SAP

SAPSystem Applications Products in Data processingAbout SAPFounded By FIVE IBM EMPLOYEES IN 1972 and head quartered in WALLDORF GERMANY.

Number one VENDOR of standard business application software with a worldwide market share of 30%.Fourth largest independent software supplier in the world.

4MATERIAL MANAGEMENT(MM)Material Management OverviewOrganizational ElementsMaster DataProcurement CycleInventory Management Invoice VerificationPrice Control5Materials Management OverviewWhat is Materials Management ?

MMMaster DataInventory ManagementProcurementRequisition PlanningPurchase RequisitionsRFQ s ContractsPurchase OrdersMaterialsVendorsInformation RecordsReceivingDisbursementPhysical Inventory (Raw Material, Semi Finished Goods, Finished Goods)The Material Management module comprises of procurement and the inventory management functions Materials Management is the term applied to all processes and business activities relating to how materials are moved into, stored, used, and moved out of a company.

Materials that a company manages include Raw Materials, Semi Finished Goods, Finished Goods, supplies, services, equipment and other resource needs.

The materials management component of SAP supports the functions and processes that occur in day-to-day business operations.

Materials Management consists of key business activities, all of which are supported by SAP.

Purchase RequisitionsPurchasing (Contracts, RFQs, POs)Receiving Disbursement (to a Cost Center, or Issue to Production)Inventory Management for raw materials, semi finished goods, and finished goodsPhysical Inventory Warehouse Management for finished goods

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Materials Management OverviewVendorPurchasingInfo Records

MASTERDATAMaterialsThe processes of Material Management are based on various types of Master Data which are stored in Master RecordsMaster RecordsEach of the business activities in Material Management must share information from master data to effectively manage materials.

All MM transaction master data is stored in Master RecordsWhen MM departments process transactions, the system accesses the master records and the data stored in them.

MM transactions utilize 3 types of SAP master data:

Vendor DataMaterials DataPurchasing Information Records

Each of the business activities in Material Management must share information from master data to effectively manage materials.

All MM transaction master data is stored in Master RecordsWhen MM departments process transactions, the system accesses the master records and the data stored in them.

MM transactions utilize 3 types of SAP master data:

Vendor DataMaterials DataPurchasing Information Records

7Materials Management Overview

This diagram illustrates a typical SAP-supported procurement cycle.

The procurement cycle which is supported by SAP functionality.

1.The need to procure a material, product or service originates in a specific department with a purchase requisition.2.If no sources (vendors) are available, quotations are solicited. A request for quotation (RFQ) transmits the need for materials to potential vendors.3.On-line vendor selection on SAP simplifies the selection process, and provides for the continuous tracking of information such as vendor quotations.4.The individual who selects the vendor then creates the purchase order for the materials. 5.The purchasing agent is in contact with the vendor as to whenthe materials will be received, shipping conditions, etc.6.Goods are received.If the material is an inventoried item, such as a raw material, finished good or semi finished goods, the material is shipped to the warehouse, and stored in inventory by a warehouse material handler.If the material is not inventoried, it is delivered to the requisitioner.If an item is not received at a Receiving Dock, the Goods Receipt indicator must be turned off on the P.O. detail screen.7.Invoices must be verified and matched with the corresponding purchase order and goods receipt, for that product/material, by Accounts Payable.

81. Determination of Requirements :- The material requirements are identified by the user departments or material requirement planning. Requirements will be passed manually to the purchase department. In case of Material requirement planning system generate the Purchase requisition automatically against demand or Consumption based planning.2. Source Determination :- Identify the potential source for the supply. This is based on the past orders, existing information, other communication methods like internet, paper, etc.3. Vendor Selection:- Selection of vendors by comparing the prices, delivery date and credit period of various quotations. Sending the rejection letters for non selected vendors.4. Purchase order Processing :- Create the purchase order for the selected vendors against the purchase orderrequisition or manual purchase order. Purchase order contains required material qty, delivery date, shipping conditions andprice which agreed in negotiation.5. Purchase order Monitoring :- Sending the purchase order to supplier by using of various communications methodslike email, fax, courrier, etc. Sending the reminders to vendors in a pre defined intervals.

