Material Management Present by :- Ravi Jain

Content Introduction Why Material Management ??? Process Flow Material Management Integration Material Management Component Benefits of Material Management Implementation Challenges Q&A Thank you !!! Appendix A - MM Definition Appendix B – Material Type Appendix C – MM Terms & Definition Appendix D – Important MM Tables

Introduction

Why Material Management ???

Process Flow

Material Management Integration

Material Management Component

Benefits of Material Management

Implementation Challenges

Q&A

Thank you !!!

Appendix A - MM Definition

Appendix B – Material Type

Appendix C – MM Terms & Definition

Appendix D – Important MM Tables

Introduction SAP MM Module is one of the most important SAP Modules where MM stands for Materials Management - underpins the supply chain, including Requisitions Purchase orders Goods receipts Accounts payable Inventory management BOM’s Master raw materials, finished goods etc

SAP MM Module is one of the most important SAP Modules where MM stands for Materials Management - underpins the supply chain, including

Requisitions

Purchase orders

Goods receipts

Accounts payable

Inventory management

BOM’s

Master raw materials, finished goods etc

Why Need MM ??? amount spend on material is higher than other inputs material offer considerable scope for reducing cost and improving profit material add value to the product quality of end product depend on material efficiency of any organization depend upon the availability of right material, in right quantity at right time and at right place.

amount spend on material is higher than other inputs

material offer considerable scope for reducing cost and improving profit

material add value to the product

quality of end product depend on material

efficiency of any organization depend upon the availability of right material, in right quantity at right time and at right place.

S U P P I E R S C U S T O M E R R E C I V I N G D I S T R I B T N Purchasing Raw Material Storage Transformation Processes In Process Storage Finish Goods Storage orders Process Flow

MM Integration SD PP QM PM FI AM CO PS MM Material Management Sales & Distribution Production Planning Quality Management Production Management Financial Accounting Asset Management Controls Project System

Material Management Component Consumption based planning (MM-CBP) Purchasing (MM-PUR) External Service Management (MM- SRV) Inventory Management (MM-IM) Logistic Invoice Verification (MM - IV) Vendor Evaluation Management

Consumption based planning (MM-CBP)

Purchasing (MM-PUR)

External Service Management (MM- SRV)

Inventory Management (MM-IM)

Logistic Invoice Verification (MM - IV)

Vendor Evaluation Management

Consumption based planning CBP is based on the past consumption values and uses the forecast or other statistical procedure to determine future requirements. It gets trigger when stock level falls below pre-defined reorder points. Procedure available for MRP :- Reorder point procedure Forecast based planning Time-phased materials planning

CBP is based on the past consumption values and uses the forecast or other statistical procedure to determine future requirements. It gets trigger when stock level falls below pre-defined reorder points.

Procedure available for MRP :-

Reorder point procedure

Forecast based planning

Time-phased materials planning

Purchasing Purchasing is a component of Material Management. Task of Purchasing as following :- External procurement of material & services Determination of possible source of supply Monitoring deliveries from and payment to vendors. Integration with :- SD, FI & CO

Purchasing is a component of Material Management.

Task of Purchasing as following :-

External procurement of material & services

Determination of possible source of supply

Monitoring deliveries from and payment to vendors.

Integration with :- SD, FI & CO

External Service Management SRV is a MM component. It supports the complete cycle of bid invitation, award / order placement & acceptance of services. Task of Purchasing as following :- External procurement of material & services Determination of possible source of supply Monitoring deliveries from and payment to vendors. Integration with :- PM & PS

SRV is a MM component. It supports the complete cycle of bid invitation, award / order placement & acceptance of services.

Task of Purchasing as following :-

External procurement of material & services

Determination of possible source of supply

Monitoring deliveries from and payment to vendors.

Integration with :- PM & PS

Inventory Management Task of SAP-IM as following :- Management of material stocks on a quantity and value basis Planning, entry and documentation of all goods movement Carrying out the physical inventory Integration with :- SD, PP, QM & PM

Task of SAP-IM as following :-

Management of material stocks on a quantity and value basis

Planning, entry and documentation of all goods movement

Carrying out the physical inventory

Integration with :- SD, PP, QM & PM

Logistic Invoice Verification :- It is a component of MM. It is in the logistic invoice verification that incoming invoice are verified in terms of content, price and arithmetic. Task of SAP-IV-LIV as following :- It completes material procurement process, which start with purchase requisition & result in goods receipts. It allows invoices, that do not generate in material procurement like expenses to be processed. It allows credit memo to be processed. Integration with :- FI & CO

It is a component of MM. It is in the logistic invoice verification that incoming invoice are verified in terms of content, price and arithmetic.

