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  • 1. SAP MM /WM - Overview Dilip Sadh
  • 2. Procurement Cycle Workshop - Objectives Describe the basic business process of Procuring Materials and Services in the SAP R/3 System. Discuss the integration points in procurement to Financial Accounting and Inventory management. Discuss the reporting and analysis tools used in the procurement cycle. Discuss the Company’s procurement process. Communicate scope expectations.
  • 3. SAP modulesSD : Sales & Distribution FI : Financial AccountingMM: Material Management Finance FI-AM : Assets ManagementWM : Warehouse Management CO : ControllingPP : Production Planning PS : Project System SD FI MM CO PP AM Logistics SAP QM PS PM WF IS Global toolsQM : Quality Management HRPM : Plant Maintenance WF : Workflow Modules in PROJECT IS : Industry Solutions Human MM module Resources
  • 4. SD FI MM CO PP AM QM SAP PS PM WF IS HRMM Materials Management MM is a component of Logistics in SAP that focuses on inventory management, warehouse management, vendors and purchases.
  • 5. MM overview Material planning Purchasing Production External procurement Internal procurement MM Goods receipts Storage areas Invoice MASTER managementverification DATA Inventory management •Materials •BatchesInvoice entry Goods issue •Vendors Stock transfers •Purchasing info record •Source list Financial accounting Sales
  • 6. Procurement Cycle Workshop Agenda Attendees:  Business Managers, Process Owners Topics:  Master Data  Procurement Process Overview  Reporting
  • 7. Procurement Organizational and Master Data Business Process for Procurement Reporting and Analysis
  • 8. Procurement The primary SAP R/3 SD FI application modules that Sales & Financial Distribution Accounting support the Procurement MM Materials CO process include: Manage- Controlling PP ment AM  Materials Management Production Fixed Assets Planning R/3 Manage- ment  Purchasing QM Client / Server PS  Goods Receipts Quality Project Manage- ment PM ABAP/4 System  Invoice verification WF Plant Main- Workflow tenance HR IS  Financial Accounting Human Industry Resources Solutions  Payment processing  Materials Valuation
  • 9. Organizational Elements The SAP R/3 Procurement business process uses the following R/3 organizational elements: COMPANY CODE Plant Storage Location Company Code Purchasing Organization Purchasing Group
  • 10. Master Data The following master data is used in the Procurement cycle:  Material Master  Vendor Master
  • 11. Master Data: Material Master  The material master record contains all data required to define and manage material. It integrates data from manufacturing, sales and distribution, purchasing, accounting and other departments.  The material master is used as a source of data for purchase order processing throughout the procurement cycle.
  • 12. Material Master Primary Views Engineering/ Purchasing DesignSt t MRP Sales A Stocks in plant/ Work B storage location scheduling Accounting Material Master Storage
  • 13. Material Master Organizational Levels General data General data Material number Description Client Units of measure Plant-specific data Planning data Manufacturing data Purchasing data Plant Valuation data Storage Location location- specific data specific data Storage Location Stock quantities Stock quantities
  • 14. Master Data: Vendor Master The vendor master includes all data necessary for processing business transactions and corresponding with vendors. Information is shared between the accounting and purchasing departments. Data is grouped into three categories. • General data • Accounting data • Purchasing data
  • 15. Procurement Organizational and Master Data Business Process for Procurement Reporting and Analysis
  • 16. Procurement Environment 1. Requirements Purchase Order 8. Payment Determination 2. SourceVendor Determinationinvoice ? RUHR TRUCKING 7. Invoice Verification 3. Vendor Selection 6. Goods Receipt and Inventory Management 5. Order Follow-up 4. Order Processing
  • 17. The Procurement Process Purchase Purchase Goods Invoice Requisition Order Receipt Processing for Goods/ Vendor Services invoice Purchase Purchase Requisition Order 10 10 20 20 30 30 Planning, Reporting, and Analysis
  • 18. Purchase Requisition Purchase Purchase Goods Invoice Requisition Order Receipt Processing for Goods/ Vendor Services invoice Purchase Purchase Requisition Order 10 10 20 20 30 30 Planning, Reporting, and AnalysisPurchase Requisitions:  Request or instruction to the purchasing department to procure a certain quantity of a material or service on or by a certain date.  Are created directly by a requesting department or automatically via material requirements planning (MRP).  Are internal documents not used outside the company.
