SPROÆ Enterprise Structure Æ Definition Æ Logistics – General
Define valuation level (OX14)
Define Output Format of Material Numbers
SPROÆLogistics – General Æ Material Master Æ Basic Settings
Define Output Format of Material Numbers (OMSL)
Maintain Company code at Material Management
Maintain Company Codes for Materials Management (OMSY)
Define Attributes of Material Types
Material TypesÆ Define Attributes of Material Types (OMS2)
- Qty and Value updating
Define Number Ranges for Each Material Type
Material TypesÆ Define No Ranges for Each Material Type (MMNR)
Define Material Groups
SPROÆLogistics – General Æ Material Master Æ Settings for Key Fields
Define Material Groups (OMSF)
Create Purchasing Groups
SPROÆMaterial Management Æ Purchasing Æ Material Master
Create Purchasing Groups
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Master Data:
Vendor Master
03
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Vendor Master:
Vendor:
Vendor is a Business Partner fro whom the material or services can be procured
. Or
Vendor is a business partner to whom amounts are payable for goods delivered/ services
performed by him.
Note: Vendor is also called creditor, he is the external source of supply
Vendor Master:
It contains the complete data of Vendor to whom the a company conducts business with.
Vendor Master Record:
The Data Record that containing all the information necessary for any contact with a certain
vendor, in particular for carrying out business transaction.
Vendor Master Record consists of XK01 MK01
o General Data (2 screens)

Address, Communication details
Control data
Bank details
o Company code data (5 screens)
Account management (reconciliation a/c etc.)
Payment transaction (payment methods for automatic payment transactions)
Correspondence
With hold tax
o Purchasing Org. data (2 screens
Purchasing data (order currency, inco-terms, Vendor tax data)
Partner roles
Note:
Vendor can also be called as source or creditor
Vendor will fulfill the requirement of the organization.
Since vendor is crediting business partner, accounting and purchasing departments maintain
the vendor master record
In HR each employee is treated as Vendor.
If the Quality of Vendor’s product is poor, you can block a vendor for an individual
material via source list.
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Type of Vendors:
Internal Vendors: Supplying by another company code under the same client
External Vendors: A company or a person who supplies material from out side (Indigenous and
imported vendor)
Regular Vendors: A vendor supplies the material at client level.
He supplies to entire corporate group.
Fixed Vendor: The vendor from whom company will take certain materials, which are low value
and high volume type
One time Vendors: Supply only once. (If RFQ/PO is sent to the vendor, you have to enter the
vendor data manually)
Vendor Account:
- It contains transaction figures where value movements are recorded as period totals in account
payables.
- Payables to vendors are recorded simultaneously in a general ledger account by assigning a
reconciliation account to the vendor account.
- Each vendor account is a G/L account in FI module.
Vendor Account Group:
It is the end node of the hierarchy, can contain any number of accounts that belongs to Chart of
Accounts. These can be
o G/L Accounts from the Financial Accounting
o Primary cost or secondary cost
o Revenue elements from controlling
Vendor Account Group determines
• The Intervals for the Account numbers.
• Whether it is a one-time account?
• Which fields are ready for input or must be filled in the material master.
• Whether the number range is assigned internally or externally
Note: An Account Group must be assigned to each Vendor master record
Important Vendor Groups are:
0001 - Vendor standard LIEF - External Vendor

0002 - Goods Supplier MFNR - Manufacturer
0003 - Alternative Payee KRED - Internal Vendor
0004 - Invoice presented by CPD - One time Vendor
0005 - Forwarding Agent
0006 - Plants
Note:
• A Vendor can play all roles mentioned above except freight Vendor.
• Vendor is assigned to only one Purchase Organization.
• Vendor is used at company code level only.
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Procurement Cycle
Document Concept in SAP
Transactional Data:
Purchase Requisition
04
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PROCUREMENT CYCLE
8. Payment Processing 1. Determination of Requirements
7. Invoice Verification 2. Source Determination

PROCUREMENT CYCLE
6. Goods Receipt 3. Vendor Selection
5. PO Monitoring 4. PO processing
1. Determination of Requirements
• The material requirements are identified by the user departments or material planning &
control
• The requirement passed manually to the purchasing department
[In case if you set MRP procedure for a material in the material master R/3 system will
automatically generates a purchasing requisition]
2. Source Determination
• Identifies the potential source of supply
• This is based on a) Past Order b) existing long term purchasing requirement
3. Vendor Selection
• The selection of vendors by comparing the prices of various quotations
• Sending the rejection letters for the non-selected Vendors.
4. Purchase Order processing

• Creating the Purchase orders by including the Vendor schedule agreements and contracts
5. PO Monitoring
• Sending the reminders to Vendors in a pre defined intervals
6. Goods Receipt & Inventory Management

• Confirming the receipts of the Goods
• Compare the Goods receipts quantities with the PO quantities.
• Inform the limit over or under deliveries of order goods.
7. Invoice Verification
• Invoices are checked for accuracy of prices and contents
• Noting of quantity and price variances based on purchase order & goods receipt data
8. Payment processing
• Find accounting for vendor payments
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Purchasing Document
A purchasing document is used for purchasing for materials and services

Structure of the Purchasing Document
• It is common for all Purchasing documents. In earlier versions (i.e. before 4.6c) below three
segments are as three screens.
• In latest versions all three screen information is in a single screen information with tabular
form called Enjoy Transaction (It ends with ‘n’ in Transaction code)
Header Doc Type, Doc No, Date of Doc. Created.
Item over View Item Qty, Plant, Storage Loc.
Item Details Mat. Group, Unit of measure, Vendor mat. No, vendor A/c group etc.
• All documents are subject to the release of electronic approval

• Confirmation settings for all documents are same.
Types of Purchasing Documents:
1. Internal Purchasing Documents

i) Purchase Requisition (PR) is an internal purchasing document
2. External Purchasing Documents
i) Request for Quotation (RFQ)
ii) Quotation
iii) Purchase Order (PO)
iv) Contract
v) Schedule Agreement (SA)
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Purchase Requisition (PR):
T codes Reports
Creation - ME51/n List of PRs -- ME5A
Change - ME52/n
Display - ME53/n
Process
RFQ
Manual
PR OA
MRP
PO
Master
data
It is a request to procure certain quantity of material at certain point of time/date.

• It is an Internal Document and not used at out side of the Enterprise.
• Purchase Requisitions can be created
o Manually – fill the data manually
o By MRP -- If you set up a MRP procedure for a material master the system automatically
generates a PR.
• Purchase Requisition does not have Header and Schedule lines.
• There is no vendor detail to be filled-in in PR.
• In PR you can indent more than one Item or more than one plant
• It does not influence the financial updating.
• When the system creates a purchase requisition automatically, a user program (MRP or order
management) determines the material, PO quantity and delivery date. If required the Purchase
Requisition is automatically assigned to an account.
• Purchasing converts the PR in to a Request for Quotation, Purchase Order or Out-line
Agreement.
• The tables related to PR are: EBAN (PR), EBKN (PR a/c assignment)
• Some of the fields in these tables are:
EBAN EBKN
BANFN – PR Number BANFN – PR Number
BNFPO – Item number of PR BNFPO – Item number of PR
BSART – PR doc type ZEBKN – Prog. A/c assignment.
EKORG – Purchase Organization
MENG -- PR Quantity
MATNR -- Material Number
WERKS – Plant
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IMG setting for Purchasing Requisition
Define Number Ranges (OMH7)

SPRO Æ Material Management Æ Purchasing Requisition Æ
Define Number Ranges
Define Document Types (SPRO)
Define Document Types
Assign number range to document type
Release Procedure
Release Procedure
- Procedure with Classification
- Edit Characteristics (CT04)
- Edit Classes (CL02)
- Set up Procedure with Classification (SPRO)
- Check Release Strategies (OMGQCK)
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Transactional Data:
Request For Quotation (RFQ)
Da y - 9
05
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Request For Quotation (RFQ):
T codes Reports
Creation - ME41 RFQ list by Mat.-- ME4M
Change - ME42 RFQ by collt No.-- ME4S
Display - ME43
Source of Supply
PO
Vendor A
PR
RFQ Vendor B Quotations
Manual
Vendor C
Rejection
letter
Material & vendor
Master data
• It is an Invitation to Vendor for providing Quotation (bid or tender) for supplying the material.
• You should have suitable vendors for the RFQ
• You should enter the dead lines for submission of Quotation
• RFQ is same as PR, but it has a collective number [It is a 10-digit code used for the system
automatically picks all the relative quotations for a particular material. It is used in Header]
• When you filling up the item details and schedule lines for the materials system determines the
address from the vendor master record
RFQ can be entered

• By Manually
• With respect to Out-line agreement
• With respect to PR (using reference technique)
• By another RFQ (copying of existing RFQ using reference technique)
When RFQ required?
• When you identify a New Vendor
• When first time you go for project
• When a gap between procurement is very long
• Upon expiry of contract
• For New Material / Services
• You cannot enter an account assignment in RFQ only item category will be maintained.
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RFQ Consists of:
o Header - General information on RFQ like Vendor’s address

o Item - Total Quantities and Delivery dates for Materials
o Schedule lines
An Item of Quotation may contain a deliver schedule with no of
schedule lines in which total quantity is broken down in to smaller
quantities to be delivered on a specific dates over certain period.
IMG setting for Request for Quotation (RFQ)

Release Procedure for RFQs
- Define Release Procedure for RFQs (SPRO)
- Check Release Strategies (OMGSCK)
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Transactional Data:
Quotation Maintenance
06
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Quotation:
T codes
Creation & Change - ME47
Display - ME48
Price comparison. - ME49
• Quotation is an offer by a Vendor to Purchasing Organization regarding the supply of material

subject to specified conditions.
• It is legally binding on the Vendor for a certain period.
• It is Vendor response for RFQ issued by a Purchasing Organization.
• It consists Items on which total quantity and delivery date of an offered material.
• An Item of a Quotation may contain a delivery schedule made up of a number of schedule lines
in which total quantity is broken down into smaller quantities to be delivered on the specified
dates over certain period.
• You can save the Quotation data in which you are interested in a Purchasing Info Record. The
Info Record can be generated automatically if you set a valid info update indicator when you
maintain Quotation.
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Master Data:
Purchasing Info Record
07
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Purchasing Info Record
T codes Reports
Creation - ME11 By Material – ME1M
Change - ME12 By Vendor - ME1L
Display - ME13
• It is a Link or represents Material-Vendor relation ship.

• We can define as: Source of Information on (purchasing) procurement of certain
material from a certain vendor.
• The Info Record allows you to determine (for buyer)
o Which materials have been previously offered or supplied by specific vendor
o Which vendor have offered /supplied specific material
• Purchase Info record consists:
o Price (current & future) and conditions (freight & discount etc)
o Delivery data (planned del. Time, tolerance limits for under deliveries or over
deliveries
o The number of Last Purchase Order
o Vendor Evaluation data
o An indicator showing whether the vendor counts as regular vendor for the material
o Availability period during which the vendor can supply the material
o It also contains Quotation order data, current and future pricing data.
Important Notes:
Info record determines the price suggested in purchase document in two ways
1. Conditions:
Conditions are included if they have been mentioned for an info record manually or
from a quotation
2. Last purchase order:
If an info record does not contain any condition, the system reads the number of the
last purchase document in the info record and suggests the price from this document.
While customizing the default values for buyer, you can define such that how the
system handles the conditions from the last PO as
Always copied
Are not copied when the price is entered manually
Are never copied
Purchase Info Record – IMG settings
Define Number Ranges (OMEO)

Assign the Number range to std document type for SAP i.e. IL
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Master Data:
Source List
08
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Source List
T codes Reports
Creation List of Vendors
& Change - ME01 for material -- ME0M
Display - ME03
• It is also a master record and gives a list of vendors available for a particular material and
checks the validity of the vendor.
• It specifies the possible source 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 or under
certain long-term agreement.
• Source list support the user in answering the question “ which vendor can supply a material
at a given point of time”.
Important Notes:
1. In the source list you can block a vendor for a single material or fix the vendor (make the
vendor continuously)
2. Source list requirement are set at PLANT level but not at company code level (SAP
recommends this)
3. It is also used in automatic selection of vendors for a material.
4. If a source list requirement exists, a material may not be procured from sources other than
those included in the source list. A source list requirement can be specified for an
individual material (in the material master) or for all materials of the plant (using the
customizing parameter)
5. Source list records can be created manually either directly or from with in out line
agreement or info record maintenance.
6. You can create the source list for a material by referencing another material
7. There is NO number range for source list
8. Source list is need not be maintained for one time vendor. But Vendor Master can be
maintained (flagging one time vendor)
Source List IMG settings
Define Source List Requirement at Plant Level (SPRO)

Check the Check box of source list in Purchasing View in
Material Master
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Transactional Data:
Outline Agreement - Contract
09
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Outline Agreements
• It is a long time agreement between a Purchasing Organization and a Vendor who is supplying
the material (or services) over a certain time frame on the basis of pre-defined terms and
conditions.
• It is a legal document between Vendor and Purchasing Organization
• There are two types of Outline Agreements.
1. Contracts. (It is also called release order/call off order)
2. Scheduling Agreements (SA).
1. Contracts:
T codes Reports / List of
Creation - ME31K Contracts for Material. - ME3M
Change - ME32K Contracts for Vendor. - ME3L
Display - ME33K
• It is used for mass production Industries or where material consumption is very high.
• In Contract company/Purchasing organization assures the vendor about the Quantity or Value.
• However you have to release Purchase order for every supply.
• Contracts are Outline Agreements.
• They do not contain details of delivery dates for each item.
• Contract contains control data for billing purpose, for creation of budget billing plans and for
contract accounts receivable and payables
• A contract created by one plant can be referred by purchase organization of another plant.
However the referring purchasing organization is the Standard Purchasing Organization for the
other plant.
How it works?
• To inform Vendors of which quantities you need for which date, you enter a contract release
order for contract.
• A release order is a PO that references a contract.
• If the Info Record with conditions exists for the Material and Vendor, the system automatically
the system automatically suggest the net price according to those conditions when you create the
Contract item.
• You can create a contract manually. When you do so, you can reference other contracts, purchase
requisitions, RFQs and Quotations.
• One thing you define in Contract Header is the Validity period
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Types of Contract:
1. Quantity Contract (MK)
The Total Quantity is assured to vendor and the supply of the material based on the Material
Contract individual release order issued against this contract. [Definition: A long-term
purchase agreement for purchasing the quantity of the goods is agreed.]
2. Value Contract (WK)
Here the Total Value is assured.

[Definition: A long-term purchase agreement for purchasing of goods up to certain total
value agreed.]
3. Distributed Contract (DC):
These are centrally agreed contracts that are more available to other R/3 systems for issuing
Release orders against them.
Note:
• For each item in Quantity Contract, you define the target Quantity and PO
Conditions.
o Once the Quantities are over system will display error.
o For creation of Value Contract choose the agreement type as ‘WK’
• Hence the ‘Target Value’ will appear instead of ‘Target quantity’ in the screen.
Out-line Agreements (OA) - Contract – IMG Settings

Release Procedure for Contracts
- Define Release Procedure for Contracts (SPRO)
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Transactional Data:
Out-line Agreement -
Schedule Agreement
45
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Schedule Agreement (SA):

T codes Reports
Creation - ME31L ME3M
Change - ME32L ME3L
Display - ME33L
for delivery schedules - ME38
• It is a long-term purchase agreement with a vendor for supply of materials according to the pre-
determined conditions.
• There is no Purchase Order required. So no release order for Schedule Agreement.
• Details of the Delivery dates and quantities for supply of material will be intimated to the Vendor
in the form of Schedules.
• There is no Assurance of Quantity or Value will be given to the vendor in Schedule
Agreements.
• Delivery Schedule lines can be created with or with out reference to the Purchase Requisition.
• Schedule lines can also be generated automatically using MRP system. Such delivery lines do
not constitute separate document, but from the part of the Schedule Agreement.
• Procurements using Schedule Agreements there fore help us to reduce the volume of the
document in use.
• The basic idea of Schedule Agreement is to reduce the office inventory.
We can create the Schedule Agreements with respect to
Purchase Requisition
Quotation
Out line Agreement
Type of Schedule Agreements:
1. Schedule Agreement - agreement type ‘L’ (Manual)

2. Schedule Agreement – Agreement type ‘LPA’ (Automatic)
Out Line agreements- Schedule Agreements (SA) – IMG settings

Release Procedure for Scheduling Agreements
- Define Release Procedure for Scheduling Agreements (SPRO)
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Creation of Cost Center
11
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CONTROLLING
• Controlling provides information for management for decision-making.
• If facilitates co-ordination, monitoring and optimization of all process in an organization.
COST CENTER
• Organizational Unit within a controlling area that represents a defined location of cost
incurrence is called Cost Center
• Tcodes for Creation of Cost Center are
o Define Standard hierarchy - OKKP
o Creation of Cost Center - KS01
o Creation of Cost Element - KA01
COST ELEMENTS
• Cost Elements Describe the origin of costs.
• Cost element classifies the organization-valuated consumption of production factors within a
controlling area.
• Primary Cost Elements
o Primary cost elements are used for direct posting and must be accompanied in GL a/cs
in FI.
CUSTOMIZATION
• Creation of Std. Hierarchy for Cost center
SPRO Æ Controlling Æ General controlling Æ Organization Æ Maintain
Controlling Area
o Click Position and enter your controlling area
o Select your controlling area and click details button.
o Enter the field Cost Ctr. Std Hierarchy with some hierarchy name.
o Click save button.
Creation of Cost center
SPRO Æ Controlling Æ Cost center Accounting Æ Master data Æ Cost center Æ
Create Cost center
o Set Controlling Area to our controlling area.
o [On menu bar Æ Extras Æ Set Controlling Area]
o Enter Name, Description, Person responsible, Cost Center Category as F for
production, Std. Hierarchy, Business Area as 0001 and Currency INR and
click save button.
Creation of Cost Element
SPRO Æ Controlling Æ Cost center Accounting Æ Master data Æ Cost Elements Æ
Create Cost element
Set Controlling Area to our controlling area.[On menu bar Æ Extras Æ Set
Controlling Area]
Enter Cost Element as 400000 and valid from date and in basic data tab enter name and
description and cost element category as 1 (1 for Primary cost/cost reducing revenue)
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Transactional Data:
Purchase Order
Purchase order 12
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Purchase Order
• It is a out going document. It is an ultimate document
• It is a legal document
• A purchase order is a request to a vendor to supply certain goods or services under the
stated conditions.
• It is confirmation from company regarding Materials, Quantities and Delivery details
• You can create Purchase Order
o Manually
o With respect to PR, RFQ, Contract, another Purchase Order
o With respect to PR, RFQ, contract and other PO at a time
• You can change the price and quantities here even though we agreed for earlier at the
time of negotiations
• The Standard Document Types for Purchase Order are:
o NB – Standard PO
o FO – Frame work order (Blanket PO/Limit PO)
o DO – Dummy PO
o EC – Electronics Commerce (for SRM applications)
• Purchase Order screen is divided into three sections
o Header
This section contains information applicable to all line items contained
on the purchase order like :
Purchase org, Purchase Group, Company code Details
o Item overview
This section contains information on the materials and/or services to
be delivered or rendered.
Material No, Description, Quantity, Delivery Plant and Storage
Location etc.
o Item details
This section contains information that will be applicable to a particular
line item in the purchase order.
Material description, Material group, quantity etc.
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• Purchase Order having ‘N’ Transaction also.
TCode Creation Change Display List of Pos

PO ME21 ME22 ME23N ME2M, ME2L
ME21N ME22N ME23N
Note:
When you enter the purchase order data the system suggests default values. For example:
o It suggests the ordering address, as well as the terms of payment and freight (inco-
terms) from the vendor master record.
o If you have maintained a material master for a given material in the R/3 System, the
system suggests the material short text or the material group,
o if a purchasing info record already exists in the system, the system copies a price
proposal to the purchase order.
IMG settings - Purchase Orders

Purchase Orders
Purchase Orders IMG settings
Define Number range
Define Document type of Purchase Orders
Assign number range to document type
Set tolerance for price variance (PE, SE)
Release Procedure for PO
- Define Release Procedure for PO (SPRO)
Automatic Conversion of PR to PO
Steps:
1. Material Master purchasing view tick automatic PO check box

2. Vendor Master purchasing view tick automatic PO check box.
3. Maintain Source list for Vendor & Material. (ME01)
4. Maintain Purchase Info Record. (ME11)
5. Create a Purchase Requisition. (ME51)
6. Note: During creation of PR, select check box of Source Determination in
7. 1st screen of ME51 /ME51N
8. Use Tcode: ME59 & execute for PR for vendor, it creates automatic PO.
i. Enter the document type field in case if you want to create the PO with
your document type.
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Tcodes for MM Purchase

