Download - Material Management Presentation (New 1)

FUNCTIONAL OVERVIEW

Materials ManagementMaterials Management

R/3R/3Client / ServerClient / Server

ABAP/4ABAP/4

FIFIFinancialFinancial

AccountingAccounting

COCOControllingControlling

AMAMFixed AssetsFixed Assets

Mgmt.Mgmt.

PSPSProjectProjectSystemSystem

WFWFWorkflowWorkflow

ISISIndustryIndustry

SolutionsSolutions

MMMMMaterialsMaterials

Mgmt.Mgmt.

HRHRHumanHuman

ResourcesResources

SDSDSales &Sales &

DistributionDistribution

PPPPProductionProductionPlanningPlanning

QMQMQualityQualityMgmt.Mgmt. PMPM

PlantPlantMaintenanceMaintenance

Integrated solutions

Open systems

Client / serverarchitecture

Enterprise datamodel

Designed for all typesof business

Multinational

Comprehensivefunctionality

Presentation Agenda

Presentation Contents:

.The Integrated Supply Chain

.Organization Structures .Master data – Structures - Configuration .MM-MRP Planning . Release Strategy for Purchase Requisition

.MM-Purchasing Process .Source List , Info record, Quota arrangement

.RFQ, Maintain Quote .Purchase order .Scheduling Agreements .Inventory Management .Physical inventory .Invoice Verification.Warehouse Management .Other issues – repair processing, hard allocation, shelf life, project stores, vendor consignment processing.Valuation.Reporting , Information system

Material Management

SDSDMMMM•Material Management . . . . . . .

SAPSAPR/3R/3

The Integrated Supply Chain

Capacity resourcesCapacity resources

Capital resourcesCapital resources

long-termlong-term short-termshort-term

Material resourcesMaterial resources

Logistic processesLogistic processes

vendorvendor

productionproduction sales sales procurementprocurement

clientclient

Organizational Levels : Logistics

Group

Company Code

Valuation level

Purchasing Organization

Sales Organization

Plants

Warehouses

001001

001001002

002

001001

002002

003003

30003000

40004000

001001

001001

00010001

00020002 0003

0003

special stocks

special stocks 0002

0002 0001 LVS0001 LVS

Organizational Structure

• Company Code– A legally independent unit within a client that prepares its own balance sheet

– Is the central organizational unit in financial accounting

• Purchasing Organization– A organizational unit that procures materials or services, and negotiates

general purchasing conditions with vendors

– Responsible for procuring materials and services for the plants to which it has been assigned

– Uniquely allocated to one company code

• Purchasing Group– A purchasing organization is divided into purchasing groups (groups of

buyers) that are responsible for operational tasks

Organizational Structure...

• Plant– An operating unit concerned with production and

planning or

Simply a combination of locations with material

stocks, known as storage locations

– Is a central organization unit in materials management

• Storage Location– The total of all storage bins in a plant that are

managed together

MM - Organizational Units

Group

Company code

Purch.Org.

Plants

Storage Location

001001

0002000200010001

300030002000200010001000

0005000500040004000300030002000200010001

WM 0088WM 00880002000200010001

Plant

Overview

MRP

Purchasing

Accounting

Warehousemanagementsystem

Goods receipt

Inventory Management Material Valuation

Goods Transferissue posting

Invoice receipt

Invoice verification

Master data

MaterialBatchesVendorsCustomers :

Organizational Structure & Master Data

Organizational Structure & Master Data

• Materials• Vendors• Information Records

MMMaster

Data

MMMaster

DataInventory

Management

Inventory ManagementProcurementProcurement

MRPMRP

Organisation Structures

P la n t1 11

P la n t2 22

P u rch .O rgC C C C

C o m p a n y co deB B B B

C o m p a n y co deX X X X

C o m p a n y co deY Y Y Y

C lie n tA A A A

Purchasing View

Purch.

