Sap MM Complete Training Material

CONTENTS
MM - Overview MM - Purchasing MM - Purchase Order MM - Inventory Management MM - Invoice Verification
TATA CONSULTANCY SERVIES
Overview of MATERIALS MANAGEMENT
Target Group
Purchase department Stores department
Course Objectives
On conclusion of this course, you should be able to:
Visualize the MM functionalities Maintain MM related views of Material
Master and vendor master

Create other master records or changing
the existing master records
Introduction
Contents
MM overview Organizational Structure Material master Vendor master Other master records
Exercises Solutions
MM - Overview
Major components of MM- Module

materials planning and control purchasing inventory management invoice verification.
Integration with other Modules
Procurement Logistics Planning Sales Logistics Production
Finance / Asset Management
Integrated Business Process Overview
FI
G/L Inventory / GRIR G/L GRIR/ Expense AP Invoice Vendor Payment
SD
Requirement for Goods / Services Purchase Order Goods Receipt Invoice Verification
Financial and Managerial Reporting and Analysis
Organizational Elements - Client
Client Characteristics
Highest Hierarchical Level in SAP(e.g. a corporation) Can be Used to Differentiate between a Development, Quality Assurance, and Production System within R/3 All Areas of an Organization that are to be Integrated into the SAP R/3 Production System should be Included Under one Client
Organizational Elements - MM
Purchasing Organization
Responsible for Procurement for One or More Plants Responsible for Negotiating Pricing and Delivery Terms with Vendors Purchasing Organization is Assigned to A Company where Inventory is Legally Tracked or Costs are Legally Incurred.
Plant
Usually a Manufacturing Facility, Warehouse, or a Location that Stocks , Manages, and Valuates Inventory May be a Physical Site with Multiple Manufacturing/Production Lines May be Multiple Manufacturing/Production Lines at One Physical Site Can be a Physical Location(cost centers may or may not be associated to a plant i.e. administrative Vs. manufacturing cost centers) SD Availability Checking is Normally Done at the Plant Level
Plant (Cont.)
Links to Production (PP), Materials Management (MM), and Sales and Distribution (SD) A Plant is Assigned to A Company Purchasing Organization are Assigned to Plants
Storage Location
A Location within a Plant where Inventory is Stored
Master data in MM
Material Master Vendor Master Service Master Purchasing info record Source List Vendor Excise Details Material and Chapter ID combination Excise Tax rate
Material master in SAP.

The material master contains information on all the materials that a company procures, produces, stores, and sells. The material master is used by all components in the SAP Logistics System Different departments in a company work with the same material, so data in a material master record is subdivided in the form of user departments. Material description and Base unit of measure appear in all user departments.
Use of material master in SAP logistics system functions.

In Purchasing for ordering materials. In Inventory Management for goods movement postings and physical inventory In Invoice Verification for posting invoices In FI for maintaining value of material. In Production Planning and Control for material requirements planning, scheduling, and work scheduling
User departments using same material master
Material Numbers
Definition

Number uniquely identifying a material master record, and thus a material.
Use

For every material that your company uses, you must create a material master record in the material master. This record is uniquely identified by a material number.
Internal and External number assignment.
Industry sector
It determines type of industry .

Eg. mechanical industry,chemical industry,pharmaceutical etc.
The industry sector you specify determines

Which screens appear and in what sequence Which industry-specific fields appear on the individual screens
Material Types
Materials with the same basic attributes are grouped together and assigned to a material type. When creating a material master record, you must assign the material to a material type. The material type determines certain attributes of the material and has important control functions. Some of the standard material types are

ROH: Raw materials which are bought from outside and goes into production. Halb :Semi-finished material which are bought externally and manufactured inside. They can be sold individually as well. FERT:Finished materials are final products of the company
Views relevant to MM
Basic data1 Purchasing Purchase order text Storage 1 Storage 2
CREATING MATERIAL MASTER IN SAP

From logistics screen click

Logistics p Materials Management p material master, to bring up material master screen. Click material pcreate(general) pimmediately
Organizational levels.

Plant Storage location
Material master
In Purchasing screen you can enter

Purchasing group purchasing value key Set indicator for automatic PO
Material master
In purchase order text screen,

you can enter the text , which will be defaulted in PO every time when you create a PO for this material.
In Storage 1 you can enter,

Storage bin Unit of issue Shelf life data Batch management
Concept of vendor master in SAP.

vendor master record is maintained by both Accounting and Purchasing.
A vendor can be a one time vendor or regular vendor A vendor master record contains the vendors name and address, as well as data such as:
y y y
the currency used for ordering from the vendor terms of payment names of important contact persons (sales staff)
Organization of vendor master records

A vendor master record is subdivided into three different data areas:

General Data Company code data Purchasing organization data
Creating vendor master record.

Menu Path

Logistics -> Material management -> purchasing ->master data vendor ->purchasing ->create
In the initial screen you can enter,

Vendor number (For External number assignment ) Vendor account group Purchasing organization
Creating vendor master record.

