Mm+documentation

1 R/3 STRUCTURE OF SAP.................................................................................................7
CLIENT – SERVER BENEFITS.......................................................................................7
BUSINESS TRANSACTION............................................................................................7
BUSINESS FRAMEWORK...............................................................................................7
BAPI...............................................................................................................................8
2 ENTERPRISE STRUCTURE.............................................................................................9
CLIENT..............................................................................................................................9
COMPANY CODE.............................................................................................................9
PLANT................................................................................................................................9
STORAGE LOCATION.....................................................................................................9
VALUATION AREA.........................................................................................................9
PURCHASE ORGANIZATION........................................................................................9
CENTRALISED PURCHASE ORGANIZATION ....................................................10
PURCHASING GROUPS................................................................................................10
3 BASIC PROCUREMENT PROCESS (GENERAL)........................................................11
Flow..................................................................................................................................11
Purchasing value Key ......................................................................................................11
Item Category ...................................................................................................................11
ZERO VALUE POs..........................................................................................................12
Changeability of PO..........................................................................................................12
Invoicing Plan...................................................................................................................12
Reporting...........................................................................................................................13
Analysis of Order Values..................................................................................................13
4 MASTER DATA...............................................................................................................14
VENDOR MASTER.........................................................................................................14
ACCOUNT GROUP of a Vendor.................................................................................14
Vendor Reconciliation account.....................................................................................14
Pre-requisite for Vendor Partner roles..........................................................................14
Controls of Document type...........................................................................................15
Payment terms...............................................................................................................15
Inco-terms ...................................................................................................................15
Text types for central Texts..........................................................................................15
Text types for Purchase Organization Texts.................................................................16
MATERIAL MASTER.....................................................................................................16
MATERIAL NUMBER ...............................................................................................16
MATERIAL TYPE.......................................................................................................17
Material filed selection reference..................................................................................17
INDUSTRY SECTOR..................................................................................................18
Unit of measure.............................................................................................................18
Accounting View..........................................................................................................18
5 PROCUREMENT OF STOCK MATERIAL....................................................................19
PURCHASING – GENERAL..........................................................................................19
Centralized Purchasing ................................................................................................19
Distributed Purchasing .................................................................................................19
Company specific..........................................................................................................19
Reference Purchase Organization.................................................................................19
Page 1 of 161
Classification: Confidential

Data in MM Purchasing....................................................................................................19
Master records in Purchasing........................................................................................19
PURCHASE REQUISITION...........................................................................................20
PR changeability...........................................................................................................20
RFQ / QUOTATIONS......................................................................................................20
Creation of RFQ............................................................................................................21
Quotation processing....................................................................................................21
Conditions in Purchasing..............................................................................................21
PURCHASING INFO RECORD.....................................................................................21
Info update indicator ....................................................................................................22
Info update scenarios....................................................................................................23
Structure of Info Record...............................................................................................23
TEXTS..............................................................................................................................24
Text types for Purchase Organization Texts.................................................................25
CONDITIONS..................................................................................................................25
CONDITION TECHNIQUE ...........................................................................................26
Purchase Requisition Prices..............................................................................................27
VENDOR CONFIRMATIONS........................................................................................27
RELEASE PROCEDURE................................................................................................27
Changeability after the start of a release procedure......................................................28
MANUFACTURER PART NUMBER............................................................................28
VENDOR EVALUATION...............................................................................................28
6 PROCUREMENT OF CONSUMABLE MATERIALS...................................................31
Stock Vs Consumable.......................................................................................................32
Purchase Requisition for Consumable Material...............................................................32
Procedure for SPLIT VALUATION - transactional.........................................................32
BLANKET PURCHASE ORDERS.................................................................................32
7 EXTERNAL SERVICES PROCUREMENT....................................................................34
Service Master..................................................................................................................34
Master Records in Service Management.........................................................................35
Maintaining Service Conditions.......................................................................................35
Standard Service Catalogue..............................................................................................36
Model Service Specifications...........................................................................................36
Account assignment in services........................................................................................36
Global Percentage Bidding (GPB)....................................................................................36
Pre-requisites are...........................................................................................................36
Process..........................................................................................................................37
OUTLINE AGREEMENTS.............................................................................................37
CONTRACTS...................................................................................................................37
SCHEDULING AGREEMENTS.....................................................................................38
SOURCE DETERMINATION.........................................................................................40
Source determination at PR level..................................................................................40
SOURCE LIST.................................................................................................................40
QUOTA ARRANGEMENT.............................................................................................41
REPORTING....................................................................................................................43
8 AUTOMATED PROCUREMENT PROCESSES............................................................45
Page 2 of 161