S to ra g e T ypeB in 1B in 2

W a re h ou se9 99

S to ra g e L oc5 55



P la n t1 11

P la n t2 22

C o m p a n y co deB B B B

C o m p a n y co deX X X X

C o m p a n y co deY Y Y Y

C lie n tA A A A

Materials View

Master data structures - configuration

Master data structures - configuration

Master Data - Material

Configuration Issues• Material Number structure

• Material type

• Material groups

• Classification

• Price control

• Split valuation

• Material description / texts

• Screen sequence / control

• Field selection

• Define match codes

• Batch management

• Shelf life management

• MRP / Forecast profile

• Engineering change management

• Changing critical fields - Unit of measure, valuation class, material type

• Deletion / archiving material

• Authorization for views

Material Type - Design Considerations…

Material Type

• Stock Material, Direct Material, Project Material, Trading Goods etc.

Attributes of Material Type

• Field Selection , Material Number range

• Views of Master data - engineering, Procurement, MRP, Accounting etc

• Qty / Value basis

• Internal / External procurement allowed

• Accounting assignments - Account categories - Valuation classes

• Price control - Moving average, standard price

Material Type - Design Considerations…

• Restrict number of material types

• Use material groups to classify materials as far as possible

• Difficult to change the material type later on

• Example of Material type - ZSTK, ZDM, ZPRO Configuration specifics - Field reference , material number, account assignments

Materials Master Data -

How Data is Organized

General DataGeneral Data

Materials numberDescriptionUnits of measureTechnical Data

Materials numberDescriptionUnits of measureTechnical Data

Plant Plant

MRP typePlanned Delv typePurchasing groupBatch indicator

MRP typePlanned Delv typePurchasing groupBatch indicator

ValuationValuation

Valuation typeValuation priceValuation procedureValuated quantity

Valuation typeValuation priceValuation procedureValuated quantity

Warehouse Warehouse

Unit of measurePalletizationinstructions

Unit of measurePalletizationinstructions

PurchasingPurchasing

Purchase groupPurchase value key

Sales texts

Purchase groupPurchase value key

Sales texts

Storage loc.Storage loc.

Storage periodStock fields

Storage periodStock fields

Forecast dataForecast data

Forecast model paramsConsumption data

Forecast model paramsConsumption data

Vary by material type

Material TypeMaterial Type

• Raw Material• Op-Supplies • Trading Goods • Spare part • Finished goods• Etc.

Materials Master Data - How Data is Viewed

Engineering Data Accounting

Purchasing DataSales Data

Storage

MRP Data

Warehouse Management

Material TypeMaterial Type

Material Match codes and ClassificationMaterial Match codes and Classification

Material match codes and classification are two different methodologies used to search for and select materials

Material Class (Classification)...

LogicalPumps

Butterfly Pump Metal Pump

Butterfly Pumpone

Butterfly Pumptwo

SAP Classes

Butterfly Pump

Characteristics:WEIGHTVOLUMEPRESSURE

REAL CLASS

Butterfly Pump, one,110bsValuesWeight 40kgVolume 20cmPressure 110 lb

Material 100001

Butterfly Pump, two,120lbsValuesWeight 50kgVolume 25cmPressure 120 lb

Material 100005

Material Master Record

Material Match codes

Material Material DescriptionMaterial DescriptionMaterial Description... ...... ...

DescriptionOld Mat’l No Mat’l Group(Class)

SAP Transaction Screen List of Selected Materials

Material Matchcode

ClassificationClassificationMatchcodesMatchcodes

Advantages and Disadvantages

Advantages•Quick to use

•Easy to setup

•Does not require on-going maintenance

•Integrated intostandard reports

Disadvantages•Not Structured

•Depends on following naming conventions and standards

Advantages•Easy to use

•Follows specific Standards

•Uses Hierarchies

Disadvantages•Requires continuous maintenance

•Slower to use, more screens to enter

•Not integrated intostandard reports

Vendors - Complex Structures

• Central vendor master - Material, contract, Finance

• Vendor Number structure

• Match codes - vendor number, search term, vendor name

• Account group which controls field layout / data retention level

• Partner functions

• Critical fields– GR Based invoice verification

– Acknowledgement required

– Order currency

– Subsequent settlement

– Business volume comparison

– Terms of payment

• Maintenance Procedure / Authorization control

• Blocking Vendor

Vendors - Complex Structures

• ‘Vendor Partner Functions’ introduced with v3.0• Allows you to link separate ‘vendor’ address

records together in a family• Can assign roles to each type of ‘vendor’ address

records• Also referred to as ‘business partners’ in the SAP

documentation• Configuration sits under ‘Logistics’ not ‘Material

Management’

Vendors - Complex Structures...