Purchasing Reports
Module By By
Maintain Create Change Display Release Vendor Material General
Master Data
MM60 - List
Material Master MM01 MM02 MM03 of materials
Vendor Master XK01 XK02 XK03 MKVZ
Purchase Master
i) Purchasing Info
Record ME11 ME12 ME13 ME1L ME1M
ii) Source List ME01 ME04 ME03 ME0M
iii) Quota
arrangement MEQ1 MEQ4 MEQ3 MEQM
Purchasing
Documents
Purchasing
Requisition ME51N ME52N ME53N ME54N ME5A
Request for
Quotation ME41 ME42 ME43 ME45 ME4L ME4M
Maintenance of ME49 (Price
Quotation ME47 ME48 Comparison)
Out Line
Agreement
a) Contract ME31K ME32K ME33K ME35K ME3L ME3M
b) Schedule
Agreement ME31 ME32 ME33 ME35
i) Delivery
Schedule ME38
ii) Inbound
Delivery VL31N VL32N VL33N
Purchase Order ME21N ME22N ME23N ME29N ME2L ME2M
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Shipping Instructions &

Purchase Value Key
13
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Shipping Instructions & Purchase Value Keys

Shipping Instructions
Instructions issued to a vendor regarding shipment or packing of ordered goods

Specify instructions for an item by entering the predefined code.
The corresponding text is then included in the purchasing document
Customization:
Define shipping Instructions.
SPRO Æ Material Management Æ Purchasing Æ Material Master Æ Define

shipping Instructions.
Purchase Value Keys
A Key defining the valid reminder days and tolerance limits applicable to this material for
the purchasing department
Customization:
Define Purchase Value Keys
SPRO Æ Material Management Æ Purchasing Æ Material Master Æ Define

Purchase Value Keys
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Pricing Procedure
14
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Pricing
• This component is to store the pricing stipulations agreed with the Vendor (like
discounts, surcharges or payment of freight etc) in the system.
• You can enter these conditions in
o Quotations
o Outline Agreements (Contracts and Schedule Agreements)
o Purchase Info Records
• The system applies the conditions in determining the price in Purchase Order
Note: You can enter further conditions in the PO itself.
• There are three kinds of prices in purchasing.
o Gross price:
It is the basic price of the material w/o discounts, surcharges and taxes
Gross price = Basic Price of the Material
o Net Price:
The Gross price after considering duties & taxes into account.
Net Price = Gross Price + Duties + Taxes
o Effective price:
The net price after considering surcharge and discount
Effective price = Net price + surcharges + discounts
Condition Technique:
• The Condition Technique is used to determine the purchase price by systematic
consideration of all the relevant pricing elements
• This is the technique for formulation of rules and requirements.
• The system arrives at a suggested price by applying conditions defined by means of
Condition technique.
• The Condition Technique is how the price determined?
• The Condition Technique is used for
o Pricing for price determination
o Tax Determination
o For automatic account determination
Access Sequence access a Condition Record of a Condition Type in a Condition Table is
a Condition Technique. This is a simple logic
• Here the Condition Type is very important like PB00, PBXX and RA01 etc.
In the background every Condition Type has its own definition means the purpose of
the Condition Type like, is it for Pricing or Percentage, Quantity base, Accrual Fields
etc is to be defined to work this functions.
• Normally we use the existing ones without any risk.
• But some cases, we have to create a New Condition Types as per the organization
requirement.
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Access Condition
Access a
Sequence Record
O
Condition Technique f
Condition Condition
In a
Table Type
Elements in price determination:

• The Important elements in price determinations are:
o Access Sequence
o Condition Required
o Condition Record
o Condition Table
o Calculation Schema
1. Access Sequence
o An access sequence is a search strategy and it searches for a valid condition
record in a sequence
o It checks where prices are stored and at what condition prices are to be picked
up.
o If Contract or Schedule Agreement exists, what price has to be picked-up
2. Condition Record
• It represents that actual condition value and is stored in a condition key.
Field Description Field name
Material no. MATNR
Vendor LIFNR
Purchase Org. EKORG
Plant WERKS
Purchase Info Record ESOKZ
3. Condition Record
• Condition types represent price/elements factors in the system
• E.g.: Discounts in the Gross, Discounts on Net, Freight, Insurance, custom Duties,
and Taxes.
Note: Via Condition type you specify how the price factor is calculated.
E.g.PB00 - Standard Gross (Basic) Price (Automatic)
PBXX - Standard Gross (Basic) Price (Manual)
FRA1 - Delivery Costs
NAVS - Non-Deduct able Input Tax
SKTO - Cash Discount
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4. Condition Table
• A Condition Table consists of one or more condition keys and data part.
• Data Part contains a number that references a record in another table (which contains
the condition records)
Field Catalog: Grouping of certain fields for determining prices

Material MATNR komp
Vendor LIFNR komk p - item field in komp & komk
Purch. Org EKORG komk k - header field in komp & komk
Plant WERKS komp
Purch.Info Re ESOKZ komp
Note: 1. Each condition type has same control data
2. Control data for condition type:
3 All condition types have the same screens. In that field values may be different.
5. Calculation Schema
• The Pricing Schema means the calculations procedure of Condition Type.
• The standard Calculation schema provided by SAP for Purchasing is RM0000
In General the Pricing structure or break up provided by vendors is under the following
format
Rs. Condition Types
Gross Price 100.00 PB00
Discount on Gross Price (@5%): 5.00 RA01
------------
Gross Price after Discount 95.00
Excise duty @ 10% on GP after ED00
Discount 9.50
------------
Sub Total 104.50
Sales Tax @ 10% on sub total 10.45 ST00
Freight 20% on GP 20.00 FRA1
Packing 2% on GP 2.00 PK00
-----------
Total Price 136.95
• A framework of steps used to calculate or determine costs, prices, period end rebates
and taxes.
o Ex. RA01 - Discount % is calculated on PB00 - Gross Price.
o It means RA01 is based on PB00 like that we have to define in the Pricing
Schema
o Here PB00 has the Access Sequence - 0002. But RA01 does not have the
Access Sequence. Why because it is a dependent on PB00. But both are
Condition Types.
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IMG settings
Define Price Determination Process
Define Access Sequences
Define Condition Types
Define Calculation Schema
Define Schema Group
- Schema Groups: Vendor
- Schema Groups for Purchasing Organizations
- Assignment of Schema Group to Purchasing Organization
Define Schema Determination
- Determine Calculation Schema for Standard Purchase Orders
• After completion of the Schema Group, we have to assign it to Vendors.

Then whenever we use any transaction with this Vendor, the concerned Schema will
work as configured by us.
• The Pricing in MM is vast because each Condition has its own importance and each
Access Sequence has its own importance. So you need not bother about this. First you
learn how to define the Calculation Schema through the above.
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Output and Printer Determination

for Purchase Order
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Output and Printer Determination for PO
Define Condition Table for Purchase Order
Access Sequences
Define Message Type for Purchase Order
Maintain Message Determination Schema
Assign Schema to Purchase Order
Define Partner Role for Purchase Order
Messages-> Purchase Order-> MN04-> Create
Now you create PO (ME21N) and save it.
Go to ME22N and print the PO by giving output type.
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Release procedure
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Release Procedure
• This is an Electronic Document Approval i.e. 'on-line approval rather than manual
signature.
• It is an approval process for Purchasing requisition and external Purchasing
documents
• It Involves
o Checking the correctness of the data
o Giving authorization to purchase
• The approval may be based on doc. type, doc value, plant etc
• There are two types of Release Procedures:
o With Classification (Item level release and only for PR)
o With Out Classification (Header/document level release for RFQ, PO,
contract and Scheduling. Agreement)
Note:
Item level Approval is possible only in PR
For other Purchase Documents only header level is possible
1. Release Strategy:
• It defines the sequence in which the purchase document is to be released

• It contains the release conditions, release codes, release pre requisites
• It defines the entire approval or release process
2. Release Condition:
• It determines/identifies which release strategy applies.
3. Release Group:
• Group of persons responsible for releasing the Purchasing documents with assigned
strategy.
4. Release Code/Point:
• It is a two character alphanumeric id defined for each individual group (department)

in the release group.
5. Release Pre-requisite:
• It defines, who has to be release the document first.
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6. Release Indicator:
• It is a one-character id, represents a release status.

• It is assigned to a document.
• When individual person of a group affects release with his release code, a release
indicator is assigned to a document]
E.g.: Blocked - ‘B’, Released - 'R"
• If a document is not released
o It cannot print a document
o You cannot send this to the concerned vendor
o You cannot do the goods receipt
Frequently used tables in Release procedure
Doc Table Name Fields
PR CEBAN MATKL - Material Group.

BSART - Doc. Type.
RFQ
PO CEKKO BSART - Doc. Type
Contract GNETW- Net Order Value
Scheduling Agreement
SES SESSR LWERT - Total Value Release

(Service Entry UWERT- Partial Value Release
Sheet)
Note: The effected Release can also be cancelled, but it is possible only before the higher
person in hierarchy has not approved
IMG Settings: Release Procedure

Edit Characteristics
Edit Class
Define release Procedure for PO
Release Groups
Release codes
Release Indicators
Release Strategies
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Partner Functions/Roles
- Vendor
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Partner Functions
The Vendor as Business Partner he can assume different roles in its dealings with another
enterprise. In a procurement transaction, the vendor roles are:
• Vendor (VN)
• Ordering address (OA)
• Goods supplier (GS)
• Invoicing party (PI)
Customization Settings:
1. Define Account Groups and Assignment.
SPRO Æ Logistics General Æ Business Partner Æ Vendors Æ Control Æ

a. Define Account Groups and Field Selection (Vendor)
b. Define Number Ranges for Vendor Master Records and Assignment
2. Partner Determination
a. Partner Roles
SPRO Æ Material Management Æ Business Partner Æ Partner Determination
Æ Partner Roles Æ Define partner roles
b. Define Permissible Partner Roles per Account Group
SPRO Æ Material Management Æ Business Partner Æ Partner Determination
Æ Define Permissible Partner Roles per Account Group
c. Partner Settings in Vendor Master Record
Define Partner Schemas
SPRO Æ Material Management Æ Business Partner Æ Partner
Determination Æ Partner Settings in Vendor Master Record Æ Define
Partner Schemas
Assign Partner Schemas to Account Groups
Determination Æ Partner Settings in Vendor Master Record Æ Assign
Partner Schemas to Account Groups
d. Partner Settings in Purchasing Documents
Define Partner Schemas
Determination Æ Partner Settings in Purchasing Documents Æ Define
Partner Schemas
Assign Partner Schemas to Document Types
Determination Æ Partner Settings in Purchasing Documents Æ Assign
Partner Schemas to Document Types
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Valuation and Account Assignment

(MM and FI Integration)
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Valuation and Account determination
Valuation and Account Assignment: This is fully integrated with FI.
Material Valuation: Stock value = Stock Qty X Price

Material valuation will updates the G/L accounts in Financial Accounting.
Material Valuation features:
1. It allows you to revaluate the materials
2. You can evaluate the materials differently based on sub stocks.
3. It allows you to evaluate the balance sheet.
Material Valuation control:
This valuation is controllable by
1. System settings (where valuation has to be done)
2. Material master records (As a rule for each material has to be evaluated under a
material type. If this material type is valuated or not
For every material you are you are assigning valuation class.
You are grouping a material type under valuation class.
All materials of a material type can have a one material valuation
class.
Under a material type you can have different valuation class for
different materials
Materials under different material types can have same valuation class.
Valuation Structure
1. Valuation Area:
a. Valuation areas are possible at
i. Company code level
ii. Plant level
Note: SAP Recommends Valuation at Plant level
2. Valuation class: Grouping of similar properties of materials for the purpose of automatic
accounts determination.
a. If you don’t give valuation class to material it will be posted to a consumption
account
3. Valuation category:
a. If you want to valuate the materials differently based on certain criterion you can
use the valuation category.
b. For example based on origin, procurement, based on status (new, rework, repaired
material). You can maintain tender wise also
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4. Valuation type: It is the characteristics of the valuation category
Valuation Category Valuation type

Origin Import
Local
Procurement Internal
External
Status New
Reworked
Repaired
5. Material type
6. Account category reference:
7. Grouping of valuation classes for automatic account determination. This is attached to a
material type.
8. Movement type: which material movement
9. Valuation grouping code: is used to group the valuation areas.
a. With in the same valuation area you can determine different G/L accounts.
b. VGC is also called valuation modifier
10. Transaction/Event Key:
It is an internal processing Key.
It is used for the purpose of automatic account determination
Examples:
o Inventory posting BSX
o Offsetting entry for inventory posting GBB
o Cost (price) differences PRD
o GR/IR clearing accounts WRX
o Consignment liabilities KON
11. Account modifier:
It is a finer account determination.
It is a sub division of finer account determination. (These or sub division of
accounts)
Account modifiers are pre-defined in the system for GBB, PRD & KON.
They are defined for GBB, PRD & KON only.
Note:
1) For GBB account modifier is activated by default
2) For KON & PRD – it is not activated. In case if we want it can be activated.
3) For GBB you can create new account modifiers where as for KON and PRD
you can’t create the same
Ex: for account modifier for GBB:
AUF: GR with production orders with account assignment
BSA: Internal entry for stock balance
INV: Expenses or revenues from the inventory differences
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Customization:
1. SPRO Æ Material Management Æ Valuation and Account Assignment Æ Define Price
Control for Material Types
2. SPRO Æ Material Management Æ Valuation and Account Assignment Æ Account
Determination Æ Account Determination Without Wizard
a. Define Valuation Control (OMWM)
b. Group Together Valuation Areas
c. Define Valuation Classes
d. Define Account Grouping for Movement Types (OMWN)
e. Configure Automatic Postings
Define Valuation Control (OMWM)
• Choosing the valuation level is one of the first steps we will perform while
customizing the system.
• If using the PP Production module, the valuation area must be set at the plant level.
• For account determination, you can group together valuation areas by activating the
valuation grouping code. This makes the configuration of automatic postings much
easier.
Group Together Valuation Areas
• Valuation areas are grouped together with the objective of simplifying management
of the standard accounts table by minimizing the number of entries.
• Along with other factors, the valuation grouping code determines the G/L Accounts,
to which a goods movement is posted (Automatic Account Determination).
• The valuation grouping code makes it easier to set the automatic account
determination.
• Within the chart of accounts, we assigned the same valuation grouping code to the
valuation areas.
• Since we want to assign to the same G/L account, we assigned the same valuation
grouping code to the valuation areas.
• Valuation Area Company Code Chart Of Accounts Valuation Group Code
TPL1 TMOT INT 0001
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Grouping of Valuation Areas
Valuation
Company Code Valuation Area Grouping Code/
Valuation
Modification
Valuation Area
Plant
Define Valuation Classes
• The Valuation class is a group of material with the same G/L account.
• When you create a material master record, you must assign the material to a valuation
class. The valuation class is assigned to a material at plant level. However, if using
split valuation, the valuation class will be assigned at the valuation type level.
• The choices for valuation class are dependent on the material type. In general, several
valuation classes can be allowed for one material type. Also, the same valuation class
could be allowed for different material types.
• The link between the valuation class and the material type is the account category
reference. The account category reference is assigned to a material type.
• The G/L account determined for a material is carried out according to the settings for
its valuation class.
Step1:
• Account Category Reference
Account Category Reference (4 Char): Group of valuation classes that’s the system
uses to check whether the valuation class you have entered is allowed when you
maintain accounting data in a material master record.
Step2:
• Valuation Class
Here The Valuation Class is defined and a Account Category Reference is attached to
a Valuation Class.
Example: 3000 (Raw Materials) -> 0001 (Reference for Raw Materials)
Step3:
• Material Type / Account Category Reference
Here the Material Type can be assigned to a Account Category Reference.
Example: ROH (Raw Materials) -> 0001 (Reference For Raw Materials)
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Material Type
Account Category
Reference
Valuation Class
Define Account Grouping for Movement Types

• Movement type
• Special stock indicator
• Value updating
• Quantity updating
• Movement Indicator
• Consumption posting
• Posting string for values
• Counter
• Transaction/event key
• Account modification
• Check
Transaction key
Movement type FR1
Value String Transaction key Dr Stock

WA01 BSX
Transaction Key
WRX Cr
GR/IR
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The following diagram shows the relation between Chart of account, Transaction, account
modifiers, accounts posting keys.
Account Determination Procedure Overview
Material Plant
Master
Type of
Material
Type Company
Movement type Qty C d
Account
Categ.
Reference
Value
string
Val.
Account Grouping
Valuation
modification Chart of
Class
Account
Processing
Key
G/L
Account
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TRANSACTION / EVENT KEYS IN SAP
(WITH NOTES ON APPLICABILITY)
AUM Stock transfers are there between plants and from one movement type to another with
split valuation. The difference between the price at the delivering plant and the
receiving point is booked at the later.
Account to be opened:
Loss – Stock Transfer
Gain – Stock Transfer A/c
BO1 Check up Subsequent settlement of Provisions (e.g.: volume based rebate)
BO2 Check up. Subsequent settlement of revenues -conditions in inv. Verification
BO3 Check up Provision Differences
BSV The Company sends materials for subcontract work, this transaction is considered.
Accounts to be opened
Materials Consumed/Trading Goods w/o cost element -- for ROH
Inventory Change – Cost of Goods sold w/o Cost element -- for FERT s
BSX All stock postings to Stock Accounts due to Goods receipts & goods issues in
Inventory Management. B/s Inventory A/c s 11101 to 11111
DIF Small Differences that may arise during invoice verification in the invoice amount not
exceeding tolerance.
Accounts to be opened:
Loss—Inventory Differences A/c
Gain---Inventory Differences A/c
FRx These are used for posting delivery costs when goods and invoices are received for
purchase orders
FR1 Freight Clearing 69002 Separate A/c s is required
FR2 Provisions for freight Charges 69002
FR3 Customs Clearing 69002
FR4 Provisions for Customs Clearing
FRL Services are performed for the company externally.
Purchased Services A/c
FRN Services are performed for the company externally and hence delivery costs
External Procurement Costs A/c
GBB Offsetting Entries for Inventory Postings
AUA For Order settlement
68005 (Factory output for Production)
AUF For GRs for orders (w/o account assignment)
68005
BSA For initial entry of stock balances
11199
INV Expenditure/Income from Inventory differences
68004 – Raw Material Consumption A/c
VAX For goods issues for sales orders with no assignment object
The account will not be cost element
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68002 –Raw Material Indigenous
72001 – Stores & Spares
VAY For goods issues for sales orders with assignment object
The account is a cost element
VBO Consumption from stock provided to vendor
68002 –Raw Material Indigenous
VBR For internal goods issues (e.g.: to a cost center)
68005—Factory output for Production
72001 – Stores & Spares
VKA For consumption in Sales Order without SD (Mvt. Type 231)
VNG For Scrapping & destruction
68004 – Raw Material Consumption – Others
VQY For sampling with account assignment
ZOB For goods issues with no Purchase order reference (Mvt 501)
ZOF For goods issues with no production order reference (Mvt 521)
KBS Account - assigned Purchase Order ie. account assignment taken from PO
Account need not be assigned in OBYC
KDR Exchange rate rounding differences in case of foreign currency invoices
80029 -- Exchange Rate Difference - Valuation 1
KDM Exchange rate rounding differences for open items (invoice posting with a
Different exch. rate than the GR/due to Std price difference/insufficient stock
coverage)
80028 --Exchange Rate Difference - foreign currency to local
KDV Material ledger from low levels E/R diff.
KON Consignment payables
KTR Offsetting entry for price differences in cost object hierarchies
LKW Accruals and deference. acct (material ledger)
PRD Price Differences
Loss/Gain Inventory Differences (Two A/cs to be opened & assigned)
68004 – Raw Material Consumption – Others A/c is assigned
PRK Price Differences in cost object hierarchies
Loss/Gain Inventory Differences (Two A/cs to be opened & assigned)
RKA Inv. reductions from logistic invoice verification
UMB Gain/loss from revaluation Check up- 68004 is found attached (Raw Material
Consumption – Others A/c )
UPF Unplanned delivery costs
VST Input Tax
WGI Goods issue inflation revaluation
WGR Goods receipt inflation revaluation
WRX GR/IR clearing account
40051 – GR/IR Clearing A/c
WRY GR/IR clearing acct (mat. ledger) (old)
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Inventory Management:
- Overview
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Inventory Management Overview

