SAP MM – Basics

 What is SAP
 What is ERP
 Types of Projects in SAP

SAP MM- SAP Enterprise Structure

1. Define Company
2. Define Company Code
3. Assign Company Code to Company
4. Define Plant
5. Assign Plant to Company Code
6. Maintain Storage Locations
7. Maintain Purchase Organization
8. Create Purchasing groups
9. Assign Purchasing Organization to Company Code
10. Assign purchasing organization to reference purchasing
organization
11. Assign Purchase Organization to Plant

SAP MM – Master Data

1. Split Valuation configuration

2. Create Material Group in SAP MM
3. Create Material Types in SAP MM
4. Define Industry Sectors
5. Maintain company codes for material management
6. Define MRP Controllers
7. Create, Change, Display Material
8. Create purchasing info records

SAP MM – Vendor Master

1. Define vendor account groups

2. Maintain number ranges for vendor accounts
3. Assign number ranges to vendor accounts
4. Create sundry credit account
5. Tolerance group for vendors
6. Vendor payment terms
7. Create vendor master data
8. Automatic payment program configuration
9. Interest calculation configuration
SAP MM – Procurement

1. Procurement Process Cycle Overview

2. Set Tolerance Limits for Price Variance
3. Maintain source list
4. Create Purchase Requisition (PR)
5. Create Request for Quotation (RFQ)
6. Maintain Quotations
7. Create Purchase Order for stock materials

SAP MM – Inventory Management

1. Create Movement Types
2. Goods Receipt Invoice (GRIN)
3. Post goods issue
4. Stock transfer and Transfer posting

What is SAP (Systems Applications

Products)?
The following articles guide you everything about SAP ERP
Systems. The first question which arises in our mind “what is
SAP”? And what is SAP ERP software ?, which is the best SAP
module, and which module has the best scope for a bright
future ??
What does SAP stand for – SAP stands for Systems,
Applications, and Products in data processing.
 SAP is the fourth largest software company in the world –
www.sap.com
 The SAP R/3 system is a business software package designed
to integrate all areas of a business.
 It provides end-to-end solutions for financials, manufacturing,
logistics, distribution, etc.
 All business processes are executed in one SAP system and
sharing common information with everyone.
SAP is an Enterprise Resource Planning (ERP) system by SAP
AG, a company based out of Walldorf in Germany. AG is derived
from the German word AKtiengesellschaft. According to German
Language SAP Stands for Systeme, Anwendungen und Produkte
in Der Datenverarbeitung. An SAP software suite that is being
implemented as part of re-engineering and Provides end-to-end
solutions for financial, logistics, distribution, inventories. Present
scenario large number of companies are using sap software for
their day-to-day business activities.
After the hugely successful R/3, SAP created more and more
niche software like Customer Relationship Management (CRM),
SRM, XI (now called Process Integration or PI) and once again
living up to the standards of SAP by maintaining tight integration
with their core ECC software. The newest version of the suite
is SAP ECC 6.0.

SAP History
SAP Founded in and around 1972 by five IBM engineers Hopp,
Wellenreuther, Hector, Tschira and Plattner.
SAP R/1:– The first version of SAP software was launched in and
around 1972 known as the “R/1 system. R” stands for real-time
data processing. it is one tier architecture in which three layers
Presentation, Application, and Database are installed in one
system/server
(one – Presentation + Application + Database)

SAP R/2:– In 1979 second version of SAP R/2 was released. with
IBM’s database and a dialogue-oriented business application.
SAP R/2 to handle different languages and currencies. R/2 is 2
tier architecture in which three layers of Presentation,
Application, and Database are installed in two separate servers.
(Server one – Presentation, Server two – Application + Database

SAP R/3:– SAP upgraded R/2 to R/3. SAP R/3 is the client/server
version of the software and it is 3 tier architecture in which three
layers of Presentation, Application, and database are installed in
three servers/systems.
Server one – Presentation, Server Two – Application, server
Three – Database

SAP S/4Hana – In the year 2010, a new version of SAP Hana has
been released. SAP Hana (High-Performance Analytic
Application) is a memory computing database. The latest version
of Hana is SAP S4 Hana 2021.

Products of SAP
 SAP R/3 and R/3 Enterprise
 mySAP Business Suite
 SAP ERP
 SAP Industry Solutions
 SAP xApps
 SAP Solution Manager
Industry Solutions of SAP

SAP R/3 – Modules & Integration

SAP Functional Modules

 FICO – Finance & Control
 PP – Production Planning
 MM – Material Management
 SD – Sales & Distribution
 WM – Warehouse Management
 QM – Quality Management
 HR – Human Resources
 CRM – Customer Relationship Management
SAP Technical Modules
 ABAP – Advanced business applications programming
 XI – Exchange Infrastructure
 Net viewer
 Basis
 BIW – Business Information Warehousing
What is SAP FICO?
SAP FICO Stands for FI (Financial Accounting) and CO
(Controlling). SAP FICO is the imp module of ERP and both
Finance and Controlling modules stores the financial
transactions data. The ‘FI (Financial Accounting)’ records,
collects, and processes financial transactions or information on a
real-time basis to provide the necessary inputs for external
(statutory) reporting purposes. SAP CO plays an important role
for the management decision-making purpose and for the
internal reporting purpose. Read More for SAP FICO
FICO contains the following sub-modules.
FI CO
General Ledger
accounting Cost Element Accounting
Accounts Receivables Cost Center Accounting
Accounts Payable Profit Center Accounting
Asset Accounting Internal Orders
Bank Accounting Product Cost Controlling
Consolidation Profitability Analysis
Special Purpose
Ledger
Travel Management

What is SAP MM?

SAP MM ( Material Management ) is one of the imp modules in

SAP ERP software and it supports the procurement and
inventory functions occurring in day-to-day business operations.
This MM module contains many aspects such as purchasing,
goods receiving, material storage, consumption-based planning,
and inventory. SAP MM module is fully integrated with other
modules in the SAP R/3 System such as FICO, SD, QM, PM, PP,
and WM. Read More for SAP MM
SAP PP

The Production Planning application module is used to plan and

control the manufacturing activities of a company. consists of all
system configuration, master data, and complete solutions to the
Produce process. Read more for SAP PP Training
SAP SD ?
SAP SD ( Sales and Distribution ) is an important module
of SAP and it is a part of logistics. The main activities of SD are
sales order handling, distribution of shipments to customers, the
billing process, customer invoice, delivery. SD module is fully
integrated with other modules in the SAP R/3 System such as
Finance, Purchasing(MM), Production Planning(PP).

What is SAP HR?

SAP Human Resources manages the complete employee life
cycle and payroll. All aspects are covered from training to
appraisal. Read more for SAP Human Capital management
Advantages of SAP:-
 SAP software manages these business management tasks in
modules that all work together in one system by sharing
information.
 Promoting consistent practice across an entire division
 No duplicate data
 Automate Project Monitoring and Multidimensional and
flexible reporting
 Standardization of business processes
 Make Planning, Scheduling, Tracking, and Management
easier leaving more time for you to perform value-added work
 Ability to provide clear cut job roles with authorizations
 Enabling integration with e-commerce
 Cost Savings on overheads such as Stationery, File Storage,
etc.
Why – SAP R/3 software has been successful
 Multi-Lingual
 Secure Information
 Multi-Currency
 Best Business Practice
 Enterprise-Wide
 Real-time processing with an integrated suite of client/server
applications
SAP R/3 Architecture
SAP Systems contains three layers such as Presentation Layer,
Application Layer, and Database Layer.
 Presentation: – It is a layer where the user works with SAP
GUI. It interacts with the database layer via the Application
layer.
 Application: – It interacts between presentation and
database layer
 Database: – It is a central database that stores all the data of
ERP SAP Systems.
SAP System Landscape
Every SAP Implementation project goes through deployment
phases. The SAP system landscape included the following
environments
1. Development System
2. Test and Quality Assurance System
3. Production System

SAP Business Suites

SAP offering various applications along with the ERP SAP to

meet the customer requirement. The important applications of
SAP are as follows.
 SAP Supply Chain Management (SAP SCM)
 SAP Customer Relationship Management (SAP CRM)
 SAP Product Life Cycle Management (SAP PLM)
 SAP Supplier Relationship Management (SAP SRM)
 SAP Advanced Planning and Optimization (SAP APO)
Phases of SAP Implementation project
 Phase 1 – Project Preparation,
 Phase 2 – Business Blueprint,
 Phase 3 – Realization,
 Phase 4 – Final Preparation,
 Phase 5 – Go-Live and support

