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SAP ECC 6.0

PRACTICAL KNOWLEDGE SHARI

SAP MM
PRIYAS
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CONTENTS
Date Topics Days Page. no
15.07.2020 Introduction to SAP Day 1 7 - 19
16.07.2020 Procure to Pay Cycle (P2P) Day 2 19 - 20
16.07.2020 Enterprise Structure Day 2 20 - 32
17.07.2020 Material Master record Day 3 33 - 39
Configuration
18.07.02020 Vendor Master Record Day 4 39 - 43
Configuration
19.07.2020 Purchase Info Record Day 5 44 - 49
20.07.2020 PIR Configuration Day 6 49 - 52
20.07.2020 Source list Day 6 53 - 55
21.07.2020 Purchase requisition Day 7 56 - 60
Configuration
22.07.2020 Purchase Order Configuration Day 8 61 - 64
23.07.2020 RFQ/Quotation Day 9 65 - 67
24.07.2020 RFQ/Quotation Day10 68 - 69
24.07.2020 Pricing Procedure Day10 70 - 76
25.07.2020 Pricing Procedure Day11 77 - 81
26.07.2020 Automatic PO Creation Day12 82 - 86
27.07.2020 Release Strategy Day13 87 - 91
28.07.2020 Consignment Procurement Day14 91 - 95
29.07.2020 Subcontract Procurement Day15 96 - 100
30.07.2020 Pipeline Procurement Day16 101-103
31.07.2020 Service Procurement Day17 103-111
01.08.2020 Outline Agreement Day18 111-116
02.08.2020 Invoice Verification Day19 117-119
03.08.2020 Quota Arrangement Day20 119-123
04.08.2020 Split Valuation Day21 124-129
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INTRODUCTION
What is ERP?
 Enterprise Resource Planning (ERP) is a software that is built to organizations belonging to
different industrial sectors, regardless of their size and strength.

 The ERP package is designed to support and integrate almost every functional area of a
business process such as procurement of goods and services, sale and distribution, finance,
accountings, human resource, manufacturing, production planning, logistics & warehouse
management.
 Before we actually see in detail, what ERP is and how ERP can help in your business process,
we will understand how different departments are involved in the whole business process,
right from the ordering of the raw material – to manufacturing goods – to delivering final
products to the customer.

 Client contacts the sales team to check the availability of the product
 Sales team approaches the Inventory department to check for the availability of the product
 In case the product is out of stock, the sales team approaches the Production Planning
Department to manufacture the product
 The production planning team checks with inventory department for availability of raw
material
 If the raw material is not available with inventory, the Production Planning team buys the
raw material from the Vendors
 Then Production Planning forwards the raw materials to the Shop Floor Execution for actual


production
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production
 of 127 the goods to the Sales Team
Once ready, the Shop Floor Team sends 

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 Sales Team who in turn deliver it to the client

 The sales team updates the finance with revenue generated by the sale of the product.
Production planning team update the finance with payments to be made to different
vendors for raw materials.
 All departments approach the HR for any Human Resource related issue.

Note:-

 It has many departments or business units

 These departments or business units continuously communicate and exchange data with
each other
 The success of any organization lies in effective communication, and data exchange, within
these departments, as well as associated third party such as vendors, outsourcers, and
customers.

Different ERP Packages

 SAP
 Oracle for A/C
 Seibel-CRM (Customer Relationship Management)
 People Soft-HR
 JD Edwards-Manufacturing
 BAAN
 Dynamics

SAP - Systems, Application and Products in Data Processing

 SAP Software was founded in 1972 by Claus Wellenreuther, Dietmar Hopp, Hans-Werner
Hector, Hasson Plattner and Klaus Tschira.
 SAP is a enterprise information software that was basically designed to manage resources,
information and activities that are required to complete business processes like
procurement and managing orders, billing of orders and management of human resources.
 SAP applications work with real time data. It has the ability to be configured according to
the needs of the business. It allows business to make rapid changes in their business
requirements through a common set of programs.

Why SAP?
 For Better Accuracy in Information
 For Better Handling of the Business
 Reduction of Lead Time


 On-Time Shipment
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 Reduction in Cycle Time of 127 

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 Improved Resource Utilization

 Better Customer Satisfaction
 Improved Supplier Performance
 Increased Flexibility
 Reduced Quality Cost
 Improved Information Accuracy and Decision-Making Capability

What does this R/1, R/2, and R/3 stands for?