- Inventory Management is a part of a Material Management module.
- Inventory management means managing the material stock by maintaining the proper
records or material movements.
- Inventory management works on two ways
o On Qty updating (at store location)
o On Value updating (at A/c)
- Inventory Management is fully integrated with PP, SD, QM, FI/CO
o In PP
IM is responsible for staging of the components required for
production orders
The receipt of finished products in the wear house is posted
[Here, when material issued to production, IM will check the availability of
the stock and release the material for production]
o In SD
Issue the stock for Sales Order
It is possible to create Sales order stock
o In QM
In case of goods movement, the system determines whether the
material is subject to an inspection operation. If so the corresponding
activity is initiated for the movement in QM
o In FI/CO
Issue to production - Consumption A/c
Scrap - Scrap A/c
Issue to Sale - Sales A/c
Before Invoice – FI
After invoice --CO
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Goods movement
There will be a transaction resulting in a change in stock.
Types of Goods movement:

• Goods Receipt (GR)
• Good Issue (GI)
• Stock Transfer
• Transfer posting
Goods Receipt (GR)
It is a goods movement, with which the receipt of the goods from vendor or
production is posted. A good receipt leads to an increase in warehouse stock
Goods Issue (GI)
It is also a good movement, with this

Material with drawl
Material Issue
Material consumption
Shipment of goods to a customer - is posted
A goods issue leads to a reduction in warehouse stock
Stock Transfer
It is also one more goods movement

It means removal of material from one storage location (or plant) to
other storage location (or other plant) with in or between company
codes
Transfer Posting
It is a general term for changes in stock type or stock category or stock

status of a material
• Transfer posting from material to material
• Release from quality inspection stock
[Note: It is irrelevant whether the posting occurs in connection with

physical movement or not]
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Result of Goods movement.
When you enter a goods movement

• A Material document is created
• If the movement is relevant for financial a/c accounting document will also be
created
• Stock quantities of the material are updated
• Stock value of the material master is updated
• Depending on the movement type additional updates are also carried out like in
case of good issue for cost center the consumption values of the items are also
updated.
Document concept:
• The account principle of ‘No posting with out document” is applies even IT based
Inventory management system
• A document is a proof that a transaction involving stock changes has taken place
• When a good movement is posted, a Material Document is generated as a proof of
the movement.
• If the movement is relevant to the financial accounting (i.e. if it is leads to an
update of G/L accounts) an accounting document will be generated parallel to the
material document.
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Material Document consists of Accounting Document consists of

Document Header Document Header
Posting date posting date
Name of he person who created Document currency
At item level at item level
Quantity G/L Account no
Storage location Associated amount posted
Plant, Movement type
Note: The Material and Accounting Documents are independent documents
Document type in Inventory management:
WA – Goods Issue
WE – Gross Goods Receipt
WN – Net Goods Receipt
WI – Physical Inventory Document
WL - Transfer posting
Movement Type
• It is a three digit identification key

• In order to differentiate various goods movements movement type is used
• Movement type has an important control function in Inventory Management
o Up dating the quantity fields
o Updating the stock and consumption accounts
o Determining which fields are to be displayed during the entry of a
document in a system
• Example of Movement type is
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Some Important Movement types:
Movement type Description of the goods movement

101 Good receipt for PO
103 Good Receipt + Blocked stock (GR Blocked)
105 Releasing from GR blocked
122 Return to vendor/supplier
124 Return to vendor from blocked stock
201 Goods Issue for a cost center
301 Stock transfer from plant to plant with 1st step
303 Stock transfer from plant to plant with 2 step - issue
305 Stock transfer from plant to plant with 2 step - receiving
Note1: Movement type + 1 = reversal

Note2: for 121 – no reversal movement type
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Tcodes in Inventory Management
1. Material documents
a. MB51 – List of Material documents
b. MR51 – List of Accounting documents
2. Stock
MMBE – Stock Overview MB52 -- Warehouse Stock
MB53 – Plant Stock Availability MB5B – Stock between Posting Dates
MB5T – Stock in Transit MBLB – Stock with Subcontract Vendor
ME2o -- Stock provided to the vendor MB50 -- Total Stock all materials
MB5S -- List of GR/IR balances
3. MB1A – Goods Issue

4. MB1B – Transfer Posting
5. MB1C -- Good Receipt
6. Layouts:
a. ME9F -- PO Printout
b. MB90 -- Output from Goods Movements
c. ME9A -- RFQ Printout
d. ME9E -- Schedule Agreement Printout
7. Reports:
a. ME80FN – General Analysis PO Report
b. MC48 -- Current Inventory
c. MC45 -- Consumption Value
MIGO Transaction code is meant for
• Goods Receipt
• To display of material document
• Goods Issue
• Releasing of GR Blocked stock
• Place in storage
• Removal from storage
• Cancellation of material document
Inventory Management IMG settings

Plant parameters
Number Assignment in INV Mgmt
Define number assignment for accounting doc (for GR, GI&PI)
Set tolerance limits for Goods Receipt (B1, B2, and VP)
Create Storage loc automatically in Inv. Mgmt
Set Delivery completed indicator
For GR based IV, Reversal of GR despite invoice
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- Goods Receipt
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Goods Receipt
Steps during GR:
• Company Sends a PO to Vendor

• Vendor will send Material to Company based on PO may be full quantity or
partial quantity to the delivery address mentioned in the PO
• Company makes a Goods Receipt
• GR will be done at the plant premises called GR area
• During the GR, system will generate one material document as a proof of action
i.e. GR and it also generate Accounting document in addition to material
document parallel and automatically
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The diagram shows an overview of all the key effects of a goods receipt referencing a
purchase order.
At the goods receiving point

• System checks whether the delivery is the same as the purchase orders data, that is,
whether the goods that were ordered have been delivered.
• The system suggests data from the purchase order when you enter the goods receipt
(for example, items and quantities). This makes it easier to enter the goods receipt and
check over deliveries and under deliveries when goods arrive.
• The purchase order history is automatically updated as a result of the deliveries.
• The Purchasing Department can send a reminder about late deliveries.
• When you post a goods receipt to the warehouse, the system creates a material
document containing information such as the material delivered and the quantity
delivered. The system also records the storage location in which you place the
material into stock in the plant concerned.
• In transactions relevant for material valuation, the system creates at least one
accounting document, which records the effects of the goods movement on the value
of the stock.
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Result of the goods receipts posting

1. Creation of the Material Document
When you post a GR, the system automatically creates a material document which
serves as a proof of the goods movement.
2. Creation of the Accounting Document
Parallel to the Material Document, the system creates an account document.
3. Creation of goods receipt/issue slip
a. When you enter GR you can print GR/Issue slip
4. Sending a mail message to Purchasing
a. If the GR message indicator has been set in PO, the the buyer automatically
receives a message about the delivery
5. Stock up date
a. Stock will be updated in the material master record, depending on the
destination of the goods
6. Good receipt into warehouse
a. Here the system will increase the total valuated stock and the stock type
(unrestricted etc) by the delivered quantity. The stock value is updated at the
same time.
7. Good receipt in to the consumption
a. Only the consumption statistics are updated in the material master record.
[However it does not update this stock for spl stock like sales order, project
stock]
8. Good Receipt into GR blocked stock
a. The stock levels remains the same
b. It records only in the PO history
9. GR into a new storage location
a. New storage location will be created when GR is posted (Provided
customizing of automatic creation of storage location is done already)
b. Other wise you have to add a new storage location to the material master
before you post a GR to it.
10. Update the GL accounts
a. System automatically updates the G/L accounts by the value of the goods
receipt.
11. UP date in PO:
a. PO History:
i. During the GR a PO history record will be automatically created
which contains data like delivered qty, Mat doc no, item, Mat type and
posting dates of GR
b. PO Item:
i. If the delivery completion indicator is set in the mat document the
order is considered to be closed and the open PO qty is set to be zero
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12. Other Updates:
a. Depending on the characteristics of the material, movement and components
used other updates are carried out like:
i. Entries will be made in the planning file or independent requirements
reduction in mat. Plg
ii. Statistical data in Inventory controlling
iii. Vendor evaluation data in purchasing
iv. Transfer requirements and quota in WM
v. Inspection lots in QM
Effects of GR on PO and Material Master.
Before GR After GR
In PO
o Header data - Header Data
Status View - Status view
• Order Qty - X Order Qty - X
• Delivery. Qty - 0 Deli. Qty - Y
• Still to be del - X Still 2 be del X - Y
o Item Over View - Item Over view
No New tab called PO history A new tab PO History create
o Delivery Tab
Del. Completed indicator Del completed indicator
• (No check/masked) (If full PO Qty receives)
In Material master
o No New view A new view will be added

For Plant stock - for plant stock
For Storage loc stock - for storage location
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- Goods Issue
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Goods Issue:
- Goods issue is the with drawl of stock or delivery to customer

- Goods issue leads to reduction in stock
Types of Goods Issue
• With drawl of material for Production orders

• With drawl of material for sampling & scrap
• Return deliveries to vendor
• Other types of internal staging of material
• Deliveries to the vendor with out involvement of SD shipping component
Entering the good issue:
Entering the goods issue can be created in two ways
Goods issues are either Planned or Unplanned
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Goods Issue
Goods issues can be planned or unplanned. The data to be entered depends on the
type of goods issue. The R/3 System prepares various account assignment fields,
depending on the movement type and system configuration. It uses automatic account
determination to determine the G/L account to which the movement is posted. You
enter a G/L account only if you want to post the goods movement to another account.
If a material is no longer of use, it is posted for scrapping. If a material is destroyed,
this information must also be entered in the R/3 System. You can scrap material from
unrestricted-use stock, stock in quality inspection, and blocked stock. When you post
a material for scrapping, the R/3 System reduces the relevant stock, transfers the
value of the scrapped material from the stock account to a scrap account, and debits
the cost center entered.
Sample withdrawal is a goods issue generally linked to a quality inspection. The SAP
sampling procedure assures you that the sample for testing is taken from the existing
stock. The sampled goods are treated as destroyed – in other words, the system
assumes that the material can no longer be used after the quality inspection. In this
way, sampling is the same as scrapping, with the exception that the value of the
sampled material is posted from the material stock account to the quality inspection
expense account.
Why Reference Document:
- When a reference document is exists (reservation/order)

- It can check whether what was requested is actually issued
- System can suggest data (like mat, qty, A/c assignment, over/under deliveries etc)
from the reference document
- After with drawl, qty with drawn is updated in reference document and reserved qty
is reduced accordingly.
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- Stock Transfer
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Stock Transfer:
In a day-to-day activities Stock transfer is one activity.
Normally stocks are transferred between organizational units based on official
communication of the concerned in charges.
Stock Transfers are two types

1. Intra Company Stock Transfer
Means Stock transfer with in the company code
2. Inter Company Stock Transfer
Means Stock Transfer between company codes
Intra Company Stock Transfer:

Again it is Two Types
1. Storage Location-to-Storage Location
2. Plant-to-Plant
1. Storage Location-to-Storage Location

Again these types of Stock transfers are two types
1. One-Step Process
2. Two-Step Process
a) One-Step Process
• Here certain quantity of material will be requested officially by the in-charge of
one storage location to the other storage location
• The following Drawing shows based on the request of Storage Loc. In-charge of
S2, S1 in-charge is sending the material under One-Step Process
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Steps:
• Use TCode: MB1B and Mvt = 311
• Enter Supplying Plant SPL1 and Supplying Storage. Location S1 in the initial
screen.
• Enter the material no and quantity
• Press save
b) Two-Step Process
[This process is adopted in SAP because when transferring the stock from one
storage location to another storage location there is a possibility of not receiving the
quantity by receiving storage location because of different events like accident, theft
may occur.
In single step whether the receiving storage location receives physically the quantity
or not it updates in stock status.
This can be avoided in the two-step process]
In Two-step process there are two sub steps:

1. Remove from Str. Loc
2. Placing into Str. Loc.
Remove from Str. Loc
screen.
• Press save
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Placing into Str. Loc

• Enter Plant as SPL1 and Receiving Storage. Location as S2 in the initial screen.
• Press save
2. Plant-to-Plant
Again these types of Stock transfers are two types
3. One-Step Process
4. Two-Step Process
a) One-Step Process
• Here certain quantity of material will be requested officially by the in-charge of
one storage location of one plant to the other storage location of other plant.
• The following Drawing shows based on request of in-charge of Storage Loc. of
S1 of Plant-1, sending to the material to the in-charge of S3 of Plant-2, under
One-Step Process
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Steps:
• Enter Supplying Plant SPL1 and Supplying Storage Location S1 in the initial
screen.
• Enter Receiving Storage Loc2
• Press save
b) Two-Step Process (Plant-to-Plant)

[This process is adopted in SAP because when transferring the stock from one storage
location of a plant to another storage location of other plant, there is a possibility of
not receiving the quantity by receiving storage location of other plant because of
different events like accident, theft may occur.
In single step whether the receiving storage location receives physically the quantity
or not it updates in stock status.
This can be avoided in the two-step process]
In Two-step process there are two sub steps:

1. Remove from Str. Loc (Plant-to-Plant)
2. Placing into Str. Loc. (Plant-to-Plant)
Remove from Str. Loc (Plant-to-Plant)
Steps:
screen.
• Enter Receiving Plant SPL2. Entering of Receiving Str. Loc is optional.
• Press save
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Placing into Str. Loc. (Plant-to-Plant)

Steps:
• Enter Receiving Plant SPL2 and Receiving Storage. Location S2 in the initial
screen.
Press save
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A consolidate Statement of Accounts triggered during various goods movements
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Transfer Posting
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Stock Types:
• In Inventory Management, there are three stock types that indicate a material’s
usability. If batch status management is active, the system supports another stock
type; restricted-use stock.
• Unrestricted-use stock:
• A company’s own stock that is physically located in the warehouse, is valuated, and
is not subject to any restrictions on usage.
• Quality inspection stock:
• A company’s own stock that is in quality inspection. Quality inspection stock is
valuated, but is not for unrestricted use. (not available for MRP, no with drawl is
possible)
• Blocked stock:
• A company’s own stock that is not to be used. It is not for unrestricted use in
Inventory Management and may be configured as not available for Materials
Planning. (i.e available from MRP perspective, no with drawl is possible)
• You can only post with drawls from consumption from unrestricted stock
• From Quality Inspection/Blocked Stock you can with draw only sample or scrap
material.
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Transfer Postings:
• You can only post withdrawals for consumption from unrestricted-use stock. From
quality inspection stock and blocked stock, you can only withdraw a sample, scrap a
quantity, or post an inventory difference.
• If you want to withdraw goods from blocked stock or quality inspection stock, you
have to carry out a transfer posting into unrestricted-use stock first. This also applies
to stock transfers.
• When you carry out a transfer posting, the stock type, batch number, or material
number is changed. A transfer posting may also involve an actual physical stock
transfer.
• The system creates a material document so that the transaction can be entered. The
system only creates accounting documents if a change in valuation is involved (for
example, stock transfer from plant to plant).
• You use the movement type to control the stock types involved in the transfer.
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Physical Inventory
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Physical Inventory
What is Physical Inventory?
Physical Inventory is the procedure used to maintain an accurate count of material

This involves physically counting the quantity of stock at storage location.
Which stocks can be inventoried?

• Company’s own stock
• Special stock (consignment stock at customer, external consignment stock from
vendor or returnable packaging material)
Note: 1. Above stocks to be taken separately in different physical inventory documents.
2. Physical inventory can be carried out for the following stock types
a. Unrestricted stocks in wear house
b. Quality inspection stock
c. Blocked stock
d. If batch status management is active, stock type 1 covers both unrestricted-
use stock and restricted-use stock
3. Inventory of all stock types mentioned could be taken in a single transaction
4. For the material to be inventoried, one item is created in the physical inventory
document for every stock type.
5. Physical inventory takes place at storage location level.
6. A separate physical inventory document is created for every storage location
[If no storage location segment exists for a material, this means that no goods
movement has ever taken place for the material in the storage location. The material
therefore has never had any stock at the storage location and does not exist at stock
management level. It is therefore not possible to carryout a physical inventory for the
material in this storage location
This is not to be confused with a material for which a goods movement has taken place
and for which the stock balance is currently zero. A Physical inventory must be carried
out in this case. It is also possible to carry out a physical inventory since storage
location data is not deleted when the stock balance is zero]
Physical inventory procedure:
• Periodic Inventory
• Continuous inventory
• Cycle counting
• Inventory sampling
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Periodic Inventory:
• In periodic Inventory all stocks of the company are physically counted on the
balance sheet key date.
• Every material must be counted
• During counting, the warehouse must be blocked for material movements.
Continuous Inventory:
• With the continuous Inventory procedure, stocks are counted continuous during
the entire fiscal year.
• In this case, it is important to ensure that every material is physically counted at
least once during the year.
Cycle Counting:
• Cycle Counting is a method of physical inventory where the inventory is

counted at regular intervals with in the fiscal year.
• These intervals (or cycles) depend on the cycle counting indicator set for the
moving items for examples.
Inventory Sampling:
• In inventory Sampling, randomly selected stock of the company are physically

counted on the balance sheet key date.
• If the variance between the result of the count and the book inventory balance
are small enough, it is presumed that the book inventory balances for the other
stock are correct.
Physical Inventory process:
Independent of the Physical inventory procedure, the physical inventory process can be
divided into three phases:
- Physical Inventory Preparation
o This includes creating a physical inventory document
o Blocking the material for posting and printing.
o Distributing the physical inventory document
- Physical Inventory count
o The stocks in the warehouse are counted and the count results are
entered in the count list.
o These are then transferred from the count list to the system in the step
“Enter Physical inventory count”
- Physical Inventory check
o Using the list of inventory differences, you can check variances in the
stocks.
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o You should check whether the transferred count result is correct
(change count) or whether you want to initiate a recount.
o If the difference is accepted, it is posted and stock is corrected.
Create Physical
Inventory document
Set Blocking
Indicator
Print Physical
Inventory Document
Physical Inventory
count
Post the count result
Arrange for Re-count

List of differences
Change count Material document
Post the differences
Accounting document
o A Physical inventory document is corrected to record the results of a

physical Inventory.
o Once actual counts are entered in to the physical inventory document ,
the values are posted online, resulting in creation of SAP material and
accounting documents
o Tolerance group can be limited to a maximum difference per physical
inventory document and maximum difference per line item with in a
document.
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Reservation
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Reservation
What is Reservation?
A Reservation is a request to the warehouse to keep materials ready for a goods issue at a
later date (for future use) and for certain purpose.
• A Reservation for goods Issue can be requested by various departments by various

account assignment objects (such as cost center, order, assets)
• It is used to plan an inward movement in advance.
• A Reservation ensures that a material is available when it is needed
• It is also simplify and accelerate the goods issue process and prepare the task at the
point of goods issue.
• Reservation can be taken into account by MRP so that a required material can be
procured quickly if it is not available in the warehouse.
• A Reservation results in an entry in the requirement-planning file.
• Any one reservation can have only one movement type and one account
assignment
What information is in a reservation?
In a reservation information is stored that is relevant for goods issue and for MRP. For
example
• What? (Which material?)

• How much (In which quantity?)
• When? (For which requirement date?)
• From where? (From which plant or warehouse?)
• To where? (To which recipient or customer?)
Structure of the Reservation:
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A Reservation document consists of a header and at least one item
• The header contains general data about the reservation (creator, movement type,
account assignment).
• The Item describe individual planned movements (material, quantity, requirement
date)
• Note: You can create a reservation for exactly one purpose only. i.e. you can enter
only one movement type and one account assignment object (like cost center)
Reservation level:
• Reservations are made at plant or storage location level.

• For materials handled in batches reservation can also be made at batch level.
Manual/Automatic reservations:
Reservations can be created manually or automatically.