What is an ERP – Enterprise Resource

Planning
An ERP stands for Enterprise Resource Planning; it is a business software system
that supports entire business or enterprise throughout the project life cycle in
organizing, planning, maintaining, tracking and utilization of resources (Man,
Machine, Material and Money) effectively.
Let discuss briefly about what ERP software is and how it helps in business
achievements.
1. History of ERP systems
2. Why do we need ERP software
3. ERP Advantages and Disadvantages
4. Common ERP modules
5. Why ERP
6. Top ERP Vendors List
7. ERP Software Packages
What is ERP – Enterprise Resource Planning
ERP stands for Enterprise Resource Planning. It is a gateway to integrate
the data and processes of an entire organization into single system with
all modules that supports the core business areas.
 ERP systems cover all basic functions of an organization
 Enterprise Resource Planning is developing into a Multi-Module Application
Software Package that enables business processes across the supply chain
management.
 Allows to integrate all the operational units such as financing, human
resources, manufacturing, sales, marketing, finance &
accounting, procurement, inventory management and so on.
 ERP software system allows the business to achieve real time business
process, increase productivity, improves delivery, reduce cost and increase
profits, increase product quality,improve information and performance
management.
In Simple terms, we can explain an ERP as : –
ERP is a business suite with number of applications that are integrated
together between system and assist a organization in collecting,
managing and reporting information on real time throughout the
business process.
History of ERP Systems
 ERP System have took years to emerge and is still evolving. These systems are
transformation and ever-changing.
 In 1970’s manufacturing chain was the center of business operations. This led
to the development of MRP systems.
 The second phase of ERP development occurred in 1980’s which focused
more on quality measures which led to the evolution of MRP II Systems.
 In the 1990’s, Enterprise Resource Planning started using multi-module
application to increase organizations process. ERP Systems integrates with all
the modules of organization’s business modules and this led to the evolution
of ERP System.
Why do we need ERP Software
ERP is an integrated systems of different business process for
e.g. if a company has different departments like sales
department, production department, material management,
finance department, etc, so in ERP we have an integration of all
the departments and they all use common database.
1. We can have standardization of systems across locations. For
e.g. for MNC companies can have different plants in different
locations with standard systems.
2. ERP systems helps to have a better controlling over the
different process.
3. An ERP is a integrated systems, it helps to provide the better
reporting.
ERP Software components
The important and major components of ERP systems are
manufacturing, SCM, Financial Accounting management, Human
resources management and Customer relationship management.
ERP Advantages and Disadvantages
Advantages of Implementation of an ERP system :
 Reduced redundancy in entering data
 ERP system provides the real time information all needs of
the organization in a single system.
 It Allow everyone to access same source and share same source of
information
 It allow to access, update instantly and saves lot of time.
 Integration among different functional areas to ensure proper
communication, productivity and efficiency
 The Accounting for all of these tasks, tracking the Revenue, Cost and Profit
on a granular level.
 Allow standardization of business processes and enterprise’s information.
 It is a single source of systems that can be use through out
the organization.
 ERP software enables real time information availability,
reduction in inventory and cycle times.
 The benefits of ERP systems are: customer satisfaction, better information,
productivity, increased quality and decreases in time to market, product cost,
delivery time, inventory levels.
Disadvantages of ERP Systems:-
The disadvantages of ERP systems are as follows :-
 Takes a lot of effort and time and requires a lot of training
 Customization of the ERP software is limited, you may not allowed to design
application as per business requirements.
 ERP systems can be very expensive to install.
 ERP Systems centralize the data in one place and this can increase the risk of
loss of sensitive information in the event of a security violation.
 The usage of ERP system can be difficult for users, so appropriate training is to
required to use the ERP software.
Read more for ERP Advantages and Disadvantages
Common ERP Software Modules
1. Sales Order (SO)
2. Purchase Order (PO)
3. Finance and Accounting
4. Manufacturing Resource Planning
5. Customer relationship management (CRM)
6. Human Resources
7. Procurement
8. Marketing

The important modules in ERP SAP Systems are as follows-

Manufacturing – A manufacturing company could use an ERP system to track
and manage virtually every operation in the organization. Requests for Proposal
(RFP) and corresponding quotes can be entered and assigned to any large database
of customers. Quotes can be changed to Sales orders upon receipt of purchase
orders, with line items and corresponding prices that represent goods to be
delivered to a customer.
Why ERP
1. It is a sinlge application integrated software program.
2. It is a single database systems.
3. ERP systems allows to share the information and communicated more
effectively.
4. It automates customer orders, order fulfillment, billing, shipping and
tracking and so on.
The different between before ERP and After ERP system shows, why an ERP
software is important to implement for any business.
Before ERP After

ERP systems
Top ERP Vendors list
ERP Vendors are classifies based upon clients they service. We have three types
of ERP vendors they are Tier I, Tier II, Tier III. Here we are going to list top ERP
Vendors in the following sectors.
1. Manufacturing and Distribution Industry.
2. Transport, Communication, Energy and Sanitary service.
3. Service Sector and finally
4. Retail Sector.
Top ERP vendors in Manufacturing and Distribution Industry.
SAP OracleMicrosoftInforEpicorIFSlawsonOthers

Market 2
Share 28%15% 12% 7% 5% % 2% 29%

TOP ERP vendors in Transport, Communication, Energy and Sanitary service.

Oracl Info
SAP e Microsoft r EpicorIFSQADOthers

Market 1
Share 35%23% 15% 4% 2% % 1% 19%

Top ERP Vendors in Service Sector.

SAP OracleMicrosoftInfo EpicorNetsuitelawsonOthers
 r

Market
Share 30%21% 15% 2% 3% 2% 2% 25%

Top ERP vendors in Retail Sector.

SAP OracleMicrosoftInforQADSAGElawsonOthers

Market Share31%22% 22% 2% 2% 2% 2% 17%

ERP Software Packages

 Baan by Baan corporation.
 Peoplesoft from oracle corporation
 Oracle Application
 JD Edwards from oracle
 Navigen
 SAP from SAP AG (With total 60% market share).

Types of Projects in SAP

The different types of projects in SAP that are involved are
1. Implementation / Development Project
2. Support and Maintenance Project
3. Roll Out Project
4. Upgradation Project / Migration Project
5. Enhancement project

Tip: It is one of the important question that are asked during the
real time interviews for freshers and experienced candidates.
1. Implementation Project
It is a pure development of the project, where we map and
design client business requirements in the SAP system for the
first time by using ASAP methodology.
 The duration of the implementation project can be – 6 to 24
Months depends on company.
2. Support and Maintenance Project
After successful implementation of SAP for the client, next is to
provide the support and maintenance to the client for day-to-day
business transactions. The important roles and responsibilities in
the Support project are
 Issues and errors resolution
 Provide assistance to the users during the month and year-
end activities
 Configuration in existing system as per requirements of a
client.
We can two types of supporting projects i.e.
1. Ticket Based Support : In this project, we support to the
clients companies based on the Tickets
2. Production Support: The support team will be available by
24/7 for support in production system.

3. Roll Out Project

Company is already using SAP, but they want to implement SAP
for another country/plant or legal entity based on the existing
country. Roll Out project can implement
 To follow a unique method of transactions recording
 To generate consolidated financial statements within the SAP
system.
The different types of Rollout projects are
1. Country Rollout: In this Rollout project, we will copy the data
from the existing company to a new country.
2. Company Code Rollout: In this project, we will copy the data
from an existing company to a new company.

4. Upgradation / Migration Project

It involves upgrading from the old version to the new version of
the SAP system. The duration of upgrade project can be For
Example: – Migrating from SAP ECC Systems to the S4Hana
system.
It also involves the implementation of new functionalities like
 Implementation of New G/L Accounting functionality
 Adapting Material ledgers, etc.

5. Enhancement Project
In this SAP Project, we will add the additional features and
modules in the existing data. For e.g. Implementing GST (Goods
and Service Tax) to the existing Tax.
 How to Create a Company in SAP | Define Company in SAP

The following tutorial guides you how to define or create a

company in SAP step by step with screen shots. Let us discuss
briefly about company.

Define Company in SAP

About Company in SAP:- Company is the organizational unit for
which individual financial statements can be drawn according to
the relevant commercial law. A company can comprise of one or
more company codes. A Company has local currencies in which its
transactions are recorded. All company codes within a company
must use the same transaction Chart of accounts and the
same Fiscal Year. Creation of company in sap is optional.

Company in SAP – Important points

1. You can generate financial statements as per legal requirements of country,
where the company is located..
2. You can assign one or more company code to company
3. It is an optional organization unit in SAP
4. If a company consists more than one company code, then all the company
codes should use same chart of accounts.
Path to Define Company in SAP:-
SAP IMG Path: – SPRO –> Implementation Guide for R/3
Customizing (IMG) –> Enterprise Structure –> Definition –>
Financial Accounting –> Define Company
Transaction code to “Define Company in SAP”:- OX15
Steps for creation of a Company: –
Step 1 :- Enter Transaction Code “SPRO” in the commend field
and press enter on the Keyboard

Step 2 :- Next customizing execute project screen select “ SAP

Reference IMG”

Step 3 :- After Selecting SAP Reference IMG, a new screen IMG

Path with structure will be displayed. Select Define
Company execute icon for creating a new company in SAP.

Next Screen will be displayed after selecting the define

company execute icon
Step 4:– Now Select New entries icon to create a new company and enter the
company details

The following details are to be entered for creating a new

company
1. Enter 6 character alphanumeric code key that represents the
group of company
2. Enter name of your company.
3. In the Detailed information update the address – Street name,
PO Box#, Postal code, City.
4. Enter Country Code of the company
5. Enter language key
6. Enter local currency for the company (also known as Company
code currency)
7. Click on Save icon or CTRL+S after updating the required
information
Choose the Customizing request from the drop down list or create new one. To
create new Customizing request, click on create request icon as shown below

image.
Update the required details like description of customizing request number and
click on save icon to save the configured data.

Thus new Company ADARSH Limited is created in SAP.

Company in SAP HANA is an highest level of organizational

unit, and used to consolidate company codes information to
generate financial statements.
Company in SAP S/4Hana – Scenarios
1. It is an optional organization unit in SAP HANA and highest
organizational unit of enterprise structure
2. Company is used to generate consolidation of reports and
financial statements.
3. Company can be assigned to one or more company codes
4. To generate financial statements at company level, company
codes should be assigned to company
How to define company in SAP HANA
You can define company in SAP HANA by using the following
configuration steps
 Menu Path: Enterprise Structure -> Definition -> Define
Company Code
 Transaction Code: OX15
Step 1: From SAP Easy Access screen, enter SAP transaction
code “OX15” in the SAP Hana command field and press enter to
continue.