9 OPTIMIZED PURCHASING...........................................................................................46
Purchase Requisition.........................................................................................................46
SOURCE...........................................................................................................................46
USER PARAMETER – EVO...........................................................................................46
ORDER ACKNOWLEDGEMENTS...............................................................................47
EVALUATED RECEIPT SETTLEMENT (ERS)...........................................................47
10 MATERIAL REQUIREMENT PLANNING..................................................................48
Pre-requisites for MRP.....................................................................................................48
MRP RPOCEDURES – Overview...................................................................................49
CBP Vs MRP....................................................................................................................49
Consumption Based Planning (CBP)................................................................................49
ONLY ONCE INDICATOR ............................................................................................49
PRIORITY FUNCTION ..................................................................................................50
MRP Types.......................................................................................................................50
MRP relevant data in material master...............................................................................50
PLANNING RUN.............................................................................................................51
MRP run types..............................................................................................................51
Planning sequence.........................................................................................................51
Planning types...............................................................................................................51
Planning File.................................................................................................................52
CONTROL PARAMETRS OF MRP...............................................................................52
MRP area..........................................................................................................................53
Preparation of MRP run with MRP areas (in CUSTOMIZING)......................................53
PROCESS FLOW during PLANNING RUN..................................................................54
Stock- Requirement List (Transaction code – MD04)......................................................55
MRP List (MD05).............................................................................................................55
Customizing for MRP.......................................................................................................55
MRP area..........................................................................................................................55
LOT SIZING PROCEDURE............................................................................................56
Types ...........................................................................................................................56
RE-ORDER POINT PLANNING & EVALUATION.....................................................57
Procurement Proposal or Order Proposal.........................................................................57
Re-Order Point Planning...................................................................................................58
Calculation of Dead lines..................................................................................................58
11 INVENTORY MANAGEMENT....................................................................................59
MOVEMENT TYPE........................................................................................................59
Valuated Good Receipts...................................................................................................59
Stock types........................................................................................................................59
Stock Indicators are the indicators for differentiate between stock types on goods receipt
...........................................................................................................................................59
Negative Stock..................................................................................................................59
STOCKS...........................................................................................................................60
Stock Transfer Vs Transfer Posting..................................................................................60
Material Document Vs Accounting Document.................................................................61
EFFECTS OF A GOODS RECEIPT................................................................................61
Stock Overview.................................................................................................................61
Page 3 of 161