In general data you can maintain,

Address Control Payment transactions
In Purchasing organization data you can maintain,

Purchasing Data Partner functions
Changing vendor master record

You cannot change Vendor account group (One time vendor cannot be converted in to a regular vendor) Blocking a vendor Flag for deletion Changing other options

Automatic PO Vendor schema group Payment terms Discount
Service Master Records

Descriptions of all services that may need to be procured can be stored. The organizational level at which services are procured is the purchasing organization. In addition to a unique description of the service, a service master record contains further information that is necessary for procurement purposes (such as texts or units of measure).
Service master records

You can store price information at various levels: for example, $100 per hour as the "market" or "own estimated" price, $98 as vendor Acmes price and $105 as vendor Zeniths price for service A. The individual service master records can be grouped into different service types (e.g. trades or activities).
Creating a service master record

In the initial screen you can enter

Service number (if external number assignment) Service category
In the Basic data screen enter,

Base unit of measure Description of services Valuation class (3200 for services)
In the classification screen enter,

The class for classifying the services
Concept of Purchasing info rec in SAP.

An info record represents a material-vendor relationship. The info record contains concise information about a vendor and a material that you already procure from that vendor. Info records are created automatically when you order a material. You can also create, change, and delete info records.
Purchasing info rec (Contd)

Use of Purchasing info rec in PO creation

Net price for the item will be defaulted in PO
All the pricing conditions will be defaulted other uses include

Remainders Delivery tolerance Shelf life Purchase order text
Purchasing info rec (Contd)

Use of info rec in Vendor evaluation
Order price history Quotation price history Delivery reliability Quantity reliability

Concept of source list in SAP

A source list specifies the possible sources of supply for a material over a given period of time It shows the time period in which a material may be ordered from a given vendor Source list can be created automatically using generate source list option Source list can also be maintained manually.
Source List (Contd)

Uses of source list

Fixed vendor Vendor blocking Auto PO creation
Source list requirement at plant level

Can be made mandatory
Master Data for India Version

Chapter ID

Excise Law Chapters, Headings and subheadings Example 7216.10
72 - Iron and Steel 16 - Angles, shapes and sections

Material and Chapter ID combination Material assessable value

Net dealer price Material assessable value
Tables for excise purpose (contd..)

MODVAT Determination

Input material MODVAT output material MODVAT
Vendor Excise details SSI Rates Excise Tax rates
MM - Purchasing
Target Group
Purchase department
Course Objectives
On conclusion of this course you should be able to
Understand the concepts in SAP -
Purchasing component
Create or change PRs Create, change or compare RFQs Create contracts
Introduction
Contents
Purchasing overview Purchase requisitions Request for quotations Outline agreements
Exercises Solutions
Purchasing - overview
The Purchasing component has the following tasks:
y y
external procurement of materials and services determination of possible sources of supply for a requirement identified by the materials planning and control system determination of possible sources of supply for a requirement arising directly within a user department monitoring of deliveries and payments to vendors
Purchasing - integration with other modules

Integration

Controlling (CO)
Purchase orders for materials intended for direct consumption They can be directly assigned to a cost center or a production
order.

Financial Accounting (FI)
Vendor master is maintained by both accounting and purchasing

departments.
Through PO account assignment, Purchasing can also specify
which G/L accounts are to be charged in the financial accounting system.
Purchasing - integration with other modules

Sales and Distribution (SD)
Within the framework of materials planning and control, a
requirement that has arisen in the Sales area can be passed on to Purchasing. sales order.
When a requisition is created, it can be directly assigned to a
Process flow in purchasing

Determination of Requirements

Materials requirements are identified either in the user departments or via materials planning and control. It includes both MRP proper and the demand-based approach to inventory control. The regular checking of stock levels of materials defined by master records, use of the order-point method, and forecasting on the basis of past usage are important aspects of the demand management. You can enter purchase requisitions yourself, or they can be generated automatically by the materials planning and control system.

Source Determination

The Purchasing component helps in identifying potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds the process of creating requests for quotation (RFQs)
Vendor Selection and Comparison of Quotations

The system is capable of simulating pricing scenarios, allowing you to compare a number of different quotations. Rejection letters can be sent automatically.

Purchase Order Processing

The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order. You can generate Pos yourself or have the system generate them automatically. Vendor scheduling agreements and contracts are also supported.
Purchase Order Follow-Up

The system checks the reminder periods you have specified System automatically prints reminders or expediters at the predefined intervals. It provides you with an up-to-date status of all purchase requisitions, quotations, and purchase orders.

Goods Receiving and Inventory Management

Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying permissible tolerances, buyers can limit over- and underdeliveries of ordered goods.
Invoice Verification
The system supports the checking and matching of invoices. Invoice verification can be based on purchase orders or GR
documents or directly to a vendor without any document reference.
Std. Menu options in Purchasing

Create

Use this option to create a purchasing document . Enter the required information and save the document . The document is then stored under a unique number.
Change

Use this option to change a purchasing document . You need the document number in order to access the document.

Display

Use this option to display a purchasing document . You cannot change or add any information to the document that is displayed . You need the document number in order to access the document.
List displays/reporting

You can use these options to generate reports analyzing purchasing documents Example
List of all purchase orders for Vendor ABC

Follow-on functions

This option allows you to perform tasks related to (following on from) but not included in the purchasing functionality. Example
Entering a goods receipt or an invoice in the system.

Messages

This option enables you to print or transmit documents in message form Example
Transmission via fax, Printouts etc
Purchasing Documents
Definition

A purchasing document is an instrument used by Purchasing to procure materials or services.
Types of purchasing documents

Request for quotation (RFQ)
Transmits a requirement defined in a requisition for a material or

service to potential vendors .