Step 2: On change view international trading partners screen,

display list of defined company in SAP S/4Hana system. As it is
demo system of S/4Hana, it consists number of company entries.
In real time scenarios, an organization can consists one company
for consolidation reporting purpose.
To create new company in SAP S/4Hana, click on the option
“New Entries”

Step 3: On new entries of Company screen, update the following

details
 Company: Enter the new key that defines company in SAP
Hana system
 Company name: Enter the name of company
 Company name 2: Enter the company name 2
Detailed Information
 Street: Update the street address details of company
 PO Box: Update the PO Box number
 Postal code: Update poste code
 City: Update the city name
 Country: Update the country key, where the company is
located
 Language Key: Update the language key
 Currency: Update the company currency key.
After maintaining all the required details for company, choose
save icon to save the configured details in SAP S4Hana System.
Step 4: Now you are prompt for customizing request number,
click on create icon and enter the required details for
customizing request and click on save icon to save the details.
Now press enter and save the configured details.

Successfully we have created new company in SAP S/4 Hana

system.
Company code in SAP HANA is an organizational element for
which complete financial statements can be drawn for external
and internal reporting purposes. A company can have one or
more company codes, but these company codes must use the
same chart of accounts, fiscal year.
Company Code in SAP Hana – Scenarios
1. All the financial transactions are posted at the company code
level
2. At least one company code should be created to implement
SAP Financial Accounting in SAP Hana System.
3. No SAP FI in Hana exists without company code
4. All the transactions – from procurement of goods to sales of
products are posted at the company code level.
5. Company code is used in all SAP S4Hana modules.
6. Company code can be created using new entries or copying
from existing company code in SAP S4 Hana system.

How to define company code in SAP HANA

Company in SAP S4 HANA system can be created using the
following configuration steps:
 Menu Path: Enterprise Structure -> Definition -> Financial
Accounting -> Edit, Copy, Delete, Check Company Code
 Transaction Code: OX02
Step 1: From SAP Easy Access Screen, enter SAP transaction
code “OX02” in the SAP command field and press enter to
continue.

Step 2: On change view “Company Code”: Overview screen,

display list of existing company codes that were defined in SAP
Hana system. From this SAP Hana screen, you can maintain the
following activities –
 You can create new company code by using the option new
entries or copy as an option
 You can modify the existing company code
 You can delete the company code
To create new company code in SAP Hana System, click on new
entries button as shown below
Step 3: The new entries: details of the added screen, update
the following details.
 Company Code: Enter the 4 alphanumerical keys that
defines as company code in SAP Hana System. This company
code will serve as company identifies in the business
environment where the multiple company codes exists in SAP
Hana system.
 Company Name: Enter the name of the company
Additional Data
 City: Update the city name, in which city that company code
is located
 Country: Update the country key from the dropdown list,
 Currency: Enter the company code currency
 Language: Enter the default language key for company code.
Step 4: A pop of window Edit Address: AD01 displays on the
screen. The company code address screen is divided int0 five
sections. Update the required details with your company code
information.
Name.
 Title: choose the title of the company
 Name: Enter the name of the company
Search terms: Search terms enables to search the company
code very quickly if multiple company codes are defined in S/4
Hana system. Enter the relevant search term keywords.
Street Address
 Street/House Number: Update street no, house number, etc
 Postal Code/City: Update postcode pin and city of the
company
 Country: Update the country key, you can choose the country
key from the dropdown list
 Region: Update the region key, you can choose the region
key from the drop-down list
PO Box Address
 PO Box: Update the PO Box number, where the company is
located
 Postal Code: Update the postal code
 Company Postal code: Update the details of the company
postcode.
Communication
 Language: Update the language key for company code
 Telephone: Update the contact telephone number
 Mobile Phone: Update the mobile number of the company
code
 Fax: Update the fax number for fax communication
 E-Mail: Update the valid email id of the company code.
For print preview of address details, click on print preview icon
and preview the address details.
After maintaining all the required details for the company code,
press enter key to continue.
Now click on the save icon to save the configured company code
in SAP S/4Hana System.
The prompt for customizing request pop-up screen displays,
choose the customizing request number, and save the details.
Successfully we have defined new company code in the SAP
S4Hana system.

Assign Company Code to Company in SAP Hana

The integration between company code and company is
established through this assignment of company code to
company in SAP Hana. To complete the customizing task of
company code, you need to assign company code to company in
SAP Hana.

How to assign company code to company in

SAP Hana
You can assign company code to company in SAP S4Hana system
by using the following configuration steps.
 IMG Menu Path: Enterprise Structure -> Definition ->
Financial Accounting -> Assignment -> Assign Company
Code to Company.
 SAP Transaction Code: OX16
Scenarios
 We are assigning company code “AD01” to company “Adarsh”
 You can assign one or more company codes to company.
You can assign assign company code to company by using IMG
menu path navigation or transaction code.
Step 1: From SAP Easy Access screen, enter the SAP tcode
“OX16” and press enter to continue.

Step 2: From change view “Assign Company Code to

Company” overview screen, displays list of company codes that
maintained in SAP S4 Hana system. You can find the company
code manually or using the option position, the position option
enables to find the company code.
Click on position icon and enter the company code Ad06 and
press enter to continue, in our case we need to find the company
code AD01 as we are going to assign AD01 company code to
company.
Step 3: Now the company displays on top of SAP Hana system
screen, enter the company key in the given field for a particular
company code.
In our case: We have assigned company “ADARSH” to the
company code “AD01”.
After assignment of company code to company, click on save
button to save the configured details in SAP S4Hana system.
Now your promoted for customizing request number, choose the
customizing request number and save the configured in SAP
Successfully we have assigned company code to company in SAP
S/4 Hana system.

How to Define Plant in SAP

This tutorial guides you on how to create/Define a Plant in SAP step by
step.

Steps to Define Plant in SAP:

IMG Menu Path:-
 SPRO > SAP Customizing Implementation Guide (IMG) > Enterprise
Structure > Definition > Logistics – General > Define copy, delete,
check plant
 Transaction Code to Define Plant:- OX10
Step 1:- Enter Transaction Code SPRO in the command field and press
enter.
Step 2:- Click on SAP Reference IMG

Step 3:- Follow the Menu Path as per the below screenshot
Step 4:– Click on Define Plant

Step 5:- Click on New Entries

Step 6:- Enter new plant code and update the name of the Plant, and
press enter.
Step 7:- Update the address of the plant and press enter.
Step 8:- After updating all mandatory fields, click on the save icon

Thus Plant was successfully configured in SAP.

How to Assign Plant to Company Code in SAP
 Transaction code Assign Plant to Company Code:- OX18
 IMG Menu Path :- SPRO > SAP Customizing Implementation
Guide (IMG) > Enterprise Structure > Assignment > Logistics – General
>Assign Plant to Company Code
Step 1:– Enter Transaction Code SPRO in the command field and press
enter

Step 2:- Click on SAP Reference IMG

Step 3:- Follow the Menu Path as per the below screenshot
Step 4:- Click on New entries

Step 5:- Update Company code in the cocd field, update plant code in
the plnt field, and press enter.

Step 6:- Click on the save icon.

Thus Plant is successfully assigned to Company code in SAP.

How to Create Storage Location in SAP
The following SAP tutorials guide you on how to create a storage
location in the SAP MM module. You can define a new storage
location by using the following navigation methods.
 Transaction code:- OX09
 IMG Menu Path :- SPRO> SAP Customizing Implementation
Guide >Enterprise Structure Definition > Material Management >
Maintain storage Location
Step 1:– Enter Transaction Code SPRO in the command field and press
enter

Step 2: – Click on SAP Reference IMG

Step 3:- Follow the menu path as per the below screenshot and click on
maintain storage location
Step 4:- Enter the Plant key where the storage location is to be
maintained and press enter.

Step 5:- Click on new entries for creating a new storage location.
Step 6:- Enter Key in Sloc and description of storage location

Step 7:- Select storage locations and double click on the address of
storage locations

Step 8: After double-clicking on the address of storage locations, click on

new entries and give 1 in the NO field.
Step 9:- Update the address of the storage locations
After updating the address, click on the save icon. Thus new storage
locations are configured.
Maintain Purchasing Organisation in SAP MM
This Tutorial guides you on how to maintain Purchasing Organisation in
SAP MM.
 IMG Menu Path :- Customizing Implementation Guide > Enterprise
Structure > Definition > Material Management > Maintain > Maintain
Purchasing Organisation
 T Code for Maintain Purchasing Organisation:- OX08
Step 1:- Enter T Code SPRO in the SAP Command Field
Step 2:- Click on SAP Reference IMG

Step 3:- Follow the menu path as per the below screenshot for creating a
new purchase organization.
Step 4:- Click on new entries.

Step 5:- Update the following data and press enter

 Purch.Organization:- Enter 4 digits Key that identifying the purchase

organization
 Purch. Org. descr. :- Update the description of the purchase
organization
Step 6:- Click on the save icon

Thus Purchasing Organisation is successfully configured in SAP Material

Management.