ENJOY Transaction – MIGO...........................................................................................62
GR of Blocked Stock (Movement type –103)..................................................................62
Goods Receipt in to QI stock (101 +X)............................................................................63
OTHER GOODS RECEIPTS...........................................................................................63
DELIVERY COMPLETED INDICATOR.......................................................................63
RETURN DELIVERY......................................................................................................64
Difference between Reversal & Return delivery..............................................................65
Movement type –161........................................................................................................65
Quantity Distribution facility at GR.................................................................................65
Goods Receipt using Order Price Unit..............................................................................65
Entering a Freight Vendor at Goods Receipt....................................................................65
Pre-requisites.................................................................................................................65
Goods Receipt of Non-valuated goods.........................................................................65
Automatic PO generation at GR.......................................................................................66
SHELF LIFE EXPIRATION DATE (SLED) check at GR..............................................66
Dynamic availability Check .............................................................................................67
Activation in Customizing for Plant & Movement types are required for ......................67
Missing Parts Check.........................................................................................................67
Multiple account assigned GRs........................................................................................67
GR Forecast......................................................................................................................67
RESRVATION.................................................................................................................68
Structure of Reservation Screen....................................................................................68
Important points while creating/ changing a reservation..............................................68
Reservation Management Program (RMP)...................................................................69
Customizing settings for Reservations..........................................................................69
INITIAL STOCK ENTRY...............................................................................................70
GOODS ISSUE.................................................................................................................71
BACK FLUSH..................................................................................................................72
GR/ GI SLIP numbering...................................................................................................72
Goods Movement via Shipping........................................................................................73
Pre-requisites.................................................................................................................73
Movements....................................................................................................................73
Scheduling.....................................................................................................................73
MATERIAL BLOCK (ENQUEUE) for Goods Movements............................................73
STOCK DETERMINATION...........................................................................................74
Returns to Vendor.............................................................................................................75
STOCK MOVEMENTS-TRANSFERS...........................................................................75
Stock Transfer Vs Transfer Posting..............................................................................75
Levels of stock Transfer................................................................................................75
STOCK TRANFERS........................................................................................................76
SPECIAL STOCKS..........................................................................................................77
12 SPECIAL PROCUREMENT TYPES.............................................................................79
CONSIGNMENT PROCESS...........................................................................................79
Process of Consignment Procurement & Settlement....................................................80
Process of Physical Inventory of Consignment ...........................................................80
SUBCONTRACTING PROCESS....................................................................................80
Page 4 of 161

Process of Subcontracting Process................................................................................82
Purchase requisition and PO for Subcontracting..........................................................83
Providing components for existing Purchase Orders....................................................83
Subcontracting in Inventory Management (Facilities).................................................83
STOCK TRANSFER USING STOCK TRANSFER ORDER.....................................84
GENERAL –INFORMATIONS ON STO...................................................................87
THIRD PARTY PROCESSING...................................................................................88
Implications of Third Party Processing in SALES...........................................................89
Implications of Third Party processing in PURCHASING..............................................89
Implications of Third Party processing in Inventory Management..................................90
RETURNABLE PACKING (RTP) – VENDOR PROCESSING...................................90
PIPLINE MATERIAL PROCESSING............................................................................90
SALES ORDER STOCK..................................................................................................91
PROJECT STOCK............................................................................................................91
13 PHYSICAL INVENTORY MANAGEMENT................................................................91
Physical Inventory process...............................................................................................92
CYCLE COUNTING........................................................................................................94
INVENTORY SAMPLING..............................................................................................94
14 VALUATION AND ACCOUNT DETERMINATION..................................................95
Procedure for SPLIT VALUATION - transactional.......................................................106
NON-VALUATED STOCK MATERIAL (UNBW).....................................................107
RETURNABL TRANSPORT PACKAGING MATERIALS (RTP).............................107
INVOICE VERIFICATION..............................................................................................108
BASIC INVOICE VERIFICATION PROCESS............................................................109
INVOICING PLAN........................................................................................................112
PO BASED INVOICE VERIFICATION.......................................................................112
GR BASED INVOICE VERIFICATION......................................................................113
TAXES in INVOICE VERIFICATION.........................................................................113
CASH DICOUNT in INVOICE VERIFICATION........................................................113
FOREIGN CURRENCY in INVOICE VERIFICATION..............................................114
VARIANCES AND INVOICE BLOCKING.................................................................114
1. VENDOR SPECIFIC TOLERANCES...................................................................115
2. INVOICE BLOCK TOLERANCE LIMITS..........................................................115
3. PURCHASE ORGANIZATION LEVEL...............................................................118
4. AT GOODS RECEIPT...........................................................................................118
BLOCKING VARIANCES............................................................................................118
INVOICE REDUCTION................................................................................................120
VARIANCE WITHOUT REFERENCE TO AN ITEM................................................121
1. TOTAL BASED INVOICE REDUCTION............................................................122
2. TOTAL BASED ACCEPTANCE..........................................................................122
3. VENDOR SPECIFIC TOLERANCE LIMITS.......................................................122
MANUAL ACCEPTANCE........................................................................................123
INVOICE VERIFICATION OF CONSUMPTION MATERIALS...............................123
15 GENERAL INFORMATIONS on LIV.........................................................................132
16 RELEASE PROCEDURE.............................................................................................143
17 BATCH MANAGEMENT............................................................................................145
Page 5 of 161

