SAP MM /WM - Overview

Dilip Sadh

Describe the basic business process of Procuring Materials

and Services in the SAP R/3 System.

Discuss the integration points in procurement to Financial

Accounting and Inventory management.

Discuss the reporting and analysis tools used in the

procurement cycle.

Discuss the Company’s procurement process.

Communicate scope expectations.

Procurement Cycle Workshop - Objectives

SAP

CO

AM

PS

WF

IS

MM

SD

PM

PP

QM

FI

HR

Finance

Human

Resources

Global tools

Logistics

QM : Quality Management

PM : Plant Maintenance

WF : Workflow

IS : Industry Solutions

SD : Sales & Distribution

MM: Material Management

WM : Warehouse Management

PP : Production Planning

FI : Financial Accounting

FI-AM : Assets Management

CO : Controlling

PS : Project System

SAP modules

Modules in PROJECT

MM module

MM is a component of Logistics in SAP that focuses on

inventory management, warehouse management, vendors and

purchases.

SAP

CO

AM

PSWF

IS

MM

SD

PM

PP

QM

FI

HR

MM Materials Management

Inventory management

MM overview

Material planning

ProductionInternal procurement

PurchasingExternal procurement

Invoice

verification

Goods receipts

Goods issue

Stock transfers

Invoice entry

Storage areas

management

Financial accounting Sales

MM

MASTER

DATA•Materials

•Batches

•Vendors

•Purchasing

info record

•Source list

Agenda

Attendees:

Business Managers, Process Owners

Topics:

Master Data

Procurement Process Overview

Reporting

Procurement Cycle Workshop

Organizational and Master Data

Business Process for

Procurement

Reporting and Analysis

Procurement

The primary SAP R/3

application modules that

support the Procurement

process include:

Materials Management

Purchasing

Goods Receipts

Invoice verification

Financial Accounting

Payment processing

Materials Valuation

R/3Client / Server

ABAP/4

FIFinancial

Accounting

COControlling

AMFixed Assets

Manage-ment

PSProjectSystem

WFWorkflow

ISIndustry

Solutions

MMMaterialsManage-

ment

HRHuman

Resources

SDSales &

Distribution

PPProductionPlanning

QMQuality

Manage-ment PM

Plant Main-tenance

Procurement

The SAP R/3 Procurement business process usesthe following R/3 organizational elements:

Storage Location

Purchasing Organization Purchasing Group

Company Code

COMPANY CODE

Plant

Organizational Elements

The following master data is used in the Procurement cycle:

Material Master

Vendor Master

Master Data

The material master record contains all data required to

define and manage material. It integrates data from

manufacturing, sales and distribution, purchasing,

accounting and other departments.

The material master is used as a source of data for purchase

order processing throughout the procurement cycle.

Master Data: Material Master

Material Master Primary Views

Purchasing

Sales

Work

scheduling

Stocks in plant/

storage location

Accounting

Engineering/

Design

MRP

A

B

St

t

Material

Master

Storage

Client

Plant

Storage Location

General data

Material number

Description

Units of measure

Plant-specific data

Planning data

Manufacturing data

Purchasing data

Valuation data

Storage location-specific data

Stock quantities

Material number

Description

Units of measure

General data

Storage Location

specific data

Stock quantities

Material Master Organizational Levels

The vendor master includes all data necessary for processing

business transactions and corresponding with vendors.

Information is shared between the accounting and purchasing

departments.

Data is grouped into three categories.

• General data

• Accounting data

• Purchasing data

Master Data: Vendor Master

Organizational and Master Data

Business Process for

Procurement

Reporting and Analysis

Procurement

Requirements

Determination

Order Follow-upInventory Management

1.

Vendor Selection

RUHR

TRUCKING

3.

Order Processing4.5.Goods Receipt and6.

Invoice Verification

Purchase Order

7.

8. Source

Determination2.Payment

Vendor

invoice?

Procurement Environment

Invoice

Processing

Goods

Receipt

Purchase

Order

Purchase

Requisition

for Goods/

ServicesPurchase Requisition

10

20

30

Purchase Order

10

20

30

Planning, Reporting, and Analysis

Vendor

invoice

The Procurement Process

Purchase Requisition

Request or instruction to the purchasing department to procure a

certain quantity of a material or service on or by a certain date.

Are created directly by a requesting department or automatically via

material requirements planning (MRP).

Are internal documents not used outside the company.