Quotation
Contains a vendor's prices and conditions It is the basis for vendor selection.
Purchasing Documents

Purchase order (PO)
The buying entitys request or instruction to a vendor (external

supplier) to supply certain materials or render/perform certain services/works,
It formalises a purchase transaction .

Contract

In the SAP Purchasing component, a type of "outline agreement", or longer-term buying arrangement . The contract is a binding commitment to procure a certain material or service from a vendor over a certain period of time.
Purchasing documents
Structure

Each purchasing document is subdivided into two main areas:
The header

The header contains information relevant to the whole document . Example, information about the vendor and the document number is contained in the document header
The individual items .

The items specify the materials or services to be procured . Example, The material description and the order quantity are specified in each item.

The additional data
It provides extra information about the item, and has no direct

connection with the item procurement data.
Example,

account assignment data PO history for an item, which contains information on already recorded goods and invoice receipts relating to the item.
Classification of Purchasing Documents

Purchasing documents are differentiated in the SAP system via the document type . Example, relevant number range depends on document types

Document types are defined for RFQs, purchase orders, and contracts
Numbering of purchasing documents

Each document is assigned a unique number . This number can be assigned internally or externally , depending on the policy . Internal number assignment means that the system assigns the number. External number assignment means that the person creating the document must supply it. Alphanumeric assignment is only possible in the latter case.
Purchase requisitions
Definition

A purchase requisition is a request or instruction to Purchasing to procure a certain quantity of a material so that it is available at a certain point in time. It is an internal document.
Requisitions can be created in the following ways:

Directly: Someone from the requesting department enters a purchase requisition manually. Indirectly: The purchase requisition is created via another SAP component.
Purchase requisitions can be subject to a release procedure.

Purchase requisitions - integration

Requisitions can be created indirectly in the following ways:

via materials planning and control
The component Consumption-Based Planning suggests

materials that need to be ordered on the basis of past consumption or usage figures and existing stock levels. automatically.
The order quantity and the delivery date are determined Materials planning and control can stipulate that a purchase
requisition is to be resubmitted to the purchasing department if it has not been processed after a predefined period of time.
Purchase requisitions - integration

Requisitions are generated automatically from production orders if

They contain an external processing operation (e.g. subcontracting work) A precondition is that the control key for the operation allows or prescribes external processing. they contain non-stock components
Purchase requisitions
Procurement types

Standard Subcontracting
Components to be provided can be entered.

Consignment Stock transfer External service
Service specifications can be entered
Manual creation of PR
Things to remember

Item category Account assignment category Purchasing organization Purchasing group Requirement tracking number Delivery date Item with or with out material master record Order quantity
Creating Request For Quotation

Automatically from PR Manually

With reference to PR With out reference to PR
Delivery address

Address of the company asking for quotation, by default it is the address of E+L. But it can be changed.
vendor address

Just enter the codes of the vendor, System will take other details from vendor master.
Quotation dead line Delivery date

RFQ (contd)
Printing RFQ Send the Printed RFQ to the vendors Receive the quotation from the vendor Maintain the RFQ

Enter the net price quoted by the vendor Enter the pricing conditions Terms of payment Update the info record if reqd
Quotations
Compare the quotations

Maintain the collective number in the RFQs Quotations can be compared based on price Discounts and delivery costs can be included Comparison can be based on effective price also System compares and gives the ranking list
Percentage basis for comparing quotations

Mean value equals 100% Maximum value equals 100% Minimum value equals 100%
Outline agreements with the vendor

To Setup longer-term purchasing arrangements with vendors regarding the supply of materials or the performance of services.
Outline agreements can be subject to a release (approval or clearance) procedure.
Agreement types

Quantity contract Value contract
Outline agreements
Structure

Document header: containing information relating to the entire agreement. For example, the vendor information and header conditions are in the document header Items: containing the information specific to the relevant material or service.
statistics on ordering activities for the item quantity or price of the item conditions, such as quantity discounts and surcharges
Outline agreements
Texts in Outline Agreements

Header texts Item texts You can create your own text types
Creating a outline agreement

Outline agreement can be created with reference to a RFQ or without any reference Important terms
Purchasing organization Purchase group
Outline agreements
Target quantity Target Value Pricing conditions Validity starting and ending date Vendor address Delivery address Remainders
MM - PURCHASING
Target Group
Purchase department
Course Objectives
On conclusion of this course, you should be able to
Create a new PO Make changes to existing PO Print PO Navigate through purchasing information
system
Introduction
Contents
Creating POs Printing of POs Printing Remainders Changing or canceling POs Purchasing information
Exercises Solutions
Purchase order
Definition

Formal request or instruction from a purchasing organization to a vendor or a plant to supply or provide a certain quantity of goods or services at or by a certain point in time.
Structure

Header items Additional data
Creating a Purchase order

Automatically from PR

Set automatic PO indicator for material and vendor Maintain Purchasing info record Maintain source list Fixed vendor PR from MRP or Manually created PR Assign manually or automatically Process the assigned PR to create PO
Create PO - Manually
Manually creating a PO

With reference to PR

Select the PRs Select the items from PR Copy the items in to PO Enter the vendor Enter the prices and pricing conditions Requirement tracking number Update the info record if reqd
Create PO

With reference to RFQ

Select RFQ Select the items Copy the selected items in to PO Enter the Price and pricing conditions Update the info record if reqd. Acknowledgement and confirmations
Create PO

