This document provides an overview of key concepts in SAP's Materials Management module, including: 1) It describes different types of goods movements like goods receipts, goods issues, and stock transfers and how they impact inventory and accounting. 2) It explains the procurement process from purchase requisition to invoice verification and payment. Key steps include purchase order, goods receipt, invoice posting, and payment. 3) It discusses how Materials Management integrates with other SAP modules like Financial Accounting, Sales and Distribution, and Production Planning. Accounting documents are generated to update inventory, costing, and financial accounts.

1. Vendor
Info
record
Material
Conditio
n
Output
Account
group
Material type
Industry sector
Condition
types
Output
types
Manually by the
Dep. Respons.
Automatically
by MRP
Is an Internal document
20
10 Stock item
Non-stock item
Item Category
Purchase
order
Source of
supply
Info record
Quotation
Contract
Source list
Goods Receipt
MM
Doc
Movement type: determines the kind of goods movements. What happens to
the items, how they are handled…key to differentiate between goods
movements (ex: GR, GI or transfer postings). (Inv. Mgt)
Determines which stock or consumption accounts are updated (posted) in
Financial Accounting.
Determines the structure of the screen when entering documents and updating
quantity fields.
1
Storage location
F - Unrestricted
Q – Quality Insp.
X – Blocked Stock
Goods
receipt
area
105
103
101
Invoice/
Billing
2
Pay
3
FI
Doc
Consumption Raw Stock Raw Bank GR / IR
Reconciliation
Vendor
Subledger
Vendor
P / L - Balance sheet
G / L:
300 3000 3300
1 1
3300
3300 3300 3300 3300
3300
1
3 2 2
3 2
3
Cost
element
PROCUREMENT PROCESS
Purchase
Requisition
20
10
Consumable Material:
Are materials or services that are procured specifically for an account
assignment object. (EX: office supplies; computer systems)
Value is recorded in the cost element or asset accounts.
When a material is procured directly for consumption, no material master
record is necessary.
In the case of consumable material with a master record:
o Not subject to inventory management (on either quantity or value basis)
o Subject to inventory management on a quantity, but not a value basis
Account Assign. Objects
A – Asset
C – Cost Center
P – Project
P – Prod. Order
S – Sales Order
with / without
reference
Item category: defines the process used to procure a material
or service.
S – Standard: material procured externally
S – Stock transport order: mat. is transf. from 1 plant to another
S – Subcontracting: vendor manufacture a component
C – Consignment: Liability only when mat. is withdrawn from
consg. stock, no when the stock is placed in the consg. store
T – Third-party order: material order from a vendor with the
instruction to deliver the goods directly to a 3er party (customer)
Header Data:
Doc. #
Date
Vendor
Terms of payment
Currency
Item:
Material #
Delivery date
Q, $, Text
Posting a Goods Receipt by referencing to a Purchase Order has a 3 advantages:
The goods receiving department can check whether the goods delivered are what was actually ordered.
Data from PO is copied automatically to the GR transaction.
PO history is updated upon GR creation.
When goods receipt to the warehouse is posted:
A MM doc. is created: with info such as material delivered
and quantity delivered; storage location and associated plant.
An FI doc. is created: which record the effects the material
movement has on the value of the stock.
Goods movements: A transaction that causes a stock change. Include both external and internal
movements. You can distinguish between:
Goods receipt (GR): is a goods movement in which the receipt of goods from both an external vendor
and from production is posted. A GR leads to an increase of warehouse stock.
Goods issue (GI): is a goods movement in which a material withdrawal, goods issue, material
consumption, or goods shipment is posted to a customer. A GI leads to a decrease of warehouse stock.
Stock trasfer: is removal of materials from particular storage location and placement into another
storage location. Stock transfers can take place both within the same plant and between two plants.
Transer posting: changes the stock identification or qualification of a material regardless of it’s a
physical movement or not. (EX: release of the stock for quality inspection).