Purchasing Group in SAP

A purchasing group is a unit of a purchasing organization
which is responsible for day-to-day certain buying activities and
controls a particular type of procurement activity based on some
classification.
Steps to create purchasing groups:
 SAP IMG Path: – SPRO >> SAP Reference IMG(F5)
>>Materials Management >> Purchasing >> Create
Purchasing Groups
 Transaction code: – OME4

Click on new entries to create new purchasing groups

In the next screen enter the following data.

 In the purchasing group field. enter the three digits purch.
group key
 In the desc. pur. grp field enter the description of purchasing
group
 Enter the telephone contact details and press enter to
continue
 After updating all the required information, choose the save icon
to save the entries. Successfully you have configured purchasing
groups.

How to Assign Purchase Organisation to Company

Code in SAP
Steps to Assign Purchase Organisation to Company
Code:-
 IMG Menu Path:- SPRO > SAP Customizing Implementation Guide
(IMG) > Enterprise Structure > Assignment > Material Management
> Assign Purchase Organisation to Company Code
 T Code Assign Purchase Organisation to Company Code:- OX01
Step 1:- Enter transaction code SPRO in the command field and press
enter

Step 2:- Click on SAP Reference IMG

Step 3:- Follow the IMG Menu Path and click on Assign Purchasing
Organisation to Company Code

Step 4:- Click on Position and update the desired purchase organization
code to find out.
Step 5:- Update the company code in the CoCd field and press enter.

Step 6:- Click on the Save icon.

Thus successfully purchase organization is assigned to company code.

How to assign purchasing organization to

reference purchasing organization in SAP
Reference purchasing organization is that purchasing
organization where the procurement is done for all the plants of
purchasing organizations. Reference purchasing organization is
used in the case of global contract preparation which can be
referenced by any local purchasing organization.
IMG Path: SPRO >> SAP Reference IMG(F5) >> Enterprise
structure >> Assignment >> Materials Management >> Assign
purchasing organization to reference purchasing organization

Click on “New Entries” and make the entries for the

assignment

In the next screen, enter the following information

 In the purchasing organization, field enter your purchase
organization code
 Enter the reference purchase organization code
 Release order specifies that release orders are issued against
contracts set up by the reference purchasing organizations
 Conditions under reference data check the conditions of the
reference purchasing organization to be accessed.

Choose the save icon to save the configured data.

SAP MM – Master Data

1. Split Valuation configuration

2. Create Material Group in SAP MM
3. Create Material Types in SAP MM
4. Define Industry Sectors
5. Maintain company codes for material management
6. Define MRP Controllers
7. Create, Change, Display Material
8. Create purchasing info records

Split Valuation in SAP configuration steps

The tutorial guides you on how to configure split valuation in SAP MM step
by step with screenshots.
Step 1:- Define Global Valuation Types
 IMG Menu Path :- SPRO > SAP Reference IMG > Material
Management > Valuation and Account Assignment > Split Valuation >
Configure split valuation
 T Code:- OMWC
Enter Transaction code OMWC in the SAP command field and press enter.
Select cancel

On the next screen, select “Global Types.”

Select “Create” and update the mandatory fields

Create valuation type screen: – update the following fields
Valuation type:- Give the key to identifying the valuation type.
Attributes:-
Ext. purchase orders: - select external PO allowed or not. Where the
possible entries are
0- No external purchase orders allowed,
1- External purchase orders allowed, but warning issue allowed,
2- External purchase orders allowed.
Int. purchase orders:- Select internal PO allowed or not; possible entries
are
0- No Internal purchase orders allowed,
1- Internal purchase orders allowed, but warning issues allowed,
Acct cat. reference:– Account reference is a mandatory field. Select the
drop-down button and select the appropriate key

Select Create icon, and you get a message as “Valuation Type RMM01
was/were created. Save icon to save the configured data.
Successfully configured the split valuations.
Step 2:- Define “Global Valuation Categories”
Select the back button two times and select global categories
Maintain the field entries as described below
Valuation Category:- Enter the valuation category key
Attributes
Description: – Update the description of the valuation category key.
Default:ext.procure.:– Default external procurement
Ext.procurement mand: – If this check box is selected, the valuation type
cannot be changed at the PO level.
Val. type automatic:- This check box is used for split valuation and batch
management

Select Create icon and you get a message as “Valtn category A was/were
created. Select the save icon to save the configured data.
Step 3:- Assign Valuation type to valuation categories
Go to Global valuation category and select types category

Select required valuations type and click on Activate button

The message will be displayed as “Valuation type AD06 activated.

How to create a material group in SAP

The following SAP Tutorial guides you on “how to Create
Material Group in SAP MM ” step by step with screenshots.
IMG Menu Path: - SPRO > Logistic general > Material Master > Settings
for Key Fields > Define Material Group
Transaction Code:- OMSF
Enter T Code OMSF in the SAP command field and press enter

Select “New Entries” to create a new material group.

Update the following fields

Matl Group:- Enter the new material group key
Material Group Desc. :- Update the description of the material group key.
Description 2 for the material group:- Update description second for the
material group if needed.
After updating all the mandatory fields, select the save icon to save the
configured data.

How to Create Material Types in SAP

The following SAP Tutorial guides you on how to configure/ create
material types in SAP MM step by step with screenshots.
 SAP IMG Menu path :– SPRO > Logistics – General > Material Master
> Basic Settings > Material Types > Define Attributes of material
types
 Transaction Code:– OMS2
Enter T Code OMS2 in the SAP command field and press enter.

List of material types are displayed on the screen, Select existing material
type line item and click on “New Entries” or copy as an icon to define new
material types in SAP.

Material Type:- Update New Material key

Description: - Give the description for the material key
Field Reference:- Field reference determines for each field section group
is set to hide, display, required entry, or optional entry.
Item Category Group: - Select item category group from the list
Special material types:- check the box for special material types
User Departments:- Select departments for the material types as per
business requirements.
Internal/external purchase orders:- Select the value as per business
requirements; possible entries are
 0- No external purchase orders allowed
 1 – External purchase orders allowed, but a warning issued
 2- External purchase orders allowed
Valuation
 Price Control:- Set the price control as “Standard price or moving
average price/periodic unit price.”
 Acct. Cat. Reference:- Select account category reference from the list.
The system uses to check whether the valuation class you have
entered is allowed the accounting data in a material master record is
maintained.
Click on the save icon and then select created material type and double
click on quantity/value updating.

If it is not a stock item, tick only value updating; if it is a stock item with
value tick both qty updating and value updating columns

Click on the Save icon or (Ctrl+S) to save the configured material types
data.
Successfully you configured the new material types in SAP.

How to Create Industry sectors in SAP

The following tutorial guides you on how to Create Industry sectors in SAP
MM step by step with screenshots
Transaction Code:- OMS3
Configuration steps to Create Industry sectors:-
Enter transaction Code OMS3 and press enter from the keyboard.
click on new entries to define the new industry sectors

Next overview of added entries screen update the following fields

 Industry sector:– Enter the new Industry key
 Industry Description:- Enter the description of the industry sector
 Field reference:- click the popup icon and select the appropriate field
reference from the list

After updating the fields click on the save icon to save the configured data.
You will get a message as “Data was saved”.

Maintain company codes for material management

in SAP
The following tutorial guides you on how to maintain company codes for
material management in sap step by step with screenshots
Follow the menu path (T Code: OMSY)
 IMG Menu Path :- SPRO > Logistics > General > Material Master >
Basic settings > Maintain company codes for material management
Click on the position icon and update the Company code and press enter

The next screen updates the mandatory fields – Year and period
After updating the fields, click on save icon to save the configured data.

Define SAP MRP

The following SAP MRP training tutorial guides you how to
define MRP (Material Requirement Planning) controllers in SAP
MM step by step with screen shots.
Material master for the stock material should exist in the SAP
system and no stock can be maintained without a material
master. Material Requirement Planning helps to monitor stocks
in an particularly or automatically to create procurement
proposal for purchasing and productions. So SAP MRP are
planned for each plant and every plant has its own MRP data.
Configuration Steps:-
Step 1: – Enter transaction code (t-code) “SPRO” in the
command field and press enter.(T Code:-OMD0)
Step 2: – In next screen execute project, select “SAP Reference
IMG”
Step 3: – Follow the menu path and execute SAP MRP Controllers
IMG Menu Path: – SPRO >> IMG >> Production >> Material
Requirement Planning >> Master Data >> Define MRP Controllers
Click on the “New Entries” icon to define new SAP MRP controllers
as per your business requirements.

Update the following information

> Plant: – Update your plant key in the plant field,
> MRP controller: – Enter MRP key and description
> Telephone: – Update the telephone number for contact.

After maintaining all the mandatory fields, click on save to save

the configured data.
You will get a message as “Data was saved”, successfully SAP
MRP controllers are configured.

Create Material Master Record in SAP

The following tutorial guides you on how to define material
master records (material codes) in SAP step by step with
screenshots.
Material Master is the master record of the company’s main
source of material-specific data. This information is arranged in
several pages or views such as –
 Basic Data 1
 Classification
 Sales organization
 General Plant Data / Storage
 Sales text
 Purchasing
 Quality management
 Accounting
SAP menu path :- Logistics >> Material Management
>> Material Master >> Material >> Create (General)
 MM01 – Create Material master
 MM02 – Change material
 MM03 – View material Master
Enter Transaction Code MM01 in the SAP command field and
press enter
Update the following fields
Material :- Enter the new material code you wants to create
Industry Sector: – Select industry sector from the list
Material Type:- Select the appropriate material type

Press enter and the pop-up window will be open

Select the required views and press enter to input the
organizational levels.