With out any reference
In this case you need to enter

Vendor code Delivery date Item category Account assignment category (if reqd) Requirement tracking number Order type ( NB For std purchase order) Plant ( 4000 - default plant ) Storage location
Creating a PO (contd)
Important terms in PO

Vendor
For creating a PO you need to enter vendor code Vendor master should exist for this purpose if you dont want to maintain all the details for a vendor you can
create a one time vendor

Item category
Standard Subcontracting service
Create PO (Contd)

Account assignment category
Specification of the account assignment objects that are charged

in the case of a purchase order for a material that is intended for direct usage or consumption.
Examples

Asset Sales order Production order Cost center
Types of account assignment

Single account assignment Multiple account assignment
Create PO (contd)

Delivery date
Date format

Day format Week format Month format
Delivery date entered here is only expected delivery date You can also specify a statistical delivery date
Create PO (contd)

Units of measure in PO

The order unit

This is the unit you specify in connection with the order quantity.
The order price unit

This is the unit that applies in connection with the net price and which is taken as the basis for invoice verification. If the order price unit does not correspond to the order unit, and if no conversion factor is specified in the system, you must enter a conversion factor on the item detail screen.
Create PO (Contd)
Example for units of measure in PO

Order quantity Order unit Gross price per unit Order price unit (number) Order price unit (of measure) Conversion factor 24 boxes 1
24 Box $10
kg 1 kg
Create PO (Contd)

Conditions
This component enables you to store pricing stipulations agreed

with the vendor
Examples are applicable discounts or surcharges, or stipulations

regarding the payment of freight costs in the system.
There are three kinds of price in Purchasing:

Gross price
Price without taking any possible discounts and surcharges into account
Create PO (Contd)

Net price
Price taking any applicable discounts and surcharges into account
Effective price
Net price after deduction of cash discount, with allowance for any miscellaneous provisions, delivery costs, and non-deductible taxes.
Terms of Payment
Example

Within 14 days 2% discount Within 30 days due net
Create PO (Contd)

Inco terms
Incoterms are internationally-recognized terms of delivery Example

reflecting the standards set by the International Chamber of Commerce (ICC).
FOB - Free On Board. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. You can specify Incoterms for an order item that differ from those in the PO header.
Creating PO from outline agreement

In the initial screen for Create PO,

Select the Outline agreement and items Copy the items in PO
In the item overview screen

Enter the quantity If the quantity exceeds the target quantity system gives a warning
Texts in PO
Header texts Header note Pricing types Dead lines Terms of delivery Shipping instructions Terms of payments warranties Penalties for breach of contract
Confirmations
Purpose

This component can be used, if you wish to have your vendor provide you with various kinds of confirmation regarding delivery dates and quantities It enables you to base your materials planning and control activities on more up-to-date data than that contained in purchase orders.
Confirmation control key Shipping notification Order acknowledgement
Shipping notification
Shipping Notification Definition

A vendors confirmation to a purchasing organization of the delivery date for a certain quantity of ordered materials It can be for the date of performance of ordered services also.
Structure

A shipping notification consists of several items in which the notified (confirmed) quantity of the material or service is specified.
Confirmations from the Viewpoint of IM

When you post goods receipts, there are several ways of finding the associated purchase orders.
Enter the PO number Enter the shipping notification number Enter the transport identification code
If you establish a link via the PO number itself, the relationship is unique

i.e. one goods receipt (GR) against one purchase order
Confirmations from the Viewpoint of IM

If you enter the number of the shipping notification

The system selects all purchase orders containing this number System suggests the notified quantities for the GR document.
Prerequisites

If you wish to match up GRs against POs via the shipping notification number ,
shipping notification must exist as a separate document.
Releasing the PO
Release Procedure for External Purchasing Documents

External purchasing documents (i.e. purchasing documents other than requisitions) are released at header level. Item-by-item release is not possible. These documents can only be released using the release procedure with classification.

Release Conditions

The release conditions determine the release strategy in accordance with which a PO is to be released.

If a PO does not meet the conditions for a release strategy, it is automatically released for further processing.
Release procedure
Release Strategy

The release strategy defines the approval process for purchasing documents. The strategy specifies the release codes necessary and the sequence in which releases have to be effected. A maximum of eight release codes can be defined. The assignment of the release strategy to a purchasing document is based on the release conditions.

Release procedure
Release Code

Definition
The release code is a two-character ID allowing a person to

via a system of authorizations.
release (clear, or approve) an external purchasing document.
Who may work with which release codes is basically controlled

Release Prerequisites

The release prerequisites indicate the sequence in which PO must be approved via the release codes.
Printing a PO
Menu path

Purchase order -> Header -> Messages
Data required

Output type Medium Communication method
Select the printer

Further Data
Repeat output Change output

Printing the remainders

Types of expediting letters

Remainders
A negative number of days means that a reminder is to be issued

to the vendor n days prior to the delivery date

Urging letters
A positive number of days means that a letter or message urging

delivery is to be issued n days after the due date.
Message type - MAHN (Dunning letter)
Changing and blocking POs

If you change a PO after it has been sent to the vendor, a change document is generated that can be sent to the vendor.
This tells the vendor what you have changed.

If the goods have already been delivered, then the changes you can make to the PO are limited.
For example, you cannot change the quantity to one that is less
than the quantity delivered.