SAP supports
• Manual (reservations entered directly by users)
• Automatic (these are generated by the system automatically)
There are two types of automatic reservations
o Reservations for orders, networks, WBS (Work Breakdown Structures)
elements
o Stock transfer reservations:
When stock falls the reorder point in a storage location, the system
generates a stock transfer reservation in the plant
Note: You cannot change reservations that were created automatically. If you need to
change the reservation you would have to change the original production order.
Results of the reservation
When a reservation is entered
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• A reservation document, which serves as a proof of the request is created.
• In the material master record, total stock and un-restricted use stock of the
material remain unchanged.
• Reserved stock is increased by the reserved quantity
• In MRP, available stock is reduced by the reserved quantity. This is visible in the
current stock/requirement list. The reservation causes an entry to be made in the
requirements planning file.
Note: You cannot maintain automatic reservations directly. For example, it is not
possible to change reservations for order directly. You have to change the components in
the order. The system then updates the reservation automatically.
Displaying the reserved stock:

There are two functions available for displaying reserved stock
Stock over view at plant level
When you use this function, the system displays the total reserve stock of the material
at plant level. From the stock over view you can select environment Æ to display a list of
the reservations for the material
Current stock/requirement list:
When you use this function, the system lists all the open reservations for the material at
the plant level along the reserved quantities for each.
Settings for reservation:
- You can change the field selection depending on the movement type.
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- You can define per plant whether the R/3 system is allowed to create stock segment for
reservations in a particular storage location automatically.
Movement Selection list for

allowed reference items
Perform
Days allowed for Settings for Availability check
movement Reservation
Message for non

Retention availability
period
Checking
rule
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Logistic Invoice Verification:

- Overview
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Logistic Invoice Verification: Over View
• Logistics Invoice Verification is a part of Materials Management (MM).
• It is end of the logistics supply chain
• It verifies Incoming Invoices in terms of their
– Content, prices and arithmetic and invoice is posted.
– When you post LIV certain G/L accounts are updated in FI & controlling for
their further actions. This is the integration of FI & CO
• Up to 4.6B versions – there is CIV (Conventional Invoice Verification)
• From 4.6C onwards CIV is dropped and LIV is adopted.
LIV – With this you can verify the invoices, which are generated from procurement. You
can also process the invoices which are not generated from invoices i.e. other expenses
i.e. inspection costs, travel costs etc.
• Invoice verification: Vendor invoices are checked for accuracy of prices and contents.
• Payment processing: Financial Accounting normally deals with vendor payments.
Types of Invoice Verifications:
1. Invoice verification online (Enter Invoice)

a. Invoices with purchase order reference (PO based invoice verification)
b. Invoices with goods receipt reference
c. Invoices without purchase order reference
2. Invoice Parking:
a. When an invoice is parked the system saves the invoice document
b. It does not make any posting i.e. No accounts are posted
c. You can post this parked document after verification.
3. Invoice verification in background:
a. To save the time just enter the total amount of the invoice, system checks for
matching invoices in the back ground
b. If no errors, it post the doc in background
c. If errors, the invoice is parked or blocked.& it has to be processed separately
4. Automatic Invoice verification:
a. Evaluated Receipt Settlement (ERS)
i. Here you don’t receive any invoice from the vendor but post them
yourself based on the info in PO & GR.
b. Consignment and Pipeline Settlement
i. No invoice is expected from vendor, instead you settle the posted with
drawls yourself & send the vendor a statement of the settlement
c. Invoicing plan
i. No need to wait for invoice from the vendor every time.
ii. Instead you can create invoices based on the dates scheduled in the PO
and these trigger the payment to the vendor
d. Revaluation
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5. Invoices Received via EDI:
a. Invoices are sent by vendor through EDI are verified by our SAP system and
is posted automatically.
b. If there are any differences or error occurs, they are settled manually.
c. You can also send PO through EDI.
Note: Most commonly used is Invoice verification online and in US is ERS.

The Invoice Processing:
• In Invoice verification process:

– Vendor invoices and credit memos are entered
– Contents and prices are checked
– Payment & evaluation is not the part of Invoice verification. This task is
passed to the other departments
– Invoice verification is Link between MM & external or internal accounting.
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• The general Format of an invoice
• Important Notes
• Logistics Invoice Verification creates a separate accounting document in addition to
the invoice verification document. This is used in Financial Accounting to settle the
invoice, but can also be processed by distributed systems or external systems In
Invoice Verification; you enter all the relevant data for the vendor invoice (for
example gross amount, tax, invoice date, and so on).
• The system checks this data in subsequent processing steps and compares it with data
that already exists in the system, such as the purchase order document and the goods
receipt document.
• When you enter an invoice with reference to a purchase order
– The system suggests data from the purchase order and the goods receipts for
the purchase order (for example, vendor, material, quantity still to be
invoiced, terms of payment, and so on).
– If there are discrepancies between the purchase order or goods receipt and the
invoice, the system warns the user, and depending on how the system is
configured, blocks the invoice for payment
– You can also assign the invoice items to a purchase order using the number of
the delivery note or bill of lading, provided that these numbers were entered at
goods receipt.
– The posting of the invoice completes the invoice verification process. The
system updates the purchase order history and Financial Accounting initiates
payment for the open invoice items
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Important A/c info in Invoice verification
– When you post the invoice, the system selects the accounts to be posted
– Account assignment is based partly on
• Your entries when you create on-line
• On information stored in the system
Important a/c in LIV
1. Vendor a/c
2. Stock a/c
a. The system only posts to the stock a/c when price difference occurs for an
invoice
3. GR/IR clearing a/c
a. At GR
i. Net invoice amount expected is posted to stock a/c
ii. The off set entry is posted to GR/IR clearing a/c
b. At IR
i. GR/IR clearing a/c offset entry will be cleared
ii. Offset entry on the vendor a/c
4. Tax A/c
5. Price difference a/c
a. When price difference occurs, system post into this a/c and no posting to stock
a/c
6. Cash Discount clearing a/c
a. When you post a net invoice value,
i. Cash discount is taken into a/c in the invoice,
ii. it reduce the value of the items
iii. The offset postings is made in cash discount clearing a/c which is then
cleared when payment is made
7. Freight clearing a/c
– The stock account is debited with planned delivery cost at GR
– Offset posting to freight clearing account
– This is cleared by an offsetting entry to vendor a/c at invoice receipt
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Logistic Invoice Verification Module - Tcodes
1) Document Entry
a) Enter Invoice MIRO
b) Parking Invoice MIR7
c) Enter invoice for IV for background MIRA
2) Further Processing Invoice

a) Display Invoice MIR4
b) Cancel Invoice MR8M
c) Rel. Blocked Invoice MRBR
d) Invoice Overview MIR6
3) Automatic Settlement
a) ERS MRRL
b) Consignment & Pipeline MRKO
c) Invoice Plan Settlement MR1S
d) RE Evaluation MRNB
Additional Notes on
ERS – Evaluated Receipt Settlement.
You need not wait for invoice or you are not going to receive the invoice from the vendor.
Based on the information available in the system & in the PO invoices are posted.
1. In the Vendor master purchasing view you have to flag the ERS settlement and you
have to use the tax code (sales tax) in purchase order itself (in invoice tab)
a. Sales tax Æ Sales tax on sales or sales tax on purchasing (we have to pay to
vendor)
2. Subsequent settlement
a. When you are using vendor consignment & pipeline materials.
b. Based on issue of material from consignment a liability will be created.
c. For posted with drawn you have make payments periodically to vendor.
d. Here you don’t get any invoice from vendor.
e. There is no PO. There is no GR issue.
3. Invoice Plan: are used for blanket PO or Network PO (for projects). For organization
you have ordered stationary through PO. You specify the invoice dates in PO. Based
on the invoices receive in the PO you can settle payments to the vendor
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Invoice Verification: IMG Settings
• Maintain Number assignment for accounting docs
• Configure how unplanned delivery costs are posted
• Configure Vendor specific Tolerance
• Set check for duplicate invoices
• Tax settings
o Check Calculation procedure
o Assign country to calculation procedure
o Check and change the settings for calculation procedure
o Define tax codes for sale & purchases
1. Maintain Number assignment for accounting docs

SPRO Æ MM Æ LIV Æ Incoming Invoice Æ Number Assignment Æ
Maintain Number Assignments for Accounting Documents
2. Maintain Default Values for Tax Codes
SPRO Æ MM Æ LIV Æ
3. Configure How Exchange Rate Differences Are Treated
4. Configure How Unplanned Delivery Costs Are Posted
5. Define Mail to Purchasing When Price Variances Occur
6. Configure Vendor-Specific Tolerances
7. Activate Direct Posting to G/L Accounts and Material Accounts
8. Set Check for Duplicate Invoices
TAX Settings:
1. SPROÆ Financial Accounting Æ Financial Accounting Global Settings Æ Tax on
Sales/Purchases Æ Basic Settings Æ Check Calculation Procedure
Sales/Purchases Æ Basic Settings Æ Assign Country to Calculation Procedure
Sales/Purchases Æ Calculation Æ Define Tax Codes for Sales and Purchases
Invoice Verification
Entering of Invoice (in MIRO)

Parking of Invoice
Holding of Invoice
Releasing of Parked and hold invoices
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Special Procurements:
- Sub Contract Scenario
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SUB-CONTRACTING SCENARIO:
1. Create Materials with type ROH (Raw Material), HALB (Semi-finished), ERSA
(Spare Parts), which are procured Externally. Components – 2 nos. Main Assembly 1
no.
2. Maintain BOM with components by using Transaction code CS01. Any waste or
scrap generated or received can be maintained as component with negative quantity.
3. Maintain Initial stock of components in the plant, which you are going to send to
vendor for subcontract.
4. Create a Purchase Info Record with info category as ‘Subcontracting’ for material and
vendor.
5. Create a Subcontracting Purchase Order (with Item category ‘Subcontracting’ i.e. ‘L’)
and see that BOM explodes. Other wise enter components manually.
6. Make a Transfer Posting to issue components for Subcontract Purchase Order so that
material is sent to the Subcontracting Vendor. Here the Quantity is shown as
‘Material provided to Vendor’ if you look at the stock of that components in MMBE
transaction code. (Maintain in ME20)
7. Make Goods Receipt (Transaction code – MIGO_GR) for the finished material or
Main Assembly against Subcontract Purchase Order. Here the moment type 543 will
be triggered automatically for the components consumed by vendor and moment type
545 will also be triggered in case of is there any Bi-products from the vendor.
8. So totally three (3) accounting documents will be generated.
a. For finished goods received in to stock.
b. For subcontracting/service charges/making charges payable to SC Vendor.
c. Components consumed – Materials provided to Vendor.
9. Do invoice Verification for the Subcontracting Purchase Order and the process will
be completed. Now to get Bi-Product in to our Plant stocks do movement type 542.
10. Six (6) Accounting Documents will be triggered for subcontracting materials.
PK Account Description
1. 89 79000 Unfinished Product
2. 96 191100 GR/IR Account
3. 91 893010 Cost of Goods Sold
4. 86 417001 Purchased Services
5. 99 300000 Inventory Raw Material
6. 81 400020 Raw Material Consumed
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- Stock Transport Order
Scenario
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Stock Transport Order Scenario
• You are Purchasing the Material internally by transforming the goods movement type
[UB] and Item category [U]
• There are two type of Stock Transport Orders
A) Inter Company Stock Transport Order (Between Companies)
B) Intra Company Stock Transport Order (With In the Company)
A) Inter Company Stock Transport Order (Between Companies)
Pre Requisites:
1. Material should exist in both plants and it should have sales view.
[or Create material with sales data and extend to both Supplying and Receiving plants]
2. Material Type should be Semi Finished (HALB) or Finished (FERT) product or Trading
goods(HAWA)
3. Both company codes should have Common Division.
Note: There can be a price difference of the material in the both plants.
There will be a cross company billing.
Settings :
Supplying Plant (PL1) Receiving Plant (PL2)
1. Create customer (XD01) with a/c group Create Supplying plant (PL1) as Vendor (XK01)
Ship-to-Party (0002) and Receiving Plant (PL2) With Account Group 0007- in Purchasing view-->
As customer Go to extras --> enter supplying plant
IMG Settings: IMG Settings:
SPRO--> MM --> Purchasing -->PO --> Setup STO SPRO--> MM --> Purchasing -->PO --> Setup
STO
Define Shipping Data for Plants --> Define Shipping Data for Plants -->
Customer No Plant -----No customer Number Customer No Plant -----PL1
Sales org -- Supply Plant S Org Sales org -- Receiving Plant S Org
Distr. chan -- Supply Plant Dist Chan Distr. chan -- Receiving Plant Dist Chan.
Int comp.bill Div - Important <---(both should have the same div.)--> Int comp.bill Division - Important
2. Document type : NB 2. Document type : NB

Delivery type : NLCC Delivery type : NLCC
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Ways of doing STO: Pur. Doc Item Movement Type at Shipping Billing
Type category Supply Receiving
Single Step --- -- 301 --- --- No

Two Step --- -- 303 305 --- No
W/o SD w/o Billing UB U 351 101 --- No
With SD w/o Billing UB U 641 101 NL No
With SD, with Billing NB -- 643 101 NLCC Yes
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- Vendor Consignment
Scenario
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Vendor Consignment
Consignment is functionality in MM purchasing, when you purchase the material
from vendor on consignment basis.
We will provide the premises to vendor in our stores; however we are not responsible
for the stock.
The stock is legally owned by the vendor only
When the delivery comes, we will make a GR even then, stock still legally by the
vendor. If you look at our stock status, it shows as ‘Vendor Consignment’ stock.
As and when we want the material, whatever the quantity it is we will simply transfer
the vendor consignment stock in to our company own stock.
Vendor need not send the invoice or bill for with drawl quantity. Company will settle
his consignment liabilities
IMG Settings:
1. Activate consignment prices via info records
SPRO Æ Material Management Æ General Settings for Material Management

Æ Activate consignment prices via info records (OMEV)
Double click: Activate consignment prices via info records

Select Radio button as below
Click Save and come back
2. Define special procurement types
SPRO Æ Material Management Æ Consumption Based Planning Æ Master

Data Æ Define Special Procurement Types
Click ‘New Entries’ button

Enter the Following
Plant: BPL1 - Birla Plant 1
Spl. Proc. Type: 10 - Consignments
Procurement type: F – External procurement
Spl. Proc.
Spl. Proc. K – consignment
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3. Maintain Message settings and communication method for you vendor
SPRO Æ Logistic Invoice Verification Æ Message Determination Æ Maintain
Conditions Æ Change Conditions Æ Output Type : KONS and key combination
is: company code and vendor.
Steps in Consignment:
1. Create or change the material master (MM01 or MM02)

Select MRP1 view
MRP type \: ND
MRP2 view
Spl. Procurement : 10 for consignment
2. Create Info Record (ME11), with info category as ‘consignment’
Note: Maintain Tax Code in purchase data view
3. Create Purchase Order (ME21N) with item category as ‘K’
4. Take the receipt of the material i.e. GR (MIGO)
- Here as a proof of action one material document is created
- However no Accounting document creates
5. Now the stock status (MMBE) shows that the material now as ‘Vendor Consignment’
6. Transfer the stock to company own stock (MB1B – Mvt 411K)
a. Now as a proof of action one material document is created
b. Here Accounting document creates with the following a/cs
i. A/c payable – Consignment sale -ve - 169900
ii. Inventory- Raw Material A/c +ve - 300000
7. Consignment liabilities can be settled in MRKO
Enter the following:
Company code:
Vendor:
Plant:
Material
Material Document:
Check consignment select Display.
Note: First Select Display radio button and execute it. It is success full then select the
radio button to settle and execute it again.
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Special Procurement:
Third Party Scenario
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Third Party Scenario

What is Third Party?
Company’s Vendor supplies material to company’s Customer
Or
Vendor Supplies material to a customer of a customer is called Third party.
1. Our Company sales department receives a PO from our customer for a material
2. Then company sends a PO with a delivery address as Customer to supply this
material
3. Vendor will supply this material directly to the customer
4. Vendor will send an invoice to the company
5. Vendor bill will be settled after the company got the payment from customer
In SAP the Third Party procurement will be done in two ways.

A) With SD Involvement
B) W/o SD Involvement
A) With SD Involvement:
1. Normally Sales people will take the PO from the customers & they create a Sales
Order (VA01) with 3rd party Item cat 'TAS'
2. In the back ground automatically Purchase Requisition (PR) will be created with Item
category 'S' along with Delivery address.
3. Purchase Dept creates the PO with Item cat 'S' and a/c assignment cat '1'. here
customer adds will be copied from the PR.
4. Then this PO will be sent to the Vendor.
5. Based on the PO line items vendor will supply material directly to the customer and
invoice to our Purchase organization.
6. Based on the conditions provided in the PO
a. If it is PO based invoice verification you can create a bill (Bill to the
Customer) with out waiting for Vendor IV.
b. If it is GR based invoice Verification we must very the vendor invoice before
creating a bill to customer
B) W/o SD Involvement:
1. No sales order, No PR is generated in the back ground

2. You can directly create a PO, based on the requirement of customer with the item cat
'S' and A/c assignment cat 'X' (auxiliary a/c)
3. Rest of the steps are same as above
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Third Party Scenario Steps:
1. Customer sends PO to Sales dept of the Company.

2. Create customer (XD01) with account group as sold-to-party
3. Sales people will create a Sales Order (VA01) with item category as ‘TAS’, i.e.
Third Party.
4. Create material with
1. Material type as HAWA type
2. Adding a sales view
3. In Sales Data 1 view:
a. General .Item Cat BANS, Division, Tax code
4. In sales Data 2 view:
a. Item Cat group: BANS
5. In sales General/Plant view:
a. Availability Check: 01, Transport Group as 0001, Loading as 0001
6. In Purchase view: Check Automatic PO
7. In Plant data storage loc 2 view: check negative stock allowed .
8. Accounting view: Valuation class: 3100 (for – HAWA), Price:
5. Create Vendor (Tcode XK01) – in purchase data view

Check Automatic PO check box
6. Maintain Purchasing Info Record (T code ME11) for these vendor and material
7. Change the SO (VA02) and go to Schedule lines and check whether PR is
created?
8. PR will be generated in the back ground with Item category 'S' and A/c
assignment category '1' or X aux a/c
9. T code ME59 and enter relevant data to create automatic PO with respect to PR
10. Send PO to Vendor.
11. Vendor delivers the material to the customer.
1. If it is PO based invoice verification you can create a bill (Bill to the
Customer) with out waiting for Vendor Invoice Verification.
2. If It is GR based invoice Verification we must verify the vendor invoice
before creating a bill to customer
12. We can do GR and IV however stock should not be updated.
[Note: If you are not always allowing third party order processing then you can create
a material master record with item category group as ‘NORM’ and procurement
should be marked as ‘X’ meaning both types of procurement (in-house manufacturing
and external product) ]
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Consumption Based Planning
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Consumption Based Planning
MRP: It guarantees the material availability

for manufacturing (Internal requirements) and
for Sales & Distribution for external requirement)
MPS: Master production schedules are
The main assemblies or end prod which are planned for extra care.
These MPS items are contributed to higher inventory
If there is a change in MPS item the whole MRP changes
A frequent change to MPS de-establishes the MRP
CBP
Procurements are triggered based on the past consumption parameters
or fore cast planning
When stock value falls below certain limit, based on the forecast
values your procurement triggers
Based on the past consumption values you are planning your future
procurement requirements
In CBP there are 3 procedures:
1. Re-order Point planning

2. Forecast based planning
3. Time phased planning
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1. Re-order Point planning
When stock level falls below the ROP, system suggest for procurement
RLT = Purchase process time + Planned time + Gr processing Time
Based on the past consumption data you can define ROP and safety stock
During the period of RLT excess consumption or excess demand is met by the
SAFETY stock
Note:
When using the CBP your Inventory management should be current and
active.
Your consumption pattern must be constant or consistent
For CBP
i. Maintain MRP1, MRP2 and forecast views
ii. Define ROP and safety stock in Material master data
At ROP procurement triggers
Procurement Quantities are in LOTs
Quantity triggered for procurement is net requirement
Generally Maximum stock is not defined only ROP is defined
Lot Size Procedure:
When net requirements are triggered those are converted into lots
For this Lot sizing procedures are defined
1. Static Lot Sizing Procedure

2. Periodic Lot sizing Procedure
3. Optimum lot sizing procedure
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1. Static Lot Sizing Procedure:
Again these are 4 procedures
a) Fixed LOT : In MRP you have to mention the LOT size
b) LOT for LOT : Based on Order Quantity LOT size is created
c) Replenishment to maximum stock level: this is only one lot you have
to define the maximum stock level
d) Fixed LOT with splitting and over lapping: you can allow the splitting
and the over lapping of LOTs
2. Periodic Lot sizing Procedure
Here you can have
o Daily – Daily requirements per a day form a LOT
o Weekly – all requirements generates over a period
o Monthly - all requirements generates over a period
o Periods of flexible length equal to posting periods
o Freely definable periods as per planning calendar
o All lot sizes are allowed for splitting and over lapping
Based on the period all requirements generated over a period
3. Optimum lot sizing procedure
a) Part period balancing
b) Least Unit Cost method
c) Dynamic Lot creation
d) Groff Reorder point planning
[Costs: Storage Costs (For storing the inventory)
Setup costs: Procurement Cost]
a) Part period balancing

Here the storage costs are equal, set up costs till the time
requirements are gathered and formed as LOT
(Requirement x Price x Storage cost% x
time in storage)
Average Cost = -------------------------------------
100 X 365
Requirement = Total Material requirement
Price = Material Price
Storage cost= 10 % of Base cost (Material cost) generally
Considered in SAP
Time in storage = in days
b) Least Unit Cost method
Storage costs should be greater than the setup costs
The same formula for storage cost can be used here.
c) Dynamic Lot creation
The Storage cost + Proc. Cost should cover to create a LOT.
The sum of the Storage cost + Proc. Cost should be the
optimum
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d) Groff Reorder point planning
a. You are expecting a saving.
b. The formula is
(Requirement x Price x Storage cost% x

time in storage)
Average Cost = -------------------------------------
2 x100 x 365
Here from storage and procurement 100% savings are expected
2. Forecast based planning

Based on the past consumption values, the requirements are fore cast for the
future.
In the FBP when you plot a graph with a past consumption date, you can find
certain pattern in consumption
When you plot a graph of consumption over a period of time, SAP assumes
the consumption pattern on one of the below models
Constant Model
Trend Model
Some times you can see an increasing trend of consumption over a
period of time due to the increase in the business.
This is called Trend Model
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Seasonal Model
Consumptions are high only for a particular period
Trend seasonal model

In this model Business seasonal consumption seasonally increases.
This is called a Trend Seasonal model
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3. Time phased planning
This is used very rarely used
May be used in advance countries
Planning Cycle: Vendor supplies material in this period

Delivery cycle: Company receives the material in this period
From Tues day to Friday

i. Vendor waits for receipts for GR
ii. Goods at plant and wait for GR
iii. If receipt is not done on Friday, then it has to be done in the next
Friday.
iv. You have to plan the material accordingly.
MRP Master Data

MRP controller
He is a planner in the production department
A Group or individual person responsible for easy planning
We can create MRP controller as a 3 Digit alphanumeric code
MRP Group
You group deferent material and you plan as a group for easy planning
Or
Grouping certain material for easy planning
PPC calendar
Production Planning and Control Calendar defines when the MRP run take place
This calendar is created by PP module
PPC Calendar is not required for CBP
MRP Procedure
It is pre-defined in the system, what type of planning you are adopting for MRP
Different Planning runs

Standard Indicators for planning run are
1. Regenerative Planning (NEUPL)
2. Net change Planning (NETCH)
3. Net change Planning in Planning Origin(NETPL)
When you create a material with a MRP views, the material is automatically entered
into the Planning
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In the planning file on of the planning indicator has to be set.
NETCH indicator is set in planning file then the system needs the low level code
Low level code materials will be planned first.

