Key User Training - MM

MM MM OverviewOverview

MM OverviewRecordingRecording

RequirementsRequirements

Placement ofPlacement ofordersorders

Follow up forFollow up forordersorders

Vendor InvoiceVendor InvoiceVerificationVerification

InventoryInventoryValuationValuation

MaterialMaterialReceiptsReceipts

StockStockAdjustmentsAdjustments

MaterialMaterialIssuesIssues

MaterialsManagement

The Procurement Process

RFQ /Quotation

SourceDetermination

Pur. Order

PurchaseOrder

GoodsReceipt

InvoiceProcessing

Planning, Reporting & Analysis

Purchase Order

PurchaseRequisition

10203040

Request forQuotation

10203040

PurchaseOrder

10203040

MasterData

Vendor

AnotherPlant

Purchasing

GoodsReceipt

Area

Goods Receipt

PurchaseOrder

10203040

AnotherPlant

Vendor

MaterialDocument

AccountingDocument

Invoice ProcessingPurchaseOrder

10203040

MaterialDocument

VendorInvoice

Invoice Verification

MasterData

InvoiceDocument

132451 A/c Dr 1000165234 A/c Cr 1000

PaymentProcessing

Procurement Types

Procurement for ConsumptionProcurement for Stocks

Procurement for stocks causes an increase in the stock quantities and values.Material is received and placed in storage.

Procurement for consumption does not cause the above. Materials are directly posted to consumption.

Consumable Material

Consumable materials are materials or services that are procured directly for an account assignment object.

Inventory Management is not carried out.

Examples of consumable materials are: office materials, computer systems, grease, welding rods.

The system automatically updates consumption of materials with a material master record.

Account Assignment Objects

PurchasingDocument

AccountAssignment

A/c AssignmentCategories

A: Asset

K: Cost Centre

F: Order

P: Project

Account Assignment (contd..)

Receipts

Receipts directly postsconsumption againstdepartment.

ConsumingDepartment

Issues ConsumingDepartment

Issue is not required.

Procurement for Stock Materials

Entry of material number required.

No account assignment category.

Posting to stock accounts.

Quantity and value updated in the material master.

Moving average price is updated.

Procurement for Consumables

Entry of material number not required, but is possible.

Account assignment category mandatory.

Posting to consumption accounts.

Consumption update for materials with material master only.

Scope of Inventory Management

MaterialStocks

GoodsReceipts

GoodsIssues

StockTransfers

PhysicalInventory

Integration of Inventory Management

InventoryManagement

ControllingGoods Issue to Prodn or Cost Centre creates a costing document creation.

Financial AccountingGoods Receipt / Issue causes a stock / consumption posting in respective accounts.

PlanningGoods Receipt / Issue updates the stocks and hence the planning situation.

ProductionConfirmations entered in the production order leads to goods issues and / or receipts.

Material Movements in IM

MaterialMovements

GoodsIssues

TransferPostings

GoodsReceipts

Types of Stocks

NormalStocks

Quality Inspection StockUnrestricted StockGR Blocked StockBlocked Stock

SpecialStocks

Consignment StockSales Order StockProject StockVendor Stock

Goods Receipt for Stock Materials

Vendor

PurchaseOrder

10203040

Box 2 Box 3

Box 1

GoodsReceipt

Warehouse

Effects of Goods Receipt

GoodsReceipts

MaterialDelivery

Material Master - Stock quantity, value and price (moving average) are updated

Quality Management - Creation of an inspection lot to trigger a quality inspection.

Accounting - Stock and consumption account are updated through accounting document.

Purchasing - Purchase order history and PO are updated.

Inventory - Stock (may be quality inspection) is updated through a material document.

Goods Issue

Account assigned Purchase Order

Goods Receiptagainst PO

Consumption Posting (Same as

Goods Issue)

Production Order for BOM

Materials

Goods Issue against Prodn

Order

Stock and Prodn Order updated

with consumption

Reservations for Non BOM Materials

Goods Issue against

Reservation

Update of Stock, Reservation &

Cost Object

Effects of Goods Issue

Material Master - Stock quantity, value are updated.

