On January 31, 2014 SAP Material Master – A Practical Guide author Matt Johnson shared his top 5 tips for buyer and planner functions in SAP Material Master. Topics discussed included:: Key buyer and planner concepts in SAP Material Master How to leverage buying power on economies of scale Benefits of the automatic reordering mrp types

2. 5 Tips for Planners
and Buyers in SAP
Material Management
Matt Johnson
Martin-Baker America, Inc.
© 2014 ERP Corp. All rights reserved.

3. Introduction
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Material buyers and planners are at the front line of materials
management
SAP provides the necessary tools to allow buyers and planners
to make a significant impact on lowering the cost of goods sold
This is accomplished by properly managing the SAP Material
Master and supporting functions
Here are 5 tips that will help you succeed!

4. But first….. a question for the attendees!
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How many of you have authorization to make changes to the
material master?

5. 5 Great Materials Management Tips
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Buyers
• Tip #1 PO Unit of Measure Conversion – Economies of Scale
• Tip #2 Quota Arrangements – Split Material Sourcing
Planners
• Tip #3 Reorder Point Planning – Lead Time Reduction
• Tip #4 Lot Sizing – Accurate Cost Estimates
Team Environment
• Tip #5 Materials Management as a Team

6. Buyers: Tip #1 Buying on Economies of Scale
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The Order Unit field is used to buy materials in UoM that differ
from the Base UoM
A great tool for buying in bulk to reduce inventory costs
Set the Order Unit field in the Material Master to your supplier’s
UoM where price breaks are given

7. Buyers: Tip #1 Buying on Economies of Scale (cont.)
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A conversion factor between the Base UoM and the Order UoM
must be set
Upon entering any alternative unit of measure, like the Order
UoM, a pop-up screen will appear for you to complete the
conversion factor

8. 5 Great Materials Management Tips
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Buyers
• Tip #1 PO Unit of Measure Conversion – Economies of Scale
• Tip #2 Quota Arrangements – Split Material Sourcing
Planners
• Tip #3 Reorder Point Planning – Lead Time Reduction
• Tip #4 Lot Sizing – Accurate Cost Estimates
Team Environment
• Tip #5 Materials Management as a Team

9. Buyers: Tip #2 Split Material Sourcing
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A quota arrangement is a way of allocating work among several
sources of supply for the same material
You must select which business processes are to be
considered for quota arrangements in the Purchasing screen of
the Material Master (for example: planned orders and purchase
requisitions)
You must also maintain a source list of vendors to be included
in the quota arrangement

10. Buyers: Tip #2 Split Material Sourcing (cont.)
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In the quota arrangement, you must define the percentage to be
allocated to each vendor
There are refinements available to customize lot sizing

11. Buyer / Planner Question
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How many of you are performing a joint buyer / planner role?

12. 5 Great Materials Management Tips
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Buyers
• Tip #1 PO Unit of Measure Conversion – Economies of Scale
• Tip #2 Quota Arrangements – Split Material Sourcing
Planners
• Tip #3 Reorder Point Planning – Lead Time Reduction
• Tip #4 Lot Sizing – Accurate Cost Estimates
Team Environment
• Tip #5 Materials Management as a Team

13. Planners: Tip #3 Lead time reduction
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Reorder point planning is a method of ensuring continuous
inventory supply
You must use one of the Reorder point planning MRP Types in
the MRP 1 screen of the material master
If you are using a manual reorder point, you must calculate your
reorder point based on consumption during the vendor’s lead
time

14. Planners: Tip #3 Lead time reduction (cont.)
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There are two significant benefits to reorder point planning
• 1) You can reduce the overall lead time of an assembly by
placing long lead time components of the critical path on
reorder point planning
• 2) By placing common hardware, such as nuts, bolts and
rivets on reorder point planning, and allowing production
technicians to make material reservations from inventory,
you will provide employee empowerment to the shop floor

15. 5 Great Materials Management Tips
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Buyers
• Tip #1 PO Unit of Measure Conversion – Economies of Scale
• Tip #2 Quota Arrangements – Split Material Sourcing
Planners
• Tip #3 Reorder Point Planning – Lead Time Reduction
• Tip #4 Lot Sizing – Accurate Cost Estimates
Team Environment
• Tip #5 Materials Management as a Team

16. Planners: Tip #4 Accurate Costing
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The costing lot size, defined in the Costing 1 screen of the
Material Master, is the lot size used as a basis for your cost
estimates
Setting this lot size equal to your normal production lot size will
help you to provide accurate cost estimates
This is particularly critical when using standard setup times in
your production routers

17. 5 Great Materials Management Tips
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Buyers
• Tip #1 PO Unit of Measure Conversion – Economies of Scale
• Tip #2 Quota Arrangements – Split Material Sourcing
Planners
• Tip #3 Reorder Point Planning – Lead Time Reduction
• Tip #4 Lot Sizing – Accurate Cost Estimates
Team Environment
• Tip #5 Materials Management as a Team

18. Buyers / Planners: Tip #5 Teamwork
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The SAP Material Master requires inputs from both buyers and
planners
Make sure that responsibilities are clearly defined
Educate one another on the various settings for each party’s
responsibilities
Communicate openly with each other, as well as inventory
control personnel, on Material Master settings and activities

19. Buyers / Planners: Tip #5 Teamwork (cont.)
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Example: The planned delivery time is maintained in the MRP 2
screen
This screen is traditionally maintained by a material planner
However, I recommend that buyers maintain the planned
delivery time field, as they are more in sync with lead times in
the vendor source list

20. Five Key Ideas
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Material buyers should use a PO unit of measure that is aligned
with the most economic lot size that is available or allowed
Quota arrangements facilitate long term and strategic
partnerships at the buyer level
Reorder point planning is an excellent source for lead time
reduction and employee empowerment
Aligning procurement and production lot sizes with costing lot
sizes will help to make cost estimates more accurate and
meaningful
Team work is critical amongst buyer / planner / inventory
management roles

21. A gift for the attendees
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All attendees of today’s webinar are entitled to a $5 voucher
towards my book, SAP Material Master – A Practical Guide
Please visit the following link:
https://www.createspace.com/4548187
Apply the discount code: DBSM3T3M to receive $5 off of your
purchase

22. Resources
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Matthew Johnson, SAP Material Master – A Practical Guide
(Espresso Tutorials, 2013).
• ISBN-10: 1-4943-1859-8
ISBN-13: 978-1-4943-1859-8
• www.amazon.com/SAP-Material-Master-PracticalGuide/dp/1494318598/ref=sr_1_1?ie=UTF8&qid=1388430123&
sr=8-1&keywords=sap+material+master
• www.amazon.com/SAP-Material-Master-Practical-Guideebook/dp/B00H8SPI8G/ref=sr_1_2?ie=UTF8&qid=1388430419
&sr=8-2&keywords=sap+material+master

23. Questions
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Now:
• Ask questions now for immediate answers
Later:
• mjohnson122@verizon.net
Q&A
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24. Disclaimer
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services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in
Germany and in several other countries all over the world. All other product and service names mentioned are the
trademarks of their respective companies. ERP Corp is neither owned nor controlled by SAP.