ExampleManufacturer AManufacturer A

Manufacturer BManufacturer B

Vendor Record # 100001


‘Order From’ Address ‘A’

‘Order From’ Address ‘A’

‘Order from’ Address ‘B’

‘Order from’ Address ‘B’



SupplierPrimary Vendor‘Pay To’ Address


Vendor Types

Vendor Type

• Controlled by account group

• Controls field selection

• Partner Determination Procedure (role) assigned for each type (1:1)

• Number range assigned for each vendor type

• Data retention at sub range / plant level

MM -MRP Planning

MM -MRP Planning

• Purchase Requisitions• RFQs • Contracts• Purchase Orders

• Receiving• Disbursement• Physical Inventory (Raw, Crib,

Finished Goods)• Warehouse Management

MMMaster

Data

MMMaster

DataInventory

Management

Inventory ManagementProcurementProcurement

MRPMRP

MM Business Activities

Materials Requirement Planning

Configuration issues - Plant level

• MRP Types - V1, V2, VB, PD, VV

• MRP groups

• MRP Controllers

• Planning horizon

• Available stock

• PR or Planned order

• Blocked stock or Disposal store

Materials Requirement Planning

MRP determines the quantity of material required and creates the purchase order proposal based upon:

Reorder point planning (Consumption based MRP)

Forecast based planning (Deterministic MRP)

MRP General Parameters

MRP Parameters are set up at plant level

MRP groupThe MRP group, groups together materials from the planning point of view for allocating special control parameters for the planning run.

MRP controller

In this field, you must enter a key for a single MRP controller or

for a group of MRP controllers who/which is responsible for the

planning of a material. In the future, you can process

the MRP results according to the MRP controller.

MRP General Parameters

MRP parameters are set up at plant level

Purchasing group

In this field, you must enter a key for a buyer or for a group of buyers who/which is responsible for purchasing the material. As a result, during a planning run, order proposals for externally procured materials can immediately be allocated to the appropriate purchasing group.

Safety stockThe safety stock is used to prevent material shortfalls during the stocking-up period which may occur if consumption is unexpectedly high or if delivery dates are not kept. You have the choice between manually determining the safety stock or letting the system automatically.

1. Automatic creation of Purchase Requisitions

2. Automatic assignment of Buyer or Purchasing group

3. Automatic source selection for Sole supplier materials

4. Automatic assignment of MRP controller for review of plan results

5. Automatic cancellation of Purchase requests no longer required

6. Printing of MRP Replenishment List by MRP controller

7. Automatic creation of schedule line for blanket order outline agreements

MRP Planning - Automatic processes

1. Selective store can be excluded for MRP

Eg. Disposal store

2. Items under Blocked Status are excluded from MRP

3. Material in Blocked Stock area can be excluded from MRP

Eg. Rejected material after inspection lying in the blocked stock area

4. Material with Planning type - ND are not planned in MRP run

MRP Planning - Include/ Exclude

1. Schedule the MRP planning run

Automatic scheduling as per the frequency determined by MRP controller

2. Review and process the MRP List

3. Review the proposed Purchase Requisition

Amend PR quantity or Cancel PR if necessary

4. Release PR for further processing by Procurement

5. Review exception messages from MRP list for any necessary action

Eg. Cancel Purchase order if requirements no longer exist

Actions by MRP controller

Purchase Requisition Processing

Allocate and processAllocate and process

Purchase requisitionPurchase requisition

MRPMRP Direct entryDirect entry

Purchaseorder

RFQ

?Quotation

?