Here 0001 code materials will be planned first
You have to see whether BOM explodes or not
Normally MRP is used for B&C Type of items
Any requirement from previous run has to be deleted or included in first
planning. It is decided by the MRP controller
Net Requirement planning is the next step
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Warehouse Management
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Warehouse Structure Without WMS
If you are not using the Warehouse Management System, the storage location is the lowest
level of inventory management in the system.
In the Inventory Management (IM) component, the storage location is defined as the location
of physical stock in a plant.
Warehouse Structure With WMS
When you implement the Warehouse Management System (WMS) in a plant, you define the
Individual warehouses as storage types within a warehouse complex and group them together
under a warehouse number.
As a rule, it is not necessary to define several storage locations for a plant since you assign
the WMS warehouse number to a storage location from Inventory Management (IM).
You can also manage stock for several plants in the same warehouse at the same time. In this
case, the same warehouse number is assigned to the storage locations for these plants.
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The warehouse structure in Warehouse Management
Warehouse Number
Warehouse number uniquely identifies the warehouse in a plant
Storage Type
A storage type is a storage area, warehouse facility, or a warehouse zone that you define in
Warehouse Management (WM) for a warehouse number.
This is a physical or logical subdivision of a warehouse complex.
--> Bulk storage
--> Open Storage
--> High rack storage
--> Picking area
--> Shelf storage
You can also define storage types in WM that are shared by both the Inventory Management
(IM) and Warehouse Management (WM) application components.
These are called interim storage areas
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Storage Section
A storage section is an organizational subdivision of a storage type that groups together
storage bins with similar features for the purpose of putting away stock. The criteria for
grouping bins can be defined on a user-individual basis, for example, heavy parts, bulky
materials, fast-moving items, slow-moving items.
Picking Area
A picking area is a section within a storage type in which all picking activities are carried out
in the same way.
The picking area group’s storage bins together from the viewpoint of picking strategies and is
a counterpart to the storage section, which group’s bins from the viewpoint of put away
strategies.
Storage Bin
A storage type generally contains several storage spaces or slots.
These are called storage bins in Warehouse Management (WM).
The storage bin is the smallest available unit of space in a warehouse.
The storage bin therefore describes the position in the warehouse where the goods are or can
be stored.
Since the address of a storage bin is frequently derived from a coordinate system, a storage
bin is often referred to as a coordinate.
The coordinate 01-02-03 for example, can refer to a storage bin in row 1, stack 2, and level 3.
Creating Storage Bins

You can create one storage bin manually or you can group a range of storage bins with
similar characteristics and define them simultaneously.
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Creating a single storage bin
1. From the SAP Menu, choose Logistics --> Logistics Execution --> Master Data -->
Warehouse --> Storage Bin --> Create -->-->Manually.
2. Enter data as required.
As a minimum, you must enter the storage section for the storage bin.
3. Save your entries.
Creating several storage bins simultaneously
To create a group of storage bins with similar characteristics, you define a template with the
coordinate structure as follows:
1. To display a list of all previously defined templates, from the SAP menu choose Logistics
--> Logistics Execution --> Master Data --> Warehouse --> Storage Bin --> Create -->
Automatically.
2. To create a new template, choose New entries.
3. Enter the warehouse number, storage type and current number in the first section of the
screen. For the current number, enter any number that has not been used previously.
4. In the “Bin definition” section of the screen, enter values to define the template and
coordinates of the storage bins that you want to create.
For more information on how to enter data for defining the storage bin coordinate structure,
see the example.
5. You define the characteristics for all storage bins in the “Additional data” section of the
screen. As a minimum, you must enter a storage section, storage bin type and maximum
weight.
Save the characteristics data.
6. To generate the coordinates, choose Environment --> Create bins.
The system displays a screen with the storage bin characteristics and the coordinates of all
the bins that will be generated based on your entries.
7. If the data is incorrect, return to the data entry screen, make the necessary corrections, and
save the data again.
If the data is correct, choose Create online to create the storage bins or Create by batch input
to create the bins later in batch mode.
Example: Creating Several Storage Bins
If you chose to create the storage bins in batch mode, the system returns to the data entry
screen with a message stating that a batch session was created.
Make a note of the batch session name for subsequent processing.
Example: Creating Several Storage Bins
To create the following series of storage bins (coordinates)
02-1-020 02-2-020 03-1-020 03-2-020
02-1-040 02-2-040 03-1-040 03-2-040
You complete the Bin Definition section of the automatic bin creation screen in the following
manner:
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Template
The template field is used to specify the numeric and non-numeric characters
from which bin coordinates are built.
--> N represents a variable numeric value.
--> C represents a constant.
--> A represents ascending alphabetic values.
Note: Two alphabetic variables (2 A’s) cannot be entered next to each other.
Structure
The structure field is used to group together the numeric characters (N-values of the
template) into individual variable sections.
These sections are counted by the system.
You must enter the numeric characters in exactly the same positions as the alphabetic
characters in the template.
Start value
This data field specifies the storage bin to be created first in a range of storage bins.
End value
This data field specifies the storage bin to be created last in a range of storage bins.
Increment
In this data field, you define the increment for the individual variables (N or A) in the
template.
Quant
This is the stock of any material with the same features in one storage bin. The system
manages different batches of a material as different quants. The quantity of a quant can be
increased by an addition to existing stock. Quants can be created or deleted solely through
goods movements.
The quants serve to manage stocks at storage bin level.
When you store goods in an empty storage bin in WM, the system automatically creates a
quant in this bin.
The system automatically assigns a quant number.
The quant is automatically deleted by the system when the material quantity is picked.
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ASAP Methodology
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ASAP
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ASAP (Accelerated SAP) methodology
Phase I: Project Preparation
• Decision makers define clearly Project objectives and an effective decision making
process.
• Define Project organization and Roles.
• Implementation scope is finalized
• System Landscape and technical requirements are finalized
• Infrastructure (Hardware/Interfaces)
• High level Strategies for client
• Archiving strategy
• Issues of Data bases
• Other issues like
• Unanticipated tasks
• Normal tasks that can not be completed
• External factors that need to be dealt with
Phase II: Blue Print Phase
• Scope of R/3 implementation is defined.

• Business blue print is created.
o Tools used for this is
ASAP Implementation assistant
Question and Answer Data Base (Q&A dB)
Business Process Master List (BPML)
R/3 Structure Modules
Business Navigator and External Modeling tools
• Project Management (Activities like…)
o Conducting Status Meeting for Project Meeting
o Conducting Steering committee meetings
o Addresses the issues like Organizational Change Management
• Other Activities Like
o Project Team Training
o Developing the system environment
o Defining Org Structure
o Define Business Process
Phase III: Realization Phase
• Configuring the R/3 System

• Defining the Authorizations in R/3
• Defining the work flow
• Creating Use Documentation
• System manager procedures
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o Developing the System Test plans
o Define the Service level Commitment
o Establishing the System Administration function
o Setting up the Quality Assurance environment
Phase IV: Testing and Final Preparation
• Testing, user Training, System management and Cutover activities

• Test Plan has the activities of:
o Testing the conversion procedures and programs
o Total Interface programs
o Volume and Stress testing
o Final User acceptance testing
o Developing a Final Go-Live strategy
• Redirection to Go-Live
• Preparation of End-user documentation
• Training for the End Users
• Technical environment installation on Production system and testing
• Transfer of Legacy data and preparation plan for Go-Live
Phase V: GO-Live Phase
• Production support facilities are carried out

• Validations of Business process and their configuration
• Follow up training for End Users
• Sign–Off.
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Important MM Tables
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Important MM Tables
Materials: Material Documents:
MARA- Material Master - General Data MKPF - Header Material Document

MARC - Material Master - Coy Segment MSEG - Document Segment material
MARD- Mat. Master - Strloc/Batch Seg. BSIM - Sec. Index, Docs for materials
MARKT- Material Description
MAPL - Allocation of Task list to Material
MARV- Material Control Record
MARM- Unit of Measure
MBEW- Material Valuation
MOFF - Outstanding Material Master Record
MSTA - Material Master Status
MVER - Material Consumption
MVKE - Material Master Sales Data
MAPR - Material Index for Forecast
Purchasing Documents: Bill of Materials:
EKAN - Vendor Address- Purchasing Document MAST - Material to BOM Link

EKBE - History of Purchasing Document EQST - Equipments to BOM Link
EKBZ - History of Pur. document - Delivery Costs STKO - BOM Header
EKET - Delivery Schedules STAS - BOMs Item Selections
EKKN - 'Account assignment' in Purchase doc. STPN - BOM Followup control
EKKO - Purchasing document Header STPO - BOM Item
EKPO - Purchasing Document Item STPU - BOM Sub item
EKPB - "Material Provided" Item in Pur. Doc. STST - Standard BOM Link
EKPV - Ship.Specific data on stock trf for Prod docSTVB-BOM serialization of posting
STZU - Permanant BOM Data
Purchasing Infor Record: Vendor Master:
EINA - Purchasing Info Record Gen Data LFA1- Vendor Master (Gen Section)
EINE - Purc. Info Record Pur. org data LFAS -do- (VAT Regd Nos- Gen. Section)
EIPA - Order price History Info Record LFB1 - -do- (Company Code)
EIKP - Export/Import Header Data LFB5 - -do- (Dunning Data)
EIPO - Export/Import Item Data LFBK - -do- (Bank Details)
KONH - Conditions Header LFC1 - -do- (Transaction figures)
KONP - Conditions Item LFC3 - -do- (Spl G/L Transaction figures)
KONM -Conditions(Dimensional Qty Scale) LFM1 - -do- record purchasing org data
KONW- Conditions (Dimensional Value Scale)
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SAP MM Tcodes
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SAP MM TCODES
All transaction Tcodes are stored in table TSTC. Transaction Tcodes for MM module start
with M.
Material Creation
MM01 - Create Material MMI1 - Create Operating Supplies

MM02 - Change Material MMN1 - Create Non-Stock Material
MM03 - Display Material MMU1 - Create Non-Val. Material
MM50 - List Extendable Materials MM60 - List of Material
Stock Services
MMBE - Stock Overview MMS1 - Create Service

ME2O SC Stock Monitoring (Vendor) ME2S Services per Purchase Order
ME3S Service List for Contract
Purchase Requisition (PR)
ME51 Create Purchase Requisition ME51N - Create Purchase Requisition

ME52 Change Purchase Requisition ME52N - Change Purchase Requisition
ME53 Display Purchase Requisition ME53N - Display Purchase Requisition
ME54 - Release Purchase Requisition ME52NB Buyer Approval: Purch. Req.
ME55 Collective Release of Purchase Req. ME54N Release Purchase Requisition
ME56 Assign Source to Purchase Req. ME59N Automatic generation of POs
ME57 Assign and Process Requisitions ME58 Ordering: Assigned Requisitions
ME59 Automatic Generation of POs
ME5A - PR: List Display ME5J - Purch Requisitions for Project

ME5K - Requisitions by Account Asgmt MELB - PurchTransactions by TrackNo.
ME5F Release Reminder: Purchase. Req ME5R Archived Purchase Requisitions
ME5W Resubmission of Purchase Req. ME97 Archive Purchase Requisitions
RFQ
ME41 Create Request for Quotation ME42 Change Request for Quotation
ME43 Display Request for Quotation ME44 Maintain RFQ Supplement
ME45 Release RFQ ME4B RFQs by Requirement Tracking Number
ME4C RFQs by Material Group ME4L RFQs by Vendor
ME4M RFQs by Material ME4N RFQs by RFQ Number
ME4S RFQs by Collective Number ME80A Purchasing Reporting: RFQs
ME9A Message Output: RFQs
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Release of Purchase Documents Quotation
CT01 - Create Characteristic ME47 Create Quotation

CT02 - Change Characteristic ME48 Display Quotation
CT03 - Display Characteristic ME49 Price Comparison List
CL01 - Create Class
CL02 - Classes
CL03 - Display Class
CL04 - Delete Class
CL2B - Class Types
Purchasing Info Record Source List
ME11 - Create Purchasing Info Record ME01 - Maintain Source List

ME12 - Change Purchasing Info Record ME03 - Display Source List
ME13 - Display Purchasing Info Record ME04 - Changes to Source List
ME14 - Changes to Purchasing Info Record ME05 - Generate Source List
ME15 – Flag Purchase Info Rec. for DeletionME06 - Analyze Source List
ME16 - Purchasing Info Recs. for Deletion ME07 - Reorganize Source List
ME17 - Archive Info Records ME08 - Send Source List
ME18 - Send Purchasing Info Record ME0M - Source List for Material
ME1A - Archived Purchasing Info Records ME1B- Re determine Info Record Price
ME1E Quotation Price History ME1L Info Records Per Vendor
ME1M Info Records per Material ME1P Purchase Order Price History
ME1W Info Records Per Material Group ME1X Buyer's Negotiation Sheet for Ven
ME1Y Buyer's Negotiations. Sheet for Mat.
Outline Agreement
ME31 Create Outline Agreement ME32 Change Outline Agreement

ME33 Display Outline Agreement ME34 Maintain Outline Agreement Supplement
ME35 Release Outline Agreement ME3A Transmit. Release Doc Record
ME3B OA per Requirement No. ME3C OAgreements by Material Group
ME3J Outline Agreements per Project ME3K OA by Acct. Assignment
ME3L Outline Agreements per Vendor ME3M Outline Agreements by Material
ME3N Outline Agreements by Agmt No. ME80R Purchasing Reporting: O.Agmts.
Contract
ME308 Send Contracts with Conditions ME31K Create Contract

ME32K Change Contract ME33K Display Contract
ME34K Maintain Contract Supplement ME35K Release Contract
ME3P Recalculate Contract Price ME9K Message Output: Contracts
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Scheduling Agreement
ME31L Create Scheduling Agreement ME32L Change Scheduling Agreement

ME33L Display Scheduling Agreement ME34L Maintain SA Supplement
ME35L Release Scheduling Agreement ME36 Display Agmt Supplement (IR)
ME37 Create Transport Scheduling Agrmt ME38 Maintain SAgreement Schedule
ME39 Display SA Schedule (TEST) ME3R Recalculate SA Price
ME84 Generation of SA Releases ME84A Individual Display of SA Releas ME85
Renumber Schedule Lines ME86 Aggregate Schedule Lines
Purchase Order
ME21 Create Purchase Order ME21N Create Purchase Order

ME22 Change Purchase Order ME22N Change Purchase Order
ME23 Display Purchase Order ME23N Display Purchase Order
ME24 Maintain Purchase Order Supplement ME29N Release purchase Order
ME25 Create PO with Source Determination ME2A Monitor Confirmations
ME26 Display PO Supplement (IR) ME27 Create Stock Transport Order
ME28 Release Purchase Order ME2B POs by Requirement Tracking No ME2C
Purchase Orders by Material Group ME2J Purchase Orders for Project
ME2K Purchase. Orders by Account AssgmtME2L Purchase Orders by Vendor
ME2M Purchase Orders by Material ME2N Purchase Orders by PO Number
ME2W Purchase Orders for Supplying Plant ME80F Purchasing Reporting: POs
ME91F Purch Orders: Urging/Reminders ME87 Aggregate PO History
ME9F Message Output: Purchase Orders
Goods Receipt Reservation
MB1C - Other Goods Receipts MB21 - Create Reservation

MB90 - Output Processing for Mat. Documents MB22 - Change Reservation
MBRL - Return Delivery per Mat. Document MB23 - Display Reservation
MB1C - Other Goods Receipts MB24 - Reservations by Material
MB90 - Output Processing for Mat. Documents MB25 – Reser. by Acct Assignment
MB1B - Transfer Posting
ME2V Goods Receipt Forecast
Physical Inventory
MIBC - ABC Analysis for Cycle Counting MI01 - Create Physical Inventory Document
MI02 - Change Physical Inventory Doc MI03 - Display Physical Inventory Doc
MI21 - Print physical inventory document MI04 - Enter Inventory Count with Doc
MI05 - Change Inventory Count MI06 - Display Inventory Count
MI07 - Process List of Differences MI08 - Create List of Differences with Doc.
MI09 - Enter Inventory Count w/o Doc MI10 - Create List of Differences w/o Doc.
MI11 - Physical Inventory Doc Recount MI20 - Print List of Differences
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Batch determination
MI31 - Batch Input: Create Phys. Inv. Doc. MI32 - Batch Input: Block Material
MI33 - Batch Input: Freeze Book Inv. Bal MICN – B.I/p PI Docs for Cycle Counting
MIK1 - Batch Input: PI Docs Vendor Cons. MIQ1 - Batch Input: PI Docs. Project Stock
MI34 - Batch Input: Enter Count MI35 - Batch Input: Post Zero Stock Bal
MI38 - Batch Input: Count and Differences MI39 - Batch Input: Document and Count
MI40 - Batch Input: Doc., Count and Diff. MI37 - Batch Input: Post Differences
Vendor Evaluation
ME61 Maintain Vendor Evaluation ME62 Display Vendor Evaluation

ME63 Evaluation of Automatic Sub criteria ME64 Evaluation Comparison
ME65 Evaluation Lists ME6A Changes to Vendor Evaluation
ME6B Display Vendor Evaluation for Mat ME6C Vendors without Evaluation
ME6D Vendors Not Evaluated Since. ME6E Evaluation Records w/oWeighting
ME6F Print ME6G Ven Evaluation in the Background
ME6H Standard Analysis: Ven Evaluation ME6Z Transport Vendor Evaluation Tables
General Analysis
ME80 Purchasing Reporting ME80AN General Analyses (A)

