Material Management

(MM)
ER P -S A P
PREPARED BY: M . IM RAN TASEER
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M ain Functions(M M )
Material Master Data
Vendor Master Data
Purchasing
Inventory Management
Logistics Invoice Verification
Physical Inventory
Material Valuation
Material Requirements Planning (MRP)
External Services Management
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O rganizationalStructures

Inventory M anagem ent w ith a

W arehouse M anagem ent System
0001
0001 ABC
ABC inc.
inc.

client
company code
purchasing organization
plant

distrib.0001
center 0001

0001
storage location 0001

0001
0001 Jones
Jones inc.
inc.
0001
0001

0002
0002

0002
0002

0003
0003

0002
0002

warehouse number
storage type
storage bin

0002
0002 Model
Model Ltd.
Ltd.

0004
0004
0003
0003

MM
MM

0001
0001 factory
0004
0004

001
001
001
001

(physical
stock)

0003
0003

WM
WM

002
002
05-04-03
05-04-03

05-04-04
05-04-04
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M ATER IA L M A S TER D ATA

M aterialM aster

M aterialTypes
Standard Material
Types

Customized Material
Types
ZADM (General

ROH (Raw Material)

FERT (Finished Goods)
HAWA (Trading Goods)
HALB (Semi-Finished

Product)
ERSA (spare parts)

Materials)
ZIT (IT Materials)
ZSAT (Stationery
Materials)
ZAST (Asset
Materials)
ZSAM (Sample
Material)
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Create M aterialM aster

Create M aterialM aster

Maximum Length of Material Code is

standard 18 digits. Like

100000000000000018
Maximum material description is 40
Characters.
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Create M aterialM aster

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Create M aterialM aster (cont)

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Create M aterialM aster (cont)

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Create M aterialM aster (cont)

SAVE

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V EN D O R M A S TER D ATA

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Structure of the Vendor Master Record

sections

utilization

General data
name
address
control data

area of validity

client
client wide
wide

purchasing
purchasing
terms
terms and
and cond.
cond.
partner
partner functions
functions
currency
currency

accounting
accounting data
bank
bank account
account
acc.
acc. maintenance
maintenance
payment
payment

invoice
invoice entry
invoice
invoice verification
payment
payment handling
handling

request
request for
for quotation
quotation
quotation
quotation processing
processing
purch.
purch. order
order handling

for
for each
each
purchasing
organization
organization

client
client wide
wide or
or
for
for each
each
company
company code
code
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Vendor M aster Creation

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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Vendor M aster Creation (Cont)

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P U R C H A S IN G /P R O C U R EM E
NT
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Procurement Process
(Procure-to-Pay)

Purchase
Requisition

Purchas
e
Order
3Way
Matc
h

Payment
to Vendor
Invoice
Receipt

Notify
Vendor

Vendor
Shipment
Goods
Receipt
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Purchasing Process
Create a requisition
First release of requisition (approval)
Create RFQ (Request for Quotation) with

reference to requisition
Create PO (Purchase Order) with reference
to RFQ
Approval of PO
Department receives material ordered
(GR)
Department pays invoice (MIRO).
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P urchase R equisition
Document generated by a user
department or storeroom-personnel
to notify the purchasing department
of items it needs to order, their
quantity, and the timeframe. It may
also contain the authorization to
proceed with the purchase. Also
called purchase request or
requisition.
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R equest for Q uotation

Is a standard business process its
purpose is to invite suppliers into a
bidding process to bid on specific
products or services. RFQ generally
means the same thing as IFB
(Invitation For Bid)

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P urchase O rder
Buyer-generated document that
authorizes a purchase transaction.
It sets forth the descriptions,
quantities, prices, discounts,
payment terms, date of performance
or shipment, other associated terms
and conditions, and identifies a
specific seller.

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Create Purchase Requisition

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Create Purchase O rder

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Procurem ent D ocum ents

Requisition
Purchase
Requisition

RFQ
RFQ
RFQ

Purchase Order
PO

Quotation

Contract

Quotation

Service Entry Sheet

Contract

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Aw arding Contracts (O rder placem ent)

Purchase
Requisition

RFQs

Vendor C
Vendor B

Price
Comparison
list

Best
Offer

Purchase
Order

Vendor A
Quotation

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IN V EN TO R Y M A N A G EM EN T

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Inventory M anagem ent

Inventory list parameters (Physical

Inventory)
Movement types for differences
Warehouse Management
Minimum and Maximum stock levels
Re-order point

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G oods Receipt:Transfer posting

Unrestricted stock: You can consume the material stock in

unrestricted use.
Quality inspection: Area controlled by QM to inspect the
quality of material.
Blocked stock: is a holding area for materials that have not
been posted to a companys warehouse stock.(Not available for

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PhysicalInventory
Audit of inventory
Compare physical stock with stock

appears in system
Enter physical inventory count
Investigates if stock mismatch
Balance sheet effect

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M ovem ent Types

Themovement typesare defined as 3-

character field in system. It is used to

describe the type of material movement
that need to be performed. The movement
type is used for all type of goods
movement in SAP (receipts, issues,
transfers, reversal).
The predefined movement types in SAP is
between 100 and 899. The movement type
900 and upwards can be used for
customized movement types.

M ovem ent Types

101 - Goods receipt

(GR) for purchase

order
102 - GR for purchase
order reversal
122 - Return delivery
to vendor
123 - Reversal of
return delivery to
vendor

201 GI for cost center

202 RE for cost center
301 - Transfer posting

plant to plant
302 - Transfer posting
plant to plant
reversal

IN V O IC E V ER IFIC ATIO N

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Invoice Verification
input
input
information
information
orders
goods receipt
master data:
material
vendors
accounts
terms & cond.

invoice
invoice verification

output
output
information
information

actions:
enter invoice
verify invoice
post invoice
update
relevant data
(re-edit
invoice)

financial
accounting
asset
management
cost accounting
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Invoice Verifi
cation
When you post an invoice, an accounting document
is created:
Update Vendor account
Update the account GR/IR (Goods Receipt/Invoice
Receive)
Update master data: moving average price, value
Update purchase order history

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M ATER IA L V A LU ATIO N

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M aterialValuation
Stock value = stock quantity x

material price
(If the stock quantity or the material
price changes, the stock value
changes)
Standard price
Moving average price

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M ATER IA L R EQ U IR EM EN TS
P LA N N IN G (M R P )
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M aterialRequirem ents
Planning (M RP)
The main objective of MRP is to

guarantee material availability

Planning strategies - made to order
or made to stock
Consumption based planning
methods (Forecast) or demand based
planning methods
BOM, automatic PRs and POs
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S ER V IC E M A N A G EM EN T

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Service M anagem ent

Service master data
Service PR
Service PO
Service Entry Sheet

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