MM-Overview

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  • You can create a request for quotation to determine the source of supply for a material or service. After sending the requests for quotation to the desired vendors, you can enter the quotation received. You can compare the quotations received using a price comparison list. You can then select the most favourable quotation and convert it into a purchase order. If required, the R/3 system generates rejection letters for quotation not accepted. For goods receipt referencing a purchase order, the system compares the goods receipt quantity with the purchase order quantity. You can set under delivery and over delivery tolerances in the purchase order. In Invoice Verification, you enter the vendor invoices received and check the contents and prices for accuracy. If a purchase order is referred to during verification, the system checks the accuracy of the contents using information in the purchase order and goods receipt.
  • A purchase order is a formal request to a vendor to supply certain goods or services under the stated conditions. Purchase orders can be created without reference, or with reference to a purchase requisition, a RFQ or another purchase order. When you enter the purchase order data, the system suggests values to use. For example, the ordering addresses, as well as the terms of payment and freight (Incoterms) are suggested from the vendor master record. If you have maintained a material master for a certain material, the material groups, amongst other things, are suggested for you. If a purchasing info record already exists in the system, a default price is copied to the purchase order. The purchase order is either sent to a vendor or you carry out a stock transport order in another plant belonging to your company or group. With a stock transport order, you can take into account the associated freight costs in the purchase order.
  • Posting a goods receipt to stock with reference to a purchase order has a number of advantages for you, including: the goods receiving department can check whether the goods delivered are what was actually ordered. the system suggests data in the purchase order when you enter the goods receipt (for example material ordered, quantity) which makes it easier to enter the goods receipt and check overdeliveries and under deliveries when goods arrive. The purchase order is updated with the deliveries and purchasing department can generate reminders for overdue deliveries When a goods receipt to warehouse is posted, a material document is created that contains information such as the material delivered and the quantity delivered. The storage location in which you place the material into stock in the associated plant is recorded. In transaction relevant for material valuation, at least one accounting document is created which records the effects the material movement has on the value of the stock.
  • In Materials Management, the procurement process is completed by Invoice Verification. The invoices and credit memos are entered and checked for accuracy of the contents and prices. However, payment related transactions are carried out only in Financial Accounting (Accounts Payable). Only information is passed on to FI by Invoice Verification. Thus, it is a link between Materials Management and external or internal accounting. When you enter an invoice with reference to a purchase order, the system suggests data from the purchase order and the goods receipt for the purchase order, for example, vendor, material, quantity still to be invoiced, terms of payments and so on. If there are variances between the purchase order or goods receipt and the invoice, the system warns the user and blocks the invoice for payment, if necessary. Posting the invoice completes the process of Invoice Verification. The purchase order history is updated and Financial Accounting can pay the open invoice item.
  • When you create a material master record, you must assign the material to a material type. The latter defines certain attributes of the material and has important control functions. The material type defines the procurement type for a material, for example. The procurement type indicates whether the material is produced in-house, procured externally or both. Together with the plant, the material type determines the inventory management requirement for a material. That is to say, it determines, whether changes in quantities are updated in the material master record. Whether changes in the value of the material are also updated in the stock accounts of FI. Furthermore, the material type determines which accounts are to be posted when a material enters or leaves the warehouses or stores. The standard material types NLAG and DIEN are available for materials that cannot or are not intended to be stored (kept in stock) and for simple services respectively: NLAG - non-stock material is material that is not stored but is used or consumed immediately. DIEN - Services are procured externally.Since they obviously cannot be stored, they are also regarded as being consumed immediately. A material master record belonging to this material type can always contain purchasing data.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.
  • 07/19/11 In the R/3 system, the external procurement is structured in the following way: Determination of requirements : The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition. Determination of source of supply : The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations. Vendor Selection : The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option. Purchase Order Processing : When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs. Purchase Order Monitoring : The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors. Goods Receipt : By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances. Invoice Verification : Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt. Payment Processing : Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.

