Components of SAP Material Management

Functions of SAP Material Management

• SAP MM is one of the modules of SAP that deals with

material management and inventory management. ????????

• Material Management process ensures that there is no

shortage of materials or any gaps in the supply chain process
of the organization.

• SAP MM speeds up the procurement and material management

activities making the business run smoother with complete
time and cost efficiency.

• It deals with managing the materials products and services

resources of an organization with the aim of accelerating
productivity, reducing costs and improve business
process

• MM implemented at the following level

Clint  Company Code Plant Storage Location  PO ORG
 MM Organization Structure

Purchase Purchase
group group
 MM Master Creation Process

Create, Change, Create, Change ,

Create, Change, Display Vendor Display Purchase
Display Material Master with Info records
Master with details Details ME11,ME12,ME13
MM01, MM02, MM03 XK01, XK02, XK03
 Steps in SAP MM Processes

1. Material Data Process

2. Vendor Data Process

3. Procurement or Purchase Data Process

4. Account Determination & Valuation of Material Data process

5. Invoice Verification and Payment Data Process

6. Inventory Management (stock Maintenance) Data process

7. Material Requirement Planning (MRP) process

 MM Masters in SAP
• Vendor : NO, Name, Address, Group, Commination info,
Accounts info, Tax data, Delivery Terms
• Customer: NO, Name, Group, Address, Commination info, Tax data,

• Material: NO, Group, full Desc, Short Text, UOM, Weight, Part no,
Valuation class, Vender’s Nos, Mini, Max, Reorder,
Safety level. Self life, Plant, Storage location, BIN.
• Assets: NO, Type, Desc, PO date, Cost & Depreciation value

• Service Master: NO, Type, Desc, Service Period, Rate, Due date,

• Employee: ID, Name, Address, DOB, DOJ, Dept, Salary GR, Desig,
Job description, Reporting to, KRA & KPA
• Purchase Info Record: Keep standard Terms & Condition
applicable for any PO for a company

• GL Account: For Invoice verification and Payment Posting

• Material Types :
 Material Types in SAP MM
• Material Type: Is a group of Materials.
• Material type defines certain attributes of the Material &
has important control functions.
1. Raw Materials for production
2. Spare Parts
3. Consumables goods
4. Capital Goods
5. Non valued Item Why Different Material Types ?????

6. Chemicals
7. Civil items
8. Electrical items
9. Semi Finish Goods
10. Finish goods
• It also determines whether the material will be valued at a standard
price or a moving average price.
 Material Management Transactions

• Purchase Requisition: PR No, Material NO & Desc, Qty, Prefer Vendor

• Standard PO: No, Debtors, Terms, Delivery dt, Material No &

Desc, UOM, Qty, Value, Tax, Freight etc.

• Inventory Management : GRN, Issues, MRP, Return, Credit note

• Invoice verification : No, Item No & desc, UOM, Qty, Rate &
Amount, Tax, Term, Bank details

• Documents: PO, Gate in, Gate Out, GR & Issue with Qty, Stock ledger
Vendor Invoice, Rejections return etc.
• Account Determination: Cost of Goods & Services that needs to
be paid to vendor and posted in G/L account.
• Valuation of Materials: Determining the price of the material, and in
which G/L AC it needs to be posted at company or plant code level.

• MRP: Marital Requirement Planning

 Procurement Process Functions in SAP

(i) To make Supply Chain Management more efficient

(ii) Planning and Programming for Materials Purchase. (PR & PO)

Demand
Source Vendor
Determination PO Handling
Determination Selection
(PR)

Invoice
Transportation Goods Verification &
PO Monitoring & Goods Receipt (GRN) Release for
Handling accounts

• Types of purchase orders: (???????)

1. Standard Purchase Orders (PO)

2. Planned Purchase Orders (PPO)

3. Blanket Purchase Orders (BPO) (Referred to as a “Standing Order”)

4. Contract Purchase Orders (CPO)

 Purchase Organization Structure
(i) An organizational unit within MM subdividing for Purchasing
(ii) Types of Purchasing organisation
1. Plant specific or Local purchase organization.
2. Cross plant purchase organization.
3. Cross company purchase organization.
4. Central purchase organization at company code level.

(4)

(1)
(3)

(2)
 Purpose of Material Masters in SAP

• Material Master enables the Company to store all the

Information about a particular Material (or Product).

• MM data is uniquely identified by a Material Number, which can be

Internal or External.

• Materials Internal Numbers are Auto generated by SAP

system while External Numbers can be Explicitly chosen by
users.

