3. NCPDM (US National Committee on Physical
Distribution Management) :
"..physical distribution management .. is ..
the integration of one or more activities
for the purpose of planning, implementing and
controlling the efficient flow of raw
materials, in-process inventory and
finished goods from point of origin to
point of consumption..."
Definition: Logistics
4. Resource Management in Logistics
Capacity resources
Capital resources
long-term short-term
Material resources
Logistics chain
Vendor
Production Sales
Purchase orders
Procurement
materials
services
Distributions
products
services
Sales orders
Ware-
house
Ware-
house
Customer
Capital Investment Expense/costs Cash
6. Procurement Process
Order
Order processing
Order follow-up
Goods receipt and
inventory management
MM
Materials
management
6
5
4
Source
determination
2
Vendor selection
3
Invoice
Order
?
Invoice verification
7
Requirement determination
1
MRP
7. Organizational structures in R/3
Organizational units
Company
Controlling areas
Sales organizations Purchasing organizations
Company codes
Plants
Valuation areas
Storage locations/batches/special stocks
16. Material master record
General data
Material number
Description
Units of measure
Technical data
Plant-specific data
MRP/type
Planned delivery time
Purchasing group
Batch indicator
Valuation
Valuation price
Valuation procedure
Valuated quantity
Sales-specific data
Delivering plant
Sales texts
Unit of measure
Palletting instruction
Storage location-
specific data
Storage time
Stockfields
Forecast data
Consumption data
Warehouse Manage-
ment system data
17. Units of measure
Base unit: Piece
Box
(unit of issue)
Crate
(order unit)
Pallet
(sales unit)
4 16 72
19. Maintenance of material
data
Price control
Standard-
price control:
Valuation of
standard price
from the material
master record
Moving average
price control:
Final delivered price
(such as purchase
order price) influences
the valuation price
S V
22. The vendor
Goods receipt
Bank
order account
?
=
Invoice verification
purch
ase
order
Invoice
Material
Purchasing
Payment
DEUTSCHE
MARK
DEUTSCHE
MARK
DEUTSCHE
MARK
Vendor
23. Organizational levels of vendor
master record
General data
Purchasing
organization data
Company code
data
Company code
001
24. Vendor master record
General data
Address
Communication
Purchasing data
Order currency
Incoterms
Minimum order value
Accounting data
Bank data
Payment transactions
Account management
Valid
for the whole group
Valid
for one purchasing
organization
Valid
for the whole group or
for one company code
28. Purchasing info records
Vendor A
Material
Piece
%
Conditions
USD
Info record
Vendor B
Stock material M1
Consumable
material M2
Service S1
Info record
Info record
Info record
Info record
29. Data in the purchasing info record
General data
Vendor data
Origin data
Order unit
Texts
Control data
Delivery time
Minimum quantity
Tolerances
Prices and
conditions
Gross price
Discounts
Freight
Price history
Purchasing statistics
Changes
30. Pricing
Records for condition type
No valid record exists
Valid record exists
Pricing procedure RM000
Item 10 120 pcs
PB00 Price $99
$100 for 1 pcs
$99 for 100 pcs
$98 for 200 pcs
1.Price PB00
2.Discount RA00
Access sequence: PB01
1. Outline agreement
2. Vendor/material/
organizational level
3. Vendor/material group/
organizational level
Condition type: PB00
Access sequence: PB01
1
2
3
4
Purchase order
Vendor 123
Purchasing organization 2000
5
Scale
31. Conditions
Gross price
Discount %
Net price:
Fixed freight
charge +
Effective price:
PB00
RA01
FRA1
Condition type
Calculation type
Scale basis
Price/quantity
scale
Pricing procedure
38. Structure of a purchasing
document
Item 1
General data
Conditions
Texts
Schedule line
Additional
data for item 1
Purchase
order history
.
.
.
Item 2
.
.
.
Additional
data for item 2
.
.
.
Purchasing
document ocument
General data
statistics
Messages
Conditions
Document header
45. Materials planning and
control procedures
Requirements
planning
Deterministic MRP
Consumption-based
Reorder point
procedure
Stochastic
VM, VB VV
Time
Consumption
Stock level
Time
47. Net Requirements Calculation in the
Reorder Point Procedure
Reorder level
Purchase order
Fixed planned
orders
Fixed purchase
requisition
Purchase order proposal
to the amount of
the lot size
Warehouse stock
Shortage
Comparison
48. Safety Stock and Reorder Level
Replenishment
lead time
Reorder
level
Safety stock
Time
Stock
Replenishment
lead time
Service level
MAD
Daily
x Replenishment
lead time
49. Net Requirements Calculation in
Forecast Based Plng.
