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1. Application SAP for Materials
Management
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2. WHAT DO WE HAVE IN THIS
PRESENTATION????
PHASE 1 BASICS OF SAP
 What is SAP?
 SAP the company
 Origin and Evolution of SAP
 Reasons why company implements SAP
 Benefits from SAP
 Failures of SAP
 Modules of SAP
 Markets of SAP

3. WHAT DO WE HAVE IN THIS
PRESENTATION????
PHASE 2 : SAP MM- MODULE
• Material flow
• Production Planning and control
• Production Planning systems
• Master Production Schedule
• Material Requirement Planning
• Bill Of Material
• Purchasing
• Inventory Management
• Overview Of SAP MM - module

4. WHAT IS SAP?????
SAP ( ess aay pee) stands for
Systems, Applications , Products
in Data Processing .
SAP is an integrated business
solution software comes
under Enterprise Resource
Planning. (E R P)

5. S A P INTRODUCTION…………….
 THE SAP SYSTEM IS A COLLECTION OF SOFTWARE
THAT PERFORMS STANDARD BUSINESS FUNCTION.
 IT PROVIDES A COMPLETE SOLUTION TO
STANDARD BUSINESS REQUIREMENTS.
 IT INCORPORATES CONCEPT OF ERP BUSINESS
PROCESS PLANNING INTO AN INTEGRATED
SOLUTION FOR BUSINESS APPLICATIONS.

6. THE COMPANY……..
 SAP the company was founded in Germany in 1972
by five ex- IBM engineers .
 Being incorporated in Germany the full name of
parent company is SAP AG , located in Walldorf ,
Germany .
 World’s Third largest independent software provider
 Serves more than 10 million global customers
worldwide in more than 120 countries .
 Now 70 – 80 % top companies in their respective
fields have implemented SAP.

7. HOW DID SAP EVOLVE ???
INVENTORY CONTROL 1960
MATERIAL REQUIREMENT PLANNING
1980
ENTERPRISE RESOURCE PLANNING 1990
THE COMPANY
PRODUCTS
MODULES
SAP
R/3

8. SAP R/3 VERSION(R=Realtime,3=3tier)
1st tier
PRESENTATION TIER
2nd tier
LOGIC TIER
3rd tier
DATA TIER
data

9. SAP UNIQUE ARCHITECTURE
Presentation SAPGUI
Terminal
process
R/3 Application
Dispatcher
Tables
Work Work Programs
Buffer process process
Database
DB

10. REASONS WHY A COMPANY IMPLEMENTS SAP.
 For better decision making.
For strategic planning.
For higher system performance.
To gain competitive advantage.
To meet key business goals.
To gain increased solution flexibility.
Enables a company to link its business functions.
Ties together disseperate business processes.
Enabling business change.
Replacement of an outdated inefficient IT architecture.

11. BENEFITS FROM SAP
 Simultaneous visibility across whole enterprise
 Offers good understanding of current situation of
company
 Offers high security and info consistency
 To choose best marketing strategy
 Offers co ordination across the company
 Enables to focus attention on core process.

12. GROWING COMPANIES
NEED TO WORK SMART
AND MOVE FAST TO BE
SUCCESSFULL

13. FAILURES OF SAP
TWO MAJOR FAILURES
CLIENT FAILURE
SYSTEM FAILURE

14. Client Failure:
 Incorrect application Of software.
 Poor analysis of cost and benefits.
 Lack of trained personnel
 Not enough systems or probably
computers to handle.

15. System Failure
 Localization of software.
 Customization for different accounting
systems and tax systems which changes
from country to country.

16. SAP IS MADE FOR…>>>
 ALL RANGE OF COMPANIES
 DIFFERENT SUITE ARE AVAILABLE FOR
DIFFERENT RANGE OF COMPANIES
 DESIGNED TO SATISFY THE INFORMATION
NEEDS FOR ALL BUSINESS FUNCTIONS
 DIFFERENT MODULE SELECTION FOR
DIFFERENT AREA OF BUSINESSES
 MULTILINGUISTIC, BASE INDEPENDENT-
works on any operating systems.

17. WHAT IT TAKES TO
IMPLEMENT SAP……
THREE MAJOR FACTORS
 cost……
 timeframe……
 hardware……

18. GENERAL AREAS OF APPLICATION OF SAP
 Financials
 Human Resource
 Customer Relationship Management
 Supplier Relationship Management.
 Product life Cycle Management
 Business Intelligence
 Supply Chain Management

19. Modules or Products of SAP
 FI Financial Accounting
 CO Controlling
 AM Asset Management
 PS Project Systems
 MM Materials Management
 QM Quality Management
 PP Production Planning
 SD Sales and Distribution
 PM Plant Maintenance

20. Markets of SAP………….
 Manufacturing
 Chemicals
 Automotive
 Transportation and Tourism
 Consumer goods
 Government, Public administration
 Health Care and Hospitals
 Educational Institutions and Research

21. Ok Now How does SAP
we know helps me as an
Basics of Mechanical OR
SAP!! Production
engineer??

22. As a Mechanical or Production
engineer areas where SAP applies
 PP - production planning
 MM- material management
 SD- sales and distribution
 PM- plant maintenance
 QM – quality management

