MM Cookbook - Process Flow

By Subhajeet Behera

Determination of Requirements The user department responsible is manually passing a requirement for materials to the purchasing department via Purchase Requisition. Purchase requests are generated when business runs the MRP and Request are also generated based in Consumption based planning (CBP) for Production and Engg.Stores. Determination of Source of Supply The purchasing component helps the buyer determine the sources of supply. User use the determination of the source of supply to create Requests for quotation (RFQs) and then to enter quotations. User is accessing the existing Purchase Orders and Conditions in the System. Vendor Selection and Comparison of Quotations The System is capable of simulating pricing scenarios and simplifies the selection of vendors by making price comparisons between the various quotations. Purchase Order Processing The purchasing system adopts information from purchase requisition and the quotation to help to create Purchase Orders. They are also creating manual purchase order directly for stock, non-stock items, services etc. Purchase Order Monitoring The buyer monitor the processing status of the purchase order online at any time and determine whether goods or an invoice have been received for the relevant purchase order item. Goods Receipt and Inventory Management

The Goods receiving requester confirms the receipt of the materials by simply entering the Purchase Order Number. The system compares the goods receipt quantity with the purchase order quantity. By specifying permissible tolerances, buyers can limit over deliveries and under deliveries of ordered materials. PURCHASING Purchasing Functionality is integrated with Inventory Management and Invoice Verification within MM.

MM Cookbook - Enterprise Structure

Define valuation level BACKGROUND This configuration setting enables to define at which level the stock are to be valuated in SAP. Stocks can be valuated at following two levels in SAP. Plant level Company code level

It is recommended to keep at plant level. This is a client level setting. INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Definition Logistics - General Define valuation level

1.

Click

2.

Select the radio button Click Save

3.

Define Plant BACKGROUND This configuration setting enables to define the plant. Each manufacturing facility or branch of a company is defined as a plant in SAP. Plant is assigned to the company code. Storage locations are created under each plant. If the valuation level is the plant, the stocks are valuated at plant level. Note: - It is common practice to copy plan from the existing defined plant. It will be defined by the FI. INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Definition Logistics - General Define copy, delete, check plant

1.

Click

2.

Click Click

3.

4.

Click

5. 6.

Enter from plant as 0001 to copy from SAP defined plant Enter To Plant E.g. IND6 Click Click to return to main menu.

7.

8.

Note: - Definition of plant and assignment of plant to the company codes along with relevant GL accounts is done by the FI team. However the creation of plant is demonstrated.

Click here to continue... Maintain plant details and Factory calendar in Plant BACKGROUND When copying the plant, the entire details will be copied from the source plant. Address of the plant and other details attached to the plant can be changed. INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Definition Logistics - General Define copy, delete, check plant
1. 2.

Double click Select plant IND6 by clicking the grey box in the left side Click Click Maintain the entire address, contact details of the plant. Factory calendar must be attached to the plant

3.

4. 5. 6.

Below screen shows the details of plant settings.

Define Location BACKGROUND This configuration setting enables to define the location. Location indicates where the materials are stored inside the plant. INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Definition Logistics - General Define Location
1.

Click Click

2.

3.

Update required and optional fields: Description Name of the plant Location identification Description of the location Value e.g. IND6 E.g. PROD Production location

Field Name Plant Location Name

Click

Note: - Maintain the address of the location in the subsequent screen.

5. 6.

Enter title as Company Enter country

7.

Click .

Click

Maintain Storage Location BACKGROUND This configuration setting enables to define the physical storage location. This will indicate where the stocks are stored physically inside the plant. Each item must have storage location. One material can be stored in many storage locations. Storage locations can be assigned to the warehouse through warehouse management. INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Definition Materials Management Maintain storage location Click

Enter the plant where the storage location is to be created. E.g. IND6 Click Click Enter Storage location Enter description of the storage location Click

Select the storage location Double Click Enter the sequential number 1 Click

Select the sequence number Click

Maintain the address. Click Click Repeat the above to maintain the address for all storage locations. Maintain Purchase organization BACKGROUND This configuration setting enables to define the purchase organization.