Purchase Requisitions:

Invoice

Processing

Goods

Receipt

Purchase

Order

Purchase

Requisition

for Goods/

ServicesPurchase Requisition

10

20

30

Purchase Order

10

20

30

Planning, Reporting, and Analysis

Vendor

invoice

MRP

Purchase requisition Release strategy

Purchase

Order

Determine source of supply

Direct Entry

Purchase Requisition Processing

Purchase Order

Represent the formal approval of a purchasing transaction with a vendor.

Identify the following items such as:

Vendor

Material and quantity ordered

Price and terms

Delivery date and location

Purchase orders:

The Procurement Process

Invoice

Processing

Goods

Receipt

Purchase

Order

Purchase

Requisition

for Goods/

ServicesPurchase Requisition

10

20

30

Purchase Order

10

20

30

Planning, Reporting, and Analysis

Vendor

invoice

Service

Consumable Material

Stock Material

Account Assignment(cost center, asset,

internal order)

Statistics Order History

Purchase

Order

• Standard

Purchase Requisition

Direct Entry

or Purchase

Requisition

Purchase Order Processing

Processing Purchase Orders

Purchaserequisition

Reference document

Contract

Vendor

One-time vendor

Purchaseorder

10

20

30

Goods Receipt

Verifying the receipt against the order.

Valuating material at purchase order price.

Creating material and accounting documents to record the event.

Updating the purchase order history.

Providing basis for invoice verification (2nd part of 3-way match).

Goods receipts record the inward movement of goods or materials by:

The Procurement Process

Invoice

Processing

Goods

Receipt

Purchase

Order

Purchase

Requisition

for Goods/

ServicesPurchase Requisition

10

20

30

Purchase Order

10

20

30

Planning, Reporting, and Analysis

Vendor

invoice

Goods

Receipt

Vendor

RUHR

TRUCKING

Purchasing

Documents

Items

1.

2.

3.RUHR

TRUCKING

Warehouse/Stores

Entering the goods receipt increases the inventory

level of a material that is procured for stock.

Goods Receipt for Stock Material

Consumption Statistics

Purchasing Data:Order item

Order history

Goods

Receipt

Posting

G/L Accounts:

Stock AccountConsumption AccountGR/IR Account

Accounting DocumentStock Quantity

Point of ConsumptionCost centerOrder

Material

Document

Goods Receipt

Slip

Results of a Goods Receipt Posting

Material Movements Through IM and WM

Material Movements Flow:

Transfer Requirement (TR)

Transfer Order (TO)

Confirm Transfer Order

Invoice Processing (1)

Matches the vendor’s invoice to the purchase order and the

goods received (3rd part of 3-way match).

Matches price, and quantity.

Updates the purchase order and its history.

Updates accounting information.

Invoice verification:

The Procurement Process

Invoice

Processing

Goods

Receipt

Purchase

Order

Purchase

Requisition

for Goods/

ServicesPurchase Requisition

10

20

30

Purchase Order

10

20

30

Planning, Reporting, and Analysis

Vendor

invoice

Invoice Verification Environment

G/L accounts:

PurchaseOrder

Goods Receipt

VendorInvoice

Invoice

Verification

Invoice verification accesses data from purchasing, inventory

management, material master, and vendor master files.

Material Master

Vendor Master

Conditions

G/L Accounts

Assets

Cost Centers

Projects

Orders

Posting an invoice in the SAP System

updates purchasing and accounting data

Vendor

Invoice?

Invoice Processing (2)

Selects invoices for payment based on the payment terms in

the vendor master or purchase order.

Generates payment for released invoices.

Updates accounting information.

Invoice Payment:

The Procurement Process

Invoice

Processing

Goods

Receipt

Purchase

Order

Purchase

Requisition

for Goods/

ServicesPurchase Requisition

10

20

30

Purchase Order

10

20

30

Planning, Reporting, and Analysis

Vendor

invoice

Financial

Accounting

Vendor

1000Paymentprogram

Bank

1000

Motor Sports International

Released

invoice

Vendor Payment

PP FI FI

Purchase Requisitions

Goods Receipt

Invoice Verification

Purchase requisition

Released

invoice

?

Procurement Integration

Organizational and Master Data

Business Process for

Procurement

Reporting and Analysis

Procurement

Standard Reporting provides List Displays by:

Vendor

Material

Account assignment

Material Group

Purchase order number

General Analysis

Order Value Analysis

Inventory Transaction Analyses

Reporting and Analysis

Logistics Information Library

Logistics

Processing

Systems

Logistics

Information

Systems

R/3Sales and

Distribution

(SD)

Materials

Management

(MM)

Production

Planning

(PP)

Shop Floor

Information

System

Inventory

Controlling

Purchasing

Information

System

Sales

Information

System

Logistics Information System

Thank you for your kind attention!

Dilip Sadh