Obtain Quotes Evaluate Quotations

RFQ

? Quotation

?Quotation

?

Price Comparison

vs

Release strategy For

Purchase Requisitions

)

Purchase Requisitions Types

•Store Stock(ZSTK)•Direct Materials(ZDM)

•Work Order PR(F)•Cost Center PR(K)•Project PR(Q)

Purchase Requisition Release Strategy:

A. Store Stock:

•According to Company Standard Level of Authorization Policy.

)

B. DIRECT MATERIALS:

•Work Order (F): Purchase Requisitions can be approved on line.

MM -Purchasing Process

MM -Purchasing Process

Purchasing documents

Purchaserequisition

Quotation

Contract/Release order

Request forquotation

Purchase order

Schedulingagreement

Purchaserequisition

Purchaseorder

Contract

Quot.

A

Quot.

B?Quot.

A

Quot.

B?

Req. f. quot.

?

The Procurement Cycle

PurchaseOrder

Invoice

Invoice verification

=Determination of

material requirements

Determination of source of supply

Purchase order processing

MMMMMaterialsMaterials

ManagementManagement

Purchase order monitoring

Goods receipt andinventory management

Vendor selection

Requirementsplanning

Vendor

Outline agmt.

Processing of RFQs

Vendor AVendor A

Vendor AVendor A

Vendor AVendor A

Quotation

?

!Quotation

M X B

K G P

H E C

Stock materialStock material Consumable materialConsumable materialPurchaserequisition

Request for quot.

Quotation processing

Quotation for RFQ 1Quotation for RFQ 1 Quotation for RFQ 2Quotation for RFQ 2 Quotation for RFQ 3Quotation for RFQ 3

AA BB CCVendorVendor VendorVendor VendorVendor

Certificate

Purchase order unit

Texts

Reminder

Conditions Purchase order statistics

Purchase Purchase orderorder

RejectionRejection

Price comparison listPrice comparison list

Purchase Orders

CreateRequisition

ApprovePR

Allocate Vendor (incl. RFQ

process)

Direct source or subcontract requisition

SUBSTITUTEITEM

PURCHASE ORDER

No. 890 Vendor No. 1304

Item No. 27

Create P.O.

Purchase order processing

PurchasePurchaserequisitionrequisition

RFQRFQ QuotationQuotation ContractContract

History

Purchase order

For external purchase order

o Standard itemo Consignmento Text

Stock material

Consumable mat.

Single/ multipleAcc. assignment

n Cost centern Projectn Sales Documentn Ordern Asset

Items/item categoryoptional

mandatory

Methods of Creating POs on SAP

• PO with reference to a purchase requisition

• PO with reference to a contract (Release Order)

• PO with reference to a RFQ

• PO with reference to another PO

• PO without reference

How is the source of supply determined?

Quota arrangements?Quota arrangements?

Source lists?Source lists?

Outline agreement?Outline agreement?

Info record?Info record?

Purchaserequisition

Purchaserequisition

Purchaserequisition

nn Outline Outline agreement item agreement itemnn Fixed vendor Fixed vendor

nn Outline Outline agreement item agreement item

nn Fixed vendor Fixed vendor/ vendor item information

80% 20%80% 20%

Outlineagreement

Piece

% Conditions

$

SourceList

Outline agreements

SupplementSupplement

Contract

Quality contract

Value contract

Consignment contract

Schedulingagreement

SupplementSupplement

Release orders

Deliveryschedule

Source list

Maintainmanually

Maintain fromoutline

agreement

Maintain frompurchasing info

record

Generate frominfo record or

outline agreement

Validity period Fixed vendor

Fixed outline agreement

Default source of supply in requisitionvia source determination

Check in purchase requisition andpurchase order for reliability

SourceList

MM -Inventory Management

MM -Inventory Management

SAP Inventory Management Structure

IM

WMfor Finished Goods

Storage Bin

Storage Section

Storage Bin

Finished GoodsStorage Location

Plant

Raw Material Storage Location

CribStorage Location

• Pick• Bulk• Interim• Mixed

Warehouse

Storage Type

Storage Bin

Inventory Management Functions

Inventory Management in SAP supports the following tasks:

• Receiving

• Management of material stocks by quantity and value

• Planning, data entry and documentation of all goods movements

• Warehouse Management

• Physical Inventory/

Cycle Counting

What is the result of a Goods Receipt ?