Fixed inward movements
e.g. purchase orders
Purchase orders proposals
Planned orders
Purchase requisitions
Lot size
Warehouse stock
Shortage
Comparison
Forecast requirements
Safety stock
50. Lotsizing procedures
Exact lot
size
Fixed lot
size
Replenish to
maximum stock
level
Static
procedure
Periodic
procedure
Optimum
procedure
Lot sizing procedures
Part period
balancing
Groff procedure
...
53. Dynamic Planning Calculation
Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365
Price : $ 20
Lot fixed costs: $ 100
Storage costs percentage : 10 %
Requirement
date
Req.
quantity
Lot size Fixed costs Storage costs
06.07.1994 1000 1000 100 0
13.07.1994 1000 2000 38.36
20.07.1994 1000 3000 76.71
27.07.1994 1000 4000 115.07
Optimum
54. Part Period Balancing
Req. x Price x Storage costs % x Time in storage
Storage costs =
100 x 365
Price : $ 20
Lot fixed costs: $ 100
Storage costs percentage : 10 %
Requirement
date
Req.
quantity
Lot size Fixed
costs
Storage
costs
Total storage
costs
06.07.1994 1000 1000 100 0 0
13.07.1994 1000 2000 38.36 38.36
20.07.1994 1000 3000 76.71 115.07
27.07.1994 1000 4000 115.07 198.78
Optimum
55. Least Unit Cost Procedure
Req. x Price x Storage costs x Time in storage
Storage costs =
100 x 365
Price : $ 20
Lot fixed costs : $ 100
Storage costs percentage : 10 %
Requirement
date
Req.
quantity
Lot size Fixed
costs
Storage
costs
Total
costs
Unit
costs
06.07.1994 1000 1000 100 0 100 0.10
13.07.1994 1000 2000 38.36 138.36 0.07
20.07.1994 1000 3000 76.71 215.07 0.11
27.07.1994 1000 4000 115.07 330.14 0.08
Optimum
56. Scheduling in the case of external
procurement
1 2
1
2
Forward scheduling
Backward scheduling
Replenishment lead time
Replenishment lead time
GR processing time
GR processing time
Today + 1 Purch. order
delivery date
MRP
delivery date
t
t
Purch.order
delivery date
MRP
delivery date
Start /
release date
66. Processing Quotations:
Example
Enter price and pricing conditions
1
Vendor B
Quotation for
RFQ 2
Item 10
Gross price: 400/t
Surcharge: 50%
Vendor C, B
- Rejection-
Thank you for your
offer. Unfortunately,
we cannot place an
order at this time .....
Vendor A
Quotation for
RFQ 1
Item 10
Gross price: 400/t
Discount: $50
Vendor C
Quotation for
RFQ 3
Item 10
Gross price: 400/t
Fixed costs: $40
Vendor A
- Order -
Mat. Qty Price
Steel 2t 350/t
Create info record or reject quotation
3
Steel 2 t
Price
350/t 480/t 520/t 450/t
Quotation 1 Quotation 2 Quotation 3 Mean value
quotation
Compare quotations using price comparison list
2
75. Inventory management
Warehouse 1 Warehouse 2
Goods receipt
Goods issue
Old system Vendor In-house
production
Consumption
Scrapping
Transfer posting
76. Documents for goods movements
Goods movement
Material
A
Material
document Accounting
document
Warehouse
78. Split Valuation: Structure
Valuation area 0001
Material 1
Valuation category H
Quantity 100
Mvg. av. price 5.20
Valuation
Plant 0001
Material 1
Plant
Storage
location
Batch
Stor. loc. 0001
Quantity 30
Stor. loc. 0002
Quantity 70
Italy
Quantity 10
France
Quantity 20
Italy
Quantity 30
France
Quantity 40
Quantity 40
V - price 4.00
Quantity 60
S - price 6.00
Valuation type
Italy
Valuation type
France
79. Updating the stock situation
Stock situation
On a quantity basis
Material master
Special stocks
Stock fields per
plant, storage location
and special stock
On a value basis
G/L accounts
Debits and credits
per company code,
period and, possibly,
business area
80. Entering material documents
Movement type
Material document item
Account determination
Consumption update
Quantity update
Indicator for printout
Field selection
81. Standard analyses
Analyses in inventory
management
Analyses
Stocks
overviews
Stock per material
Material
movement list
Inventory
control
Plant stock availability
Reqs./stock list
Warehouse stock list
ABC-Analyses
Stock value
Range of coverage
Slow-moving items/
inventory turnover
83. Purchase Order Views in Inventory
Management
Purchase order
General
Purchase order
history
Changes
Statistics
$ Conditions
01/01/95
10/01/95
30/03/95
Schedule
lines
Account assignment
Texts
Header
Vendor Conditions
Texts Output
Items
84. Determining the purchase order
during GR
Manuell
Goods receipt for
purchase order
Purchase
order
List of open purchase orders by
- vendor
- material
- delivery plant
Matchcode
Manual
85. Stock types for goods receipt
Account assignment object
Unrestricted-use stock
Stock in quality inspection
Blocked stock
Goods receipt blocked stock
Warehouse
Cost center
Order
......