Purchase organization is the part of the enterprise structure from MM point of view. It represents the responsibilities to Procure materials and services Negotiation with vendor

Purchase organization is assigned to the company codes and plants. Following are the possibilities of assignments. One purchase organization to many company codes One purchase organization to one company code One purchase organization to one plant

Note: - It must be assigned to plant. INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Definition Materials Management Maintain purchase organization
1.

Click

2. 3.

click Update the following fields Description Key identifying the purchase organization. E.g. IND6 Description of the purchase organization. E.g. For plant IND6

Field Name Purch.organization Purch.org.descr.

4.

Click

Assign Plant to company BACKGROUND This configuration setting enables to assign plant to the company code.

INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Assignment Logistics General Assign plant to company code
1. 2.

Click Select the desired company code by clicking the cursor on it.

3. 4.

Click Select the plant from the display Click Click .

5.

6.

Assign purchase organization to the company code BACKGROUND This configuration setting enables to assign the purchase organization to a company code. INSTRUCTIONS Follow the Menu Path: IMG Enterprise structure Assignment Materials Management Assign purchase organization to company code
1. 2.

Click Select the desired company code by clicking the cursor on it. Click Select the purchase organization Click

3. 4.

5.

6. Click Assign purchase organization to plant BACKGROUND This configuration setting enables to assign the purchase organization to a plant. INSTRUCTIONS

Follow the Menu Path: IMG Enterprise structure Assignment Materials Management Assign purchase organization to plant
1. 2.

Click Select the desired plant by clicking the cursor on it. Click Select the purchase organization Click Click

3. 4.

5.

6.

All right guys, not much about MM organization structure. Now we shall look into material master related to configurations.

MM Cookbook - Vendor Creation

Definition:Every vendor is identified with the code in SAP. It is called Vendor master record. Vendor master record contains details of Address Payment terms Delivery terms Lead time to supply GL Account for reconciliation

Each vendor record will be created at company code and purchase organization level. Normally vendor master contains the details of both accounts related and also purely purchasing related, hence it is created in consultation with FI team. Menu Path:Logistics Materials Management Purchasing Master Data Vendor Central XK01 Create

Maintain Vendor code number, company code, Purchase organization and account group

Click

Maintain

Maintain

Note: - Click Maintain Maintain

to enter more lines in the address

Click

Nothing specific to be maintained in this screen Click

Maintain the payment related details. Click

MM Cookbook - Create RFQ

Definition:Purchase request is the requirement document created manually or through the MRP run. Purchase request is further processed to create Purchase order document. It is possible to create Request for Quotation purpose.

Let us create RFQ for a material. Menu Path:Logistics Materials Management Purchasing RFQ/Quotation Request for Quotation ME41 Create

Double Click ME41 Maintain the details as shown below

Click

Click here to continue.

MM Cookbook - Create RFQ

Enter collective number. Collective number is like a tracking number in PR creation used to group together and process the RFQ. E.g. RM10 to indicate Raw Material requirement for 10 Month Click Click F7 key to maintain Vendor address Maintain vendor as shown below
th

Click Note: - Details will be copied from info record. Click

Click

to enter material number and quantity

Click Click

Click Message appear at the bottom

MM Cookbook - Maintain Quotation

Definition:When the quote is received from the vendor, with reference to the request, quote can be maintained. Quotation is the reply from vendor for our enquiry regarding the price and quantity and supply schedule confirmation. Let us maintain the quotation for the RFQ 6000000007.

Prerequisite:Manual confirmation from vendor must be available RFQ must be available Menu Path:Logistics Materials Management Purchasing RFQ/Quotation Request for Quotation ME47 Maintain

Double Click ME47 Maintain the details as shown below

Enter RFQ number Click to maintain rate at item level details

Click

to maintain condition record

Maintain discount and freight as shown below.

Click here to continue...