Basic Data 1: – Update all the required data such as material

group, unit of measure, item category
 In the Material field enter the material description
 In the basic unit of measure and material group field “enter
the unit of measure and material group“
 In the packing material data field “enter the data if the
material is returnable packing as VERP and non-returnable
packing as LEIH”

Sales Organisation levels:- Update all the required data.

Purchasing: - Update all the required information related to

purchase data
 Accounting views:- Update all the required data such as
valuation class, price control, and moving price.

After entering all the details, click on the save icon for the
material.
Message will be displayed as material code created.

Successfully we have created an SAP material master record in

SAP.

Purchasing Info Records

SAP Purchasing Training guides how to create purchasing
information records in SAP. Purchasing info records are created
for different procurement types such as standard,
subcontracting, pipeline, and consignment. It is used store
information on a vendor and a material as master data at plant
level or purch. org.
SAP Path: – SAP Easy Access > Logistics > Materials
Management > Purchasing > Master Data > Info Record >
Create
Transaction Code: – ME11 – Create
ME12 – Change
ME13 – Display
Step 1: – In the initial screen Create info records and enter the
following information.
 Enter Vendor code, Material code, purchasing org, and plant
 Enter the info category as standard (for normal procurement)
or subcontracting (for sub-contracting)

In next screen, no need to enter any information as it copies all

the data from the Vendor Master.
Step 2:– In the next screen, update the following data.
1. Enter delivery time and purchase organization defaults from
the Material Master
2. Enter the Standard Quantity
3. Enter the appropriate Tax Code
4. Rem. Shelf life is defaulted from the Material Master.
5. Enter the Net Price
Create info record: purch organization data 2

The purchase order text defaults from the Material Master data.
After updating the mandatory fields, click on the save icon to
save the data.

SAP MM – Vendor Master

1. Define vendor account groups

2. Maintain number ranges for vendor accounts
3. Assign number ranges to vendor accounts
4. Create sundry credit account
5. Tolerance group for vendors
6. Vendor payment terms
7. Create vendor master data
8. Automatic payment program configuration
9. Interest calculation configuration

Create Vendor Account Groups in SAP

The following SAP Tutorial guides you on how to create vendor account groups in
SAP FI.
Let configure the following vendor account groups in the SAP system
Group Name

A001 Domestic Vendors

A002 Import Vendors

A003 One Time Vendors

Steps to create vendor account groups:-
Refer below step by step procedure to create vendor account
groups in the SAP system.
 IMG Menu Path:- IMG > Financial accounting –> Accounts Receivable and
Accounts Payable –> Vendor Accounts –>Master data –> preparation for
creating vendor master data –> Define Account Groups with Screen Layout (Vendors)
 Transaction code:– OBD3
Step 1:- Enter Transaction code SPRO in the SAP command field and press enter

Step 2:- Select SAP Reference IMG

Step 3:– Follow IMG Menu Path and select Define Account Groups with Screen
Layout(Vendor)
Step 4:- Select New entries to create a new vendor account group

Step 5:– Update the following data

 Account Group:- Enter four digits Vendor Account group code
 Description:– Enter the name of the Vendor account group.
 Select Company code data under field status and select Account management
under a group,

Select Reconciliation account as required entry

How to Create Number Ranges for Vendor

Accounts in SAP
After the creation of vendor account groups, the next is
maintaining number range intervals for vendor accounts in SAP.
The Vendor account number range intervals can be maintained
with an internal assignment or external assignment.
 Internal assignment enables the system to generate the
vendor account automatically during the creation of vendor
accounts in SAP
 External assignment enables the user to assign the vendor
account number during the creation of accounts.
You can Create Number Ranges for Vendor Accounts by using
the following navigation method:
 IMG Menu Path:- IMG > Financial accounting –> Accounts
Receivable and Accounts Payable –> Vendor Accounts –>
Master data –> Preparation for creating vendor master data –
> Create number ranges for a vendor account
 Transaction Code:- XKN1
Step 1:- Enter TCode SPRO in the command field and press
enter
Step 2:– Select SAP Reference IMG

Step 3:– Follow the IMG Menu path to Create Number Ranges
for Vendor Account

Step 4:- Select Change interval for creating number ranges for
Vendor accounts
Step 5:- Select “Insert Interval”

Step 6:- Update the following information and Enter

1. NO:- Enter NO that you want to identify the vendor accounts
number range
2. From Number: - Enter from number of vendor number
range
3. To number:- Enter to number of vendor number range
4 .Ext:- Select EXT box if you want external numbering
Step 7:- Select Save and ignore the warning message.

Press enter to continue and

save the configured vendor number range intervals in the SAP
System.

Step 6:- Select Save Icon to save the configured settings

Similarly create Vendor account groups for A002, A003 in SAP

Thus Vendor account groups are successfully configured in the SAP system.
How to Assign Number Ranges to Vendor Account
Groups in SAP
After defining vendor account groups and number range
intervals for vendor accounts in SAP, the next configuration step
is the assignment of number ranges to vendor account groups in
the SAP system.
It is a mandatory configuration step when you are creating the
customer accounts as per account groups, and the system
generates a number for vendor account as per this number range
intervals.
You Assign Number Ranges to Vendor Account Groups in SAP by
using the following navigation method.
 IMG Menu path :- Implementation Guide for R/3 Customizing (IMG) ->
Financial Accounting -> Accounts Receivable and Accounts Payable ->
Vendor Accounts -> Master Data -> Assign Number Ranges to Vendor
Account Groups
 Transaction Code:– OBAS
In this activity, we will assign “88” number ranges to the “AD01”
vendor account group in SAP.
Configuration Steps
Step 1:- Enter transaction Code SPRO in the SAP command field
and press enter.

Step 2:- Select SAP Reference IMG

Step 3:– Follow the IMG menu path

Step 4:– Select Position

Now update the vendor account group that you want to assign
number ranges and press enter.

Step 5:– Update Number range key in the number range field
Step 6:– Click on the save icon to save the configured setting

Thus Number range intervals are successfully assigned to vendor

account groups in the SAP system.

Create Sundry Creditors in SAP

The following SAP Tutorial guides you on how to Create Sundry Creditors
GL Account in SAP step by step. You can sundry creditors through the
creation of a General ledger account and assign the vendor to a
reconciliation account for the account type.
 Menu Path:- IMG –> Financial accounting –> G/L Accounting –> GL
Accounts –> Master Data–> Preparations –> GL Account Creation and
Processing –> Edit G/L Account
 Transaction Code:- FS00
Step 1:- Enter Transaction Code FS00 in the SAP command field and
press enter

Step 2:- In the Edit G/L Account Centrally screen, Update the following
details
1. Enter G/L Account
2. Update Company Code
3. Click on Create Icon
Step 3:- In the Next screen, update the following data
1. Account Group:- Update Account Group of GL Account
2. Select P&L Statement account or Balance sheet account
3. Short text:- Enter the short text of G/L
4. G/L long text:- Enter a detailed description of the GL account
Step 4:- Click on Control data and update the following data.
1. Account Currency: – Update Account currency of GL Account
2. Reconciliation Account for account type: Select reconciliation
account type ( we are creating GL Account for Sundry Creditors, so we
selected vendors )
3.Account Management in company code: Select Appropriate Account
Management i.e., open item management or Line item display
4. Sort Key: Update sort key
Step 5:- Click on Create/ Bank /Interest and enter the following data
Enter the Reconciliation accounts field status group and enter
Step 6:– Click on the Save icon to save the configured GL Account

Sundry Creditors GL Account is successfully created in SAP.

Define tolerance group for vendors /Customers

Importance of tolerance group: – The tolerance group is very
important to define in the SAP system to facilitate dealing with
the differences in payment
SAP R/3 IMG Menu Path: – IMG > Financial accounting >
Accounts receivable and accounts payable > Business
transactions > Outgoing payments > Manual outgoing payments
> Define Tolerances (Vendors)
IMG > Financial accounting > Accounts receivable and accounts
payable > Business transactions > incoming payments > Manual
incoming payments > Define Tolerances (Customer)
Transaction Code: – OBA3
Enter transaction code OBA3 in the SAP command field and
press enter

Click on “New Entries” to define the tolerance groups for

customers and vendors.

Update following data

1. Company code: – Enter your company code
2. Tolerance group: – Keep blank tolerance group field and
update the description of tolerance
3. Permitted Payment differences: – Enter amount and
percent for gain and loss i.e 100 INR or 5% whichever is
lower.
Click on the save icon to save the configured data. You have
successfully maintained a tolerance group for vendors and
customers.

Maintain terms of payment

The following tutorial guides you on how to maintain terms of
payment in SAP. We are creating payment term key CP03 which
is applicable for both customers and vendors.
Terms of Payment are used for vendor and customer invoice
payments with conditions of cash discount allowed within a
period of payment, the due date for payment, baseline date, etc.
Payment terms: If the payment is made within 14 days – 5%
discount, or within 20 days – 2% discount, net due 30 days.
 SAP IMG Path: – SPRO >SAP Reference IMG (F5) > Financial
accounting > Accounts receivable and accounts payable >
Business transactions > Incoming invoices / Credit memos
>> Maintain terms of payment
 Transaction code: – OBB8
Step 1: – You can get the payment term configuration screen by
IMG path or by entering t-code OBB8
Click on “New entries” to create new payment terms
Step 2: – In the new entries screen, enter the following fields
1. Payment terms: Enter four digits payment term key.
2. Sales text: Enter a short description of the payment term key
and the text limit is 30 characters.
3. Own explanation: This field is used to give a detailed
explanation of the payment term key. It will be override the
explanation that is automatically generated by the system.
4. Customer: Select this option if the payment term is to be
used for Customer accounts (accounts receivable).
5. Vendor: Select this option if the payment term is to be used
for Vendor accounts (accounts payable).
6. Block key: If Select the appropriate block key to block
certain activities like payment block, payment clearing, etc.
7. Select the appropriate baseline date calculation option from
the list.
8. Percentage: Enter the discount percentage rate.
9. No of Days: Enter the no of days from the baseline date for
which the discount percentage rate is valid.
10. Fixed-rate: If you don’t want to use the baseline date,
enter the days of the month that the discount ends.
11. Explanation: – Detailed explanation automatically
generated by the system
 S
elect the save button to save the configured data. Successfully
we have maintained terms of payment for vendors and
customers.