 R means Real Time Data Processing and 1 Means 1-Tier (R/1)

 R means Real Time Data Processing and 2 Means 2-Tier (R/2)
 R means Real Time Data Processing and 3 Means 3-Tier (R/3)

In 1972 first product was released i.e. R/1

 Presentation Layer
 Application Layer All Runs on the Single Server
 Database Layer

In 1979 Upgradation of R/1 was released i.e. R/2

 Presentation Layer Runs in One Single Server

 Application Layer
Both Runs in One Single Server
 Database Layer

In 1992 Upgradation of R/2 was Released i.e. R/3

 Presentation Layer  Runs in one single server

 Application Layer  Runs in one single server
 Database Layer  Runs in one single server

SAP : Three-Tier Architecture

With SAP R/3, SAP users in a new generation of enterprise software — from mainframe
computing (client-server architecture) to the three-tier architecture of database, application, and
user interface.
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Three-Tier Arch itect ure of SAP R/3

Presentation Servers
Presentation servers contain systems capable of providing a graphical interface.

 Presentation Layer is also known as client Layer

 Presentation Layer is a user interaction
 In SAP-User interaction purpose we use GUI
 GUI stands for Graphical user interface
 Example − Desktop, Mobile Devices, laptops

Application Servers
Application servers include specialized systems with multiple CPUs and a vast amount of RAM.
 Application Layer is also known as Kernel Layer and Basic Layer.
 SAP application programs are executed in Application Layer.
 Application Layer serves as a purpose of a communicator between Presentation and
Database Layer.
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 Application server is where the dispatcher distributes the work load to the different work
processes makes the job done.

Database Servers
Database servers contain specialized systems with fast and large hard-drives.

 Database layer stores the data

 Data store can be Business data, SAP system data, SAP tables, Programs.
 Examples − Oracle, Microsoft SQL Server, IBM DB/2, Siebel, Sybase, etc.

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SAP include a number of functional modules, which support transactions to execute key business
processes, such as −

 Financial Accounting (FI)

 Financial Supply Chain Management (FSCM)
 Controlling (CO)
 Materials Management (MM)
 Sales and Distribution (SD)
 Logistics Execution (LE)
 Production Planning (PP)
 Quality Management (QM)
 Plant Maintenance (PM)
 Project System (PS)
 Human Resources (HR)

Finance and Controlling (FICO)

SAP FICO is a combination of two ERP modules, i.e., Finance Accounting (FI) and
Controlling (CO). Under Finance in SAP and at an enterprise level, the following modules take
part −

 FI − Finance
 CO − Controlling
 IM − Investment Management
 TR − Treasury


 EC − Enterprise Controlling
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SAP FI (Financial Accounting) is accountable for tracking the flow of financial data across
the organization in a controlled manner and integrating all the information for effective
strategic decision-making.

Activities Involved in SAP FI

 Creation of Organizational Structure (Defining Company, Company Codes, business Areas,
Functional Areas, Credit Control, Assignment of Company Codes to Credit Controls)
 Financial Accounting Global Settings (Maintenance of Fiscal Year, Posting Periods, defining
Document types, posting keys, Number ranges for documents)
 General Ledger Accounting (Creation of Chart of Accounts, Account groups, defining data
transfer rules, creation of General Ledger Account)
 Tax Configuration & Creation and Maintenance of House of Banks
 Account Payables (Creation of Vendor Master data and vendor-related finance attributes
like account groups and payment terms)
 Account Receivables (Creation of Customer Master data and customer-related finance
attributes like account groups and payment terms
 Asset Accounting
 Integration with SD and MM

SAP CO (Controlling) module facilitates coordinating, monitoring, and optimizing all the
processes in an organization. It controls the business flow in an organization. This module helps in
analyzing the actual figures with the planned data and in planning business strategies.

Two kinds of elements are managed in CO −

 Cost elements
 Revenue elements

These elements are stored in the FI module.

Activities Involved in SAP CO

 Cost Element Accounting (Overview of the costs and revenues that occur in an
organization)
 Cost Center Accounting
 Activity-Based-Accounting (Analyzes cross-departmental business processes)
 Internal Orders
 Product Cost Controlling (Calculates the costs that occur during the manufacture of a
product or provision of a service)

Profitability Analysis (Analyzes the profit or loss of an organization by individual market



t )
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 Profit Center Accounting (Evaluates the profit or loss of individual, independent areas
within an organization)

Sales & Distribution Management (SD)

SAP SD is one of the most important modules in SAP. It has a high level of integration
complexity. SAP SD is used by organizations to support sales and distribution activities of products
and services, starting from enquiry to order and then ending with delivery.

