Key User Training - MM

MM
Overview
MM Overview
Recording
Requirements

Vendor Invoice Placement of

Verification orders

Inventory Materials Follow up for

Valuation orders
Management

Stock Material
Adjustments Receipts

Material
Issues
 The Procurement Process

Source Purchase Goods Invoice

Determination Order Receipt Processing

RFQ /
Pur. Order
Quotation

Planning, Reporting & Analysis

Purchase Order

Purchasing
Purchase
Requisition Vendor
10
20 Purchase
30 Order Another
40 10
20 Plant
30
Request for 40
Quotation
10
20
30
40

Master
Data
 Goods Receipt

Purchase
Order Vendor Goods
10 Receipt
20 Another
30 Area
40 Plant

Material Accounting
Document Document
 Invoice Processing
Purchase
Order
Invoice
10
Document
20
30 132451 A/c Dr 1000
40 165234 A/c Cr 1000

Material
Invoice
Document Verification

Payment
Vendor Master
Data
Processing
Invoice
 Procurement Types

Procurement for Stocks

Procurement for Consumption

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

A: Asset

Purchasing K: Cost Centre

A/c Assignment
Document
Categories
F: Order

Account
Assignment P: Project
 Account Assignment
(contd..)
Receipts directly posts
consumption against
department.
Receipts Consuming
Department

Issue is not required.

Issues Consuming
Department
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

Stock Goods
Transfers Receipts

Material
Stocks

Physical Goods
Inventory Issues
 Integration of Inventory
Management

Planning Controlling
Goods Receipt / Issue updates Goods Issue to Prodn or Cost
the stocks and hence the Centre creates a costing
planning situation. document creation.

Inventory
Management
Production Financial Accounting
Confirmations entered in the Goods Receipt / Issue causes
production order leads to a stock / consumption posting
goods issues and / or receipts. in respective accounts.
Material Movements in IM
Goods
Receipts

Material Goods
Movements Issues

Transfer
Postings
Types of Stocks

Quality Inspection Stock Normal

Unrestricted Stock Stocks
GR Blocked Stock
Blocked Stock

Consignment Stock
Sales Order Stock
Special Project Stock
Stocks Vendor Stock
 Goods Receipt for Stock
Materials
Purchase
Order
10
20
30
40

Box 1

Box 2 Box 3

Goods Warehouse
Vendor Receipt
Effects of Goods Receipt
Material Master - Stock quantity, value and
price (moving average) are updated
Material
Delivery Quality Management - Creation of an
inspection lot to trigger a quality inspection.

Inventory - Stock (may be quality inspection)

is updated through a material document.
Goods
Receipts
Accounting - Stock and consumption account
are updated through accounting document.

Purchasing - Purchase order history and PO

are updated.
 Goods Issue

Production Reservations for

Account assigned
Order for BOM Non BOM
Purchase Order
Materials Materials

Goods Issue Goods Issue

Goods Receipt
against Prodn against
against PO
Order Reservation

Consumption Stock and Prodn Update of Stock,

Posting (Same as Order updated Reservation &
Goods Issue) with consumption Cost Object
Effects of Goods Issue

Material Master - Stock quantity, value are

Production updated.
Requirements
Inventory - Unrestricted Stock quantity is
updated through a material document.
Goods Accounting - Stock & Consumption accounts
Issue are updated through accounting document.

Production - Relevant Production Order /

Run Schedule Hdr updated with qty / value
Other
Requirements Controlling - Material Costs are posted into
the cost object through Costing Document.
 Stock Transfers
Physical Logical

Quality Unrestricted
Storage Storage
Inspection Use
Location 1 Location 2

Unrestricted Blocked
Plant 1 Plant 2 Use Stock

Project Unrestricted
Plant 1 Vendor 001 Stock Use
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

Material Vendor Bill of

Routing
Data Data Material

Transactions
Placing Orders, Material Receipts / Issues, Creating
Production Orders, Booking Vendor Invoices

Purchase Material Production

Contract
Order Movements 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

Production
Stores Various departments use the
Sales material master for their day to
Planning day activities.

Purchase Various departments need

different data for the same
material.
 Org. Levels in Material
Master
Material is In-house
Stock transfer
manufactured at
from Plant 1 to Plant 2
Plant 1

Lead time for Plant 1 Lead time for Plant 2

is for e.g 10 days is for e.g 8 days

Moving average price Moving average price

of say Rs 230.00 of say Rs 234.50

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

organizational levels
 Org. Levels (contd…)
Material master data is organized at various Organizational levels.

Material
Master

Client Level Plant Level Sales Org Level

Data Data Data

•Basic Data •Purchasing •Sales Gen. Data

•Purchase Text •Planning (MRP) •Sales Org Data
•Sales Text •Work Scheduling
Material Master : Views
Basic
Data

Costing Sales
Data Data

Accounting Material Purchasing

Data Data
Master

Storage Planning
Data Data

Scheduling
Data
Material Type

Operating
Raw Materials
Supplies

i a l Semi-finished
a er
t Products
Spare Parts
M pe
Ty Finished
Products
Non-Valuated

Trading Goods Others

 Control using Material Type

Controls which views are

maintained for each material

Controls the material numbering

Material (Internal / External, Range)

Type Update control for quantities and

values in the various valuation areas

Controls the external procurement /

inhouse production for a material
Material Types (contd…)
Some typical examples of control functions:

Raw Materials are not sold.

Finished Goods are not purchased.

Non valuated materials are not

accounted in terms of value.

Packaging materials are not costed.

 Material Groups
Groups 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 Class - Classifies the materials

from accounting perspective.

Valuation Category - Defines whether a

material is to be split valuated or not.

Price Control Indicator - Defines whether a

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