• Material Master is the Central Source of Information for a

Material related to several application area (Purchasing, Storage,
Accounting, Sales, etc) based on Material Type.

• Material Master data is maintained at Plant level and Accounting

Information is maintained at Valuation area level.
• The Valuation is an Organization level at which Material are
Valuated. The valuation are can be a Plant or a Company
level
SAP Screen for MM Modules
 Material Master Creation Initial screen
T-Code : Creation MM01, Chang MM02, Display MM03
Menu Path: Logistic Material Management Material Master Create (General
Path) - Initial Screen with examples for creating new material
• Material : (Auto Generated)
• Industry Sector: Mechanical Engineering
• Material Type: FERT Finish Product (Enter)
 Material Master Creation Basic Data 1

Basic Views: General information of material.

• Material Description: Long and Short Description

• Base Unit of Measure (UOM) in which material stock is managed.

• Material Group: Each Material is assigned to a particular material group.

• Item Category : Stock item or Non-Stock item.

• Weight Unit: Kg per unit

• Gross Weight: 26,988 – with Packing Material of 1 unit of product.

• Net Weight: 24,651 – Weight of 1 unit of only the product.

Material Master Creation Basic data 1 SAP Screen
 Material Master Classification

• Classification View: Materials can be classified in order to be found later by their

class, batch characteristics etc..
 Material Master Sales Organisation Data 1

Select :
Sale Org: MC01, Distribution Ch: LED TV40, Basic Unit: PC, Division: 00
Material Gr: MCG1 Tax Details : Country, Tax category, Tax code, Tax
Description
 Material Master Sales Text View screen

• Define a sales item text for this material

• This could be some general explanation about the material,
• It will show up in all sales documents.
 Material Master Purchasing View Creation screen
Purchasing group: MCG1 Example: Raw material, Trading goods, Services etc.
Value will be the default value for all the items entered in purchasing documents.
Order unit: PC Default unit used for ordering the material.
Purchasing value key: Maintained in customizing consisting of all the values like delivery
tolerance, over delivery tolerance
 Material Master Purchase Order Text View screen

Purchase order text View: Exactly the same view as a sales order text view.
 Material Master Accounting 1

Accounting view of Material Master shows how FI & Material are integrated base on points
1. GL integration with Material Master
2. Valuation of material master
Selections
• Period : ddmmyyy
• Base Unit : EA Each
• Valuation Class: 7920 (Relevant for controlling G/L AC for goods movement)
• Price Determination: Transaction Based
• Price Control: If selected S (Slandered price)
If Selected V (Moving Average Price (MAP) )
• Currency : USD
• Price Unit : 1
Definition of Valuation class

• Valuation class depends system settings,

• Can have a valuation class for finished goods and for trading goods.
• In this case valuation class, 7920 is SAP default class for finished goods. For
HALB, this class is 7900 by default, and for ROH we can use 3000.
Material Master Accounting 1 Screen
 Vendor Master Functionalities

• Vendor master database contains Information about the Vendors

that supply all materials .

• Vendor’s information is stored in individual vendor master records. A

• vendor master record contains the vendor's name and address,

• Currency used for ordering from the vendor.

• Vendor is a Business Partner

• "vendor" can assume different roles in its dealings with another plant.

• Accordingly, in a procurement transaction, first to enter ordering address,

then the supply of goods, then the invoicing party and finally the payee
Manu Path for Vendor Master in SAP
Vendor Master Creation Key FK1
 Vendor Master Creation Initial Screen
T-code : Creation : FK01, Change : FK02, Display: FK03
Path: Accounting  Financial Account  Account payable  Master record
 Create : FK01 Initial screen to create vendor Master

Update the following fields and press enter.

• Vender code: Auto Generated
1. Company Code: AD06 , Company Name: Adarsh Technologies
2. Purchase Organisation : ADD
3. Account Group: AD01 (Domestic Vendor) (Enter)
 Vendor Master Creation Address Data

Next Screen for General information of Vendor

Update the Vendor Address in detail and press enter

• Title: Company

• Name: XYZ Lted

• Search term : XYZ

• Street: Road Name House no:

• Postal code: 560100 City : Bangalore

• Country : IN Region : Initial 2 word: Name will appear

• Language: English

• Mobile No:

• Email ID
Create Vender Master Address Data screen
 Vender Master Text View
Vendor text View: Company’s accounting and Purchase Standard Terms
 Create Vender Master Data Control Information
Next screen update vendor control information and press enter
 Vendor Master Creation Bank Details

Navigate to : Bank Details for Payment Transaction

• Bank Key
• Bank Account no:
• Account Holder Name:
• IFS Code:
 Vendor Master Creation
Vendor’s Account Information
• Reconciliation Account :130001
• Cash Management : A1 (Domestic)

Click on the Save icon to save configured vendor master record.