18 CLASSIFICATION.......................................................................................................146
Elements of Classification..............................................................................................146
19 PRICING PROCEDURE...............................................................................................148
Time dependent conditions.............................................................................................148
Maintaining TD Conditions............................................................................................148
CONDITION TYPES. ...................................................................................................149
ACCESS SEQUENCE...................................................................................................152
EXCLUSION OF CONDITIONS..................................................................................152
Define Condition Exclusion........................................................................................152
Condition records in Condition Tables...........................................................................153
PRICING PROCEDURE (Calculation SCHEMA)........................................................154
SCHEMA DETERMINATION......................................................................................155
INFO RECORD and ORDER PRICE HISTORY..........................................................155
HEADER, GROUP & ITEM CONDITIONS................................................................155
Logistics Information System.........................................................................................156
Early Warning System....................................................................................................161
Page 6 of 161

1 R/3 STRUCTURE OF SAP
Real time 3 tier architecture
CLIENT – SERVER BENEFITS
1. Presentation Server
2. Application Server
3. Database Server
Presentation Server Application Server Database Server
• R/3 structure system architecture allows separating application from
presentation and Database. So the load distribution is possible at 3 different levels.
• Because of R/3 structure, Scalability (No of users) increases. This scalability
provides with flexibility when choosing hardware and software.
BUSINESS TRANSACTION
Is a sequence of dialog steps that are consistent in a business context and that belong
together logically.
- Business Object - eg. Employee
- Attributes (Characteristics) – eg. Name
- Methods - eg. Change address
A business object composed of Tables that are related in a business context, including
related application programs
Attributes can be modified by the methods that belong to the business object.
Business objects are maintained at Business Object Repository (BOR)
Maximum number of sessions we can open in SAP R/3 is Six
BUSINESS FRAMEWORK
- Business framework portrays the R/3 system as a family of product made up of
separate integrated components.
Page 7 of 161

- Business Framework architecture woks using business components that are
configurable software modules and it offers the enterprise a flexible business
infrastructure.
Ie. The enterprise software can react quickly to business demands and can
be changed or enhanced simply without disturbing the flow of business.
BAPI
- Business components react with business frame work architecture via Business
Application Program Interface (BAPI)
- Business Framework architecture is the strategic product architecture of the R/3
system.
- BAPI is a well defined interface providing access to processes and data of business
application system.
- BAPI is an entry gate to R/3 system
- Functions of BAPIs are
1. Create Objects
2. Display attributes of objects
3. Change attributes of objects
- A BAPI is assigned to One and ONLY one business object
- Using Business framework technology, SAP provides its customer with a platform
to configure and connect business processes and information flows across all
components of the business frame work, also across physically separated
components.
- Benefits of Business Frame work architecture are :
1. Ability to easy changes and configure dynamically and independently
2. Easy integration with Internet.
3. Simple connection between R/3 and third party (non-SAP) software.
Page 8 of 161

2 ENTERPRISE STRUCTURE
CLIENT
Is a commercial Organizational Unit within R/3 system with its own data, Master
records and set of tables.
- It is the highest level element of all Organizational unit
- Represented by 3 digit alphanumeric key
COMPANY CODE
It is the smallest Organizational unit within R/3 system for which can have an
independent accounting department within external accounting. Legal entity
- It is having balance sheets, Profit & Loss accounting required by the law
- Represented by 4 digit alphanumeric key.
PLANT
Is an organizational logistic unit that structures the enterprise from the perspective
of production, procurement, Plant maintenance, Material Planning
- It can be a branch office/ Central delivery ware house/ HQ/ Maintenance Plant.
- Represented by 4 digit alphanumeric key
STORAGE LOCATION
Is an Organizational unit that allows the differentiation of material stocks within the
Plant
- Inventory management on quantity basis is carried out at storage location level.
- Physical Inventory is also carried out at storage location level.
VALUATION AREA
Is an organizational level at which material is valuated.
- R/3 system recommends Plant level
- Valuation at Plant level is mandatory if you are using Production planning/ CO/
Retail system
- Valuation area selection is a fundamental setting in customization and very difficult
to REVERSE
PURCHASE ORGANIZATION
Is an organizational level that negotiates conditions of purchase with Vendors for 1
or more Plant.
- It is legally responsible for completing purchasing contracts
Page 9 of 161