If the invoice has been received or the goods have been paid for, and your intended change affects the price, the change will be ineffective.
You can display the PO history for an item to determine whether

deliveries have been received or the item has been invoiced.
Purchasing information
List displays

List of POs for a vendor or for a range of vendors
This gives the details of the purchase order like still to be

delivered, still to be invoiced etc.

List of POs for a material or for a range of materials List of POs for a account assignment List of POs for a requirement tracking number
Reporting

General analyses Order value analyses Subcontracting stocks per vendor
Purchasing information
Material

Purchasing values Purchasing quantities On time delivery Qty reliability Frequencies
Vendor Material group Purchasing group
MM - Inventory management
Target Group
Purchase department Stores department
Course Objectives
Do planned and unplanned goods receipts Do Issue of Goods Do transfer posting of goods Manage stocks of the company on both
quantity and value basis
Introduction
Contents
Overview Integration with other modules Type of stocks Concept of material documents Goods movements Movement type concept
Inventory management - overview
What is inventory management ?

SAP's Inventory Management system allows you to
manage your stocks on a quantity and value basis

The stocks are managed not only on a quantity basis but also by value - a prerequisite for cost accounting. With every goods movement, the following values are updated:
the stock value for inventory management the account assignment for cost accounting the corresponding G/L accounts for financial accounting via automatic account assignment
What is inventory management ?

Planning, Entry, and Proof of Goods Movements
Goods movements include

external movements (goods receipts from external procurement, goods issues for sales orders) internal movements (goods receipts from production, withdrawals of material for internal purposes, stock transfers, and transfer postings). For each goods movement a document is created which is used by the system to update quantities and values and serves as proof of goods movements.
Integration with other modules

Integration in Materials Management (MM)

As a component of Materials Management, Inventory Management is directly linked with Material Requirements Planning , Purchasing, and Invoice Verification. Inventory Management forms the basis for material requirements planning, which takes into account not only physical stocks but also planned movements (requirements, receipts). Quantities and values from the purchase order and the goods receipt document are checked to ensure conformity with those in the invoice.

Integration in Production Planning (PP)

Inventory Management is closely linked to the Production Planning module:

Inventory Management is responsible for staging of the components required for production orders
Goods issue against production orders
The receipt of the finished products into the warehouse is posted in Inventory Management.

Integration in Sales & Distribution (SD)

As soon as you enter a sales order, you can initiate a dynamic availability check of stocks on hand. When the delivery is created, the quantity to be delivered is marked as "Scheduled for delivery."It is deducted from the total stock when the goods issue is posted. It is also possible to create sales order stocks. These SD transactions are depicted in the Sales & Distribution system.


Integration in Quality Management (QM)

In the case of a goods movement, the system determines whether the material is subject to an inspection operation. If so, a corresponding activity is initiated for the movement in the Quality Management system.
Financial Accounting (FI)

Automatic account assignment, a procedure during which the system determines the accounts relevant for the given goods movements.

Controlling (CO)
The interface to the cost accounting system is activated in the

case of material consumption
For example, when materials are issued for various account

assignment objects such as orders or cost centers. assigned directly to cost centers or orders.
Cost accounting is also involved when goods receipts are
IM - Material Master
Relevant views

Accounting
Price and accounting information. Examples:

type of price control valuation class.
Materials Planning
Information for materials planning. Examples:

safety stock, reorder level, availability check.
Purchasing

Procurement information for a material. Examples:

overdelivery and underdelivery tolerances purchasing order unit of measure (order unit).
Storage

Information for warehousing and storing the material. Example:

unit of issue storage conditions, fixed bin location

Quality Management
Information for sampling and inspecting a material. Examples:

indicator for goods receipt via quality inspection
Work Scheduling
Information for producing the material. Examples:

production unit overdelivery and underdelivery tolerances allowed.
IM - Data Required
For Inventory Management, you must maintain the following data:

Plant data
This data can be maintained via different views (for example, via
Purchasing, Storage, Work scheduling). the organizational level plant.
You have to maintain at least one view that requires the entry of

Valuation data
Valuation data is required for managing the stock by value. You maintain this data via the Accounting view.
IM - Data Required

Storage location data
You maintain the storage location data via the Storage view. If a material is located in a storage location, the storage data for
that storage location must exist in the material master record, so that the system can manage the stock quantities at storagelocation level.
Storage data can be manually entered when the material master record is created It can be automatically created during the first goods movement in that storage location.
Types of stocks
Total valuated stock

Sum of all valuated stocks of a material. It consists of all the types of stock your company owns.
Unrestricted-use stock

Company's own stock that is physically located in the warehouse, valuated, and not subject to any kind of usage restrictions.
quality inspection stock

Company's own stock that is in quality inspection.
Types of stocks

Stock in quality inspection is valuated but does not count as unrestricted-use stock. For MRP, it is either available or not available, depending on how the system is set.
Blocked stock

Company's own stock that should not be used. It does not count as unrestricted-use stock for Inventory Management It is usually not available for MRP.
Types of stocks
Restricted-use stock

Valuated stock of a material managed in batches held by a company (and belonging to that company) Usage of this stock is subject to certain restrictions. This category of stock is only used when batch status management is active.
Blocked stock returns

Stock that was returned by the customer and conditionally accepted. It is neither valuated nor does it count as unrestricted-use stock.
Types of stocks
stock in transfer

Quantity that was already withdrawn from stock at the issuing location but that has not yet arrived at the receiving location Stock in transfer is managed in the valuated stock of the receiving location, but it does not yet count as unrestricted-use stock.
Stock in transit