 Purchasing Info Record
1. Connects Vendor Master records & Material master records
2. Allow to procure specific material from different vendor & different conditions

VENDOR
MASTER MATERIAL
RECORDS MASTER
RECORDS

ZK-DEMO-47 ZM-DEMO-02

V
ZK-DEMO-04 ZM-DEMO-06
ZK-DEMO-16 ZM-DEMO-24

PURCHASING
INFO RECORDS
 Purchasing Info Record Purpose

• Serves as a source of information for Purchasing

• Purchasing info record contains information on a specific material of
a vendor supplying the material
The info record contains:
• Prices & conditions are stored for the relevant purchasing organization
• Reference Number of the last purchase order
• Tolerance lts for over deliveries and under deliveries
• Lead time required by the vendor to deliver the material
• Vendor evaluation data with Rating
• Indicator whether the vendor is a regular vendor for the material
• Quotation and ordering data

• Order Price History : Texts in the Info Record

1. Info record memo: Internal Note or comment
2. PO text in info record: Decs of order Material
3. Short text: From Material Master record
4. PO Text in Info Record Link to PO Text in Material Master Record
5. All above information are for printing in PO for Vendor
 PO Info record Creation
T-code : Creation : ME11, Change : ME12, Display : ME13
Path : Logistic  Material Management  Purchasing  Master Data 
Info Record  Create  Initial screen to create Info Record
 Purchasing Info Record at Orag. level
Organisation Level Inputs:
• Vender code: Input
• Material Code : Input
• Purchase Organisation : Select
• Plant : Select
• Info Category : Standard (Enter)
 Purchasing Info Record General Data

1. Reminder 1, 2, 3: These three fields indicate remainders to be issued

to vendor. Negative value indicates that the vendor should deliver
prior to quotation or delivery date.

2. Vendor Material number: Used by the vendor for this material.

3. Vendor material group: Used by the vendor for this material.

4. Salesperson: Name of the contact person of vendor.

5. Telephone: phone number of contact person or vendor

6. Return agreement: Indicate if goods return is available and if there

are refunds available.

7. Order UOM: In which this material is except by vendor.

8. Certificate category: Type of certificate issued by the vendor for material.

9. Country of Origin: country in which this material is produced.

PO Info record Creation General Data Screen
 PO Info Record Creation Org Data

Purch. Org. Data 1 to be transferred to the screen for entering Purchase

Organization dependent information.

We have chosen Standard procurement type, can populate relevant fields here.

1. Planned delivery time: default time in days.

2. Purchasing group: Mentioned in material master lessons.

3. Standard quantity: standard purchase quantity for material.

4. Minimum quantity: Do not allow procurement of a quantity less than stated here.

5. Maximum quantity: Do not want to purchase more than this quantity at a time.

6. Net price: Net price of material per procurement unit.

7. Incoterms: Trading and delivery terms.

PO Info Record Creation Org Data Screen
PO Info Record Creation Price Condition
Maintaining pricing conditions (PB00)
Price that was entered on the previous screen was transferred to this screen.
1. Condition type: Enter a condition type in this field.
2. Amount per unit: in these 4 fields enter an amount and amount unit
Example : 2.800 EUR), Quantity for which this amount is valid (1 PAL).
3. Valid from. 4. Valid to. (Validity Period)
 PO Info record Creation Text
Standard texts for this material/vendor combination can be defined in Texts view
1. Can enter the info record note in five lines, and it will be active only if a
check box for info record note is ticked during PO creation.2,
2. This standard item text can be copied to purchase order item.
Material Procurement Process
 Purchase Order (PO) Creation

Two types of PO: 1. Stock Item 2. Consumable Item

Following Records and Documents are created for PO

• Header Record: PO NO, Vendor, Company Code, PO Organisation,

Purchase Gr, Vendor Address, Transportation, Payment details, Terms

• Item Details : Item Category (Stock/Consumable Item), Material, UOM,

Qty, Delivery Dt. Price, Plant, Storage Location, Info record NO, Material
GR..