CENTRALISED PURCHASE ORGANIZATION
Should be attached to Company Code or otherwise Plant specific (attached to Plants). We
can have cross-company code OR Cross-plant Purchase Organizations
PURCHASING GROUPS
Is the key for buyer or group of buyers responsible for certain specific purchasing
activities (eg. Mech/ Elect, etc.)
Organizational Unit – Organizational grouping of an enterprise.
Transaction – Application programs which executes business processes in R/3
system
Document – Data record generated through a transaction
Material Master – Central data object in SAP R/3 system.
• Configuring is the method of doing customizing
• CONFIGURE to CUSTOMIZE
Page 10 of 161

3 BASIC PROCUREMENT PROCESS (GENERAL)
Flow
1. Determination of requirements
2. Source determination
3. Vendor selection
4. Purchase Order processing
5. Purchase Order monitoring
6. Goods Receipt
7. Invoice Verification
8. Payment processing (FI)
Purchase Order : A formal request to Vendor to supply certain goods / services under the
stated conditions
When we enter an invoice against a PO/ GR, the system checks the price, rate, payment
terms with respect to Purchase Order and Quantity w.r.to GR
While entering the GR, system checks whether the material is as per PO or not w.r.to
Quantity, Shelf life, etc.
Several GRs can be entered for a PO item in one operation
The type of Invoice verification (PO Based / GR Based ) is to be fixed in PO , Invoice Tab
If MRP Procedure is set, PR will be generated automatically during MRP run.
Purchasing value Key
for auto-reminders and supply tolerances. It is fixed in the purchasing view of the material
master. It is managed at CLIENT LEVEL.
Info update Indicator is set in material data of Purchase Order/ Quotations/ Outline
Agreement (Item Tab)
Item Category
Defines whether an item requires or can have
- A material number
- An account assignment
- Goods Receipt
- Invoice Receipt
Item categories displayed depends upon DOCUMENT TYPE (fixed in customizing)
Page 11 of 161

- Standard – Blank – materials that are procured externally
- Subcontracting – L – Finished product ordered from a Vendor (maintained at
STORAGE LOCATION level)
- Consignment – K – Vendor makes the material available and manage a
consignment stock (maintained at PLANT Level)
- Stock Transfer – U –
- Third Party – S –
- Text
MANDATORY REQUIREMENTS (GENERAL)
Material Account Stock Goods Invoice
ITEM CATEGORY Number Assignment Receipt Receipt
Standard BLANK YES YES
Consignment K YES YES YES
Subcontracting L YES YES YES
Stock Transfer U YES YES YES
Third Party S YES YES
Limit/ Blanket B YES YES
ZERO VALUE POs
Generally used for samples. But generally used monitoring the delivery. FOC indicator is
set in item level. Invoice receipt is cancelled because of this tick
Variable Order unit can be specified in material master record and purchasing info record.
In PO,
Inco-terms are specified at Header level
Shipping Instructions can be at Item and header level (As a Text in header level and
Delivery tab at item level)
Delivery instructions can be at Item and header level. (In texts tab)
Changeability of PO
1. If PO is already sent to Vendor – CAN change the PO and send a copy to the
Vendor
2. If Vendor is delivered material against PO – Only LIMITED changes like texts are
possible (We can not change qty)
3. If Goods received and payment made – NO changes possible.
Invoicing Plan
• System creates invoice automatically as per Plan and release them for payment
Page 12 of 161

• For automatic settlement for periodic invoicing plan, ERS must be selected in
Vendor Master
• In partial invoicing plan, provision of down payment in the Billing or Invoicing
plan rule date
HOLD function is available for a PO while creation
Reporting
1. Creating and running reports
2. Adjusting List analysis
3. General analysis
Analysis of Order Values
1. Total Analysis
2. ABC analysis
3. Analysis using comparison periods
4. Frequency analysis
ON HOLD POs are considered as incomplete and NOT available for analysis
Role – describes a set of logically linked transactions
Activity groups (User Roles) – have to be set-up using the profile generator so that the
users of the SAP system can work with user specific or position related menus
Page 13 of 161