SAP SD can monitor a plethora of activities that take place in an organization such as
products enquires, quotation (pre-sales activities), placing order, pricing, scheduling deliveries
(sales activity), picking, packing, goods issue, shipment of products to customers, delivery of
products and billings.

In all these processes, multiple modules are involved such as FI (Finance Accounting), CO
(Controlling), MM (Material Management), PP (Production Planning), LE (Logistics Execution), etc.,
which shows the complexity of the integration involved.

Activities Involved in SAP SD

 Setting up Organization Structure (creation of new company, company codes, sales
organization, distribution channels, divisions, business area, plants, sales area, maintaining
sales offices, storage location)
 Assigning Organizational Units (Assignment of individual components created in the above
activities with each other according to design like company code to company, sales
organization to company code, distribution channel to sales organization, etc.)
 Defining Pricing Components (Defining condition tables, condition types, condition
sequences)
 Setting up sales document types, billing types, and tax-related components


 Setting up Customer master data records and configuration

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Supplier Relationship Management (SRM)

As the name SRM suggests, this module deals with the effective and efficient transition of
products and services between an organization and its suppliers. The main process covered in this
section is procurement of products like direct materials, indirect materials, and services. This
module can effectively integrate with planning, accounting, and inventory system.

End-to-End Procurement Cycle

Procurement process with SAP Enterprise Buyer comprises of the following major steps −

 Shopping Carts
 Approval of Shopping Cart
 Sourcing of Requirements
 Purchase Orders
 Purchase Order Approval
 Confirm Goods/Services
 Confirmation Approval
 Process Invoice
 Invoice Approval

Customer Relationship Management (CRM)

CRM deals with end-to-end customer related processes. CRM is designed to centralize the
data related to all the customers associated with an organization. It helps an organization −
 Maintain its sales, services, and build marketing strategies according the market demand


and customer data analysis.

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 Remain focused on its customers and via information analysis, help the business to know
more about its customers.
 Improve sales and services and building better relationships with customers.

Human Resource (HR)

The most important objective of master data administration in Human Resources is to
enter employee-related data for administrative, time-recording, and payroll purposes.

A new employee can be hired without using Recruitment. Instead you can hire someone
by running a personnel action in Personnel Administration, thereby creating the necessary data
for the employee to be hired.

Employee data must be kept current. After an employee is hired, circumstances can
always arise which necessitate either the entry of new data or the correction of current data. For
instance −
 An employee moves to his or her new address must be stored in the system.
 An employee gets a pay hike at the start of the year. The new salary must be stored for the
relevant date.
 An employee changes jobs within the organization. His or her organizational assignment,
working time, and salary also change.
 Data can be stored for the past, present, or future.

Note − Entering payroll-relevant data in the past triggers retroactive accounting.



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The HR module is comprised of major areas of functionality known as sub-modules. The

HR module is a true demonstration of the strength of the SAP product in Enterprise Resource
Planning.

The HR system has very strong integration points (where data is passed back and forth
without human intervention) with just about all of the other SAP modules. In addition, there is
very tight integration amongst the HR sub-modules.

The above illustration highlights some of the basic SAP HR terms as listed below.

 Business trip management

 Recruitment
 Payroll
 Personal development
 Organizational Management
 Time Management
 Workforce Planning
 ESS
 MSS
 Training and event management
 CATS
 Benefits
 Compensation management
 Personal Administration
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Material Management (MM)

Material Management deals with movement of materials via other modules like logistics,
supply chain management, sales and delivery, warehouse management, production and planning

 A business process in SAP is termed as “Module”.

 SAP Materials Management (MM) is a part of Logistics area and helps to manage the
procurement activity of an organization from procurement.

 It supports all aspects of material management (planning, control etc).

 It is the backbone of the Logistics area which incorporates modules like Sales and
Distribution, Production Planning, Plant Maintenance, Project Systems, Warehouse
Management which are extremely obsessed on Materials Management module.

 It deals with managing the materials (products and or services) resources of an organization
with the aim of accelerating productivity, reducing costs and increase improvement and at
a similar time be versatile to accommodate changes in day to day life.

 It deals with the Procurement Process, Master Data (Material & Vendor Master), Account
Determination & Valuation of Material, Inventory Management, Invoice Verification,
Material Requirement Planning etc.
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Data Types
There are 3 types of Data they are

1. Master Data
2. Transaction Data
3. Configuration Data

1. Master Data

 Master Data is a CORE DATA that acts as a BASE for any Transaction.
 It's the Data which saves most of the Information

Example:
When a Patient enters in to the hospital before starting the treatment, the hospital staff
will take the details of the patient. This Details acts as a Master Data, in further if the
patient again visits the hospitals, he/she don't require to give the details once again
because the data will be already available. Using this Details further billing can be made.