Stock type
you enter goods receipt against
production and purchase orders
Effects of Goods Receipt:
MM - Material document is created (quantity)
FI - Accounting document is created (value)
CO – Cost Accounting document cost analysis purpose
Material master is updated (here not in the inv. verif)
_ Account affected:
.Stock raw (+ Consumption Raw) is debited
.Provision in the GR/IR is credited
. NON Bank, Reconc. Vendor, Subdledger Vendor
PO History for a PO items is updated (when a GR is
entered with reference to this item)
Quality Management (Inspection lot is created)
Warehouse Management (Transfer Requir. is created)
Output may be generated (GR slip)
Material Mgt, manages the procurement process until Invoice verif.
Other Dpt (account) manage the payment and evaluation of invoices.
Therefore, Inv. Verif. creates a link between Mat. Mgt and external (FI) or Internal account. (CO)
Invoice Verification and Vendor Payment
If there are variances between the PO or GR vs INVOICE, the system warns the user and blocks the invoice for payment.
Posting the invoice completes the process of Invoice Verification.
Types of Invoice Verification:
Invoice items can be posted with reference to:
Goods receipt based Invoice verification: invoices for quantities greater
than the goods receipt cannot be posted.
Purchase order based Invoice verification: you can settle all items,
irrespective of whether there have been partial deliveries.
The postings are automatically made to the corresponding G/L accounts.
When an Invoice is posted, an open item is credited on the vendor account.
Logistics: Invoice Verification: Effects
FI - Accounting document is created
PO History is updated
Open Item is created in the vendor’s account
If invoice $ differs from the PO $, the stock value and the current moving price is
recalculated and updated in the material master, for a material valuated with mov. aver. $.
_ Account affected:
.Provision in the GR/IR clearing account are reversed - debited
.Reconc. Vendor is credited
.Subledger Vendor is credited
. NON Stock raw-consum. raw, Bank
Material Management Integration:
(FI) Financial Accounting: Purchasing and FI maintains data on the VENDOR master data (is a creditor account in FI) that contains account.+ procur. info
(SD) Sales and Distribution: requirements that arrives to Sales can be passed on to Purchasing. when a P.Req. is created, it can be directly assigned to a Sales Order.
Production Planning: and MM are linked through inventory needs. Inv. Mgt is responsible for assuring all components required for production.
Plant Maintenance and MM are linked by BOM. It’s possible to post a GR with ref to an equipment BOM and to withdraw part for maintenance orders too.
Integration in Logistics: the Inv. Mgt system (manages Stock (Q) quantity + ($) value) can be extended by the WMS which manages storage (also Storage Bins)
Process of GR with Transfer Order
GR posting is subject to WMS: checks for each PO item and
generates:
MM + FI docs for goods movt.:
_MM doc.: Header + Item (q, descrip, stor.loc., plant), is
identified by material document number and year.
_FI doc.: Header + Item (G/L acc. #, $) records the effects of
material movements on the accounts. Is identified by CC (of the
plant); acc doc. #, fiscal year.
Transfer requirement doc
Incoming quantity of materials into the goods receiving area
An Interim storage area in the receiving warehouse number
A transfer order is used to move the items from the receiving
area
(in a put away process) the destination storage type, the storage
section, storage bin are determined
Org. level needed for a PO
Plant
Purch. Org.
Vendor
Storage loc not nec. until good
are not received.
Account Posting
Good Receipt : Debit Stock, Credit GR/IR
Invoice Receipt: Debit GR/IR, Credit Vendor (Recon.+Subledger) (=> acc. payable)
Pay Vendor: Debit Vendor (Recon.+Subledger), Credit Bank/Cash
FI
Doc
MM
Doc
MM
Doc
FI
Doc
CO
Doc
Documents generated
Account payable
Vendor (Recon.+Subledger) are debited,
Bank/Cash is credited
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