4 MASTER DATA
VENDOR MASTER
Vendor Master Data is maintained at
- General - CLIENT LEVEL INFORMATIONS
Addresses
- Company code level – COMPANY CODE LEVEL INFORMATIONS
Accounting related - Payment terms, payees,
- Purchasing Organization level -
Related to purchasing – Currency, Inco-terms, VSR, etc
We can BLOCK a Vendor Master Record (XK05) - Complete
If we want to block a Vendor for a SPECIFIC MATERIAL done through SOURCE LIST –
ME01
Automatic PO generation is in purchasing data.
ACCOUNT GROUP of a Vendor
Control functions of Vendor account group are –
1. Status of the Vendor ( One time Vendor or routine vendor)
2. Field selection in the Vendor Master Record
3. Partner schemas
4. Vendor Sub range
5. Type of number assignment (external or internal)
Single Master Record is maintained for one time Vendor – Account group is CPD
Other routine vendors are generally in LIEF
Vendor Reconciliation account
It’s a G/L account which maps Company’s liability towards several vendors.
Depending on account grouping selected, system assigns a number (can enter manually
also). This Vendor number is used in sub-ledger number in Financial Accounting.
When posting an invoice, system uses the reconciliation account automatically from
Vendor master record.
A vendor account code is created against Company code and Purchase Organization, so its
account is unique in all Plants under the Company code.
Pre-requisite for Vendor Partner roles
1. Vendor master record for each partner separately
2. Specified in customizing – Partner roles selected
Page 14 of 161

Controls of Document type
- Screen sequence and screen layout (Screen variant)
- Number ranges of document
Payment terms
The control functions with payment terms are:
1. Day Limit - Day of the month up until which the corresponding terms are valid.
For terms of payment which depend on whether or not the baseline date is after or
before the 15th of the month, you can define a two-part payment term under the
same terms of payment key. The terms of payment key is expanded by the day
limit entered here. Thus there are two entries in which different terms can be
specified.
Example
The following terms of payment require you to enter a day limit:
Documents with an invoice date on or before the 15th of the month are payable on
the last day of the next month
Documents with an invoice date after the 15th of the month are payable on the 15th
of the month after the next month.
2. Base line date calculation. – We can fix the base line date. The options available are
fixed day and additional months
3. Default payment block and method of payment
4. Default base line date. It can be –No default/ posting date/ document date/ entry date
5. Indicator for installment payment
Inco-terms
International Commercial terms
We can make a mandatory requirement of location entry for an inco-term
Text types for central Texts
In this step, you define the text IDs for the "general" part of vendor master records. Text
can be entered in the master records for each text ID, enabling you to store information on
the vendor in the master record.
Actions
1. Enter a text ID.
2. Enter the name of the text type.
3. Select the "Text relevant" indicator. The text is offered when a vendor master record is
maintained or displayed.
To enable a vendor text to be adopted in a purchasing document, proceed as follows:
4. Choose Text for <purchasing document> -> Define text types and copying rules for
header texts.
5. Then specify for the desired text type(s) which text is to be copied from the vendor
master record.
Page 15 of 161