Purchasing DocumentA purchasing document is used for purchasing of materials or services structure of thepurchasing documents.It is common for all purchasing documents. In earlier versions (i.e before 4.6 c) below threesegments are as three screens.In latest versions all three screen information is in a single screen with tabular this is called as aenjoy transactions.( The transaction code ends with N).HeaderItem over viewItem6. Goods Receipts :- Confirming the receipts of the goods. Compare the goods receipts quantities with the vendor invoice quantities. Inform the limit over or under deliveries of order goods.7. Invoice Verification :- Invoices are checked for accuracy of prices and content. Verifying the quantities against the GR and price against purchase order.8. Payment Processing :- Processing of vendor payment against the vendor invoice.MATERIAL MANAGEMENT(MM)Material Management OverviewOrganizational ElementsMaster DataProcurement CycleInventory Management Invoice VerificationPrice Control11Organizational Elements in MM

In the SAP R/3 System, organizational levels are structures that represent the legal or organizational views of a company. n A client is the highest organizational level, representing, for example, a corporate group. Balance sheets and Profit and Loss statements, required by law, are created at company code level. n You can set up several company codes in one client in order to manage various separate legal entities simultaneously, each with their own balance sheet of financial books.

Materials Management Organizational Elements ClientCompany CodePurchasing OrganizationPlantStorage LocationPurchasingGroupGroupCompanySubsidiaryStorage locationStorage locationStorage locationStorage locationPlantPlantPurchasing Org.Purchasing Group

PlantPlant is an organizational unit that structures the enterprise from the perspective of production, procurement, plant maintenance, and materials planning.Plant can be for example Regional sales office Manufacturing facility Corporate headquarters Central distribution center Maintenance plant Plant is assigned to a company. Material is usually valuated at plant level.A physical location within a company, where materials are stored, manufactured, purchased or sold.

Storage LocationStorage location is an organizational unit that allows differentiation of material stocks within a plant.Physical inventory is carried out at storage location level in the plant.A subdivision of a plant representing locations where materials are physically stored.

Purchasing Organization and GroupPurchasing organization subdivides an enterprise according to the requirements of Purchasing. Purchasing organization procures materials and services, negotiates conditions of purchase with vendors, and bears legal responsibility for such transactions.Purchasing group is the key for a buyer or group of buyers responsible for certain purchasing activities.Usually the principal channel for a company's dealings with its vendors

Purchasing Organization:

An organizational unit responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions.

Organisational Elements in MM Purchasing:

Centralized Vs Decentralized PurchasingYou can organize your purchasing function in the following ways:Centralized purchasing, with just one purchasing organization Distributed purchasing, with a number of different purchasing organizations each responsible for different plants

Purchasing GroupThe purchasing organization is further subdivided into purchasing groups (buyer groups), which are responsible for day-to-day buying activities. A purchasing group can also act for several purchasing organizations. It is internally responsible for the purchase of a material or a class of materials.SAP CharacteristicsKey for a buyer of group of buyers responsible for certain purchasing activities UsagePurchasing groups can represent the buying responsibility groups such as:Raw Materials, Packing Materials, Capital Goods, A&SP procurement, Services - Admin, Finished Goods, Indirect Material- Plant, Indirect Material- HOAdvantagesReporting can be consolidated at Purchasing group level.Purchase document release procedures based on value limits can be implemented.MATERIAL MANAGEMENT(MM)Material Management OverviewOrganizational ElementsMaster DataProcurement CycleInventory Management Invoice VerificationPrice Control20Understand the concept of Master Data as it relates to the Materials Management module in SAPBe able to identify the different types of Master Data used in Materials ManagementCreate and display Master Data in an SAP system

Material Management : Master DataObjectivesMaterial MasterVendor MasterService mastersPurchasing Info RecordsSource ListsPrice ConditionsVendor EvaluationBills of Materials (BOM s)

MASTER DATA

MASTER DATAVendorPurchasingInfo Records

MASTERDATAMaterialsThe processes of Material Management are based on various types of Master Data which are stored in Master RecordsMaster Records23