What is Payment Terms in SAP

Payment terms (Terms of Payment) are the conditions agreed
with business partners (Customers and Suppliers) for the invoice
payments. Terms of Payment can have the following
specifications:
 Due date
 Cash discount offered within a certain period of time
 Baseline date as per document date or posting date or entry
date.
Scenario: The received or given cash discounts are posted
automatically in the SAP Hana system, for this you need to define
account determination for automatic postings of cash discounts.

How to Define Terms of Payment in SAP Hana

Payment Term: AD10 Condition
5% Cash Discount with 7 Days
 2% Cash Discount within 14 Days
No Discount After 14 Days, Full Amount
to Paid
Baseline Date – Posting date
Standard SAP Hana system delivers with several terms of
payment, each payment terms can have a different day limits.
You can create new Payment terms as per the requirements of
client.
Refer below step by step procedure on how to create a new
terms of payment for customer and vendor invoice payments.
Step 1: Execute the transaction code “OBB8″ or follow the IMG
path.

Step 2: On change view “Terms of Payment” overview screen,

click on new entries

Step 3: On new new of Payment Terms creation screen, update

the following details
 Payment terms: Enter a new key that defines as payment
terms in SAP S4 Hana system
 Own Explanation: Provide the descriptive text for the
payment terms. You can provide your own explanation as per
requirements
 Account Type: Select the account type as customer or
vendor. If you want to use this payment term for both
customers and suppliers, choose the both options.
 Customer:If this payment term is applicable for only
Accounts receivable documents, select customers
  If the payment term is applicable for Payable document
select only Vendor.
 Default for Baseline date: It refers to the date from which
date the credit/ debit line to be calculated. You can choose
one of the option as per the requirement
 No Default: You need to enter the baseline date manually
during the document entry
 Posting Date: The system automatically pick up the
posting date.
 Document Date: The system automatically pick up the date
based on the document date
 Entry Date: Entry date is updated for the baseline date
 Payment Block/ Payment Method Default:
 Block Key
 Payment Method
 Payment Terms: This is the important configuration where
you maintain the cash discount percentage allowed within no
of days and due date.
 Scenario: You can use this Payment Terms for both customers
and supplies as per requirements. Payment terms are maintained
at client level, so all the company codes can use the payment
terms.

Project Work – Work Space

5% Cash Discount with 14 Days, 30
AD10 Days Due Date – For Customer Only
10% Cash Discount within 7 days, 5%
Cash Discount within 10 days, 45 Days
AD20 Due Date – For Vendors Only
Create Vendor code in SAP
The following tutorial guides you how to create vendor code in
SAP step by step with screen shots.
SAP Menu Path : – SAP Menu >> Logistics >> Material
Management >> Purchasing >> Master Data >> Vendor >>
Central
Transaction code : – XK01
Enter transaction code XK01 in the sap command field and press
enter

Enter the following data

1. Company code :- Enter company code
2. Purchasing Organization :- Enter Purchasing Organization
3. Account group : – Enter account group

Press enter to input the details of the vendor

 Title: – Select Company, Dr., Mr., Ms.
 Name: – Enter the name of the vendor
 Search: – enter the search term
 Street Address: – Enter the street #, postal code city,
Country, Region, City
 Language: – Enter the language
Enter the VAT Reg No of the vendor

Enter the bank details of the vendor

Account data:– Enter the appropriate Reconciliation accounts,

the sort key
Payment transactions:-
1. Enter the appropriate payment terms
2. Select the Chk double inv.
3. Enter the appropriate payment methods such as cheque
payment, Bank transfer, Online transfer

Purchasing Organisation Data:-

1. Enter the order currency, terms of payment, and incoterms.
2, Enter the appropriate schema group, vendor
3. Select GR-based Inv. Verification if invoice verification is done
after GR
4. Select Srv. Based inv. verf if invoice verification after service
entry
5. Enter the partners for the appropriate partner functions
Press the save icon to save the vendor master and vendor code in
SAP is automatically generated. The vendor code is generated for
the respective purchasing organization and company code.

Automatic Payment Program (APP):- This training tutorial provides the

Configuration steps involved in the Automatic Outgoing Payment Program
in SAP FI and handles a few unique scenarios. Automatic Payment
Program payments are used to both Vendor as well as the Customer. All
company codes from different countries cannot use the same APP.
The Automatic Payment Program in SAP is used to identify the due and
overdue items and process a huge list of vendor invoices and customer
invoices to make payments in a single time.

APP helps in fetching all the due and overdue invoices for a wide range of
Vendors and Customers and makes the payment possible before the net
due date, which in turn earns a good reputation to the organization
Automatic Payment Program Configuration Steps:-
The steps involved in the Configuration of Automatic Outgoing Payment-
Program are
1. All Company Codes
2. Paying Company Codes
3. Payment methods in-country
4. Payment methods in Company code
5. Bank Determination
6. House Bank
IMG Menu Path :- SPRO -> IMG -> Financial Accounting -> Accounts
Receivables and Accounts Payable -> Business Transactions ->Outgoing
Payments -> Automatic Outgoing Payments -> Payment Method/Bank
Selection for Payment Program
TCODE: FBZP

Step 1 :- All Company Codes :-

select New Entries

Enter company code in the ‘company code’ field and in the ‘Paying
company code’ field, check the two check pyt meth suppl. And Max. cash
discounts box and click on the save icon.

Step 2. Paying Company Codes:-

Select Paying Company Codes and click on ‘New Entries
1. Enter paying company code
2. Maintain the incoming or outgoing payments
3. No exchange rate postings are generated by APP when you check this
box
4. The invoices and the credit memos with the same reference can be
settled with one payment if this option is selected
5. Bill of Exchange payment request, check/bill of exchange procedure can
be used when it is checked.

Setting for the Bill of Exchange to be maintained when it is checked.

Step 3:- Payment methods in-country
Click position and select the Country ‘IN’ as the Company code currency is
INR, and the list of payment methods available/permitted for the Country
‘IN’ will be displayed. We can create a new method if required.
Click on ‘New Entries’
1. Enter country’s name, select paymt method, and update the description
2. Select paymt method for incoming or outgoing payments
3. select the appropriate option in payment method classification and select
the check box for ‘Allowed for personal payments’
Step 4:- Payment methods in Company code:-
Select ‘Paymt Methods in Company Code’ button, click on ‘New Entries’
1. Enter company code and select payment method C
2. Select ‘No optimization’ for Bank selection control
3. Update the minimum amount and maximum amount for Amount limits
4. Update F110_PRENUM_CHCK’. In the form data type.’
5. Enter the details ‘Drawer on the form’ field and click on save
Step 5:- Bank Determination
1. Select the Paying Company code AD06 and Click on Bank Accounts
Button
2.Select ranking order and give the payment method ranking order for the
company code
3. Click on New Entries Button and Enter the below values to create Bank
Accounts
Step 6. House Bank
House Bank provides the information about the Bank through which the
Company makes paymts to Vendors/Customers.
Click on the New Entries button and update the house bank key and house
bank data information,
Now Select the House Bank, click on new entries, and enter the Account ID
and description, Bank Account Number.

Interest calculation configuration can be done by two methods

i.e Interest calculation on account balances and Interest
calculation on areas.
Interest calculation configuration steps
Step1: – Define the interest calculation procedure
Step2: – Prepare account balance interest calculation
Step3: – Define reference interest rates
Step4: – Define Time based terms
Step5: – Enter interest values
Step6: – CreateG/L Accounts
Step 7: – Prepare G/L account balances interest calculation
configuration procedure
The following steps describe the calculation of interest.
Step 1: – Define the interest calculation procedure
 SAP IMG Path: – SPRO > Financial Accounting > Accounts
Receivable & Accounts Payable >Business Transactions >
Interest Calculation > Interest Calculation Global Settings
> Define Interest Calculation Types
 Transaction Code: – OB46
Click on “new entries” and update the following entries

1. Enter your interest indicator in the Int ID field

2. Enter a description of your interest indicator
3. Select interest calculation type .i.e Balance interest
calculation type or item interest calculation type
Click on the save icon to save the configured data.
Step 2: – Prepare account balance interest calculation
 IMG Path: – SPRO > Financial Accounting > Accounts
Receivable & Accounts Payable >Business Transactions >
Interest Calculation > Interest Calculation Global Settings >
Prepare Account Balance Interest Calculation
 Transaction code: – OBAA
Click on new entries and update the following entries

 Enter your interest calculation indicator

 Update the period determination i.e interest calculation
frequency and settlement day
 Select appropriate calendar type (B- 30/360, G – 28,…,31/365)
 Select output control for printing form and terms of
payment for posting

Step 3: – Define reference interest rates

 Path: SPRO > Financial Accounting > Accounts Receivable &
Accounts Payable >Business Transactions > Interest
Calculation > Define Reference Interest Rates
Transaction Code: – OBAC
Click on new entries and maintain the following entries

Enter your reference interest rate key, long text, Description,

date from, valid currency of ref.int. rate.
Click on the save icon to save the data.
Step 4: – Define Time based terms
 Path: SPRO > Financial Accounting > Accounts Receivable &
Accounts Payable >Business Transactions > Interest
Calculation > Interest Calculation > Define Time-Based
Terms.
Transaction Code: – OB81
Choose new entries and update the following entries

 Enter your interest calculation indicator key in the

int.cal.indicator field
 Update the fields currency key, Eff. from, sequential number
 Select the transaction type from the list
 Enter the Reference interest rate (Check step 3)
Choose the save button to save the data.
Step 5: – Enter interest values
SPRO > SAP Reference IMG (F5) > Financial Accounting >
Accounts Receivable & Accounts Payable
>Business Transactions > Interest Calculation > Interest
Calculation > Enter Interest Values.
Transaction Code: – OB83

 Enter the reference interest rate key in the reference field

 Update the valid from and interest rate percentage

Click on the save icon to save the data.