Text types for Purchase Organization Texts
Define Text Types for Purchasing Organization Texts
In this step, you define text IDs for the part of vendor master records that applies to specific
purchasing organizations. You can enter a text giving information on the vendor for each
text ID when you maintain master records.
Actions
1. Enter a text ID.
3. Select the "Text relevant" indicator. The text is offered when you maintain or display
the purchasing data of a vendor master record.
header texts.
master record.
MATERIAL MASTER
Material Master is structured for various organizational levels.
Data at CLIENT / COMPANY CODE LEVEL (table – MARA)
Data Valid for the total Company. Basic data
Material No., Material group, Unit of measure, Conversion factors, Purchasing
value key, etc
Data at COMPANY CODE LEVEL
Accounting Data, Costing data if valuation is at Company code
Data at PLANT LEVEL (Table – MARC)
Purchasing data, MRP Data, Scheduling data, Forecasting Data, etc.
Data at STORAGE LOCATION LEVEL
Storage bin, picking area, etc.
MATERIAL NUMBER
18 character alpha numeric key
- Basic data is CLIENT SPECIFIC
- Some Purchasing data are PLANT Specific – Pur group, GR processing time, etc.
- Purchasing Value key is maintained at CLIENT LEVEL
- If we are not specifying a Plant at Organizational level, only data at higher level
(Client) will be displayed
- Language selection is additional data of Material Master.
Page 16 of 161

The standard system uses a BUFFER when assigning numbers to the material master
records
The amount of numbers for the buffer is 10. Using this buffer and having the material
number assigned before saving a new number, the master can be lead to a gaps in the
number assignment. However if you reset the number level of an interval back to the initial
value, R/3 system fills these gaps when you create the new materials
MATERIAL TYPE
Materials with same characteristics are grouped together in Material types- Raw Material,
Finished Goods, etc.
Represented by 4 digit alphanumeric codes
Material type is having following CONTROL functions
1. The type of number assignment (Internal or external)
2. The permitted number ranges
3. Screen layout and screen sequence
4. User specific views
5. Procurement type (Internal / external)
6. Up-dating of Quantity and Value in master records / FI
7. Account determination on goods movements
8. Price control
Material type CANNOT be changed for materials whose Purchase Order is made.
Special Material types available in std SAP
• Additionals (VKHM) - requirements like effective presentation to Customs
Eg. – Care labels
• Advertising media (WERB) – presentation for advertising. Eg. – leaflets/ catalogues
• Apparels (MODE)
• Empties (LEER) – Type of RTP generally subject to deposit of money. Can have
several components together in BOM. Eg. – empty bottle/ empty crate, etc. (SD)
• Full Products (VOLL) – counter part of empties.
• Operating supplies (HIBE) – Procured externally and required for the manufacture
of other products.
• Packing Materials (VERP) – Transport with goods/ come with goods of FOC. It is
managed at quantity and value in Material master even though it is free of cost.
Used in HU management
Material filed selection reference
A reference control key defines which control string applies to the relevant influencing
factor
We can maintain reference key for
1. Material type
2. Plant
3. Industry sector in customizing
Page 17 of 161

Filed selection group
• Grouping of master records according to the filed option (Hide/ Display/ Optional/
reqrd. entry)
• Field selection against TRANSACTION is also to be defined for filed option
• Link rules of each transaction against the material type
• SAP defined link rules CAN NOT be changed
• Screen/ views can be customized as per Company code
INDUSTRY SECTOR
Represented by 1 digit alphanumeric key
The control functions of Industry sector are
- Screen selection and its sequence
- Industry specific fields
If we assigned a material to an Industry sector, we CANNOT change it later.
Unit of measure
- Base unit of measure
- Purchasing Unit, Sales Unit, Issue unit
- Order Price Unit (OPu)
Main fields in Purchasing View are
- Purchasing Value key
- Automatic PO Selection
- Source list requirement
- Quota Management
Accounting View
Valuation Class – determines to which stock accounts are to be updated on goods
movements
Price Control – Standard or Moving Average Price
Valuation of material depends on the price control set in Material Master.
Standard Price – All stock postings will be at standard price and in case of any
deviation posting the difference to Price difference account
Moving Average Price (MAP or v)
GR valuation will be at PO price and Goods Issue at Moving average price
MAP updates on goods movements.
In case of any difference with respect PO price, the difference amount will be
posted to the stock account (on total stock at that moment). If sufficient stock is not
available to distribute, system will post the difference to Price difference account.
Extending/ adding a View to an existing material master – MM50
Then select the required view, Select
B – Accounting
D – MRP
E – Purchasing
Page 18 of 161