Click Click Enter the quotation validity period Enter payment terms Enter vendor quotation reference. Maintain the details as shown below.

Click

to confirm the condition at header level

Click Click

Click

Click Note: - To compare the price from various vendor, use transaction code ME49 price comparison

MM Cookbook - Create Info record

Definition:Purchase info record is the kind of template with all the information required to create purchase order. For each vendor, material and plant combination purchase info record can be created. Info records are created for following types of transactions Standard PO Sub contracting Consignment Pipeline

When creating PO, most of the information will be copied from info record into PO.

Info record controls Menu Path:Logistics Materials Management Purchasing Master Data Info Record ME11 Create Validity period for each vendor Indicates vendor as preferred vendor Blocking vendor from raising PO Source relevancy to MRP Supplying plant incase of STO

Double Click ME11

Maintain Vendor code number Maintain Material code number Maintain purchasing organization Maintain Plant Select the radio button Standard Click

Click here to continue... Maintain the following fields according to the business needs Field name Field description Number of days after which a reminder is to be sent to the vendor for supply. Material number used by vendor. Material group to which the vendor belongs to. Used for volume and point based rebates.

Click

Maintain planned delivery time Maintain purchasing group Maintain standard quantity Maintain net price Click

Click

Note: - Text maintained in purchase order text will be copied into the PO.

Click

Condition type specific to this vendor and material can be maintained here. It will be copied into the purchase order Click Message appear at the bottom

MM Cookbook - Maintain Source list

Definition:Source list is used to find the vendor automatically during auto vendor assignment process. It is a plant specific master data. Through configuration, it can be made as mandatory or an optional. Source list controls Validity period for each vendor

 Menu Path:-

Indicates vendor as preferred vendor Blocking vendor from raising PO Source relevancy to MRP Supplying plant incase of STO

Logistics Materials Management Purchasing Master Data Source List ME01 Maintain

Double Click ME01

Maintain Material code number Maintain Plant Click

Maintain valid from date Maintain Valid to date

Maintain vendor code Maintain Purchase organization Note: - field is used incase of STO. Supplying plant can be mentioned here. to indicate the vendor as preferred vendor.

Tick the check box

Note: - Only one vendor can be indicated as preferred vendor in the same validity period. Check box is used to block the vendor column.

If this source is to be used by MRP, fill the Following are the allowed entries

Click

MM Cookbook - Create Purchase Request

Definition:Purchase request is the requirement document created manually or through the MRP run. Purchase request is further processed to create Purchase order document. It is possible to create Request for Quotation purpose. Let us create Purchase Request for a material. Menu Path:Logistics Materials Management Purchasing Purchase Requisition ME51N Create

Double Click ME51N

Click Click

to close enjoySAP portion of the screen to open the window

Maintain the details at item level as shown below

Click To view more details, click the item details tab screen one by one. Click

Change or maintain the details as required by the business. Click

Click

Click

Click

click

Note: - Maintain the required text here Click

Click Message appear at the bottom

MM Cookbook - Create Purchase Order

Definition:Purchase order is an agreement between the vendor and a company to supply the goods at an agreed rate and at an agreed duration of interval. Purchase order is a legal document between a vendor and a company. It covers the payment terms and terms of delivery also. Menu Path:Logistics Materials Management Purchasing Purchase Order Create ME21N Vendor/Supplying Plant known

Double Click ME21N

Enter vendor number. E.g. IND6-1 Click Enter Purchase organization, purchasing group and company code details as shown below

Click

Click

to view the item over view

Enter Material, PO quantity and Plant where it is to be received as shown below.

Click the tab screens one by one in the item detail screen. Maintain the appropriate entries. Click

Click

Click

Click Click

Click here to continue...

Note: - If material master is set with the QM inspection type 01, then stock type will be QM stock. QA control key from the material master will be copied here into the PO. Click Ensure Enter the tax code. check box is ticked to have GR based Invoice.

Click

Click Click

Click

to scroll down the screen

Click

Click

to maintain Payment terms

Note: - To send the message at the time of GR to the person who created the PO, click the check box Click

Click

Note: - Text can be maintained here.