• Footer Record: Weight, Conditions, Delivery schedule, Confirmation,

Account Assignment…
Create Purchase Order (PO)
T-code : Creation : ME21N, Change : ME22N, Display: ME23N
Path : Logistic  Material Management  Purchasing  Purchase Order
Create  Vendor/Delivering Plant known. Initial screen to create PO
• Standard PO
• Vender code: ZK-DEM0-430
• Document dt: ddmmyyyy
• Material : ZM-DEMO-10
• Delivery Dt: ddmmyyyy
• Purchase Organisation : 1000
• Purchase Gr: 000
• Company code: 1000
• Plant : 1000
• Storage Location: 0001 (Material Main Store)
• PO Qty : 100 (Enter)
• Net Price:
System determine the net price for the Material ordered from Info Record
Check button: if all ok, system will msg “No Massage issued during check”
SAVE :
MSG: Standard PO no 45000017149 created
Menu path for PO Creation

Path : Logistic  Material Management 

Purchasing  Purchase Order Create  Vendor
 Create Purchase Order (PO) ME21N

1. Enter transaction code ME21N.

2. Enter vendor.
3. Enter material number that needs to be procured.
4. Enter the quantity and unit of measure
5. Press ENTER to confirm the data entered.
Create Purchase Order (PO)

Purchase order item is now populated with information from purchase info
record and material master, in combination with the vendor master data.
This can be seen on the next few screens.
Delivery date & net price populated from information supplied in master data.
Create Purchase Order (PO)
In below screenshot
Blocks 1 and 2 were populated from purchase info record,
while 3 was populated from vendor master.
Create Purchase Order (PO)
Default texts populated via purchase info record master data.
1. Info record PO text – text populated from info record master.
2. Info record note – populated from info record master.
3. Text in this field is the same as in our info record.
 Create Purchase Order (PO)
1. POr contains several tabs at header level.
2. On the “Status” tab, the status of the purchase order.
3. General status (Active) as well as purchase order
confirmation (Not Yet Sent), Delivery status and Invoice
status.
Quantities and value, ordered qty and value, delivered qty and
value, Still to deliver qty and value,
Invoiced qty and value, and finally downpayment information.
 Create Purchase Order Delivery

1. Delivery/Invoice tab holds data about payment terms and trading terms. 2.
2. Payment terms here (like =D06 – payment 30 days after delivery),
3. Trading terms (in two incoterms fields – for example EXW Wien).
 Create Purchase Organisation

•On the delivery schedule tab, we can enter the desired delivery
schedule and quantities that are to be delivered at a certain
date.
 Create PO Delivery address
• Material data tab contains information about vendor material number,
vendor batch, EAN code etc.
• Some of the data is populated from purchase info record.
• On the delivery tab, set delivery tolerance percentages (over and under
delivery), set delivery status, delivery remainder settings and other
information.
• Invoice tab holds information on invoice related data and a field
“Tax” that should be filled (in this case tax code is V1 for both items).
• Conditions tab is used to specify conditions on item level.
• Delivery address – our company address, it can be changed if want
the material delivered elsewhere.
Purchase Order Number
•Confirmation tab holds data specific for the item confirmation
control and rejection indicator.

When all the data is double-checked for mistakes and entered accurately
we can save the purchase order.
 Inventory Management process

SAP MM-IM : After Receiving the Goods from vendor following task are performed
in SAP system by Inventory Management Department

• Manage Material Stocks (Quantity and Values)

• Plan and record Goods Movements
• Run Inventories

Different types of Good Movement

1. Goods Receipt : Post Goods delivered (Increase stock qty and value)q
2. Goods Issue: Good deliver to customer or department(Decrease Stock qty & Value)
3. Stock Transfer : Stock moved to another storage location or plant
4. Transfer posting: Recoding the goods movement in system & effects accounts

Stock types indicate the material usability/availability

1. Unrestricted stock
2. Quality Inspection pending stock
3. Blocked stock by other purpose
Goods Receipt against PO
T-code : MIGO

Path : Logistic  Material Management  LOGISTIC Invoice Verification

 Goods Movement  MIGO – Goods Movement. Initial screen for GRN
Select A01 Goods Receipt R01 Purchase order is set :Enter PO Number
Enter

SAP will propose Material and QTY from the PO

• Goods receipt PO no: 4500028620
• If qty & Material delivered match with PO, then every item to mark OK
• Post goods receipt by clicking POST or SAVE
• SAP display Material document no 5000011937
• System creates a Material and an Account documents
 GRN
1. Execute the MIGO transaction.
2.Choose A1 – Goods receipt
process. 3.Choose R01 – Purchase
order.
4.Enter your purchase order number here.
Goods Receipt against PO

Choose posting and document date (recommended t stay as today like it’s
default
Goods Receipt Vendor & Material details
Goods Receipt QTY
Goods Receipt Posting
1. destination plant and storage location,
2. information about goods recipient and
unloading

Now you can post the document.