Vendor
86. Posting procedure for goods
receipt (example)
Stock account
Stock value GR/IR clearing
Price differences
( ) ( )
Update for goods receipt
88. GR w/o Reference to a Purch. Order or
Production Order
Goods receipt
Preplanning
without purchase order
without production order
Initial entry of stock balance
Without purchase order
Without production order
Goods receipt of by-products
Delivery free of charge
Returns from customer
90. Transfer posting
Transfer posting
Stock transfer
Miscellaneous
transfer postings
From plant
to plant
From storage
location to
storage
location
From
material
to material
From QM to
unrestricted use
From
consignm.
stores to
warehouse
91. Valuation in the Case of Stock
Transfer
Receiving plant
Issuing plant 100 pcs
Stock plant 01
( a ) 200.00
( b ) 200.00
Stock plant 02
300.00
200.00
Expense / revenue
from stock transfer
100.00
Standard-
price 2.00
(a)
(a)
(b)
(b)
Moving average
price 2.00
Standard-
price 3.00
Any moving
average price
94. Effects of goods issue
Material document
Accounting document
G/L account.
Stock account
Consumption account
...
Reservation
Order
Stock quantity
Consumption statistics
...
Point of consumption:
Cost center
Order
...
Warehouse mgmt:
Transfer order
Quality management:
Inspection lot
Goods issue
95. Posting method for goods issue
Stock account
Stock value Consumption account
Update on goods issue
96. Special Stocks and Special
Procurement Types
• Consignment
• Subcontracting
• Stock Transfer with Stock Transport Order
• Third party processing
• Returnable Transport Packaging
• Pipeline handling
• Sales order stock
• Project Stock
97. Company’s Own
Special Stock
• Stock of material provided to Vendor
• Consignment stock at Customer
• Returnable packaging stock at Customer
103. Physical Inventory
• Can be carried out for Company’s own stock and
Special Stock
• Inventory for Company’s own stock and Special stock
must be taken separately in different physical
documents
• Physical inventory can be taken for
Unrestricted-use stock in the warehouse
Quality inspection stock
Blocked stock
104. Physical inventory procedure
Create physical
inventory document
1
Set blocking
indicator
2
Physical
inventory document
4
Post differences
Batch-Input
Batch-Input
Arrange
recount
Change
count
6
List of
differences
5
Print physical
inventory
document
3
5a
5b
108. Posting an invoice
Purch. order history
Goods receipts
Down payments
Invoices
Material master
Moving average
price
Value
Invoice
relating to
purchase
order
Post
A
XX
B
XX
GR/R account
Vendor account
Doc. No. 51000123
Vendor 100-
GR/R 100+
109. Variances
Goods receipt
Quantity
Invoice
50 pieces
WE 40
Price
Goods receipt
Invoice
10 pcs = 200g
Date
Invoice
Purchase
order
$5
Invoice
$6
at
= 2 kg
Purchase
order
10 pieces at
$20/kg
Order
price quantity
04/12/95
Invoice
10 pieces = 2.5 kg
26/11/95
10 pieces = 250 g
Purchase
order
Planned
delivery date
110. Tax
Company Material value
+Tax on sales/
Purchases
Material value
+ input tax
Tax office
Tax payable
Vendor
A A
A
Customer
112. Postings at Standard Price
Purchase order price 2.40 / pc
Invoice price 2.20 / pc
Stock account
( 2 ) 200.00
Exp. / revenue Price difference
( 2 ) 40.00 20.00 ( 3 )
Vendor / general ledger
220.00 ( 3)
GR / IR clearing account
( 3 ) 240.00 240.00(2)
Event Stock Total value Standard Moving av.