  • 19. Purchase Requisition Processing MRP Direct Entry Purchase Order Purchase requisition Release strategy Determine source of supply
  • 20. Purchase Order The Procurement Process Purchase Purchase Goods Invoice Requisition Order Receipt Processing for Goods/ Vendor Services invoice Purchase Purchase Requisition Order 10 10 20 20 30 30 Planning, Reporting, and Analysis Purchase orders:  Represent the formal approval of a purchasing transaction with a vendor.  Identify the following items such as:  Vendor  Material and quantity ordered  Price and terms  Delivery date and location
  • 21. Purchase Order Processing Purchase Order Statistics Order • Standard History Direct Entry or Purchase Requisition Purchase Requisition Stock Material Consumable Material Account Assignment Service (cost center, asset, internal order)
  • 22. Processing Purchase Orders Purchase Reference Contract requisition document Purchase Vendor order 10 20 30One-time vendor
  • 23. Goods Receipt The Procurement Process Purchase Purchase Goods Invoice Requisition Order Receipt Processing for Goods/ Vendor Services invoice Purchase Purchase Requisition Order 10 10 20 20 30 30 Planning, Reporting, and Analysis Goods receipts record the inward movement of goods or materials by:  Verifying the receipt against the order.  Valuating material at purchase order price.  Creating material and accounting documents to record the event.  Updating the purchase order history.  Providing basis for invoice verification (2nd part of 3-way match).
  • 24. Goods Receipt for Stock Material Purchasing Documents Items Goods 1. 2. Receipt 3. RUHR RUHR TRUCKING TRUCKING Vendor Warehouse/Stores Entering the goods receipt increases the inventory level of a material that is procured for stock.
  • 25. Results of a Goods Receipt PostingG/L Accounts: Accounting DocumentStock Account Stock QuantityConsumption Account Consumption StatisticsGR/IR Account Goods Receipt Posting Material Document Point of Consumption Cost center Order Purchasing Data: Goods Receipt Order item Slip Order history
  • 26. Material Movements Through IM and WM Material Movements Flow:  Transfer Requirement (TR)  Transfer Order (TO)  Confirm Transfer Order
  • 27. Invoice Processing (1) The Procurement Process Purchase Purchase Goods Invoice Requisition Order Receipt Processing for Goods/ Vendor Services invoice Purchase Purchase Requisition Order 10 10 20 20 30 30 Planning, Reporting, and AnalysisInvoice verification: Matches the vendor’s invoice to the purchase order and the goods received (3rd part of 3-way match). Matches price, and quantity. Updates the purchase order and its history. Updates accounting information.
  • 28. Invoice Verification Environment G/L accounts: G/L Accounts Vendor Purchase Invoice ? Order Assets Invoice Verification Cost Centers Vendor Invoice ProjectsGoods Receipt Orders Material Master Vendor Master Posting an invoice in the SAP System Conditions updates purchasing and accounting dataInvoice verification accesses data from purchasing, inventorymanagement, material master, and vendor master files.
  • 29. Invoice Processing (2) The Procurement Process Purchase Purchase Goods Invoice Requisition Order Receipt Processing for Goods/ Vendor Services invoice Purchase Purchase Requisition Order 10 10 20 20 30 30 Planning, Reporting, and AnalysisInvoice Payment: Selects invoices for payment based on the payment terms in the vendor master or purchase order. Generates payment for released invoices. Updates accounting information.
  • 30. Vendor Payment Vendor Bank Financial Payment Accounting 1000 program 1000 Motor Sports International Released invoice
  • 31. Procurement Integration PP FI FI Purchase requisition Purchase Requisitions Goods Receipt ? Invoice Verification Released invoice
  • 32. Procurement Organizational and Master Data Business Process for Procurement Reporting and Analysis
  • 33. Reporting and Analysis  Standard Reporting provides List Displays by:  Vendor  Material  Account assignment  Material Group  Purchase order number  General Analysis  Order Value Analysis  Inventory Transaction Analyses
  • 34. Logistics Information System Logistics Logistics Information Library Information SystemsSales Purchasing Shop Floor InventoryInformation Information Information ControllingSystem System System Sales and Materials Production R/3 Logistics Distribution Management Planning Processing (SD) (MM) (PP) Systems
  • 35. Thank you for your kind attention! Dilip Sadh

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