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SAP MM module presentation by Ashley Chimhanda
- 2. OVERVIEW Materials management is the backbone of Logistics area and helps to manage the procurement and inventory management activities of an organization To GET The Right quality Right quantity of supplies At the Right time At the Right place At the Right cost 5R FEATUR ES AIM Ensures that there is never a shortage of materials or any gaps in the supply chain process of the organization It deals with managing the materials (products and or services) resources of an organization It deals with the Procurement Process, Master Data, Account Determination & Valuation of Material, Inventory Management, Invoice Verification, Material Requirement Planning
- 3. Purchasing External procurement of materials and services And Determination of possible sources of supply for a requirement identified by the materials planning and control system or arising directly within a user department Contracts a type of outline purchase agreement against which release orders can be issued for agreed materials or services as and when required during a certain overall time-frame Inventory management It deals with Management of material stocks on a quantity and value basis Material master It contains data records which are stored centrally and used on a cross application basis. Logistic invoice verification It is situated at the end of the logistics supply chain and this is when the system invoice is matched with the goods delivered. MRP Is used to monitor stock and make automatic requisitions when stocks fall below specified quantities
- 4. ORGANIZATIONAL STRUCTURE The organizational structure forms a framework of a company in which business is conducted.
- 5. Client: Represents a grouping or combination of legal, organizational, business and/or administrative units with a common purpose. Storage Location: A place where inventories are physically kept in a plant and is the least level of an organization in MM. Plant: Operational unit within a company code. Company Code: Company Code represents an independent accounting unit within a client. Each company code has its own balance sheet and its own profit and loss statement.
- 6. MASTER DATA This is a collection of data about an object or person which is referenced whenever it is used in an entry field. Types of Master Data:- Material Master: Is the main source of material specific data in an enterprise. Vendor Master: Contains all required information on a vendor and is maintained by FI & Purchasing dept. Service Master: Contains the description of a service and serves as a source of data for you to draw upon when creating service specifications
- 7. Materials management Determine requirements Source determination Vendor selection Order processing Order- follow up goods receipt and inventory management Invoice verification PROCUREMENT CYCLE
- 8. PURCHASING Purchasing refers to a business or organization attempting to acquire goods or services to accomplish the goals of its enterprise. Task of Purchasing as following :- External procurement of material & services Determination of possible source of supply Monitoring deliveries from and payment to vendors.
- 9. PURCHASING DOCUMENTSPurchase requisition Request for quotation Purchase order Contract Quotation 31. 1. Contract Purchase order ? Quotation B Quotation A RFQ ? Purchasing requisition
- 10. INVENTORY MANAGEMENT Inventory Management is used to manage stocks of merchandise on a quantity and value basis. Task of Inventory Management as include :- Plan, enter and provide evidence of all goods movements. Creation of a document for every goods movement Division of the stock into categories (such as unrestricted-use stock, stock in quality inspection, or blocked stock)
- 11. PROCESSES WITHIN ‘INVENTORY’ Goods Receipt Return delivery Stores Req. Goods issue Material disposal Stock Transfers Reporting
- 12. MRP MRP: It’s main function is to guarantee material availability, i.e. it is used to procure or produce the requirement quantities on time both for internal purposes and for sales and distribution. MRP involves:- the monitoring of stocks the automatic creation of procurement proposals for purchasing Monitoring deliveries from and payment to vendors.
- 13. PROCESS FLOW • A Approve/Change PR • Generate PO/Approve • Execute MRP • Goods Receipt Stores MRP Controller Section Head Buyer/ Procurement manager
- 14. CONTRACTS In MM, a contract is a type of outline purchase agreement against which release orders (releases) can be issued for agreed materials or services as and when required during a certain overall time-frame. Contracts can be :- Centrally Agreed: For an entire company code. Distributed: For one particular plant
- 15. TY TYPES OF CONTRACT
- 16. INTEGRATION How the SAP MM module integrates with some other SAP modules
- 17. Integration with PP Creation of PR for externally procured materials after doing an MRP run in PP. Creation of PR for subcontracting for externally processed operations in a production order(PO). Creation of Reservations for components of a PO during PO creation. Goods Issue of components as soon as components are confirmed for a PO & a Goods receipt of the finished product.
- 18. Integration with FI When a PR for a non stock item is created, the system goes on to update the correct cost center in FI. After a stores req, the system assigns the cost to the relevant cost centre and updates the relevant accounts(giver & given). When a material document is created, postings are done to the relevant accounts and for every mat doc there is a corresponding FI doc. In general any transaction with a monetary value is catered for in FI.
- 19. Integration with SD Third party sales order processing. When you create a delivery for SD sales order then goods issue takes place in the background using movement type 601.
- 20. Integration with PM In the event of a maintenance(breakdown/preventative), a maintenance order is created where there’ll be a GI(MM).
Editor's Notes
- Definition of the materials management module and its scope, The aim of this module is we can indicate with 5R’s those are, To achieve right quality and quantity at right time, right place, with right cost.
- These are the components and functions of MATERIALS MANAGEMENT module in SAP, it includes Purchasing Valuation Inventory management Foreign trade Material master Logistic invoice verification MRP(materials requirement planning) Product catalog and Service master.
- This is the structure of an organization in MM module and sub modules of MM.
- This is the explanation of each factor in organizational structure of module MM in SAP.
- One topic explanation: MM process flow This is the typical procurement cycle for a service or material consists of the following phases Determination of Requirements Materials requirements are identified either in the user departments or via materials planning and control. This can cover both MRP proper and the demand-based approach to inventory control. The regular checking of stock levels of materials defined by master records, use of the order-point method, and forecasting on the basis of past usage are important aspects of the latter. we can enter purchase requisitions our self, or they can be generated automatically by the materials planning and control system. 2. Source Determination The Purchasing component helps to identify potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds the process of creating requests for quotation (RFQs), which can be sent to vendors electronically via SAP EDI, if desired. 3. Vendor Selection and Comparison of Quotations The system is capable of simulating pricing scenarios, allowing us to compare a number of different quotations. Rejection letters can be sent automatically. 4. Purchase Order Processing The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order. As with purchase requisitions, we can generate Pos our self or have the system generate them automatically. Vendor scheduling agreements and contracts are also supported. 5. Purchase Order Follow-Up The system checks the reminder periods we have specified and - if necessary - automatically prints reminders or expediters at the predefined intervals. It also provides us with an up-to-date status of all purchase requisitions, quotations, and purchase orders. 6. Goods Receiving and Inventory Management Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods. 7. Invoice Verification The system supports the checking and matching of invoices. The accounts payable clerk is notified of quantity and price variances because the system has access to PO and goods receipt data. This speeds the process of auditing and clearing invoices for payment.
- A smooth material flow requires good communication between all participants in the process. The required flow of information is ensured by the fact that Inventory Management is fully integrated in the R/3 System and communicates with other R/3 modules. Within the stores, goods are firstly received, then moved to there respective areas and if required reports are generated. The smooth flow of materials within an organization ensures stock availability.