Click

Click Message will appear at the bottom

MM Cookbook - Goods Receipt against PO

Definition:There are three types of main material movements in SAP. They are Goods Receipt Good Issue Transfer Posting

Through MIGO transaction entire above three types of transactions can be performed. There are many options with MIGO transaction code. Goods receipt is the process of receiving materials in to the storage location. Example receiving goods with reference to PO, customer returns, from production. When goods are received, inventory will be increased and relevant other documents will be adjusted.

During the material movement, material document is generated for all movements. Relevant accounting and controlling documents are also created for relevant movement types. Menu Path:Logistics Materials Management Inventory management Goods Movement MIGO Goods Movement (MIGO)

Double Click MIGO Maintain the entries as explained below

Ensure Goods receipt is selected in the left top box above the header details To look at the other possible entries click . Other possible entries are

Ensure Other possible entries are

is selected to make GR with reference to purchase order.

Above two fields indicate the Process and reference document. I.e. Goods Receipt with reference to Purchase Order. Enter the purchase order number and serial number as shown below.

Note: - PO can be selected from the left side display. Left side display will show the past purchase orders used. To select from left side display, double click on the required PO. Click Note: - as soon as pressing the the PO will disappear. key display of purchase order in the above box where we mentioned

Maintain the delivery note details

Click the tab screens one by one in the detail data area

Click

Click

Maintain the received quantity Click to maintain the storage location where it is to be received

Note:- If the material is batch managed, batch number has to be entered. Click

Click

Click Click Message

at the bottom at the top to verify the data correctness will appear at the bottom.

Note: -If any warning or information message appeared, click Click Message Note:-

to proceed.

appear at the bottom.

If the item is batch managed and the items under one delivery note with different batches are received, quantity can be split into according to the batch size by pressing

Screen will appear as below

If the item is batch managed, batch column will also appear.

Click

after completing the entry.

MM Cookbook - Create Contract

Contract is an agreement between the vendor and the company to supply goods and services as per the agreed terms and condition. At the time of negotiating, it may not be clear as of how much is required and when it is required. In such a situation, an open contract can be released on the vendor. Every contract must be followed by a release order which is nothing but a normal PO with reference to the contract. Contracts can be release centrally or with specific to plant. In case of multiple plants, central contract can be released and release order specific to each plants can be released.

Menu Path:Logistics Materials Management Purchasing Outline Agreement Contract ME31K Create

Double Click ME31K

Enter vendor number. E.g. IND6-1 Enter document type. Possible entries are

e.g select MK. Click Enter Purchase organization, purchasing group and storage location.

Click Maintain the entries as shown below.

Click Enter material code and target quantity. E.g. STJRM001 and 10000 respectively

Select the item Click to maintain the pricing conditions

Note:Condition which are already maintained in the info record only appear here. If required add discount condition type manually. Double click on item serial number to enter item detail tax

Click Message will appear at the bottom

MM Cookbook - Create Scheduling Agreement

Definition:Purchase order is an agreement between the vendor and a company to supply the goods at an agreed rate and at an agreed duration of interval. Purchase order is a legal document between a vendor and a company. It covers the payment terms and terms of delivery also. Scheduling agreement is one of the purchase order types. It defines the agreement between vendor and the company similar to the PO. For every scheduling agreement, delivery schedule is a must to indicate the supply schedule. If scheduling agreement exist, MRP can automatically create the delivery schedule. Let us create the scheduling agreement with vendor IND6-1 for material STJRM001. Menu Path:-

Logistics Materials Management Purchasing Outline Agreement Scheduling Agreement Create ME31L Vendor Known

Double Click ME31L Maintain the entries as shown below

Click Maintain the entries as shown below.

Click

to maintain the item details

Maintain the entries as shown below

Click Select the row by clicking the grey box in the left

Click

to check the conditions

Note: - Scheduling agreement is used where the rate is fixed over the period of time without any changes.

Click Message would appear at the bottom