ME80FN General Analyses (F) ME80RN General Analyses (L,K)
ME81 Analysis of Order Values ME81N Analysis of Order Values
ME82 Archived Purchasing Documents
ME88 Set Agmt. Cum. Qty./Reconcile Date ME91 Purchasing Docs: Urging/Reminding
ME98 Archive Purchasing Documents MEAN Delivery Addresses
ME91A Urge Submission of Quotations ME92 Monitor Order Acknowledgment
ME92F Monitor Order Acknowledgment ME92K Monitor Order Acknowledgment
ME92L Monitor Order Acknowledgment ME99 Messages from Purchase Orders
ME91E SA Schedules: Urging/Remind. ME9E Message Output: SA Schedules
ME9L Message Output: Scheduling Agreements
Conditions
MEK1 Create Conditions (Purchasing) MEK2 Change Conditions (Purchasing)

MEK3 Display Conditions (Purchasing) MEK31 Condition Maintenance: Change
MEK32 Condition Maintenance: Change MEK33 Condition Maintenance: Change
MEK4 Create Conditions (Purchasing) MEKA Conditions: General Overview
MEKB Conditions by Contract MEKC Conditions by Info Record
MEKD Conditions for Material Group MEKE Conditions for Vendor
MEKF Conditions for Material Type MEKG Conditions for Condition Group
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MEKH Market Price MEKI Conditions for Inco-terms
MEKJ Conditions for Invoicing Party MEKK Conditions for Vendor Sub-Range
MEKL Price Change: Scheduling Agmts MEKLE Currency Change: SA
MEKP Price Change: Info Records MEKPE Currency Change: Info Records
MEKR Price Change: Contracts MEKRE Currency Change: Contracts
MEKX Transport Condition Types Purch MEKY Trans Calc. Schema: Mkt. Pr. (Purc)
MEKZ Transport Calc. Schemas (Purch) MELB Purchasing Transaction by Track No.
Mass Maintenance
MEMASSIN Mass-Changing of Purchasing Info Records

MEMASSPO Mass Change of Purchase Orders
MEMASSRQ Mass-Changing of Purchasing Requisitions
MENU_MIGRATION Menu Migration into New Hierarchy
MEPA Order Price Simulation/Price Info
MEPB Price Info/Vendor Negotiations
MEPO Purchase Order
Quota Arrangement
MEQ1 Maintain Quota Arrangement

MEQ3 Display Quota Arrangement
MEQ4 Changes to Quota Arrangement
MEQ6 Analyze Quota Arrangement
MEQ7 Reorganize Quota Arrangement
MEQ8 Monitor Quota Arrangements
MEQB Revise Quota Arrangement
MEQM Quota Arrangement for Material
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Standard Reports in
Material Management
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Standard Reports in Material Management
Purchase Order
ME2L - By Vendor
ME2M - By Material
( to See the Open Purchase orders go to ME2M go to 'Selection parameters' field - by using
F4 (help)select WE101 and then press execute orF8 button)
ME2C - By Material Group
ME2N - By PO Number
ME80FN - General Analyses
ME2O - SC Stocks per Vendor
Stock Material
MMBE - for Stock Over View MM60 - List of materials Available Plant wise.
MB53 - Plant Stock Availability MB51 - Material Documents
MB52 - Warehouse Stock MR51 - Accounting Document for Material
MB5B - Stock for Posting Date MBSM - Cancelled Material Documents
MB5T - Stock in Transit
MBLB - Stock with Subcontractor
MB5S - List of GR/IR Balances
Purchasing Info Record Vendor
ME1L - By Vendor MKVZ - List of Vendor Purchase Org. wise

ME1M - By Material
ME1W - By Material Group
Vendor Evaluation
ME65 - Ranking lists

ME6B - Evaluations per Material (Material Group)
ME64 - Compare Evaluations
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Extra Topics:
Blanket Purchase Order
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Blanket Purchase Orders

In SAP, Blanket Purchase Orders refer to the business process where you have a
• Purchase Order with a validity period (start / end date) and a limit on the item.
• No Goods Receipt takes place.
• Payment is triggered by Invoice.
Notes:
• Multiple invoices can be processed.
• Main point is that invoices must be processed within the validity period specified in
PO.
• The total value of invoices must also not exceed the limit specified in PO item.
• The validity period is specified on PO Header Level, while the Limit is on Item level.
• The creation of Purchase requisition is Optional.
• Purchase Requisitions doesn't have validity period fields, although the limit can be
specified on item level.
• So if users create PR's then they could type the validity period simply as text in one of
the long text fields.
• During invoicing, if the date is outside validity period or the amount is bigger, either
a Warning or Error will occur. This setting is done in customizing.
Examples on where this business process can be used include:

o Services: example buying flowers, travel.
o Particularly if the receipt process is not very formalized. It is also sometimes
used for utilities (water, electricity...)
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o Look at processes where Financial invoices (no PO) are used. To improve
control, a lot of vendor invoices could be moved to Blanket Order process.
• Lets look at key fields in the Purchase Order
• The Overall Limit is the value that will be used to in the check during invoicing. If
Commitment is switched on in Costing, the Expected value is the value of the
commitment against in this case the Cost Centre.
• The actual will be posted during invoicing.
• Account assignment is mandatory, so this process is non stock purposes only.
• Stock can not be procured using this method (For stock a GR is required).
• Because no Goods Receipt (GR) will take place, the GR indicator is switched off
when the item category is selected.
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Extra Topic:
How to attach a document to
Purchase order document
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How to add an attachment to a Purchase Order in SAP?
You can attach manually any document to PO without using Document Management System
(DMS) in SAP 4.6C.
Please note that you cannot attach document while you create PO in T/Code ME21N. In
order to achieve this, follow the steps given below:
1. Save your PO (ME21N)

2 Open with change (ME22N) then you can attach document through Service for Object
button.
How To Find Service for Object button:
Service for Object button available down side of Command screen (in your PO screen
ME22N)
Click your Service Object button -> Create - > Create attachment then select your window
directory (which file you need to attach) select your file Now your system shows
message Service "Create attachment" is started.
Save again your PO. You can see (open) your attachment in same field (Service for Object)
select and Create and check attachment list. You can attach as many document in your PO.
Important Note: This is only information for internal or you can print separately this
document for sending to vendor (fax) System will not print automatically along PO print out.
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Lab Exercises:
Creation of
Organization Structure
Customization steps in MM
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A) Define Organizational Objects
1. Define company
SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Define
Company
2. Edit, Copy, Delete, Check Company Code
SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Edit,
Copy, Delete, Check Company Code
3. Maintain Controlling Area
SPRO Æ Enterprise Structure Æ Definition Æ Controlling Æ Maintain
Controlling Area
4. Define valuation level
SPRO Æ Enterprise Structure Æ Definition Æ Logistics - General Æ Define
Valuation level
5. Define, copy, delete, check plant
SPRO Æ Enterprise Structure Æ Definition Æ Logistics - General Æ Define,
Copy, delete, check plant
6. Maintain storage location
SPRO Æ Enterprise Structure Æ Definition Æ Materials Management Æ Maintain
storage location
7. Maintain purchasing organization
SPRO Æ Enterprise Structure Æ Definition Æ Materials Management Æ
Maintain purchasing organization
B) Assign Organizational Objects
8. Assign company code to company

SPRO Æ Enterprise Structure Æ Assignment Æ Financial Accounting Æ
Assign company code to company
9. Assign company code to controlling area
SPRO Æ Enterprise Structure Æ Assignment Æ Controlling Æ Assign
Company code to controlling area
10. Assign plant to company code
SPRO Æ Enterprise Structure Æ Assignment Æ Logistics - General Æ Assign
Plant to company code
11. Assign purchasing organization to company code
SPRO Æ Enterprise Structure Æ Assignment Æ Materials Management Æ
Assign purchasing organization to company code
12. Assign purchasing organization to plant
Assign purchasing organization to plant
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A) Define Organizational Objects
1. Define company
SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Define

Company
Click , the following screen will appear
Now enter the following information
Then Click or Crtl+S

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The Following message will appear
Then Click the following screen will appear enter the Short description as TATA
Projects
Then Click Now the screen is as under
Click then will appear in the status bar then click
The table appears with latest created company

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2. Edit, Copy, Delete, Check Company Code

SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Edit,
Copy, Delete, Check Company Code
System tries to read all associated tables
then the following screen will appaer
Now enter the following
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And click the following screen will appear
Press 'Yes' again the following screen will appear
Press 'Yes' again the following screen will appear
Enter INR then
Press
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The following screen
Press
Press the status shows
Then the following screen will appear
Press the status shows as under
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Click for different messages until you get the following message
Press The following screen will appear
Click the Completed Activity tab as shown above
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Click
Then Click and enter Company code as TMOT
Select TMOT Company code
And Click Details Button
The following Screen will appear.
Now Edit as under
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And click address Icon...The following screen will appear
Now edit the same and under
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And click then click save icon.
And press then status shows as
and then click and then click
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3. Maintain Controlling Area
SPRO Æ Enterprise Structure Æ Definition Æ Controlling Æ Maintain
Controlling Area
Now click button.
Then click and enter Company code as
click The following screen will be appeared
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Now edit the following fields
And click
Press .and
Click and press
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4. Define valuation level
SPRO Æ Enterprise Structure Æ Definition Æ Logistics - General Æ Define
Valuation level
The following screen will appear
Note:
1) In this step we don’t do any thing. Here we will come to know that the
valuation level is set to plant level by SAP it self (SAP recommends setting
material valuation at plant level.)
2) In case of you need to set at company code level, you have to approach for
change with reasons
Important note:
1) Once set, it is not possible to switch the valuation level from plant to
company code, or vice versa.
5. Define, copy, delete, check plant

SPRO Æ Enterprise Structure Æ Definition Æ Logistics - General Æ Define,
Copy, delete, check plant
System Shows List of Plants
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Click The following empty format will appear
Fill the following fields as under
Now click Address Icon and fill the fields as under
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And click and then click save
And press then status bar show as
Repeat the step for plant 2
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6. Maintain storage location

Maintain storage location
Enter Plant
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Press and click
Enter the following fields
Then click
Press then status bar will show this message then press
two times.
Repeat the same for the TPL2 also
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7. Maintain purchasing organization

Maintain purchasing organization
System shows list of Purchasing Org.
Click and enter the following information
Click
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Press then click two times.
B) Assign Organizational Objects

8. Assign company code to company
SPRO Æ Enterprise Structure Æ Assignment Æ Financial Accounting Æ
Assign company code to company
Click then enter
then
Click
Press then click
9. Assign company code to controlling area

SPRO Æ Enterprise Structure Æ Assignment Æ Controlling Æ Assign
Company code to controlling area
Click then enter
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Press then select TMOT row
Now
Then double click left side
Click and enter the company code and press enter
Then click
Press then click 2 times
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10. Assign plant to company code
SPRO Æ Enterprise Structure Æ Assignment Æ Logistics - General Æ Assign
Plant to company code
Click and enter the company code and plants information.
Then press enter.
Then click
Press then click 2 times
11. Assign purchasing organization to company code

Assign purchasing organization to company code
Click enter the Purchase Organization
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Then click
Press then click
12. Assign purchasing organization to plant

Assign purchasing organization to plant
Click enter the Purchase org and plants as under
Then click
Press then click two times
Now so far total Organizational Objects/Units have been defined and assigned .
How to see the Organization Structure

Tcode : EC01
Clcik and then click then Press for the message.

List of company codes will be displayed
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Click button and enter company code as TMOT
Click and
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System Shows the TMOT Company code and its Organization structure
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Lab Exercises:
Material Master
IMG settings & Creation
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Master Data – Material Master
IMG Settings in Material Master
1. Define Output Format of Material Numbers

SPROÆ Logistics - General Æ Material Master Æ Basic Settings Æ Define Output
Format of Material Numbers
2. Maintain Company Codes for Materials Management
SPROÆ Logistics - General Æ Material Master Æ Basic Settings Æ Maintain
Company Codes for Materials Management
3. Define Attributes of Material Types
SPROÆ Logistics - General Æ Material Master Æ Basic Settings Æ Material Types
Æ Define Attributes of Material Types
4. Define Number Ranges for Each Material Type
Æ Define Number Ranges for Each Material Type
5. Define Material Groups
SPROÆ Logistics - General Æ Material Master Æ Settings for Key Fields Æ Define
Material Groups
6. Create Purchasing Groups
SPRO Æ Materials Management Æ Purchasing Æ Create Purchasing Groups
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LAB Exercise:
1. Define Output Format of Material Numbers
SPROÆ Logistics - General Æ Material Master Æ Basic Settings Æ Define Output
Format of Material Numbers
Note:
1. In this step you can change the length of the number. Maximum length
provided by SAP is 18
2. Indicator for Lexicographical
Defines the way numeric material numbers are stored in the database.
a. If this indicator is not set, numeric material numbers are padded with
leading zeros and stored right-justified [Material numbers containing
at least one nonnumeric character are stored left-justified]
i. Example: if the Internally/externally assigned number
If the number is 123
The stored number is 000000000000000123
b. If this indicator is set, and if the material number (numeric or not

purely numeric) was assigned externally, it is stored left-justified as
entered.
i. Externally assigned number: 123
Stored number: 123
ii. If the material number (numeric only) was assigned internally,
it is padded with leading zeros to the defined length and stored
left justified
.
3. Indicator for leading zeros
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You can specify whether a numeric material number is to be shown with
leading zeros to fill up its defined length.
2. Maintain Company Codes for Materials Management

SPROÆ Logistics - General Æ Material Master Æ Basic Settings Æ Maintain
Company Codes for Materials Management
[In this step:
1. To create a material master record, the control record must exist and set up the
current period for your company code here.
2. To initialize company codes during productive operation, you have to use the
period closing program.]
Click and enter
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Note: See that ABP (Allow Back Posting) check box checked
Click save button
And click back button
3. Define Attributes of Material Types

[Material Type: Materials are categorized based on its attributes/Purpose is called
Material Type
Whenever you create a material master record, you must assign it to a material type.
This requires you to first define the attributes of each material type
Standard SAP Material Types are:
Raw Material - ROH
Semi-finished product – HALB
Finished Product – FERT
Trading goods – HAWA…
Like this around 30 material types have been defined by the SAP. You can copy of
this standard material types with your own name and try to use the same for creation
of materials]
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Æ Define Attributes of Material Types
The Following screen will appear:
Click and enter
Press for continue and now do as under:
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The following screen will appear:
Now change the name and description of the material type as under:
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And press ‘enter’ button. The following message will appear
Now press the status bar shows as under:
Now do the following
Click and enter

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Press the following screen will appear
Now check the check box of Qty and Value update columns of TPL1 and TPL2
plants
Then click
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Press the status bar states that the data has been saved
Then press
4. Define Number Ranges for Each Material Type (MMNR)

Æ Define Number Ranges for Each Material Type
[In this step, you define the type of number assignment and the number range
intervals for material master records.
When creating a material master record, you must assign it a unique number. There
are two ways of doing this:
1. Internal number assignment
Number within the number range interval allowed is assigned by the SAP
system.
2. External number assignment
The user assigns a number within the number range interval allowed.
You can define the intervals for external number assignment numerically and
alphanumerically.
Note:
1. You define the number range intervals for so-called groups. You assign one or
more material types to each group.
2. SAP recommends using internal number assignment]
The Following Screen will appear:
Now click button and do the following step in the next screen on menu
bar
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Now enter the Group name and number range data in the screen as under:
And click insert (enter) button

The group will be created with the entered number range and it will appear in the
bottom of the page.
Now find the TROH material type by using the button
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Press button in the box
System will position the cursor on TROH – TATA Raw Material

Now do the following
The color of the line is going to change into blue as under
Now check the check box of TATA Raw mat no range group as under
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then button
Then the TROH mat type will be assigned to this group
Now save this step by clicking the save button.

Immediately system will show the following message
Stating the data is going to be saving in the data base, however the customizing
setting has to get manually.
In order to get the customizing request manually do the following method:

Go to the initial screen of the number range (or click back arrow button) then on
Menu bar select Intervals and click the Transport
Press enter button your customizing request prompt will appear
Select you project by clicking ‘Own request’ and press enter.
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5. Define Material Groups
SPROÆ Logistics - General Æ Material Master Æ Settings for Key Fields Æ Define
Material Groups
[Materials can be categorized based on its properties is called Material Groups]
Now click ‘New Entries’ and empty screen will appear as under
Now enter the following data
Purch. Org Description
TPO TATA Purch. Org
Then Click Save button.
6. Create Purchasing Groups
SPRO Æ Materials Management Æ Purchasing Æ Create Purchasing Groups
[A purchasing group can be an individual or a group of individuals.]
System shows a list of purchasing groups.
Click The following screen will appear:
Enter new Purchasing Group with description.
Click
And press .
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Errors List:
Common Errors &
Solutions
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ERRORS List
Common Errors while you are practicing with solutions
1. Account assignment mandatory for material 300000100 (enter acc.

ass. cat.)
2. Control indicators for controlling area HMOT do not exist
3. Source not included in list despite source list requirement
4. Field selection for movement type 561 / acct 399999 differs for Ext.
GA amount in LC (023)
5. For object RF_BELEG SMOT, number range interval 49 does not
exists FBN1
6. Posting period 008 2010 is not open
Period 008 of fiscal year 2010 is not open for posting for the variant
of posting period 1000.
7. Number range for trans./event type IB in year 2010 does not exist
8. Enter rate EUR / INR rate type M for 16.12.2010 in the system
settings
9. Country IN does not store a hard currency
10. Company code not assigned to country or country to calculation
procedure
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Error: 1
Account assignment mandatory for material 300000100 (enter acc. ass. cat.)
Solution:
SPRO --> Logistics - General --> Material Master --> Basic Settings -->
Material Types --> Define Attributes of Material Types (or TCode: OMS2)
Do the following steps:
I. Click Position and enter Material type (say HROH)

II. Now select HROH and D. Click Left side folder “Quantity/Value updating"
III. Again Click position and enter Valuation area (Plant) as HPL1
IV. Check the check boxes of quantity and value columns of HPL1 and HPL2
V. Click Save and come back
Error: 2
Control indicators for controlling area HMOT do not exist
Solution:
SPRO Æ Controlling Æ General Controlling Æ Organization Æ Maintain

Controlling Area.
Click again Æ Maintain Controlling Area (or TCode: OKKP)
Do the following steps:
i. Click Position and enter Controlling area = HMOT

ii. Now Select HMOT controlling Area and double click left side folder “Activate
components/control indicators”
iii. Click new entries
iv. And enter the following fields:
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Error: 3
Source not included in list despite source list requirement
I. Check IMG settings

SPRO Æ MM Æ Purchasing Æ Source List Æ Define SL Requirement at Plant
Level
Click position and enter plant as: wpl1
Check whether wpl1 Æ source list is checked or not?
II. MM02 Æ Purchase view Æ
Check the source list check box
III. Maintain SL (TCode = ME01)
Error: 4
Field selection for movement type 561 / acct 399999 differs for Ext. GA amount in LC
(023)
Solution:
TCode: FS00 enter your company code in Left side by clicking then press find button of
the left side and enter the account number 399999 and press enter.
In the right side screen, click Create/bank/interest tab
I. Check Post automatically only
II. Enter ‘Field status group’ as G006 Material accounts
Click Save
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Error: 5
For object RF_BELEG SMOT, number range interval 49 does not exists FBN1
Solution: TCode: FBN1

Enter company code: SMOT
Maintain Number range for 49 for the year 2010
Error: 6
Posting period 008 2010 is not open
Period 008 of fiscal year 2010 is not open for posting for the variant of posting period
1000.
Solution: TCode OB52

Screen shot is showing the status as under:
Now change the same as under:
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Error: 7
Number range for trans./event type IB in year 2010 does not exist
Solution:
Execute TCode: OMBT
Error 8
Enter rate EUR / INR rate type M for 16.12.2010 in the system settings
Solution: TCode: OB08
Error: 9
Country IN does not store a hard currency
Solution: TCode: OY01

Select our country and enter the hard currency as INR
Error: 10
Company code not assigned to country or country to calculation procedure
Solution:
SPROÆFinancial Accounting ÆGeneral settings in financial accountingÆ Tax on
sales and PurchasesÆ Basic settingsÆAssign country to calculation procedure
Click Position, Enter Country = IN and enter TAXUS against IN and save it.
(In case if you have already your calculation procedure you can assign the same.
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SAP MM Question Bank

With Answers, and Explanations
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SAP MM Questions, Answers, and Explanations

Part I: Conceptual Questions
Question 1: What MRP procedures are available in MM-CBP (Consumption Based Planning)?
A: Various material planning methods are used in MRP (Material Requirements Planning) Reorder
point procedure (VM) Forecast-based planning (VV) Time-Phased materials planning (PD) These
are specified in material creation (MM01) under the MRP 1 tab.
Question 2: Under what conditions are “planned orders” created? What may-planned orders
are converted to and how is that conversion accomplished?
A: Planned orders are always created when the system creates an internal procurement proposal. In
the case of vendor procurement, the MRP Controller may create a planned order or directly create a
PR. The next step for a planned order is to be converted to a PR so it goes to purchasing and is to
eventually become a PO. A planned order can be converted to a PR using transaction code
MD14.
Question 3: What are the organizational levels of the Enterprise Structure in R/3?
A: The top level of the organizational plan is the Client, followed by Company Code, which
represents a unit with its own accounting, balance, P&L, and possibly identity (subsidiary). The next
level down is Plant, an operational unit within a company (HQ, Assembly Plant, Call Center, etc.).
The Purchasing Organization is the legally responsibly group for external transactions. This group is
further subdivided into Purchasing Groups.
Question 4: What are the different ways to organize purchasing organizations?