price price
( 1 ) Initial situation 100 200.00 2.00 2.00
( 2 ) GR for purch. order: 100 @ 2.40 200 400.00 2.00 2.20
( 3 ) IR for purch. order: 100 @ 2.20 200 400.00 2.00 2.10
113. Postings at Moving Average
Price
Stock account
( 2 ) 240.00 20.00 ( 3 )
( 4 ) 240.00 550.00 ( 5 )
10.00 ( 6 )
Event Stock Total value Moving av. price
Exp.. / revenue Price difference
10.00 ( 6 )
( 1 ) Initial situation 100 200.00 2.00
( 2 ) GR for purch. order: 100 @ 2.40 200 440.00 2.20
( 3 ) IR for purch. order: 100 @ 2.20 200 420.00 2.10
( 4 ) GR for purch. order: 100 @ 2.40 300 660.00 2.20
( 5 ) Goods issue: 250 @ 2.20 50 110.00 2.20
( 6 ) IR for purch. order: 100 @ 2.20 50 100.00 2.00
Raw material consumption
( 5 ) 550.00
GR / IR clearing account
( 3 ) 240.00 240.00 ( 2 )
240.00 ( 4 )
( 6) 240.00
Vendor / general ledger
220.00 ( 3 )
220.00 ( 6 )
114. INVOICING PLANS
Facility to schedule Invoicing dates for planned
procurement independent of goods and service receipts
Periodic Invoicing Plan
Partial Invoicing Plan
116. Types of Account Determinations
Movement Type based
Transactions
SD
MM
PP
QA
PM
HR
FI
CO
AM
PS
WF
IS
R/3-
Client/Server
ABAP/4
SD
MM
Non-Movement Type
based Transactions
Cond. Technique
117. Grouping Organizational Levels for
Account Determination
Valuation
grouping
code
Plant Company code
Case: valuation area = plant
Chart of accounts
0001
0003
0002
0001
0004
0005
0003
0002
0003
0004
0002
IKR
0001
GKR
118. Grouping of Material Type -
Valuation Class Valuation
class
Account category
reference
Material type
FERT
HALB
HAWA
.
.
.
ROH1
ROH2
ROH3
. . .
0001
0002
0003
0004
7900
3000
3010
3020
3030
3040
3100
3200
119. Grouping of Materials for Account
Determination
Option 1:
Acct. 1
Acct. 2
Acct. 3
Option 2
Acct. 1
Acct. 3
Option 3
ROH
Acct. 1
Acct. 2
Mat 1
Mat 2
ROH
Mat 2
HIBE
Mat 3
Mat 4
Mat 1
ROH
Mat 1
Mat 2
HIBE
Mat 3
Mat 4
FERT
Mat 5
Mat 6
FERT
Mat 5
Mat 6
120. Procedure Part 1: Value String -
Processing Keys
Transaction
Inventory Management Invoice verification
Value String
(Generalized
posting record)
BSX
Processing keys
G/L account number
Material
Invoice
verification
?
=
WRX
191100
300100 425000
KBS
121. Procedure Part 2: Processing Key -
Rules
Transaction
Processing keys
for debit/credit posting
Parameters on which
account allocation
depends
1
Processing Key
(Transaction)
Chart of accounts
Rules
2
122. Procedure Part 3: Rules -
Account Allocation
Rules specify
account determination
key
(Valuation grouping
code)
(Account grouping
code)
(Valuation class)
Account
number
Processing Key
(Selection of
transaction)
Selection of
chart of accounts
123. Account Determination
Procedure: Overview
Legend
Information derived from Transaction type
Information derived from Material Master
Information derived from the organiz. Structure
Main Customizing area
Movement
type based
Transaction
"Type of
Material"
Step 1 or 2
Material
Type
Plant
Value
Posting String
Qty.
Posting String
Step 3
Processing
Key (GBB)
Company Code
Chart of
Account
Valuation
Class
Val. Grouping
Code
Rules
Step 4
G/L Account
Account
Categ. Reference
Material
Master
Type of
Transaction
Non-move-
ment type based
Transaction
Account
modification
Processing
Key (AUF)
124. Automatic Posting: Maintenance
of the Settings
Selection of the
valuation grouping code
1
Selection of the posting transaction
2
Allocation of the G/L account number(s)
per valuation class
(and account grouping code)
3