23. AS A MECHANICAL ENGINEER
AREAS WHERE SAP APPLIES…….
 PP - production planning
 MM- material management
 SD- sales and distribution
 PM- plant maintenance
 QM – quality management

24. GENERAL OVERVIEW OF MANUFACTURING
INDUSTRY
ADMIN FINANCE PURCHASE STORES
SAP
PROD. SHOPS MAINTENANCE R&D / D&D

25. The Integrated Supply Chain
Product Flow
Demand
Supplier Purchasing Production Distribution Retailing Customer
Financial Human
Control Resources
Information Flow
Supply Chain Management: The delivery of enhanced customer and economic valu
through management of the flow of physical goods an
associated information.

26. MATERIALS
MANAGEMENT…….

27. Material Flow
 Flow of materials used to convert raw
materials to finished goods is material flow.
 Materials Management is a coordinating
function responsible for planning and
controlling materials flow. Its objectives are as
follows:
 Maximize the use of firm’s resources.
 Provide the required level of customer service.

28. Materials Management
 MM – Materials management can reduce costs by
being sure that the right materials are in the right
place at the right time and the resources of the
company are properly used.
 There are several ways of classifying this flow of
materials.
 A very useful classification, Manufacturing Planning
and Control, Physical Supply/ Distribution.

29. Manufacturing Planning And
Control - MPCS
 Manufacturing planning and control is responsible for the
planning and control of the flow of materials through the
manufacturing process. The primary activities carried out are
as follows:
 Production planning
 Implementation and control
 Inventory management
 All three works together for greater efficiency

30. Inputs Needed to MPCS
components
Product description Bill of Material subassemblies
OPERATION REQUIRED
Process Specification Route sheet
SEQUENCE OF OPERATIONS
Equipments & Accessories
TIME REQUIRED
Std. time needed
Facilities needed Work center file
Quantities MRP

31. MATERIAL MASTER
Basic purchasing MRP accounting stock costing
Scheduling forecasting evaluation quality
B OM
Flow of inputs
Bill of materials
for release of ROUTING
materials.
Standard cost estimate
In house
MAKING Outsourcing
GOODS ISSUE TOOL ISSUE
GOODS RECEIPT TOOL RECEIPT
USED REWORK SCRAP

32. Physical supply and
Distribution
 Involve all the activities from moving goods from
supplier to customer.
 Activities are:
 Transportation
 Warehousing
 Packaging
 Materials Handling
 Order entry

33. The balancing Act -Priority vs. Capacity
PRIORITY CAPACITY
How many needed Capability
What are needed To produce
When are needed goods
Machinery
Marketplace
Labor
Establishes
Materials
Priorities
resources
Manufacturing
Responsible
To plan
To meet requirements

34. Strategic business plan
 Shows what company wants to achieve in
near future.
 It is based on long term forecasts and
includes participation of marketing, finance,
production and engineering plans.
Production
plan
Strategic
Financial Marketing
Business
plan plan
plan
Engineering
plan

35. Production plan
 Given the objectives set by the strategic business plan, production
management is concerned with the following:
 The Quantities of each product group that must be produced in each
period.
 The Desired inventory levels.
 The resources of equipments, labor, material needed in each period.
 The Availability of resources needed.
 Production planners must device a plan to satisfy market demand within
the resources available to the company.
 This will involve determining the resources needed to meet market
demand, comparing the results to the resources available, devising a plan
to balance requirements and availability.

36. Master Production Schedule
 After the production planning next step in the manufacturing
planning and control process is to prepare a master
production schedule (MPS).
 It forms the link between production planning and what
manufacturing will actually build.
 It forms the basis for calculating the capacity and resources
needed.
 The MPS drives the material requirement plan. As a schedule
of items to be built.
 The MPS and bills of material determine what components are
needed from manufacturing and purchasing.
 It keeps priorities valid. The MPS is priority plan for
manufacturing.

37. Master Production Schedule
 Master Production schedule is plan for production of
individual end items.
 The end items made by the company are assembled from
component and subcomponent parts.
 These must be available in right quantities at the right time
to support the master production schedule.
 The information needed to develop an MPS is provided by:
 The production plan.
 Forecasts for individual end items.
 Actual orders received from customers and stock
replishment.
 Inventory levels for individual end items.
 Capacity restraints.

38. Material Requirement Plan
 The material requirement plan (MRP) is a plan for
the production and purchase of the components
used in making the items in the master production
schedule.
 Material requirement planning is the system used
to avoid missing parts.
 It establishes a schedule (priority plan) showing the
components required at each level of the assembly
and, based on lead times, calculates the time when
these components will be needed.