A: A Purchasing Organization may be responsible for multiple plants and this is referred to as
“Distributed Purchasing”. On the other hand, “Centralized Purchasing” features one Purchasing
Organization per Plant. A Purchasing Organization doesn’t necessarily need to be assigned to a
Company Code. This would enable procurement for every company code as long as buyers are
acting for an individual Plant, and that Plant is assigned to the Purchasing Organization. Hence, a
plant may be assigned to more than one Purchasing Organization.
Question 5: What are “Special Stocks”?

A: Special Stocks are stocks that are accounted for but are not owned by the client, or are not stored
at a regular facility. Consignment, sales order, and project stock are examples.
Question 6: What are some of the options available to transfer materials from one plant to
another?
A: Although it is possible to transfer materials from one plant to another without a Stock Transport
Order, many advantages are lost including entering a vendor number, planning a goods receipt in the
receiving plant, monitoring process from PO history, and the ability to create STO directly from a
MRP PR.
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Question 7: What are some of the common Stock Transport Order Movement Types?
A: One-step transfers of materials can be posted using MT 301. Other various transport scenarios
differ in the MTs by the Goods Issues and Good Receipts. Common Goods Issues may use MTs 303,
351, 641, or 643 in the STO. A STOs Good Receipt often uses MT 101.
Question 8: What is the difference between a Purchase Order and a Purchase Requisition?
A: A Purchase Requisition is a document type that gives notification of a need for materials or
services. A Purchase Order is a document type that is a formal request for materials or services from
an outside vendor or plant. Procurement types may be defined at the line item and can be standard,
subcontracting, consignment, stock transfer, or an external service.
Question 9: What is an “indirectly created” Purchase Requisition?

A: An indirectly created Purchase Requisition has been initiated by CBP, the PS Project System, PM
Maintenance, and Service Management, or PP Production Planning and Control. The “directly
created” Purchase Requisition, on the other hand, is created by a person manually in the requesting
department specifying what materials/services, units, and a delivery date.
Question 10: What is an RFQ and how is it different from the Quotation Form?
A: A RFQ is a purchasing document and an invitation to a vender(s) for quotation regarding needed
materials or services. If multiple an RFQ is sent to multiple vendors, the system can automatically
determine the best quote and send rejection letters in response to all others. The RFQ and the
Quotation Form are one in the same in the system as vendor’s quotes are entered directly in the
RFQ.
Question 11: What are the transactions that will result in a change of stock?
A: A Goods Receipt is a posting acknowledging the arrival of materials from a vendor or
production, which results in an increase in warehouse stock, a Goods Issue which results in a
reduction in stock, or a Stock Transfer moving materials from one location to another.
Question 12: When would it be prudent to post goods movements via the Shipping
Application?
A: If picking, packing, and transportation operations need to be planned in detail. Also, in shipping,
you can manage movements like returns from customers, vendors, and returns to stock. Movement
Types in shipping start with a 6.
Question 13: What is a Reservation?

A: A Reservation is a document used to make sure that the warehouse keeps a certain amount of a
material or materials ready for transfer at a later date. It contains information on what, quantity,
when, where from and to. Reservations help effective procurement by utilizing the MRP system to
avoid out of/lack of stock situations.
Question 14: Can you manually generate a Purchase Requisition referencing a Purchase Order
or a Scheduling Agreement?
A: A Purchase Requisition cannot be created with reference to either of these, as they are documents
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controlled by the purchasing organizations. Requirements can be automatically generated with MRP
that reference a Scheduling Agreement if the source list is maintained for item-vendor combination.
Question 15: How is GR/IR account related to Inventory? _

A: If you are involved with inventory, then you need the GR/IR account (Inventory Account) when
the IR is posted. If you are not involved about inventory, then the system does not need the GR/IR
account when the IR is posted; the system needs a G/L instead of the GR/IR account.
Question 16: How do planned and unplanned consumption affect Movement Types?
A: In a customized Movement Type, you have defined which consumption value gets posted in the
movement. Many will always be planned or unplanned, but for some there is a dependency on if the
movement references a reservation. This would be planned consumption.
Question 17: What are Departmental Views?

A: All functional areas of the system use the same material master data. The material master data is
defined in individual screens (departmental views) that can be added as needed. Thus a material can
be created with only basic data and other departments can add other information later as it becomes
available.
Question 18: Is Material Data valid for all organizational levels?

A: Control of master data depends largely on how each company sets up its Organizational levels
centralized or decentralized. Some material data is valid for all organizational levels while other data
is valid only at certain levels. (I.e.: client, plant, sales org., etc.).
Question 19: Why would you want to create physical inventory sheets to perform an inventory
cycle-count on a material or materials?
A: For a cycle counting procedure, physical inventory documents need to be created. These are used
to record inventory levels of the material being cycle counted. Use transaction MICN. Click on the
Execute button. On screen “Batch Input: Create Physical Inventory Documents for Cycle Counting”,
perform the following, Click on the Generate Session button and Click on the Process Session
button. This procedure details how to create the physical inventory documents for cycle counting in
a batch, rather than one at a time, based on certain criteria. This would print physical inventory
documents for all material/batches that meet those requirements.
Question 20: What is the difference between a Blanket Purchase Order and the Framework
Order?
A: In general, the Blanket POs are used for consumable materials such as office paper with a short
text, with item category B. There need not be a corresponding master record, for the simplicity of the
procurement. The FO, Framework Order, document type is used. Here, the PO validity period as
well as the limits are to be mentioned. The GR, or Service Entry for the PO is not necessary in the
case of Blanket POs. One need not mention the account assignment category during creation of the
PO. It can be U, or unknown and be changed at the time of IR.
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Question 21: What is Release Procedure?
A: Release Procedure is approving certain documents like PRs or POs by criteria defined in the
configuration. It is sensible to define separate release procedures for different groups of materials for
which different departments are responsible, and to define separate procedures for investment goods
and consumption goods.
Question 22: If you have a multi-line item PO, can you release the PO item by item?
A: No, a PO is released at the header level meaning a total release or “With Classification”. PRs, on
the other hand, have two release procedures possible. “With Classification” as described above, and
“Without Classification” where it is only possible to release the PR item by item.
Question 23: What is a Material Type?

A: A Material Type describes the characteristics of a material that are important in regards to
Accounting and Inventory Management. A material is assigned a type when you create the material
master record. “Raw Materials”, “Finished Products”, and “Semi-Finished Products” are examples.
In the standard MM module, the Material Type of ROH denotes an externally procured material, and
FERT indicates that the relevant material is produced in-house.
Question 24: What is a price comparison?

A: Perform a price comparison using ME49 and one may compare quotations from different
vendors.
Question 25: What is a Source List?

A: The Source List identifies preferred sources of supply for certain materials. If it’s been
maintained, it will ID both the source of supply and the time period. The Source List facilitates
gaining a fixed source of supply, blocked source of supply, and/or helps us to select the proffered
source during the source determination process.
Question 26: What are the various “steps” in the MM Cycle from material creation through
invoice?
A: The following creates a rough picture of the MM Cycle. Create material, create vendor, assign
material to vendor, procure raw material through PR, locate vendor for certain material, processing
GR, goods issue, and invoice verification.
Question 27: Give some examples of the information relating to a material’s

storage/warehousing?
A: Some examples are Unit of Issue, Storage Conditions, Packaging Dimensions, Gross Weight,
Volume, and Hazardous Materials Number. Also, there are various Storage Strategies information
and options.
Question 28: What are the various features of Consignment Stocks?

A: Consignment Stocks remain the legal property of the Vendor until the organization withdraws the
material from the consignment stores. The invoice can be due at set periods of time, for example
monthly, and it is also a configuration possibility that the organization will take ownership of the
stock after a certain period of time. Consignment Stock is allocated to the available stock because
the Consignment Stock is managed under the same material number as your company’s stock. The
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most important characteristic of Consignment Stock is that it isn’t valuated. When the material is
withdrawn, it is valuated at the price of the respective vendor. Before procuring the stock,
consideration should be given if one consignment is coming from multiple vendors. If so, we can
manage all of them independently at the price of the individual vendors. In the Info Record, we will
maintain three different prices for the same material for three different vendors.
Question 29: What is a Quotation?

A: Once a vendor has received an RFQ, the vendor will send back a quote that will be legally
binding for a certain period of time. Specifically, a Quotation is an offer by a vendor to a purchasing
organization regarding the supply of material(s) or performance of service(s) subject to specified
conditions. The Quotation then need to be maintained in the “Maintain Quotation: XXXX” screens.
Question 30: What is the Source List?

A: The Source List identifies preferred sources of supply for certain materials. If the Source List has
been properly maintained, it will identify both the source of a material and the period of time in
which you can order the material from the source.
Question 31: What is Invoice Verification?

A: The Invoice Verification component completes the material procurement process and allows
credit memos to be processed. Invoice Verification includes entering invoices and credit memos that
have been received, checking accuracy of invoices with respect to price and arithmetic, and checking
block invoices (these are the ones which differ too much from the original PO).
Question 32: What are the different types of Invoice Verification?

A: Invoices based on Purchase Orders. With purchase-order-based Invoice Verification, all of the
items of a purchase order can be settled together, regardless of whether or not an item has been
received in several partial deliveries. All of the deliveries are totaled and posted as one item.
Invoices based on Goods Receipts. With goods receipt- based Invoice Verification, each individual
goods receipt is invoiced separately. Invoices without an order reference. When there is no reference
to a PO, it is possible to post the transaction directly to a Material Account, a G/L Account, or an
Asset Account. You can park Invoices that reference POs and GRs as well as Invoices with no
reference in the system. When you park a document or change a parked document, neither
substitution nor validation is supported. The system only carries out these functions after you
actually post a parked document.
Question 33: Why would an organization need to allow Negative Stocks?

A: Negative Stocks are necessary when Goods Issues are entered necessarily (business process
reasons) prior to the corresponding Goods Receipts and the material is already located physically in
the warehouse.
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Part II: Configuration Related Questions

Question 34: How do you create a movement type? When will movement type numbers be
odd?
A: When prompted by a dialog box after an activity, you copy a movement type. Select the field
“Movement Type” and “Continue”. In the Define Work area, enter the movement type to be copied
in From: and the name your new movement type in the To: field. Now choose Continue. Choose the
desired movement type you want then choose Edit Copy as and re-type the selected movement
type with the new type copy all dependent entries and make sure to begin with a proper prefix
(9,X,Z). All control indicators are copied to the new movement type. Review the new movement
type changing any necessary controls. Reversal movement types are numbered as the number type
plus one. The reversal for movement type 451 (Returns From Customer) is 452. As a last step before
saving your settings, add a copy the reversal movement type and enter it in Reversal/follow-on
movement types.
Question 35: How do you adopt standard settings for the Message Determination Facility In
MM-PUR?
A: The Message Determination Facility is by default active and message determination schema is
supplied for all purchasing documents including POs, PRs, RFQs etc. All of the desired message
types must be maintained. Choose Master data Messages Purchasing document Create or
Change from the Purchasing menu. Add the message type and pick the key combination. The key
combination decides the condition table where the condition record is stored. Enter all needed items.
Next screen, create the individual condition records. Using the menu options Goto Means of
Communication, enter the proper peripheral, or output for each message record. Save.
Question 36: How do you set price control for receipts (goods/invoice) telling the system how to
value stocks?
A: Transaction Code OMW1 allows you to set price control to S (Standard Price) or V (Moving
Average Price). Under Standard Price (S), the materials and accounting documents are both valid.
The one with the lower value will be posted with a price variance entry.
Question 37: How do you access the Materials Management Configuration Menu?
A: Transaction Code OLMS has a host of options that are not accessible through the IMG.
Question 38: How are the various MM configuration Transactions accessed?

A: Transaction Codes OLMD accesses MM-CBP, OLMB accesses MM-IM, OLME accesses MM-
PUR, OLML accesses MM-Warehouse Management, OLMS accesses Material Master Data, and
OLMW is the proper transaction for valuation and account
assignment.
Question 39: What are some of the more important Materials Management Tables?
A: EINA contains general data of the (Purchasing) Information Record; EINE includes Purchasing
Organization of the same. MAKT is the Materials Description table, MARA-General Materials data,
MARC-Plant Data for Materials, MARD-Storage Location Data for Material, MAST-Material to
BOM Link, MBEW-Material Valuation, and MKPF-Header Material Document. Some of the tables
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that directly pertain to the document types are T156 Movement Type and T023/T024 Groups
Material and Purchasing.
Question 40: Can you add custom fields to POs and RFQs?
A: Yes. You must add custom fields to the customer including structures I_EKKODB and
I_EKPODB. Create a project via CMOD for enhancement MM06E005. Follow the documentation
for MM06E005, and create the sub-screens for function group XM06 using transaction SE80. Add
fields to the appropriate screen. It is recommended that you call the screen fields EKPO_CI-name or
EKKO_CI-name. This simplifies transferring data to/from the screen. Put code in
EXIT_SAPMM06E_018 to transfer data from sub screen to structure E_CI_EKPO. Put code in
EXIT_SAPMM06E_016 to transfer data from database to sub-screen using structure I_CI_EKPO. In
the PBO of the sub-screen, do any processing to make fields display only, or hide them. If you need
values from the main screen to make decisions in the sub-screen, define variables in the global data
part of the function module, and fill the variables in EXIT_SAPMM06E_016 (PBO of main screen)
Make sure everything has been activated like user exists, screens, etc.
Question 41: Where can you dictate how Planned Orders are converted into Requisitions in
MRP?
A: Look at the Transaction Code OPPR indicator. Assign proper indicator.
Question 42: What SAP program is used to update or create Material Master Records?
A: RMDATIND is used to update Material Master Records and can be used for such assignments as
extending all materials to a new plant.
Question 43: What Views are possible for a material?

A: The material type selected controls the views possible for material. For a material to be used in
the system it needs to be created for each plant. Multiple views of a material are possible but at a
minimum, the material needs to have a description and a base unit of measure assigned on the basic
data view. Additional department views (i.e. Accounting, Sales, Purchasing, MRP, Warehouse) can
be added at a later time by extending the material. As additional plants are added, a material will
need to be extended to the plants before it can be used there.
Question 44: When can a Production Resource/Tool be defined as a material?

A: A Production Resource / Tool can be defined as a material if purchasing and inventory functions
are to be carried out for that PRT. The information required to be input is dependent upon which
department views are being created. Thus, material master information is typically entered at
different times by numerous system users. Note that to add a view, the “Create Material” transaction
is used rather than the “Change Material” transaction.
Question 45: When creating a new Material, what may prompt some of the possible Material
Types?
A: Pressing F4 gives a list of choices. Select the material type for the material you are creating. For
example, FHMI for Prod. Resources/tools, ROH for Raw Materials, FERT for Finished Products,
etc.
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Question 46: How do you determine which views of a material need to be added or to see which
plants a material has been extended to?
A: You can use transaction MM50. To extend a material to a different plant requires selecting the
new plant on the organizational level screen. Note that all views of a material are not extended
unless they were selected on the initial screen. In addition, each plant may have a different system
configuration requiring additional inputs on each of the departmental screens. Material changes
made in one plant do not change that material in other plants.
Question 47: How can you set user defaults for views and organizational levels?
A: The user defaults for views can be set under Menus: Defaults Views. Select those views to be
checked on by default when generating a new material. Select ‘View selection only on request’ when
the select view pop-up is to be by-passed unless selected. For organizational levels, Menus: Defaults
organizational levels. Enter those organizational levels to be defaulted when generating a new
material. Select ‘Org. levels/profiles only on request’ when the select view pop-up is to be bypassed
unless selected.
Question 48: What needs to be present in order for Material Type to be automatically copied
from one view to another?
A: When creating any view, the Industry Sector and Material type will be automatically copied from
an existing view, so long as at least one view exists.
Question 49: How do you create a document/e-mail notifying your supplier or internal
personnel when an invoice plan is settled?
A: The IMG setting is Material Management Logistics Invoice Verification Message
Determination. If these settings are not made, the message “Invoicing Plan: No Message Was Found
for Partner XXX, Company Code XXX”. If the notifying documents are not required, simply turn
off the message by changing the message from “error” to “information” using Material Management
Logistic Invoice Verification Define Attributes of System Messages.
Question 50: How can one keep users from using standard MM Movement Types?
A: Standard Movement Types should not be deleted from the system. The account assignments,
however, may be deleted for a particular Movement Type in table T030 using transaction OBYC.
Another way to achieve the same result is to enter Movement Type in transaction OMJJ. Remove
MBXX from allowed transactions.
Question 51: How do you define a Release Procedure for PRs and POs?
A: Use Transaction ME54 and ME28 respectively.
Question 52: How do you Change Characteristic?

A: Use Transaction Code CT04. Follow these steps: Format (numeric, character, etc.), Unit of
Measure, Templates, Required Entry, Intervals as Values (?), descriptions for texts for characteristics
and characteristic values, display options for characteristics on the value assignment screen, Allowed
Values, Default Values that are set automatically on the Value Assignment Screen.
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Question 53: How do you create a Class?
A: Class is defined as the group of characteristics, which can be attributed to a product. Use
Transaction CL01. Enter the value for the Class name and a small description. Select the group from
it. The values on the different tabs are not mandatory, so you can skip the values if you wish or you
can go to any extent needed. Save, and the Class is created.
Question 54: How do you configure the Release Procedure?

A: Use Transaction OMGQ.
Question 55: Will ROH have a sales view? Will FERT have a purchasing view?
A: They shouldn’t because ROH type materials are procured from the outside not sold and FERT
type materials are created inside and aren’t procured. In some special cases, we have to sell raw
materials (ROH) and buy finished goods (FERT) from outside sources. The views must be extended
in these cases using transactions OMS2 and MM50.
Question 56: Where do we create Vendor Account Groups, or screen layout in Vendor
Master?
A: Using SPRO, Financial Accounting Accounts Payable/Receivable Vendor Accounts
Master Records Preparations for Creating Vendor Master Records Define Account Groups
With Screen Layout (Vendors) or Define Screen Layout Per Activity.
Question 57: What are the key fields for the Material Master?
A: Material Groups, External Material Groups, Divisions, Material Status, Labs & Offices, Basic
Materials, Storage Conditions, Temperature Conditions, Container Requirements, and Units or
Measure Groups.
Question 58: What are the main Purchasing Tables?

A:
EKBN Purchase Requisition
EBKN Purchase Requisition Account Assignment
EKAB Release Documentation
EKBE History of Purchase Document
Question 59: How do you create a material?

A: Use Transaction Code MM01. Name the material, choose an industry sector, choose a material
type, create or copy the views, add a basic description, give it’s attributes/values, MRP information,
reorder point, accounting valuation, warehouse management information and then save the data.
Question 60: What are some of the data points provided by Purchasing for a material?
A: Some of the key inputs when creating a material are Base Unit of Measure, Purchasing Group,
Reminder days, tolerance levels, shipping instructions, GR processing time, JIT schedule indicator,
Critical part (?), etc.
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Question 61: What are the Lot Size attributes a material can posses?
A: Lot Sizing dictates the reorder quantity for a material. A material can have a static, periodic,
optimum, or fixed lot size.
Question 62: How do you create a Vendor?

A: Use Transaction Code XK01. Add the Vendor name, Company Code, Purchasing Organization,
Account Group, and the Vendor address. Next add the country, Bank Key, Bank Account, Account
Holder (an actual name), and then save the data.
Question 63: How are materials assigned to vendors?

A: Information Record links materials to the vendor, thus facilitating the process of selecting
quotations. Use Transaction Code ME11 or Logistics Material Management Purchasing and
then Master Data Info Record Create.
Question 64: What data does the Information Record contain?