Step 6: – Create G/L Accounts
Path: – IMG > Financial accounting > G/L Accounting > G/L
Accounts > Master Data–> Preparations > GL Account Creation
and Processing > Edit G/L Account
Transaction Code: Fs00
Create G/L accounts for Term loans, Interest paid, Interest
received, loan
Step 7: – Prepare G/L account balances interest calculation
procedure
SAP IMG Path: –
SPRO > Financial Accounting > General Ledger Accounting >
Business Transactions > Bank Account Interest Calculation >
Interest Posting > Prepare G/L Account Balance
Interest Calculation
Transaction Code: – OBV2
Click on the Accounts button and enter the chart of accounts
key and press enter to continue

Update the account symbols in the Acct symbol field, G/L

Accounts as shown below. After updating the required data click
on posting specs
Click on the posting specs button, then select the edit option and
then click on create button and update the following information

Click on the save icon to save the configured data. Successfully

you have configured interest calculation in SAP.

SAP MM – Procurement

1. Procurement Process Cycle Overview

2. Set Tolerance Limits for Price Variance
3. Maintain source list
4. Create Purchase Requisition (PR)
5. Create Request for Quotation (RFQ)
6. Maintain Quotations
7. Create Purchase Order for stock materials
Procurement Process (Procure to Pay process): – Every
organisation that operates a business has to purchase materials
such as raw materials, services etc. The procurement
process has become part of today’s efficient business operation.
The Company can procure those materials as in-house
production or external procurement.

Procurement Process Cycle

Procure to pay Process consists the following processes.
1. Material requirement planning(MRP)
2. Vendor Selection
3. Request for Quotation(RFQ)
4. Purchase Requisition(PR)
5. Purchase Order(PO)
6. Goods Receipt
7. Goods Receipt Invoice
8. Invoice Verification
9. Payment to Vendors
1. Material requirement planning (MRP) :-
Materials requirements planning (MRP) refers to the
technique of using a projected manufacturing production
schedule to figure out what supplied materials you will need, and
when you will need them. Materials requirements planning
(MRP) type controls the MRP procedure, pricing, material
valuation. Material requirement planning carried out by MRP
controller in production department.
2. Vendor selection:-
Vendor selection is one of the important step in procurement
process. With the help of obtained quotations from sources and
by comparing them, vendors are selected
3. Request for Quotation (ME 41)
Requesting potential vendors to submit a quotation for a
material or services. Quotation contains the vendor’s terms and
conditions and constitutes the basis for vendor selection

4. Purchase Requisition:- (ME51N)

A purchase requisition is an internal request to purchasing. You
ask the buyer to provide a certain quantity of a material or
service on a certain date.A purchase requisition can be created
automatically by Material Requirement Planning (MRP) or
manually created. PR converts to RFQ, PO or outline
agreement. Purchase Requisition forms include the following
information
 Material Qty, description of goods & service and total value.
 Department Account number.
 Signature by an Authorized Department.
 Attached Quote from the vendor.
 Delivery instructions.
 Attach Quote from the suggested vendor.
5. Purchase Order(ME21N)
Purchase Order (PO) is a formal request to a vendor to supply
certain materials or services under the certain conditions.
A Purchase Order (PO) can be created with reference, or without
reference to a purchase requisition, a request for quotation, or
another purchase order.
POs usually specify terms of payment, delivery date,
specifications, material qty, price and reference or part numbers.
Types of purchase orders in procurement process:- Standard PO,
Planned PO, Contract PO.
6. Goods Receipt:-
Goods Receipts (GR) is created to reflect the Goods Receipts for
the specified material ordered from a vendor using Purchase
Order process. After receiving the goods the company can record
the following information, this information can be used for
accounting, stock check and rotation, to return any goods if
there is a problem

 What goods were delivered,

 Which vendor delivered the goods.
 Who, how, when goods were delivered and received the
goods.
7. Goods Receipt Invoice (GRIN):- (MIGO)
Goods receipt Invoice process is one of the important process
in procurement process cycle. It is matching the goods that a
company receives with the company PO (purchase order). It
involves checking the goods are not damaged and fit for use,
verifying the price, quantity, payment terms. Goods movement
are entered in to the system with reference of Purchase order
and goods receipt material documents are posted, automatically
appropriate general ledgers are posted and stock accounts are
updated.
8. Invoice Verification:-(MIRO)
After GRIN process, next process of procurement to pay is
invoice verification. It plays an important role in procurement
process and Materials Management Module which performs the
following tasks
 A Vendor Invoice can be created with reference to a Purchase
Order, a Goods Receipt, a Delivery Note..
 Invoice is verified in-terms of prices, quantity,
 Necessary approvals by project managers
After verifying all the data, the invoice is posted and the data is
saved in the system. The system updates the invoice data in
Materials Management and Financial Accounting.

9. Payment to Vendors:-(F-53)

The last step in procurement process cycle is payment to vendors

and it is also known procure to pay process. Vendors are get
paid as per payment terms. In this fast technology world,
companies can pay through many methods to vendors. For
example – through Net banking, check payment etc

How to Maintain Tolerance Limits for

Price Variance in SAP S4Hana
When you are posting a purchase order document, the system
checks the price of PO items and the valuation price stored in the
material master record. When price variance exceeds a tolerance
limit, the system gives a warning message. So it is a mandatory
configuration to maintain tolerance limits for price variance in
Purchase Order items.
In this activity, we are going to maintain the tolerance limits for
price variance in SAP.
You can set tolerance limits for price variance by using the
following navigation method.
 Transaction code: SPRO(OMR6)
 SAP R/3 IMG Path: – SPRO -> IMG -> Materials Management
-> Purchasing -> Purchase Order -> Set Tolerance Limits for
Price Variance
Refer to the below step-by-step procedure to define tolerance
limits for price variance purchasing.
Step 1: Follow the IMG menu path and click on Set Tolerance
Limits for Price Variance
Step 2: On the change view “tolerance limits” overview screen,
Select “new entries”
 Standard SAP provides tolerance keys PE (price variance
purchasing and SE (Maximum cash disc. the deduction,
(purchasing))
 Select tolerance key: PE – Prince Variance: Purchasing
 Enter your company code: AD06 – Adarsh Technologies
 Update tolerance limit percentage – Update Lower Limit
Percentage and Upper Limit Percentage

After updating the data, choose the save button to save the data
in the SAP system.
Successfully we have maintained tolerance limits for price
variance purchasing in SAP.

Maintain source list

The following step guides how to maintain the source list in SAP.
Step 1: – Access the transaction using one of the following
navigation options.
SAP R/3 Path: – SAP Easy Access > Logistics > Materials
Management > Purchasing > Master Data > Source List >
Maintain
Transaction Code: – ME01 – Maintain
ME03 – Display
ME04 – Changes
Step 2: – On the “Maintain source list: initial screen” enter the
following details
 Enter the material number that you to maintain the source
list.
 Enter respective plant code.

Step 3: – On the maintain source list: overview screen” enter the

following details
1. Enter the valid period until which you can procure this
material from this vendor.
2. Enter vendor code in the vendor field.
3. Enter respective purchasing organization.
4. Select the fixed source field if the vendor is fixed.
5. Select block source of supply field if the vendor is blocked for
procurement for this material.
6. Enter 1 in to be included in the MRP run.
 After updating all the mandatory fields, choose the save icon to
save the entries. The message will be displayed as the source list
changes.

Purchase requisition (PR) is an internal request to

purchasing. You can ask the buyer to provide a certain quantity
of a material or service on a certain date. A purchase requisition
can be created automatically by Material Requirement Planning
(MRP) or manually created.
PR is created to indicate purchase department to procure
materials or services with details like how much quantity is
required, what type of materials or services to be purchased, and
when required.
How to Create Purchase requisition
(PR) in SAP
A Purchase requisition can be created in SAP using transaction
code “ME51N” or by navigation menu path.
 SAP R/3 Menu Path: – SAP menu > Logistics > Materials
Management > Purchasing > Purchase Requisition > Create
 Transaction Code: – ME51N
Refer below for step by step procedure to create new
purchase requisition in SAP system using the transaction
code ME51N.
Step 1 : Enter transaction code “ME51N” in SAP command
field.
Step 2: – On the Create Purchase Requisition screen, enter the
following entries
1. Purchase Requisition Type: Select document type for PR
2. Material: Enter material code in the material field and short
text will automatically updated based on material text.
3. Quantity: Enter quantity of material
4. Deliver Date: Update delivery date
5. Plant: Enter respective plant code
6. Storage Location: Enter corresponding storage location
7. Requisition: Enter PR creator user id
Step 3: – Update purchase requisition text such as Department
Account number, Signature by an Authorized
Department, Delivery instructions, terms and conditions,
references etc.