Goods Transfer Posting
Goods Movement Posted in SAP Increases or Decreases Stock Qty & value
Plant 1000

Storage Location Storage Location 0002

0001
Post ZM DEMO001

T-code : MIGO, Set the Transaction to Transfer posting -

Other General data
• Transfer Post : R10 Others
• Transfer within Plant
• Document dt: Posting Dt:
• Document : Individual slip
Transfer Posting
FROM : Colling element
Material Material: Colling element
Plant : 10000 Plant : 10000
Storage location : 0001 Storage location: 00021
Qty : 30 PC
Goods issue
Goods issue
Goods issue
Goods issue
 Invoice Verification Against GRN
• Invoice Verification : Compare all condition of PO with Invoice send by
Vendor, such as Material received at Storage Location, Price, Tax,
delivery schedule, Penalty cluse ….

• Following conditions mut fulfil to complete invoice verification.

1. PO created in SAP
2. GRN is posted in SAP
3. Vendor invoice is available

• Three Types of Invoice Verification

1. PO based Invoice verification (no GRN is not necessary)
2. GR based Invoice verification (GRN to post for all items)
3. Invoice verification without PO (direct posting in MM & FI account)
 Invoice Verification Against GRN
T-code : MIGO

Path : Logistic  Material Management  Logistic Invoice Verification

 Document Entry Enter Invoice.
 Enter Incoming Invoice : company code 1000, Vendor code
XVDEMO1000 ENTER:

• Transaction : Invoice, Invoice dt, Posting dt

• Invoice amount: Gross amount of invoice
• Tax code : 1I, Input Tax
10% PO Reference
• Document no: of PO No
• Item:
• Amount
• Qty
• PO no, Item text

If 0.00 balance then no deviation found.

Post by SAVING
Msg : Document no 5105608698 has been added
 Invoice Verification Result Display
Invoice verification in SAP MM is closely integrated with SAP FI and SAP
CO Invoice Verification Results in TWO documents
1. Logistic Invoice Document (MM)
2. Accounting Document (FI & CO)
EXAMPLE :
1. Opening Balance of a martial in Inventory is INR 1000
2. Goods received (GRN) for another INR 1000
3. Vendor Liability account will be INR 1000
4. Invoice verification and Posting Vonder payment
5. Vendor Liability account will be “0”
6. Inventory Value will be INR 2000
 Material Requirement Planning (MRP)
• MRP categories 1) Material Requirement planning
2) consumption-based planning.

• MRP is based on the master plan designed for a material

through planned independent requirements or through incoming
sales or Production order demands.

• SAP MRP Types

1. ND – No Planning.
2. PD – Production based planning
3. R1 – Time-phased planning.
4. VB – Manual reorder point planning.
5. VM – Automatic reorder point planning.
6. VV – Forecast-based planning.

• PD: Basic Inputs of MRP

1. Master Production Schedule (MPS),
2. Inventory Status File (ISF),
3. Bill of Materials (BOM).
 Material Requirements Planning

• MRP is for Punctual and Accurate goods procurement

• MRP focus on Optimal supply for Production and Stores
• MRP focus to assure availability of Materials on time with low holding cost
• MRP is assigned in Plant and Storage location level.
• It automatically check the following
1. present stock status
2. About to fall below Reorder level
3. Future sales in line
4. Production schedule in pipeline
And create following procurement elements
1. Purchase recusation (PR)
2. Planned Order
3. Delivery Schedule
4. Procurement process can only be created if certain parameters setting
are configured in Material, Vendor and Purchase info record.
 Important T-Codes in MM module

1 MM01 Create Material 14 ME21N Create Purchase Order

2 MM02 Change Material 15 ME22N Change Purchase Order

3 16 ME23N Display Purchase Order

MM03 Display Material
17 ME29N Release Purchase Order
4 MB51 Material Document List
18 ME59N Automatic generation of Purchase Order
5 MMDE Delete All Materials
6 19 MIGO Post Goods Movement
MMNR Define Material Master Number
20 MB1A Goods Withdrawal

21 MB1B Transfer Posting

7 XK01 Create Vendor
22 MB1C Post Other Goods Receipts
8 XK02 Change Vendor
23 MB01 Post Goods Receipt for Purchase Order
9 XK03 Display Vendor
10 24 MIRO Enter Incoming Invoice
ML33 Create Vendor Conditions
12 ME11 Maintain Purchasing Info Record
13 ME01 Maintain Source List