Transcript

  • 1. Key User Training - MM
  • 2. MM Overview Recording Requirements Placement of orders Follow up for orders Vendor Invoice Verification Inventory Valuation Material Receipts Stock Adjustments Material Issues Materials Management
  • 3. The Procurement Process Planning, Reporting & Analysis RFQ / Quotation Source Determination Pur. Order Purchase Order Goods Receipt Invoice Processing
  • 4. Purchase Order Master Data Vendor Another Plant Purchasing Purchase Requisition 10 20 30 40 Request for Quotation 10 20 30 40 Purchase Order 10 20 30 40
  • 5. Goods Receipt Goods Receipt Area Another Plant Vendor Accounting Document Purchase Order 10 20 30 40 Material Document
  • 6. Invoice Processing Purchase Order 10 20 30 40 Material Document Invoice Verification Master Data Payment Processing Vendor Invoice Invoice Document 132451 A/c Dr 1000 165234 A/c Cr 1000
  • 7. Procurement Types
  • 8. Consumable Material Consumable materials are materials or services that are procured directly for an account assignment object. Inventory Management is not carried out. Examples of consumable materials are: office materials, computer systems, grease, welding rods. The system automatically updates consumption of materials with a material master record.
  • 9. Account Assignment Objects Purchasing Document Account Assignment A/c Assignment Categories A: Asset K: Cost Centre F: Order P: Project
  • 10. Account Assignment (contd..) Receipts Receipts directly posts consumption against department. Consuming Department Issues Consuming Department Issue is not required.
  • 11. Procurement for Stock Materials Entry of material number required. No account assignment category. Posting to stock accounts. Quantity and value updated in the material master. Moving average price is updated.
  • 12. Procurement for Consumables Entry of material number not required, but is possible. Account assignment category mandatory. Posting to consumption accounts. Consumption update for materials with material master only.
  • 13. Scope of Inventory Management Material Stocks Goods Receipts Goods Issues Stock Transfers Physical Inventory
  • 14. Integration of Inventory Management Inventory Management Controlling Goods Issue to Prodn or Cost Centre creates a costing document creation. Financial Accounting Goods Receipt / Issue causes a stock / consumption posting in respective accounts. Planning Goods Receipt / Issue updates the stocks and hence the planning situation. Production Confirmations entered in the production order leads to goods issues and / or receipts.
  • 15. Material Movements in IM Material Movements Goods Issues Transfer Postings Goods Receipts
  • 16. Types of Stocks Normal Stocks Quality Inspection Stock Unrestricted Stock GR Blocked Stock Blocked Stock Special Stocks Consignment Stock Sales Order Stock Project Stock Vendor Stock
  • 17. Goods Receipt for Stock Materials Vendor Purchase Order 10 20 30 40 Box 2 Box 3 Box 1 Goods Receipt Warehouse
  • 18. Effects of Goods Receipt Goods Receipts Material Delivery Material Master - Stock quantity, value and price (moving average) are updated Quality Management - Creation of an inspection lot to trigger a quality inspection. Accounting - Stock and consumption account are updated through accounting document. Purchasing - Purchase order history and PO are updated. Inventory - Stock (may be quality inspection) is updated through a material document.
  • 19. Goods Issue Account assigned Purchase Order Goods Receipt against PO Consumption Posting (Same as Goods Issue) Production Order for BOM Materials Goods Issue against Prodn Order Stock and Prodn Order updated with consumption Reservations for Non BOM Materials Goods Issue against Reservation Update of Stock, Reservation & Cost Object
  • 20. Effects of Goods Issue Material Master - Stock quantity, value are updated. Accounting - Stock & Consumption accounts are updated through accounting document. Production - Relevant Production Order / Run Schedule Hdr updated with qty / value Inventory - Unrestricted Stock quantity is updated through a material document. Controlling - Material Costs are posted into the cost object through Costing Document. Production Requirements Goods Issue Other Requirements
  • 21. Stock Transfers Logical Quality Inspection Unrestricted Use Unrestricted Use Blocked Stock Project Stock Unrestricted Use Storage Location 1 Storage Location 2 Plant 1 Plant 2 Plant 1 Vendor 001 Physical
  • 22. Effect of Transfer Postings No accounting postings created normally (except in certain specific cases) Stock quantity reduced in one location / stock type and increased in the other. Material document is created for every transfer to record the stock movement.
  • 23. Data in SAP Transactions Placing Orders, Material Receipts / Issues, Creating Production Orders, Booking Vendor Invoices Material Data Vendor Data Bill of Material Routing Purchase Order Contract Material Movements Production Orders
  • 24. Data in SAP (contd…) Master Data Central Repository, used by various departments. Created once and changed if required. Transactions use these data repeatedly. Examples : Material Master, Vendor Master, BOM, Routings Transaction Data Created when a transaction is carried out. Record of the details of a transaction. Reports use the transaction data. Examples : Purchase Orders, Production Orders, Material Receipts.
  • 25. Material Master Structure Various departments use the material master for their day to day activities. Various departments need different data for the same material. Purchase Planning Sales Stores Production
  • 26. Org. Levels in Material Master For the same material, different data is to be maintained, depending on organizational levels Material is In-house manufactured at Plant 1 Stock transfer from Plant 1 to Plant 2 Lead time for Plant 1 is for e.g 10 days Moving average price of say Rs 230.00 Lead time for Plant 2 is for e.g 8 days Moving average price of say Rs 234.50
  • 27. Org. Levels (contd…) Material Master
    • Basic Data
    • Purchase Text
    • Sales Text
    • Purchasing
    • Planning (MRP)
    • Work Scheduling
    • Sales Gen. Data
    • Sales Org Data
    Material master data is organized at various Organizational levels. Sales Org Level Data Client Level Data Plant Level Data
  • 28. Material Master : Views Basic Data Sales Data Purchasing Data Costing Data Accounting Data Planning Data Storage Data Scheduling Data Material Master
  • 29. Material Type Raw Materials Operating Supplies Semi-finished Products Spare Parts Finished Products Non-Valuated Trading Goods Others Material Type
  • 30. Control using Material Type Material Type
  • 31. Material Types (contd…) Some typical examples of control functions:
  • 32. Material Groups Groups the materials as per some common defined criteria. Some typical examples are Plastic Components, Rubber Components, Iron & Steel. Must be entered in purchasing documents if purchasing is done without any material master. Can be used for analysis / reporting in Purchasing / Inventory. Can be used to setup approval (release) procedures for Purchase Requisitions. May be changed in the material master, but distorts the analysis.
  • 33. Material Valuation Paramaters