Stock in transfer that is created in the case of a stock transfer via a stock transport order.
Types of stocks
Available stock

Dynamic stock that is calculated by MRP taking any receipts, issues, the current available stocks into account. Which requirements, receipts, and issues are included in the availability check is defined in the Customizing system.
Reserved stock

Sum of all quantities of a material that are reserved for withdrawal. Reserved stock is usually not available from the point of view of MRP For Inventory Management it still counts as unrestricted-use stock.
Types of stocks
Planned receipts

Sum of all quantities whose receipt has been planned with reservations. Planned receipts are usually already available from the point of view of MRP For Inventory Management they do not yet count as unrestricted-use stock.
Open PO quantity (total)

Sum of all outstanding PO quantities for a material. The open PO quantity usually increases available stock in MRP It does not increase unrestricted-use stock in Inventory Management.
Types of stocks
Open order quantity (total)

Sum of all outstanding order quantities for a material. The open order quantity usually increases available stock in MRP It does not increase unrestricted-use stock in Inventory Management
Goods receipt blocked stock

Sum of all quantities of a material that were delivered by vendors for purchase orders and that have been conditionally accepted. GR blocked stock is neither valuated nor does it count as unrestricted-use
Types of stocks
Stock scheduled for delivery

Sum of all current deliveries to customers for which goods issues have not yet been posted. Like reserved stock, stock scheduled for delivery is usually not available from the point of view of MRP It counts as unrestricted-use stock for Inventory Management.
Negative stocks

Negative stocks are required if, for example, goods issues are entered before the corresponding goods receipts for organizational reasons and the material is already physically located in the warehouse.
Batch management
With batch handling, you can manage not only production lots from in-house production, but also production lots from vendors as separate entities. Before you can manage batches of a material in stock, you must first specify in the material master record that the material is to be managed in batches for the specified plant. To do this, you must set the batch management requirement indicator in the material master record At the time of goods receipt system will allocate the batch number
Goods movements
Definition of Goods Movement

A goods movement is an event that causes a change in stock.
Good receipt

A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted.
Goods issue

A goods issue (GI) is a goods movement with which a material consumption, or a shipment of goods to a customer is posted.
Goods movements
Stock Transfer

Transfer of material from one plant to other plant or from one storage location to other storage location
Transfer Posting

changes in stock type or stock category of a material. Examples of transfer postings are:

Transfer Postings From Material to Material Release from quality inspection stock Transfer of consignment material into company's own stock
The document concept

When posting a goods movement in the SAP System, the following documents are created:

Material document
a material document is generated that serves as proof of the

movement

Accounting document
If the movement is relevant for Financial Accounting an

accounting document is created

Cost accounting Document
Movement types
Movement Type

When you enter a goods movement in the system, you must enter a movement type to differentiate between the various goods movements. A movement type is a three-digit identification key for a goods movement. Examples
Goods receipt for a purchase order 101 Goods issue for a cost center Release from quality inspection stock
201 321
Movement types
Control Functions of the Movement Type

The movement type has important control functions in Inventory Management. For example, the movement type plays an important role in

updating of quantity fields updating of stock and consumption accounts determining which fields are displayed during entry of a document in the system
Material documents
Changing a Material Document

you can not change a document once it has been posted. If you made a typing error when entering a goods movement you must reverse the movement with a reversal document Although you cannot change a posted document, you can use the function "Change Material Document" to
enter additional information for the document. print a goods receipt/issue slip for the document
Planning goods receipts

Referencing Document During Entry of Goods Movement

The documents used to plan goods receipts serve as reference documents for entering the goods movement
GR for purchase order
Return Deliveries
When you enter the return delivery, you should reference the purchase order or the material document, so that the system can

suggest data (for example, the storage location), to simplify data input perform certain checks (the returned quantity must not exceed the delivered quantity) reduce the quantity delivered to-date reverse other updates that occurred (for example, for goods receipt into consumption) when the goods receipt was entered

Shelf Life Expiration Date Check

When you enter a goods receipt, it is possible to check the shelf life of a material. Prerequisites

The shelf life is only checked if the following prerequisites are met:

The minimum remaining shelf life is maintained in the material master record or in the purchase order. The minimum remaining shelf life is the minimum number of days for which the material must keep for the goods receipt to be accepted by the system. .
Other goods receipts

initial entry of stock balances external goods receipts without a purchase order internal goods receipts without a production order goods receipts of by-products deliveries free of charge returns from the customer
Reservations
Goods issue for an order
Results of a Goods Issue Posting

A goods issue has the following results in the system:

material document is created accounting document is created Creation of a Goods Receipt/Issue Slip Stock Update Update of G/L Accounts Consumption Update Reservation Update Order Update
Printing documents
MM - INVOICE VERIFICATION
Target Group
Purchase department Stores department Finance department
Course Objectives
Enter and verify vendors invoice Enter and verify vendors excise invoice Devalue materials Carry out physical inventory
Introduction
Contents
Invoice entry and verification Credit memo Excise invoice Material devaluation Physical inventory Inventory management information
Exercises Solutions
MM - invoice verification
Invoice Verification in Materials Management serves the following purposes:

It completes the materials procurement process It allows invoices that do not originate in materials procurement (for example, services, expenses, course costs, etc.) to be processed It allows credit memos to be processed, either as invoice cancellations or discounts
Invoice Verification does not handle the payment or the analysis of invoices. The information required for these processes is passed on to A/C department.
Invoice verification
Invoice Verification tasks include:
Entering invoices and credit memos that have been received Checking the accuracy of invoices with respect to contents,
prices, and arithmetic
Executing the account postings resulting from an invoice Updating certain data in the SAP system, for example, open
items and material prices
Checking invoices that were blocked because they varied too

greatly from the purchase order
Types of Invoice Verification

As a rule, an invoice refers to a transaction for which the issuing party requests payment. Invoice Verification differs depending on the type of invoice involved:

Invoices based on purchase orders
With purchase-order-based Invoice Verification, all the items of a

purchase order can be settled together,

Invoices based on goods receipt
With goods-receipt-based Invoice Verification, each individual

goods receipt is invoiced separately.
Types of Invoice Verification

Invoices without an order reference
When there is no reference to a purchase order, it is possible to

post the transaction directly to
a material account a G/L account or an asset account.
Data required for invoice verification

The key data required for Invoice Verification is

Master data Transaction data
Material data

Material data is information on the materials bought or produced in the company
Vendor data

Vendor data provides information on the suppliers a company deals with.
Data required for invoice verification

Accounting data

Accounting data is used to define G/L accounts
Transaction data

Transaction data records transactions or events in the SAP system. Purchasing document Material document Accounting document
Invoice data
An invoice contains various information, such as:

Who issued the invoice? Which transaction does the invoice refer to? How much tax do you have to pay?
If the invoice refers to a particular transaction, the system will automatically retrieve information pertaining to the transaction

Terms of payment Quantities to be invoiced The amounts the system expects per item
Screens for Invoice Verification

The initial screen
This contains general data such as

company code currency invoice reference.
The vendor screen
This contains data on the vendor The terms of payment taxes.

The selection screen
This lists the items of the transaction specified on the initial

screen.
The layout of the selection screen depends on whether the

invoice is based on a purchase order or a goods receipt.

Invoice Based on a Purchase Order

All the purchase order items are listed. The quantity that is still to be billed (i.e. the difference between the quantity delivered and the quantity invoiced so far) appears as a default in the Quantity column.

Invoice Based on a Goods Receipt

Goods-receipt-based invoice verification must have been defined in the purchase order. If the GR-IV field on the item screen in the purchase order is not selected, the goods receipt cannot be settled in this way. There are two ways of finding the correct transaction in goodsreceipt-based Invoice Verification: You can enter a delivery note number or a GR document number and the system will list the items for the goods receipts on the selection screen; you can enter a purchase order number and the system will list all the GR documents
Parking the invoice

Preliminary Posting

You can enter an invoice (or a credit memo) without posting it and simply "park" it. If you park an invoice or a credit memo the system does not make any postings. A parked document can be changed as often as you like. When data is added or changed, the changes are noted by the system. When no further changes are required, you can then post the parked document.

Parking the invoice

The preliminary posting function can be of great advantage if:

You are interrupted when entering an invoice. You can park the document and continue processing it later on. This saves you time having to enter the data twice. You wish to clear up some questions before you post an invoice. You can park the document and continue processing it later on. You wish to split the Invoice Verification process. One employee can, for example, park an invoice without checking it, while another carries out the actual checks and posts the document after making any necessary corrections.
Data Update When Posting an Invoice

When you post an invoice, the system carries out the account movements and updates the following

The system generates a Financial Accounting document that displays the accounts involved in the posting and the amounts posted to these accounts. The system creates a purchase order statistic for each item in the purchase order. The moving average price is updated in the material master record If the invoiced price differs from the price in the purchase order for a material with moving average price control
Blocking the invoice

When an invoice is blocked, Financial Accounting cannot pay the invoice. The invoice must first be released in a separate step before it can be processed. Variances in an Invoice Item

Quantity variance (M) Price variance (P) Variance in order price quantity (G) Schedule variance (T) Quality inspection (I)
Credit memos
The term credit memo always refers to a credit memo from the vendor. Posting a credit memo always leads to a debit posting to the vendor account. Two types of credit memos are possible:
Credit memos that refer to a purchase order or goods receipt Credit memos that do not refer to a transaction.
Processing of credit memos is same as invoice verification
Types of Delivery Costs
In the SAP System, there are two types of delivery costs:
Planned delivery costs

They are entered in the purchase order. Provisions are set up for the relevant costs at goods receipt. The delivery costs posted at goods receipt can be referenced at invoice entry.
Unplanned delivery costs

They are only entered when the invoice is entered. No provision is made at goods receipt.
Creating a excise invoice

Transaction J1IA Required entries

Purchase order number Excise group Vendors Excise invoice number Excise invoice date
In the details screen you can change

Description Quantity Excise duty
Valuation - Lowest value determination

The Lowest Value Principle

The lowest value principle is a method of valuating material stocks for balance sheet purposes. The aim of this method is to valuate stocks as accurately as possible according to the recognition-of-loss principle. Profits that exist solely on the books as a result of changes in market prices are to be avoided. Expected losses are included in the balance sheet.
Lowest value determination

Methods

In the SAP System there are various methods of determining tax or commercial prices:
lowest value determination based on current market prices

system searches for the lowest price from among the various prices stored for each material.
lowest value determination based on rate of movement lowest value determination based on range of coverage

Range of coverage = average stock : average consumption
Lowest value determination

Calculating the Movement Rate

Movement rate = Total quantity of receipts/issues : Material stock x 100 If the percentage of receipts/issues is smaller than Movement rate, the material is slow or non-moving
Devaluation percentage Devaluation indicator Updating prices in the material master record
Physical inventory
Every company must carry out a physical inventory of its warehouse stocks at least once per fiscal year to balance its inventory Stocks that can be inventoried
unrestricted-use stock in the warehouse quality inspection stock Blocked stock
Physical Inventory Process

The process of physical inventory can be divided into three phases:

Physical inventory preparation
Create a physical inventory document. Block materials for posting. Print and distribute the physical inventory document.