Material Master DataBasic Data 1Basic Data 2ClassificationSales: Sales Org. Data 1Sales: Sales Org. Data 2Sales: General/Plant DataForeign Trade: Export DataSales TextPurchasingForeign Trade: Import DataPurchase Order TextMRP 1MRP 2MRP 3MRP 4ForecastingGeneral Plant Data / Storage 1General Plant Data / Storage 2Warehouse Management 1Warehouse Management 2Quality ManagementAccounting 1Accounting 2Costing 1Costing 2MaterialMasterMaterial TypeMaterial GroupMaterial master records contain descriptions of the goods and services that an enterprise procures or stores. The material master record represents the central source of information on a specific material. It is used by all components of the SAP Logistics System.All the information necessary for the administration of a material is stored in its master record. Since different user departments of an enterprise work with a material and each one needs to store different information relating to it, the material master record contains separate data blocks for each department.Talk about the views applicable to AMHMaterials are assigned to a material type, e.g. site materials, and a material group, e.g. bricks, blocks, stationery.Materials can be maintained at plant level, e.g. per business unit, enabling for example, different prices to be maintained on a regional basis for the same material.

Purchase Requisition :- A purchase requisition is a request or instruction to Purchasing to procure a certain quantity of a material or a service so that it is available at a certain point in time.T CODE : ME59N TABLES : EKBN EBKNPurchase order :- It is a legal document that is issued by an organization to a vendor . It contains all the details of the required material or service , such as the description, delivery date, agreed price , terms of delivery , and terms of payment.T CODE : ME21NTABLES : EKKO EKPOPurchase info record :- A standard info record contains information for standard purchase orders. The info records can be created for materials and services with and without master records.T CODE : ME11TABLES : EINA EINESource list :- It is type of master data that specifies the sources of supply for material.T CODE : ME01TABLES : EORD SPECIAL PROCUREMENT PROCESES

1. Vendor Consignment 2. Sub Contracting 3. Third Party 4. STO (stock transport order)

Vendor Consignment :- The Vendor provides the materials and stores them on your premises. The Vendor remains legal owner of the materials, until you withdraw materials from consignment stores. Only then does the Vendor require payment. The invoice is due at set period of time, for exp, monthly . Configuration : Maintain INFO record for consignment vendor & material and Tax code. Check the item category K. Maintain CONDITION record for out put (KONS) . (Through NACE ) Maintain St.loc for Consignment goods. Step by step Process : ME21N MIGO MB1B with moment type 411k. MRKO settlement.

Sub contracting:- The Raw components are sent to Sub contractor (Vendor) for manufacturing purposes and the finished or semi-finished materials are returned into inventory of enterprise.Step by step Process : Create finished product in material master (MM01) Create BOM (CS01) ME21N ( Item category L ) MB1B with moment type (541) MIGO w.r.to [101] moment type MIRO post the invoice.

Third party:- In this process , Customer raise the order to Company there is no materialIn our company now, Company raise the P.O to Third Party Vendor , The Vendor directly sends the material to customer and customer raise the Billing to Company , then Company Pay the Bill to Third Party Vendor .Step by step Process : In MM01 material type Trading goods. Item category group BANS (in sales org .2 tab in MM01). In VOV4 assign TAS to order type . A sales order is created and when saved a PR is generated at back ground - (VA01) To create customer through XD01.ME21N To create PO Vendor delivers the Goods and Bill to Company .Receives the Invoice MIRO.

STO(stock transport order):- These are TWO types 1) INTER company (C.C to C.C) stock transfer 2) INTRA company (PLANT to PLANT) stock transferINTRA company : Intra company means plant to plant with in the Company.Configuration :Path: SPRO- SAP REF IMG-M.M-PURCHASING-P.O-SETUP S.T.OStep by step Process :Document type [UB]Material should exist in both plantsMaintain Source List (Supply plant to Receiving plant)Maintain Info record ME11Delivery type NL (with out billing) Process :ME21N (Doc type UB)7. VL10B (create delivery w.r.to s t . P o)8. VL02N (check delivery)LT03 & LT12 (complete TO & confirmation)VL02N (PGI) MB5T (Check the stock ) in receiving plant MIGO goods receipt with