39. Production plan
Master Production Schedule
MPS
MATERIAL REQUIREMENT PLAN
MRP
Purchasing Production activity control
MANUFACTURING PLANNING AND CONTROL SYSTEM

40.  There are 3 inputs to MRP systems:
 Master production Schedule.
 Inventory records
 Bills of materials

41.  Bill of materials. The bill of material is one of the
most important documents in manufacturing
company.
 Before we make something, we must know what
components are needed to make it.
 To make any product list of components are
needed. This is given by BOM.
 The American Production and Inventory Control
Society (APICS) defines bill of material as ― a listing
of all subassemblies intermediate, parts and raw
materials that go into making the parent assembly
showing the quantities of each required to make an
assembly‖.
 The bill of material shows the components that go
into making the parent.
 It does not show steps or process used to make the
parent or the components.

42. Purchasing
 Purchasing is process of buying.
 Purchasing is responsible for placing order
and for ensuring that goods arrive on time at
correct place.
 It has major responsibility of locating
resources and negotiating prices.

43. PURCHASING….
REQUISITION
PURCHASES DATE SELEC
FIXED VENDOR
AUTO PUR ORDER
A QUOTATION AVAIL B REQUEST FOR QUO
VENDOR SELEC ENTRY FOR QUO
RELEASE FINANCE

44. Purchasing objectives
 Obtaining – goods- required quantity –
quality.
 Obtaining – goods – at lowest cost.
 Ensure – good service and prompt delivery –
from supplier.
 Developing - maintaining - good supplier
relationship.
 Determining purchasing specifications – right
time, right place and at price.
 Selecting right vendor.

45. Inventory management
 Inventories are materials and supplies that a
business or institution carries either for sale
or to provide inputs or supplies to the
production process.
 They contribute 20 to 60 % of total assets.
 As they move on they are converted to cash
and add value to company.
 Hence all the care should be taken to ensure
good management is involved.

46. SUPPLIER
RAW MATERIALS
PURCHASED PARTS
WORK IN PROGRESS
Flow of FINISHED GOODS
inventories
WAREHOUSE
CUSTOMER DEMAND

47. HOW DOES SAP VIEW
MATERIALS MODULE
(MM)???

48. Materials Management (MM)
Overview
 The Materials Management (MM)
module is aimed at managing
procurement and receipt of materials &
services. Materials management also
involves storage, movement, valuation
& consumption of materials.

49. CASE STUDY OF SAP -MM
PROD. SHOP
STORES
SAP –MM
PURCHASE MODULE
MAINTAINENCE

50. MM Overview
 The SAP Materials Management (MM) Module provides a
comprehensive solution for Materials Management within the
integrated supply chain.
 Also, it supports other logistics functions such as plant
maintenance and project management, which also require
materials information.
 MM works as part of an on-line, real-time system for processing,
maintaining and recording integrated transactions.
 Objectives:
 Provide a general overview of the Materials Management
(MM) Module and the relevant sub-modules.
 Identify areas where MM and other SAP modules integrate.

51. PHASES OF MATERIAL MANAGEMENT
MAINTAINING BASIC DATA
MATERIALS PLANNING
PURCHASING
GOODS RECEIVING
INVENTORY MANAGEMENT
WAREHOUSE MANAGEMENT
INVOICE VERIFICATION

52. MM Overview: Procurement
Cycle
Forecast
Material Requirements
Stocks Planning Demand
Requirement
Production Purchasing
(Internal Procurement) (External Procurement)
Invoice
Inventory Management
Invoice
Goods Receipt
Verification
Warehouse
Management
Goods Transfer
Issue Posting
Accounting
Sales and Distribution

53. SAP MM ------ MASTER DATA
 MAINTAINS BASIC DATA TO INITIATE
PROCESS
 CONTAINS VENDOR, MATERIALS, AND
DOCUMENTS
 THE BASE FOR MM MODULE

54. SAP MM ------MRP Material
Requirement Planning
 Responds to the fundamental
manufacturing equation:
 What are we going to make?
 Master production schedule.
 What does it take to make it?
 Bill of materials.
 What have we got?
 Inventory records.
 What do we have to get?
 Material Requirements plan: planned orders.

55. SAP MM----PUR Purchasing
 IT DOES STANDARD PURCHASING
OPERATIONS
 BASIC PURCHASING FUNCTION,
CONTRACTS, QUOTA ARRANGEMENTS,
 THIS IS INTEGRATION OF SD MODULE

56. SAP MM ---IS Purchasing Info
Systems
 IF YOUR VENDOR ARE MORE MM—PUR
WILL
 EVALUATE VENDORS
 COMPARES QUOTATIONS
 OPTS FOR BEST DEAL

57. SAP MM---WM Warehouse
Management
 Performs Storage Unit.
 Storage unit management.

58. MM---IM INVENTORY MGT.
 GOODS RECEIPT
 INVENTORY CONTROLLING
 PHYSICAL INVENTORY

59. SAP MM Applied to tools release
MATERIAL MASTER 17 VIEWS
BOM SCE
Standard
ROUTING Cost
Estimate
MAKING INHOUSE OR OUTSOURCE
U
GOODS ISSUE TOOLS ISSUE R
S

60. GENERAL SCREEN LAYOUT
SYSTEM MENUS
TRANSACTION NAVIGATION
TRANSACTION NAME
TRANSACTION ICONS
TRANSACTION
WORK AREA