A: The Information Records has data on Units of Measure, Vendor price changes after a certain
level, what materials have been procured by a specific vendor, price and conditions for relevant
Purchase Organization, Tolerance limits for over/under delivery, Vendor evaluation data, planned
delivery time, and availability time the vendor can supply the material.
Question 65: How do you create the Information Record based on the Material Master record?
A: In the IMG, Master Data Info Record Create. Enter Vendor Number, Material Number,
Purchasing Organization or Plant Number. Enter the number of the Information Record if external
number assignments are used (left blank, the system will assign a number). Enter the General Data
for the Vendor, order unit, origin data, and supply option, Customs Tariff Number. Next, enter the
Vendor’s planned delivery time (used for scheduling), responsible Purchasing Group, and Standard
PO quantity (used in conjunction with price scales for price determination). Check the Control Data.
The tolerance data and the responsible purchasing group are taken as default values from the
Material Master record. Enter the net price. Now, from the top of the screen Go To Texts to
display the text overview. You can enter the info memo or the PO text. If the PO text is already
defined in the Material Master record, it appears as a default value. Save the record.
Question 66: What are some of the initial configuration steps for Purchase Requisitions?
A: Define Document Types, Processing Time, Release Procedure (with and without classification),
Setup Authorization Check for G/L Accounts, Define Number Range.
Question 67: When, in initial configuration, why would you have to Setup Stock Transport
Order?
A: If it is required to carry out an inter-plant Stock Transfer through SD, then this configuration is
required and must be carried out.
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Question 68: What are some of the initial configuration steps for Inventory Management?
A: Plant Parameters, Define System Message Attributes, Number Assignment (Allocate document
type FI to transactions), Goods Issues, Transfer Postings, Define Screen Layout, Maintain Copy
Rules for Reference Documents, Setup Dynamic Availability Check, Allow Negative Stocks (?).
Question 69: What are some of the initial configuration steps for Physical Inventory?
A: Define Default Values for Physical Inventory Document, Batch Input Reports, Tolerances for
Physical Inventory Differences, and Inventory Sampling. Cycle Counting should be configured as
well.
Part III:
Practical/Troubleshooting Related Questions
Question 70: How can you process vendor returns without a Purchase Order reference?
A: Use Transaction Code ME21N. Look for the Return columns and click it at the item details,
MIGO_GR , Goods Receipt for Return Purchase Order_ Movement type will be 161 to deduct the
stock and 162 for reversal._ Before saving, check if there is a check in the Return Column to ensure
that it is a return Purchase Order.
Question 71: How can an invoice be verified?

A: Transaction Code OLMR may be utilized.
Question 72: How do you change the standard price in the Material Master?
A: The standard price in the Material Master can’t be updated in a direct manner. A great way to
update it is to fill the fields Future Price MBEWZKPRS and the Effective Date MBEW-ZKDAT for
the material on the accounting view. Next, go to Logistics → Materials Management → Valuation
→ Valuation Price Determination → Future Price → Activate. TCODE MR2B, program
RMMR2100. Lastly, run the BDC that was created to update the standard price.
Question 73: How do you perform a Goods Receipt?

A: Use Transaction MIGO. Enter the Header Data, select the Movement Type, Enter the PO
Number, select the PO items to be copied, and then post the document.
Question 74: How can you post a Goods Receipt if the PO number is not known?
A: If you selected PO Number Not Known in Transaction MIGO, you can specify search criteria for
the POs on the initial screen. The system then displays a list of purchase orders. Select and copy the
required PO items.
Question 75: How do you display a list of all reservations in the system?
A: Run report RM07RESL.
Question 76: If you have created a custom Movement Type and you get a “not allowed” error,
where should you first look for the cause?
A: Using Transaction Code OMJJ, check “Allowed Transactions” for the customized Movement
Types.
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Question 77: How do you find the logical value for stock item by date?
A: Use Transaction MC49.
Question 78: How can you disable a Reservation in MRP?

A: Use Transaction Code OPPI to check “block stock”.
Question 79: How do you add an attachment to a Purchase Order?

A: One may attach any document to a PO manually without using the Document Management
System in SAP, but no attachments can be added while you create a PO using ME21N. Save your
PO and then open the PO using ME22N. There you can attach a document with the Service for
Object button. Click the Service Object button Create Create Attachment then select your
window directory, the file to be attached. This attachment is only for internal information. The
system will not print this document automatically along with a PO printout.
Question 80: How do you generate an automatic PO after creating a PR using a particular
material?
A: In MMR and VMR check Auto PO (MM02/XK02). Maintain the Source List and select the
indicator for the source list record as MRP relevant (ME01). If more than one source list record is
generated, make one of them fixed. Run MRP and the PRs generated will be pre-assigned with the
source of supply (MD01). Enter ME59 for automatically creating POs from PRs.
Question 81: Where is the Header level and Item level data saved in a PO?
A: In SE11, we can see this information in table EKKO and EKP0 respectively.
Question 82: Where is Material Master data saved?

A: Tables MARA and MARC.
Question 83: How do we know if a PO has been issued?

A: Bring the Requisition up by using Material Management Purchasing Purchase Requisition
Display. Where the requisition overview screen is displayed, select an item by clicking on the
selection box to the left of the item. Click on the General Statistics icon on the application tool bar.
Select item. General Statistics icon. The screen appears, in the middle, under Order Statistics, in the
field Purchase Order, if there is no number the PO has not been issued.
Question 84: What is the difference between a PR with a Master Record and without a Master
Record for the material being ordered?
A: If the master record exists, then all of the information about the Source List, Information Record,
and Vendor Evaluation already exist in the system. If we don’t have a Master record for the material
we are ordering, the material is generally being ordered for direct usage or consumption. You can
specify which consumption account is to be charged which is also known as Account Assignment.
For example, we assign the purchase costs associated with a requisition to our sales order or cost
center. If the first situation exists, many times purchasing enters into a longer-term purchasing
agreement with a Vendor, which is called an “Outline Agreement”. If the Outline Agreement is
done, then Purchasing cannot issue a purchase order against a PR. It can only set up such an
agreement (either a “Contract” or a “Scheduling Agreement”).
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Question 85: Can you change a Purchase Requisition after it has been created?
A: Yes. Use Transaction ME52N. Check to see if the PR has already had a PO issued against it. If
so, you must inform the Purchasing Group. Check if the PR has been approved. If so, you may only
make changes to a limited extent and may be subject of approval. Check if the PR was created by
MRP. In this case, you don’t have much control over the modification process. All changes to items
are logged and stored. Information stored includes when the information was changed, who changed
it, what the changes were, etc. Select the desired item in the item overview and choose Go To
Statistics Changes.
Question 86: How do we create Consignment Stocks?

A: Everything is the same as a normal PR or PO, except: Enter the item category “K” for the
consignment item. This ensures that the Goods Receipt is posted to the consignment stores and an
invoice receipt cannot be generated for the item. Also, do not enter a net price.
Question 87: What is Vendor Evaluation and how do you maintain it?
A: Vendor Evaluation helps you select the Source of Supply by a score assigned to a particular
vendor. The scores are on a scale of 1 to 100 and are based on differing criteria. Use Transaction
ME61 and enter the Purchasing Organization and Vendor Number.
Question 88: What are the components of the Master Data that details a company’s
procurement; used by, Vendor Evaluation for example?
A: The key components of Master Data are: Info Record (ME11), Source List (ME01), Quota
Arrangement (MEQ1), Vendor (MK01), Vendor Evaluation (ME61), and Condition Type (MEKA).
Question 89: How do we get a proper list of vendors to send an RFQ?

A: Either use the Information Record to see who has sold a particular material to the organization in
the past, or go through the Source List.
Question 90: How do you create a Source List?

A: Use Transaction ME01. Enter the Material Number and the Plant Data. Enter source list records,
validity period, period of time material is procurable, Vendor Number, responsible Purchasing
Organization (or number of the Agreement or Contract), PPL (if the material can be procured from
another plant), Fixed Source (?), MRP control. Also, a check should be done to see whether any
source list records overlap. To do so, choose Source List Check.
Question 91: How will items be returned to the vendor?

A: When you are posting a Goods Receipt for a PO, you can also enter items that you want to return
to the vendor. To do this, you no longer have to reference the purchase order with which the goods
were originally delivered. From the item overview, choose 161 (Return for PO) as the default value
for the Movement Type. Enter the data for the return item(s) and post the document.
Question 92: Where do you perform a Goods Issue?

A: Use Transaction MIGO. 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
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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”.
Question 93: How do you perform a Goods Issue?

A: 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.
Question 94: How do you perform an Invoice Verification?

A: 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.
Question 95: How do you display parked

documents?
A: 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.
Question 96: What do the W, V, and F fields show about the status of a document in FBV3?
A: An X under the W column means the document is subject to Workflow. Most documents on this
screen should have an X in this column. However, not all documents are subject to workflow (cash
deposits etc.). An X in the V column means that the document has been marked as complete. If they
are subject to Workflow, they have been sent to Workflow for approval when they were marked
complete. An X in the F column means that the document has been approved and posted to
expenditures. This column will always be empty in this screen. An X under W, but no X under V
means that you have not marked the document as complete. If it hasn’t been marked as complete,
use FBV2 to check the document and, if it is correct, mark it as complete. You can quickly go to the
document from the list screen by double clicking on the document number. When the document is
displayed, click on Document on the menu bar, and then click on Change in the drop down menu.
The transaction will switch from FBV3-Display to FBV2- Change. An X under both W and V will
mean it is waiting for approval and you may need to check the approval path to see if has met with a
delay.
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Question 97: If you are using Transaction MRKO, vendor settlement, and we get an error
message (FS217 or M8443 etc.), how would you go about troubleshooting this?
A: (With this question, look for an answer that follows a similar logic) To troubleshoot this problem,
we have these steps to follow. Set up Output Condition Type “KONS”. The Output Type specifies
the kind of output to be produced. The Output Type is predefined for your area of the R/3 system. If
alternative choices are possible, you can, of course, list them by pressing F4. The Output Type can
specify, for example, a printed form that you need for internal use or a form that you want to send to
a customer or vendor (for example, an order confirmation). The Output Type can also be an internal
electronic mail message that you want to send to staff in another department. To create an Output
Type, we use Transaction V/30. Click on New Entries; go to where you can define a new Output
Type (i.e. KONS). Once you have fed all of the data in the screen you can save it and we will have a
new Output Type. Now, use Transaction MRM1 where we will maintain conditions for the Output
Type KONS. When you press the Key combination tab, you go to the “Create Condition Records
(Consignment): Fast Entry” screen. Here you define the Company Code, partner etc. Hit the save
button. Now you have conditions associated with the Output Type KONS. Now, we must maintain
the appropriate Tax Code in the Information Record. Use Transaction ME12. Be sure Info Category
is consignment. Hit <Enter> and you will go to the screen “Purch. Org. data 1”. Hit <Enter> again
and you will go to the next screen where you need to maintain the Tax Codes. Put in Tax Code “I0”
which means exempt. The next step would be to go to the G/L Account and update the “Tax
Category” using Transaction FS00. “Drop down” the box for Tax Category and you will get some
options. Choose the first option “-“ Only Input Tax Allowed. Hit Save. The next step, go to check
the “Field Status Compatibility at G/L Account”; use Transaction SE38. Now, enter the program
number “RM07CUFA” and hit “Execute”. Now enter Movement Type “291 K” which is used for
the Goods Issue related to consignment. When you press the Execute button, you will see screen
“Field Selection Comparison: Movement Type – G/L Account”. Now, check the Compatibilities of
all the fields, if a particular is not compatible, then there will be an Error message with a Red
Highlight. Now the signs Plus, Minus, and dot denote whether the entry in that particular field is
“Required”, “Optional”, or “Suppressed” etc. Now, the error could be because of the following
reasons: If the Mvt column has a “+” and Account column has a “- “; If the Mvt column has a “-“
and the Account column has a “+”. Once you fix the value you can go to the Error Log and see if
there are any more errors there. The last step would be to run Transaction MRKO. Now, you get all
of the “Not Settled”, “Pending Transactions”, or Good Receipts recently done. Then, go to the
previous screen and press the “Settle” tab and execute it again for settling the documents. Now the
transaction goes through and the vendors are paid automatically. If after doing this, we still get the
error message, then we could also go to Transaction OMRM and change the error message to a
warning message. The other place to find the error messages is Transaction SE31.
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Data Uploading - TOOL

LSMW – Record Method
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LSMW- 14 STEPS
LSMW - Helpful hints for Support PM for transaction updates using recording option.
TCODE: LSMW
Here you have to first Define Project, Sub Project and Object. It is mainly for grouping the
objects. One can have multiple subprojects and Object in a Project.
Execute the transaction and you will get navigated to the second screen: LSMW Work
Bench. Here one can choose the required steps by pressing the ‘User Menu’ button.
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The following 14 steps are sufficient for Support person for the LSMW update.
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Step1. Maintain Object Attributes
Define the method of upload. i.e. batch recording , direct update , BAPI etc. Go inside this
step and choose the radio button for the options. This document explains only about the
transaction recording method.
One can toggle between the Display or change option using the standard button. Select the
object type and Import method as ‘Batch Input Recording’.
Once you have selected this click on the overview button so that you can go to the recoding
overview
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Example of a recording
After recording default those fields that you want to update /use in batch update.
Step 2. Maintain Source Structures

Give any name, which can be easily identifying the input data structure. (It is equivalent to
defining an internal table in a ABAP program). Can define multiple structures also (if
required).
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Step3. Maintain Source Fields

Define all those fields that you are giving in the input file here. The order should match the
order of fields in the file. Otherwise it will get updated into the wrong fields. (Most of the
errors might be in this step)
Step 4. Maintain Structure Relations

Define the source and destination structure relation ships.
Step5. Maintain Field Mapping and Conversion Rules.
You have to define the mapping rules.., eg. Customer = customer. Or if any default value
has to be passed , or some fixed value is given like that ( company code can be a default
value if processing for a particular company code.
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After making all the mappings and initialization you can even do a syntax check to see
your mappings are correct or not
Step6. Specify Files
You have to specify the input file location in this step.
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Step7. Assign Files

Assign the physical file path to the structure
Step8. Read Data

Reading the file to the source structure
Step9. Display Read Data

This is very useful step where we can review the field values that got read.
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Step10. Convert Data
Converting the source structure data to the destination by applying the conversion rules that
have mentioned in step 4 and step 5.
Step 11. Display Converted Data
Also useful for checking the values converted.

Step12. Create Batch Input Session
This will create a BI session in SM35.
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Step 13. Run Batch Input Session
This step will call SM35 .One can run the session in SM35. You can run in foreground, Error
mode or background. Preferably run in Foreground for testing some few records…once
confirmed the update then run in back ground.
How to transport the LSMW project from Test to Production system;
The LSMW projects can be transported between systems via export /Import method.
You can export the entire project as a text file and that can be imported to another system.
In MSS no changes are allowed, so before importing to MSS , give the MSS file path in
MST and then do an export .
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Release Procedure for PR

With classification
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RELASE PROCEDURE FOR PUR.REQ WITH CLASSIFICATION
CREATION OF CHARACTERISTIC :-
Materials Management / Purchasing/ Purchase Requisition / Release Procedure /

Procedure with Classification/ Edit Characteristics.
Enter characteristic name (ceban_gswrt ) and click on create button.
Now click on additional data tab

table name : ceban
Field name : gswrt & press enter
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In basic data tab enter

Currency : inr &
check multiple values & interval vals allowed as shown below.
Now click on values tab & enter as below
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Now click on restrictions tab

Enter class type : 032 & press enter, below screen appears
Now Click on save button below screen appears.
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CREATION OF CLASSES:-

Procedure with Classification/ Edit Classes.
Enter class, class type, & click on create button.
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Enter description
now click on char. tab

& enter characteristic name, & press enter, & save it.
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Set Up Procedure with Classification:-

Procedure with Classification/ set up procedure with classification
Now click on release groups
Click on new entriesa

Enter rel.grp, class, description & click on save
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Press f3, f3(back) & click on release codes
Click on new entries

& enter grp, code, desc as below
Now press enter & click save button.
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Press f3, f3(back) & click on release indicators
Click on new entries

Enter release id, changeabile, value change & press save button.
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Similarly create another release id as shown below. & save it , press f3 ,f3.
Now click on release strategies.
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Now click on new entries
Enter release grp, release strategy, & release codes as below.
Now click on release prerequisites. Check od check box & click on continue.
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Now click on release statuses
Observe the below screen and click on continue
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Now save it & click on classification
Follow below steps

Check >=5000,00 inr check box & press enter
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Now press f3.

Click on release simulation.
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Following screen appears & click on simulate release to do release test
Now click on release possible then only OD can release pr.
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Now press f3 following screen appears.
Simillarly create release strategies with A3,A2,A1 in GI Group with these conditions
A3 = < 5000 & approval should be by plant manager A
A2 = >=10000 & approval should be by stock controller A & plant manager A
A1 = <10000 & approval should be by stock controller A.
Now create pur.req & we can release this pur.req itemwise.
Creation of purchase requisition
Now create pur.req t.code- ME51N
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Enter material , plant, delivery date, quantity & press enter button.
Now press check button below screen appears.
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Press Save .
Release procedure for pur,req t.code-ME54N.

Observe the release strategy tab .
Click on release options in release strategy tab. Now SA is released
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Click on release options in release strategy tab again to release PA as shown below.
Click on save button.
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--------------- END ------------------
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SAP-MM (Material Management)

13. Shipping Instructions & Purchase Value Key…………………………..…………53

23. Inventory Management: Transfer Posting……………………………………..……98

It is an Organizational Unit for which financial statements can be drawn up according

Note: A Company can have one or more company codes.

SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Define company

• It is a smallest Organizational Unit

SPRO Æ Enterprise Structure Æ Definition Æ Financial Accounting Æ Edit, Copy,

• It is an Organizational Unit with in a company.

SPRO Æ Enterprise Structure Æ Definition Æ Controlling Æ Maintain Controlling Area

Note: A Plant must always be assigned to a company code.

• It is an organizational level at which material is valuated.

Plant Level Company Code level

- You can valuate material at different - Valuation of price of material is

1. Enterprise Structure Æ Definition Æ Logistic-General Æ Define valuation level

Note: Valuation must be at this level in the following cases:

b) Company code level

Note: SAP recommends setting material valuation at plant level.

2. Enterprise Structure Æ Definition Æ Logistic-General Æ Define, copy, delete, check

Define Storage Location:

• It is an Organizational unit, which allows the differentiation of Material Stock with in

Note: Physical inventory is carried out at storage location level.

SPRO Æ Enterprise Structure Æ Definition Æ Material Management Æ Maintain storage

Define Purchasing Organization

 It procures the material and services.

Purchasing organization types:

So a Purchasing Organization Can be assigned to

- Several company Codes.

Reference Purchase Organization:

A purchase organization whose conditions and contracts other purchasing

Standard Purchase Organization:

SPRO Æ Enterprise Structure Æ Definition Æ Material Management Æ Maintain

SPRO Æ Enterprise Structure Æ Assignment Æ Financial Accounting Æ Assign company

SPRO Æ Enterprise Structure Æ Assignment Æ Controlling Æ Assign company code to

SPRO Æ Enterprise Structure Æ Assignment Æ Logistic-General ÆAssign plant to

SPRO Æ Enterprise Structure Æ Assignment Æ Material ManagementÆ Assign purchasing

SPRO Æ Enterprise Structure Æ Assignment Æ Material Management Æ Assign purchasing

The Data uses Mater data while creating transactions.

- It contains the description of all materials that an enterprise procures, produces or

Ex: Raw Materials, Semi finished or finished products.

Ex: Ladies ware, Office supplies etc.

Material Classification is for easy and fast retrieval of (material) data.

Notes on Material Type:

 Material Types are used for the following areas

Material Types in standard SAP:

1. ABF - Waste 11. FRIP - Perishable

1. Basic Data1 10. Quality management 19. Forecasting

T-codes Creation Change Display List of materials

For Material MM01 MM02 MM03 MM60

IMG settings: Material Master

Note: Vendor is also called creditor, he is the external source of supply

Vendor Master Record:

Vendor Master Record consists of XK01 MK01

o General Data (2 screens)

Vendor Account Group:

Important Vendor Groups are:

0001 - Vendor standard LIEF - External Vendor

8. Payment Processing 1. Determination of Requirements

7. Invoice Verification 2. Source Determination

4. Purchase Order processing

6. Goods Receipt & Inventory Management

A purchasing document is used for purchasing for materials and services

Header Doc Type, Doc No, Date of Doc. Created.

It procures the material and services.

Material Types are used for the following areas

Instructions issued to a vendor regarding shipment or packing of ordered goods