- The document discusses key concepts in materials management in SAP including procurement processes, inventory management, material master data, and material movements. - It describes the different types of procurement including consumable materials, procurement for stock, and procurement for consumables. Inventory management integrates with modules like financial accounting, controlling, and production. - The document outlines material movements like goods receipts, goods issues, and stock transfers and how they impact the material master, accounting, production, and inventory. Master and transactional data are also discussed.

1. Key User Training - MM

2. MM Overview Recording Requirements Placement of orders Follow up for orders Vendor Invoice Verification Inventory Valuation Material Receipts Stock Adjustments Material Issues Materials Management

3. The Procurement Process Planning, Reporting & Analysis RFQ / Quotation Source Determination Pur. Order Purchase Order Goods Receipt Invoice Processing

4. Purchase Order Master Data Vendor Another Plant Purchasing Purchase Requisition 10 20 30 40 Request for Quotation 10 20 30 40 Purchase Order 10 20 30 40

5. Goods Receipt Goods Receipt Area Another Plant Vendor Accounting Document Purchase Order 10 20 30 40 Material Document

6. Invoice Processing Purchase Order 10 20 30 40 Material Document Invoice Verification Master Data Payment Processing Vendor Invoice Invoice Document 132451 A/c Dr 1000 165234 A/c Cr 1000

7. Procurement Types

8. Consumable Material Consumable materials are materials or services that are procured directly for an account assignment object. Inventory Management is not carried out. Examples of consumable materials are: office materials, computer systems, grease, welding rods. The system automatically updates consumption of materials with a material master record.

9. Account Assignment Objects Purchasing Document Account Assignment A/c Assignment Categories A: Asset K: Cost Centre F: Order P: Project

10. Account Assignment (contd..) Receipts Receipts directly posts consumption against department. Consuming Department Issues Consuming Department Issue is not required.

11. Procurement for Stock Materials Entry of material number required. No account assignment category. Posting to stock accounts. Quantity and value updated in the material master. Moving average price is updated.

12. Procurement for Consumables Entry of material number not required, but is possible. Account assignment category mandatory. Posting to consumption accounts. Consumption update for materials with material master only.

13. Scope of Inventory Management Material Stocks Goods Receipts Goods Issues Stock Transfers Physical Inventory

14. Integration of Inventory Management Inventory Management Controlling Goods Issue to Prodn or Cost Centre creates a costing document creation. Financial Accounting Goods Receipt / Issue causes a stock / consumption posting in respective accounts. Planning Goods Receipt / Issue updates the stocks and hence the planning situation. Production Confirmations entered in the production order leads to goods issues and / or receipts.

15. Material Movements in IM Material Movements Goods Issues Transfer Postings Goods Receipts

16. Types of Stocks Normal Stocks Quality Inspection Stock Unrestricted Stock GR Blocked Stock Blocked Stock Special Stocks Consignment Stock Sales Order Stock Project Stock Vendor Stock

17. Goods Receipt for Stock Materials Vendor Purchase Order 10 20 30 40 Box 2 Box 3 Box 1 Goods Receipt Warehouse

18. Effects of Goods Receipt Goods Receipts Material Delivery Material Master - Stock quantity, value and price (moving average) are updated Quality Management - Creation of an inspection lot to trigger a quality inspection. Accounting - Stock and consumption account are updated through accounting document. Purchasing - Purchase order history and PO are updated. Inventory - Stock (may be quality inspection) is updated through a material document.

19. Goods Issue Account assigned Purchase Order Goods Receipt against PO Consumption Posting (Same as Goods Issue) Production Order for BOM Materials Goods Issue against Prodn Order Stock and Prodn Order updated with consumption Reservations for Non BOM Materials Goods Issue against Reservation Update of Stock, Reservation & Cost Object

20. Effects of Goods Issue Material Master - Stock quantity, value are updated. Accounting - Stock & Consumption accounts are updated through accounting document. Production - Relevant Production Order / Run Schedule Hdr updated with qty / value Inventory - Unrestricted Stock quantity is updated through a material document. Controlling - Material Costs are posted into the cost object through Costing Document. Production Requirements Goods Issue Other Requirements

21. Stock Transfers Logical Quality Inspection Unrestricted Use Unrestricted Use Blocked Stock Project Stock Unrestricted Use Storage Location 1 Storage Location 2 Plant 1 Plant 2 Plant 1 Vendor 001 Physical

22. Effect of Transfer Postings No accounting postings created normally (except in certain specific cases) Stock quantity reduced in one location / stock type and increased in the other. Material document is created for every transfer to record the stock movement.

23. Data in SAP Transactions Placing Orders, Material Receipts / Issues, Creating Production Orders, Booking Vendor Invoices Material Data Vendor Data Bill of Material Routing Purchase Order Contract Material Movements Production Orders

24. Data in SAP (contd…) Master Data Central Repository, used by various departments. Created once and changed if required. Transactions use these data repeatedly. Examples : Material Master, Vendor Master, BOM, Routings Transaction Data Created when a transaction is carried out. Record of the details of a transaction. Reports use the transaction data. Examples : Purchase Orders, Production Orders, Material Receipts.

25. Material Master Structure Various departments use the material master for their day to day activities. Various departments need different data for the same material. Purchase Planning Sales Stores Production

26. Org. Levels in Material Master For the same material, different data is to be maintained, depending on organizational levels Material is In-house manufactured at Plant 1 Stock transfer from Plant 1 to Plant 2 Lead time for Plant 1 is for e.g 10 days Moving average price of say Rs 230.00 Lead time for Plant 2 is for e.g 8 days Moving average price of say Rs 234.50

27. Org. Levels (contd…) Material Master Basic Data Purchase Text Sales Text Purchasing Planning (MRP) Work Scheduling Sales Gen. Data Sales Org Data Material master data is organized at various Organizational levels. Sales Org Level Data Client Level Data Plant Level Data

28. Material Master : Views Basic Data Sales Data Purchasing Data Costing Data Accounting Data Planning Data Storage Data Scheduling Data Material Master

29. Material Type Raw Materials Operating Supplies Semi-finished Products Spare Parts Finished Products Non-Valuated Trading Goods Others Material Type

30. Control using Material Type Material Type

31. Material Types (contd…) Some typical examples of control functions:

32. Material Groups Groups the materials as per some common defined criteria. Some typical examples are Plastic Components, Rubber Components, Iron & Steel. Must be entered in purchasing documents if purchasing is done without any material master. Can be used for analysis / reporting in Purchasing / Inventory. Can be used to setup approval (release) procedures for Purchase Requisitions. May be changed in the material master, but distorts the analysis.

33. Material Valuation Paramaters