There are 5 Types of Master Data

1. Material Master Data

2. Vendor Master Data
3. Purchase Info Record
4. Source List
5. Quota Arrangement

2. Transaction Data

Data that is associated with processing of business transaction is called as transactional

data.

Ex-Creating PR, Creating PO, MIRO etc...

3. Configuration Data

Changing settings and data to make SAP Functionality to match the business.
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Procure to Pay (P2P Cycle)

Requirement determination:-
Whenever we found any shortage or requirement of material or services in any department
within an organization

Source Determination :-
Once the requirement of the material is listed then we go for the searching Sources like
vendors, customers to get the materials.

Vendor selection & Quotation :-

After we find out the sources we prepare quotation to get the required material for better
price and quality, later it will send to different vendors & negotiating with vendors we select
suitable vendor.

Purchase requisition :-
Once the vendor selection is done non purchasing department send purchase requisition to
purchasing department to procure the require materials.

Purchase order :-
To get the required material for organization we rise purchase order for the material and
sent to vendor. If purchase manager is not satisfied with price & vendor, he can hold the PO or may


cancel.
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Goods receipt :-
Vendor will issue the goods as per the purchase order, the goods will receive at plant, or
factory & prepare goods receipt for the same.

Invoice :-
Once the goods are delivered, the vendor will sent invoice for the delivered goods. The
invoice is verified for the respective goods & later payment done to the vendor.

Organizational Structure/Enterprise Structure

Organizational elements are broadly divided into two areas they are

 Financial Area
 Logistics Area

Financial Area
 Company Code
 Controlling Area
 Currency and More

Logistics Area
 Plant
 Storage Location
 Sales Organization
 Sales Distribution Channel
 Sales Division Etc...

Enterprise Structure : -
Enterprise structure defines various levels in an organization. These levels are placed
according to some hierarchy. Each level has some specific functionality associated with it, which
in a combined way describes the working of an organization. Also enterprise structure defines
various organizational units that are present in an enterprise. The Organizational Structure in MM
consists of following Organizational Levels:

 Client

 Company Code

 Plant

 Storage Location


 Purchasing Organization
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Purchasing Organization
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 Purchasing Group

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Client
 Client is a commercial organizational unit in R/3 system.

 It has its own set of master data with independent table sets.

 According to hierarchy, Client is at highest level in SAP system.

 Data that is maintained at client level is valid for all organizational levels.

Company Code
 Within Client, Company code is the independent accounting unit.

 It is a legal entity that has its own profit, loss and balance statement.

 It is the smallest unit in organization for which a complete independent account set can be
replicated.

Plant
 Plant is an organizational unit within a company where activities take place. A plant will
produce goods and makes goods available for the company.

 It is unit having manufacturing facility, warehouse distribution center or a regional sales



office within logistic. It subdivides an enterprise in different aspects.

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Storage Location
 Storage location is an organizational unit which actually differentiates between different
material stocks in a Plant.

 Storage location is a place where stock is kept physically.

 Plant can be consisting of multiple storage location. All data is stored at storage location
level for a particular storage location.

Purchasing Organization
 Purchasing Organization is an organizational unit under company or plant which is
responsible for procurement activities according to requirements. It is responsible for
external Procurement.

 Purchasing organization can be at client level i.e. centralized purchasing organization.

 Purchasing organization can be at company or plant level i.e. company specific or plant
specific

Different forms of purchasing can be described as follows:

Centralized Purchasing
 Purchasing organization is not assigned to any company code it procures for all company
codes belonging to different client.

Company specific Purchasing

 Purchasing organization is assigned to a company code only, Plant belonging to the
company code can purchase through this Purchasing organization.

Plant specific Purchasing

 Purchasing organization is assigned to a Plant, only this specific Plant can purchase through
this Purchasing organization.

Purchasing Group
 Purchasing group is an organizational unit which is responsible for everyday procurement
activities within an organization.

 It is a buyer or group of buyer responsible for procurement activities in a purchasing

organization.


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EDON LIVE- Career Guidance

All the Definitions in SAP will be done through Display IMG screen, Now we can the customization
part for the creation of company, company code, Plant, storage loc, Purchasing organization.

Create Company:

Path to create Company:

IMG => Enterprise Structure => Definition => Financial Accounting => Define Company
Transaction Code: OX15
On display IMG screen select Define Company execute icon by following the above path.

Click on New Entry icon and fill all the required details like company, company name, street,
postal code, Country, Currency, Language key etc.… as shown below.

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