Accounting - Stock & Consumption accounts are updated through accounting document.

Production - Relevant Production Order / Run Schedule Hdr updated with qty / value

Inventory - Unrestricted Stock quantity is updated through a material document.

Controlling - Material Costs are posted into the cost object through Costing Document.

ProductionRequirements

GoodsIssue

OtherRequirements

Stock Transfers

QualityInspection

UnrestrictedUse

UnrestrictedUse

BlockedStock

ProjectStock

UnrestrictedUse

StorageLocation 1

StorageLocation 2

Plant 1 Plant 2

Plant 1 Vendor 001

Physical Logical

Effect of Transfer Postings

No accounting postings created normally (except in certain specific cases)

Stock quantity reduced in one location / stock type and increased in the other.

Material document is created for every transfer to record the stock movement.

Data in SAP

MaterialData

VendorData

Bill ofMaterial Routing

TransactionsPlacing Orders, Material Receipts / Issues, Creating

Production Orders, Booking Vendor Invoices

PurchaseOrder Contract Material

MovementsProduction

Orders

Data in SAP (contd…)Master Data

Central Repository, used by various departments.Created once and changed if required.Transactions use these data repeatedly.Examples :Material Master, Vendor Master, BOM, Routings

Transaction Data

Created when a transaction is carried out.Record of the details of a transaction.Reports use the transaction data.Examples : Purchase Orders, Production Orders, Material Receipts.

Material Master Structure

PurchasePlanning

SalesStores

ProductionVarious departments use the material master for their day to day activities.

Various departments need different data for the same material.

Org. Levels in Material Master

Material is In-housemanufactured at

Plant 1

Stock transferfrom Plant 1 to Plant 2

Lead time for Plant 1is for e.g 10 days

Moving average priceof say Rs 230.00

Lead time for Plant 2is for e.g 8 days

Moving average priceof say Rs 234.50

For the same material, different data is to be maintained, depending onorganizational levels

Org. Levels (contd…)

Sales Org LevelSales Org LevelDataData

Client LevelClient LevelDataData

Plant LevelPlant LevelDataData

MaterialMaster

•Basic Data•Purchase Text•Sales Text

•Purchasing•Planning (MRP)•Work Scheduling

•Sales Gen. Data•Sales Org Data

Material master data is organized at various Organizational levels.

Material Master : ViewsBasicBasicDataData

SalesSalesDataData

PurchasingPurchasingDataData

CostingCostingDataData

AccountingAccountingDataData

PlanningPlanningDataData

StorageStorageDataData

SchedulingSchedulingDataData

MaterialMaster

Material Type

Raw Materials Operating Supplies

Semi-finishedProducts Spare Parts

FinishedProducts Non-Valuated

Trading Goods Others

Material

Type

Control using Material Type

Controls the material numbering (Internal / External, Range)

Controls which views are maintained for each material

Update control for quantities and values in the various valuation areas

Controlsthe external procurement / inhouse production for a material

MaterialType

Material Types (contd…)

Finished Goods are not purchased.

Raw Materials are not sold.

Non valuated materials are not accounted in terms of value.

Packaging materials are not costed.

Some typical examples of control functions:

Material GroupsGroups the materials as per some common defined criteria. Some typical examples are Plastic Components, Rubber Components, Iron & Steel.

Must be entered in purchasing documents if purchasing is done without any material master.

Can be used for analysis / reporting in Purchasing / Inventory.

Can be used to setup approval (release) procedures for Purchase Requisitions.

May be changed in the material master, but distorts the analysis.

Material Valuation Paramaters

Valuation Category - Defines whether a material is to be split valuated or not.

Valuation Class - Classifies the materials from accounting perspective.

Price Control Indicator - Defineswhether a material has Moving Average Price or Standard Price.Price - MAP is calculated by the system during transactions. Standard Price is entered.