Step 4: After updating all the mandatory fields in PR creation

screen, click on save button to save the purchase requisition in
SAP system.
Successfully we have created purchase requisition for stock
material in SAP System.
Important Transaction Code to Remember
 ME51N – Create Purchase Requisition
 ME52N – Change Purchase Requisition
 ME53N – Display Purchase Requisition.

How to Create Request for Quotation

in SAP
Request for Quotation (RFQ) is used to inquire in the market
to obtain quotations from prospective vendors. RFQ can be
created with reference to Purchase Requisition, Outline
Agreement (Contract), and another RFQ.
You can create RFQ in SAP by using the following navigation menu
method
 SAP R/3 Path: – Logistics > Material Management
>Purchasing >RFQ/quotation >Request for Quotation >
Create
 Transaction Code: – ME41
Step 1: Execute T-Code “ME41” in SAP command field.
Step 2: – On the Create RFQ: Initial Screen, enter the following
data.
 Enter the RFQ type as “AN”
 Enter the Quotation Deadline
 Enter Purch. Organization and Purchasing Group
 Enter plant and storage location

Step 2: – Enter the Collective No to track of all RFQs related to

particular instances and reference data.
Step 3: – On the Create RFQ: Item overview screen, enter the
following data.
1. Enter the appropriate item category
2. Enter the Material No
3. Enter the RFQ Quantity
4. Enter the Deliv. Date
5. Enter the Plant code
6. Enter the Submission date

Step 4: – Click on the vendor address button on the toolbar,

on Create RFQ: Vendor Address screen
Enter vendor code and press enter and the vendor details will be
displayed automatically.
Step 5: – Choose save button to save the Request for Quotation
(RFQ). The vendor Address screen allows to creation same RFQ
data for a new vendor.

Similarly create RFQ for other vendors in the same screen and
RFQ Nos will be generated.

Maintain Quotation in SAP

The following step guides you to maintain quotations in SAP step
by step. The vendor communicates the price for material and the
Request for Quotation (RFQ) needs to be updated in SAP.
Step 1: – Access the transaction using one of the following
navigation options
 SAP R/3 path: – Logistics > Materials Management >
Purchasing> RFQ/quotation > Quotation > Maintain
 Transaction Code: -ME47
Step 2: – On the Maintain Quotation: Initial Screen, enter
the RFQ and press enter to continue
Step 3: – Select line item to enter the details quantity and date,
update vendor details

After updating all the mandatory fields, choose save button to

save the quotation.

Successfully quotations are maintained in SAP.

Create Purchase Order for Stock
Material in SAP
In this scenario, we are going to create purchase order for stock
materials in the SAP system.
Refer below step by step procedure to create PO for stock
material in SAP.
SAP R/3 Menu Path: – SAP Menu > Logistics > Materials
Management > Purchasing > Purchase Order >
Create>Vendor/Supplying Plant Known
Important Transaction Codes
 ME21N – Create Purchase Order
 ME22N – Change Purchase Order
 ME23N – Display Purchase Order
Step 1: Enter transaction code “ME21N” in the SAP command
field and execute.
Step 2: On create purchase order screen, click on “other
purchase order” option if you want create purchase order with
reference to the purchase requisition (PR),
> Select variant and select purchase requisition option,
> Enter the PR number and select execute button
> Select PR # and select adopt button, then the system will
automatically adopt all the data from the purchase requisition

Enter vendor code in the vendor field

 Enter purchase organization

 Enter new price of the material and currency
 Update storage location
Select account assignment tab under item option and update the
following data
 Enter appropriate General Ledger Account
 Enter business area for which Purchase order for stock
material is creating
 Enter WBS element

Select the invoice tab and update tax code

Select the delivery /invoice tab and update payment terms and
incoterms

After all the mandatory fields, press on save button to save the
PO data.
SAP MM – Inventory Management
1. Create Movement Types
2. Goods Receipt Invoice (GRIN)
3. Post goods issue
4. Stock transfer and Transfer posting

Create Movement types

The following steps guide you to create new movement types in
SAP MM step by step.
Step 1: – Access the transaction using one of the following
navigation options.
SAP IMG Path: -SPRO > Material management > Inventory
Management and Physical Inventory > Movement Types
Transaction Code: – OMJJ
Step 2: – The system displays a field selection dialogue box,
select the fields, and press enter

Step 3: – On the “Determine: work area: entry” enter the

following information
 From: Enter the movement type key that you want to copy
from
 To: Enter the new movement type key that you want to
create.

Step 4: – On “Change view movement type: overview screen,

select movement type to copy and click on a copy as an icon

Step 5: – Enter a new movement type (note new movement type

should start with X, Y, Z, or 9)
A pop-up window will be open and select copy all options and
save.

Post-Goods Receipt invoice (GRIN) in

SAP
The following tutorial guides how to post goods receipt invoice
(GRIN) in SAP step by step.
Checklist for GRIN:
 The PO# on the vendor invoice should match with
organization’s PO#
 The vendor address and PO address should match.
 Material quantity should be available in the organization’s
purchase order (PO).
 Price should be matched between invoice and PO
 Material description of invoice and PO should be a match
 The vendor name should match exactly between invoice and
Purchase order(PO)
 Approvals from users, supervisors, managers, etc.
 Supporting documents like bill of landing, and transportation.
 Check tax in PO and invoice, if mismatches consult concerned
user.

Step 1: Access the transaction by using one of the following

navigation methods
SAP Path: SAP Menu > Logistics > Materials Management >
Inventory Management > Goods Movement
Transaction Code: MIGO
On the Goods receipt order screen, enter the PO# and press
enter

Step 2: Enter the following details

1. On Delivery, note enter the invoice reference #
2. Check vendor name
3. Bill of Lading-Non-bounded(default)
4. Header text – Enter project reference
5. Tick on collective slip
6. Enter the quantity for Grin
7. Tick on a particular line item that you are doing GRIN
8. Attach the supporting documents like approvals from users,
PO copy, Invoice etc
9. After updating all the mandatory information, you can hold,
check or post the document.
10. Click on execute button to save the document.
Click on the Save button to post the document and GRIN # is
generated.
How to reverse Grin
Enter T-code MIGO and press enter
Select “Cancellation” and update GRIN# to reverse the GRIN

 Select the line items (tick ok)

 Click on the check to view the errors if any
 Click on the post to reverse the Grin
Successfully GRIN is posted in SAP by using transaction code
MIGO.

Post Goods Issue (PGI) in SAP

The following training tutorials explain briefly about good issue

and how to post goods issues in SAP step by step.
A goods issue is a movement of goods which the materials are
issued or drawn to customers is posted. In the SAP system when
the store persons do transaction of goods issue, the systems
generates individual documents. It is a movement of material
goods where the material is issued or withdrawn and the
customer is posted.
Important points to be noted.
1. It is mandatory to check whether any reference document or
data existed before posting goods issue.
2. Update the document reference no (reservation/order). It
helps the goods issuing department to check the request.
3. You can post goods issues from the reference of the
document.
4. After the materials are withdrawn, the reference document is
updated and the reversed material quantity is updated
automatically.
5. Goods issues are posted only for materials and not for
services.
6. It is mandatory to know in which financial account is credited
and debited when the goods are issued.
Moment types in SAP

How to post goods issue in SAP

1. Goods issue without reference document
 Transaction code: – MB1A
 Path: – SAP Menu >> Logistics >> Material management
>> Inventory management >> Goods movement >> Goods
issue
On the initial screen, update the following fields
1. By default document date and posting date will be updated
posting date
2. Update the movement type from the options (e.g. 201)
3. Enter the plant code
4. Update the reason for the movement key from the possible
entries.
5. After updating all the required fields, press enter to continue.
In the next screen, update the details of a cost center, material
no, and its quantity. Click on the save button to save the
configured data.

Stock transfer
The stock transfer is nothing but transferring of materials from
one plant to another storage location, from plant to plant, plant
of company code to plant of another company code. When the
stock transfer happens between plants, then the quantity
changes in both plants.

Transfer posting
Transfer posting is a removing of materials from one plant and
moving to another plant or location. Examples of transfer
postings are as follows.
1. Postings from material to material, plant to plant
2. Transfer posting from valuation type to valuation type
 3. Release the quality inspection stock that is moving the stock
to unrestricted use in SAP

Difference between stock transfer and transfer posting

The difference between stock transfer and transfer posting are
as follows
Stock Transfer Transfer Posting
1. Stock transfer is a physical
movement of goods and it is a 1. Physical movement of goods are
mandatory options in transfer posting
2. Stock transfer consists of goods
issued from the shipping point & a 2. Special Stock into Company Stock &
goods receipt in the receiving transfer of stock from one plant to
point. another plant
3. Movements types are 641- 3. Movement types are 301 – Plant to
shipping, and 643 – Cross plant, 309 – Material to material, 311 –
company. Storage location to storage location.
4. Transaction code – ME27,
ME21 4. Transaction code – MB1B