Task of SAP-IV-LIV as following :-

It completes material procurement process, which start with purchase requisition & result in goods receipts.

It allows invoices, that do not generate in material procurement like expenses to be processed.

It allows credit memo to be processed.

Integration with :- FI & CO

Vendor Evaluation :- The Vendor Evaluation component supports you in optimizing your procurement processes in the case of both materials and services . Task of SAP-IV-LIV as following :- Helps you to select source of supply & monitoring of existing supply relationships Vendor reliability Criteria :- Price / Quantity / Delivery / General Service Support Integration with :- QM & MM

The Vendor Evaluation component supports you in optimizing your procurement processes in the case of both materials and services .

Task of SAP-IV-LIV as following :-

Helps you to select source of supply & monitoring of existing supply relationships

Vendor reliability

Criteria :- Price / Quantity / Delivery / General Service Support

Integration with :- QM & MM

Benefits of MM Material cost can be lowered down Controlling of indirect cost Risk of Inventory loss minimized Reduction in loss of time of direct labor Control of manufacturing cycle Material congestion in storage places avoided Improvement in delivery of the product

Material cost can be lowered down

Controlling of indirect cost

Risk of Inventory loss minimized

Reduction in loss of time of direct labor

Control of manufacturing cycle

Material congestion in storage places avoided

Improvement in delivery of the product

Implementation Challenges Selection of appropriate vendors Management of information Optimizing time and quality for product Difficulty in forecast accurate demand

Q&A I hate it.

Thank you !!!

Appendix I – MM Definition “ Material management is the grouping of management functions supporting the complete cycle of material flow, from the purchase and the internal control of production material to the planning and control of work in process to the warehouse shipping and distribution of the finished product”. – Thomas f Wallance. “ Material management is the management of the flow of materials into an organization to the point, where those material are converted into firm's end products”.

“ Material management is the grouping of management functions supporting the complete cycle of material flow, from the purchase and the internal control of production material to the planning and control of work in process to the warehouse shipping and distribution of the finished product”. – Thomas f Wallance.

“ Material management is the management of the flow of materials into an organization to the point, where those material are converted into firm's end products”.

Appendix II Material Type DIEN ---- Services FERT ---- Finished Product FHMI ---- Production Resources / tools HALB ---- Semi finished Products HAWA ---- Trading Tools HIBE ---- Operating Supplies NLAG ---- Non-stock material ROH ---- Row Material UNBH ---- Non Valuated Material VERP ---- Packaging material WETT ---- Competitive product http://www.sap-img.com/materials/sap-mm-configuration-tips.htm

DIEN ---- Services

FERT ---- Finished Product

FHMI ---- Production Resources / tools

HALB ---- Semi finished Products

HAWA ---- Trading Tools

HIBE ---- Operating Supplies

NLAG ---- Non-stock material

ROH ---- Row Material

UNBH ---- Non Valuated Material

VERP ---- Packaging material

WETT ---- Competitive product

Material Master Record Data record contain all the basic information required to manage a material. Material Requirement Planning Term for requirement planning that take into account and plan every future requirement during the creation of order proposal. Plant An organization unit for dividing enterprise according to production, procurement, maintenance & material planning. Storage Location Warehouse Stock Location Vendor Master Contains details about all the vendors within a company. Goods Receipts Term for inventory management denoting a physical inward movement of goods or material. Appendix III – MM Terms Definition

Material Master Record

Data record contain all the basic information required to manage a material.

Material Requirement Planning

Term for requirement planning that take into account and plan every future requirement during the creation of order proposal.

Plant

An organization unit for dividing enterprise according to production, procurement, maintenance & material planning.

Storage Location

Warehouse Stock Location

Vendor Master

Contains details about all the vendors within a company.

Goods Receipts

Term for inventory management denoting a physical inward movement of goods or material.

Appendix III – MM Terms Definition Material Group Grouping of material and services according to their characteristics. Material Master Record Data contains all the basic information required to manage a material. Release Strategy Plan define the release code with which a purchase requisition item, a complete purchase requisition or a complete external purchasing document must be release.

Material Group

Grouping of material and services according to their characteristics.

Material Master Record

Data contains all the basic information required to manage a material.

Release Strategy

Plan define the release code with which a purchase requisition item, a complete purchase requisition or a complete external purchasing document must be release.

Appendix IV – MM Tables Purchasing group T024 Movement type T156 Document header RKPF Material consumption MBEW Material to BOM link MAST Storage location data for material MARD Plant data for material MARC General material data MARA Material description MAKT Purchasing info/organization record EINE Purchasing info record – general data EINA