• A material document (goods receipt) is created• An accounting document is generated

(unless consignment stock)• Stock quantities are updated• Inventory values are updated• The PO is updated or closed

Invoice VerificationInvoice Verification

Invoice Verification Overview

Invoice

Invoice

Order

Goods receipt

Vendor Invoice

Invoice Verification

Vendor Open items

Invoice Verification Process

Delivery costs

Conditions

Material

Purchase order

Vendor master

Invoiceverification

G/L accounts

Assets

Cost centers

Projects *

Orders

InvoiceDocument

Invoiceverification

* From 2.0

GR-Based Invoice Verification

GR document50000100Delivery slip 4711

GR document50000099Delivery slip 08-15

GR document50000099Delivery slip ABC

Purchase Order

100 piece GR-based inv. verif.

Goods receiptGoods receipt50 pcs50 pcs



n GR-based invoiceverification indicatordefaulted from vendormaster/info record

n Invoice receipt only aftergoods receipt

Selection screenPurchase order Delivery note QuantityX 45000012 01 ABC 50X 45000012 01 4511 40X 45000012 01 08-15 10

Entry via purchase order,delivery slip or GR document

Invoice

Invoice Receipt Posting Schema

Cost account

from orderitem

IR document

Item Consumable1 material

Item Stock2 material

Price difference account

derived from table

GR/IRclearing account

Stock account

derived fromtable materialmaster record

Materialmaster record

A/P account

G/L accountpayable

Carry forward to profit and loss

Balance Sheet

Inventory Control Methods

SAP Inventory Management has two methods of inventory control:

• Physical Inventory

• Cycle Counting

MM -Warehouse Management

MM -Warehouse Management


WAREHOUSE MANAGEMENT

General Purpose of warehouse managementGeneral Purpose of warehouse management

* Define/manage storage areas and bins in the warehouse

* Monitor stock movements

* Take inventory at storage bin level

* Ensure MM and warehouse stock posting is the same

* Integrate MM,PP and SD


Structuring the warehouse / basic data

StoragelocationStoragelocation

Warehouse Number

Warehouse Number

Storage typeStorage type Storage typeStorage type Storage typeStorage type

Storage binStorage bin Storage binStorage bin Storage binStorage bin Storage binStorage bin

QuantQuantQuantQuant QuantQuant QuantQuantQuantQuant

Physical Warehouse Structure

Goods Receipt

Goods Issue

GI Area

GR Area

HSR1

Blocked Stock

Transfer RequirementTransfer OrderTransfer RequirementTransfer Order

Transfer OrderPicking ListsTransfer OrderPicking Lists

Picking Area

NoneBlock storageOpen storageFixed bin storageAddition to existing stockNext Empty storage binStorage unit type

Cross line searchingCapacity checking

Strategies for Placing Goods

Partial Quantities first then standard quantities

FIFOLIFOAccording to quantityStringent FIFO for all storage types

Strategies for Removing Goods

MM -Other Issues

MM -Other Issues

Other Issues :

- Repair Processing

- Hard Allocation

- Shelf Life Items

- Project items

- Vendor Consignment Processing

- Valuation

MM Information SystemMM Information System

EIS

LIS

0

5

10

15

20

25

30

35

40

45

50

Inventory controllingPurchasing information system

ABC analysisRange of coverageStock valueSlow-moving itemInventory turnoverTotal analysisRanking listsDual classificationetc.

PlanningFlexible analysis according to- Purchasing group- Vendor- Material group- MaterialABC analysisPlan / actual comparisonetc.

SD PP QM PMPS

MM

PI

The End

Download - Material Management Presentation (New 1)

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