Physical inventory count
counting stocks entering the result of the count on the physical inventory
document printout
Physical inventory

Physical inventory analysis
entering the result of the count into the system initiating a recount, if necessary posting inventory differences
Processing Steps
Creating a physical inventory document Entering the Physical Inventory Count Post inventory differences
Physical inventory
posting the physical inventory count and inventory differences

If a physical inventory document exists, the following are combined in this step:
The count is posted. Any inventory differences are posted.
Posting inventory differences without reference to the physical inventory document

A physical inventory document is created. The count is posted. Any inventory differences are posted.
Physical inventory
Physical Inventory Status

To monitor physical inventory processing, each physical inventory document records the inventory steps which have been carried out. This information can be found in an item or document header.
physical inventory history for an item

In an inventory history you can determine which steps have been carried out for the item.
document header

In the document header, the fields Count status, Adjustment status and Delete status provide information on whether some or all of the items have been counted, posted (inventory differences), or deleted.
Inventory management information

You can perform the following functions by selecting Environment from the Inventory Management menu.

List display
The List display function offers reports for documents posted in

Inventory Management.
Example: material documents for a material.

Stock display
Example: Stock overview

Information
The Information function allows you to display data (master data,

transaction/movement data) from other applications.
Example: displaying a purchase order.


Balances display
The Balances display function offers analysis of the stock

accounts and of the GR/IR clearing account.

Consignment
The Consignment option permits analysis of the consignment

Batch where-used list Batch search strategy
stocks from vendors as well as the consignment stocks and the returnable packaging stocks at the customers site.


Material analysis

Stock values Receipts and issues Inventory turnover
Inventory turnover of the value of valuated stock is calculated as

follows:
Value of total consumption / Value of average valuated stock

Range of coverage
The range of coverage of the value of valuated stock is

calculated as follows:
Value of valuated stock / value of average total usage / day

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CONTENTS

MM - Overview MM - Purchasing MM - Purchase Order MM - Inventory Management MM - Invoice Verification

TATA CONSULTANCY SERVIES

Overview of MATERIALS MANAGEMENT

TATA CONSULTANCY SERVIES

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Master and vendor master

the existing master records

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materials planning and control purchasing inventory management invoice verification.

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Integration with other Modules

Procurement Logistics Planning Sales Logistics Production

Finance / Asset Management

TATA CONSULTANCY SERVIES

Integrated Business Process Overview

Financial and Managerial Reporting and Analysis

TATA CONSULTANCY SERVIES

TATA CONSULTANCY SERVIES

Organizational Elements - Client

TATA CONSULTANCY SERVIES

TATA CONSULTANCY SERVIES

TATA CONSULTANCY SERVIES

TATA CONSULTANCY SERVIES

TATA CONSULTANCY SERVIES

Material master in SAP.

TATA CONSULTANCY SERVIES

Use of material master in SAP logistics system functions.

TATA CONSULTANCY SERVIES

User departments using same material master

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Number uniquely identifying a material master record, and thus a material.

 Internal and External number assignment.

TATA CONSULTANCY SERVIES

Eg. mechanical industry,chemical industry,pharmaceutical etc.

 The industry sector you specify determines

TATA CONSULTANCY SERVIES

TATA CONSULTANCY SERVIES

 Basic data1  Purchasing  Purchase order text  Storage 1  Storage 2

TATA CONSULTANCY SERVIES

CREATING MATERIAL MASTER IN SAP

Plant Storage location

TATA CONSULTANCY SERVIES

Purchasing group purchasing value key Set indicator for automatic PO

TATA CONSULTANCY SERVIES

 In Storage 1 you can enter,

Storage bin Unit of issue Shelf life data Batch management

TATA CONSULTANCY SERVIES

Concept of vendor master in SAP.

TATA CONSULTANCY SERVIES

Organization of vendor master records

General Data Company code data Purchasing organization data

TATA CONSULTANCY SERVIES

Creating vendor master record.

 In the initial screen you can enter,

TATA CONSULTANCY SERVIES

Creating vendor master record.

Internal and External number assignment.

The industry sector you specify determines

Basic data1 Purchasing Purchase order text Storage 1 Storage 2

In Storage 1 you can enter,

In the initial screen you can enter,

In Purchasing organization data you can maintain,

In the Basic data screen enter,

In the classification screen enter,

Source list requirement at plant level

72 - Iron and Steel 16 - Angles, shapes and sections

Vendor Excise details SSI Rates Excise Tax rates

Purchasing overview Purchase requisitions Request for quotations Outline agreements

Vendor master is maintained by both accounting and purchasing

Through PO account assignment, Purchasing can also specify

Within the framework of materials planning and control, a

When a requisition is created, it can be directly assigned to a

Vendor Selection and Comparison of Quotations

Purchase Order Follow-Up