K – Basic Data
C – Classification
G – Costing
A – Work Scheduling
5 PROCUREMENT OF STOCK MATERIAL
PURCHASING – GENERAL
Centralized Purchasing
With one Purchasing Orgn
1 Purchase Orgn > responsible for a number of Company codes
Distributed Purchasing
Number of Purchase Orgn for different Plants
1 Purchase Orgn responsible for 1 Plant
Company specific
1 Purchase Orgn responsible for 1 company code
Reference Purchase Organization
Pre-requisites for reference purchase organization:
1. Both the purchase organizations (reference and normal) are to be maintained in
Organization structure
2. The reference purchase Orgn can be maintained WITH or WITHOUT Company
code and Plant
3. Assign reference purchase Orgn as Reference purchase orgn in customizing
Data in MM Purchasing
Material Master – 1. Client related data 2. Plant related data 3. Storage location related data
Vendor Master – 1. General data 2. Company code related data(accounting) 3. Purchasing
related data
Master records in Purchasing
1. Purchasing Info Record
2. Source List
3. Quota Management
4. Conditions
5. Vendor Evaluation
Page 19 of 161

The linking of document type made in customizing (in purchasing) are:
Document type to allowed item categories
Allowed item categories to Link PR document type
The conditions dependencies on time (TD & TID) are fixed at document type level at
customizing.
PURCHASE REQUISITION
PR can be created – Manual, or Auto from PP/ PS/ PM/ PPC
Texts from externally created requisitions (PS/ PM/) are adopted in the item text of PR in
purchasing
Purchase requisitions are processed by item-by-item
PR can be created for material with master record and without master record also. But if it
is without master record, it will be with Account assignment and Text & material group
PR changeability
Before changing PR, check
1. Already PO is issued or not – If issued, NOT changeable
2. Already released or not (release procedure) – If released limited changes possible.
Depend on changeability indicator
3. Created by MRP – NO Changes possible (Quantity can be chnaged while
processing. But the left out will shown as open against the same PR)
Flagging of PR items are “CLOSED”
• The item of a PR is regarded as closed, if the requested quantity is ordered in a PO
• If we are creating PR manually, the items will not be considered in MRP.
RFQ / QUOTATIONS
Single document for RFQ and Quotation
Can be created with respect to:
• Manual
• Via reference document
• Reference to PR
• Reference to Outline Agreement
RFQ/ Quotations are Created and maintained at purchasing Organization level.
For RFQ – NO COMPANY CODE / PLANT
Collective Number: For linking a number of RFQs. It is in the header of RFQ.
It is a 10 digit alphanumeric number.
Page 20 of 161

Creation of RFQ
Initial screen – Quotation deadline, Purchase Orgn & Purchase group are fixed
Header details – Collective number is assigned, Vendor addresses are maintained.
Item overview – Material, Qty & deadline for each item
We cannot enter an account assignment in RFQ
Quotation processing
• Vendor’s price and price conditions
• We can enter the prices and conditions of each vendor in RFQ.
• Comparison list
• We can save the quotation data in purchasing info record by giving the tick in check
box ‘Info update’
• We can set the rejection indicator for unsuccessful vendors.
• The mean value of all quotations can be saved as ‘Market Price” in the quotation
comparison list. This market price will be used as the basis for valuating the price
level of a vendor and is called up during Vendor Evaluation.
Conditions in Purchasing
Conditions can be maintained for – Contract/ Sch. Agreements/ PO level. Conditions can
be maintained in Info record. There are extended conditions also.
PURCHASING INFO RECORD
• Info records are created for
1. Standard
2. Subcontracting
3. Pipeline
4. Consignment,
Where the system copies the data in purchasing
• Certain concise information of a Vendor and material.
• If we are not maintaining Material in Info record, system will store this information
against a material group.
• Info record contains :
1. Current and future price with pricing conditions for Plant/ Purchase
organization
2. Delivery date and tolerance limits. Availability period – During which,
vendor can supply the material
3. Details of the Vendor & Vendor evaluation data and VSR. We can fix a
regular Vendor here.
4. Texts that can be maintained for Info record, which can be called up in PO
5. Number of last Purchasing document/ PO (In Purchasing data 2)
• We can fix the PO text in Info record
Page 21 of 161

1. If only info record text is to be fixed in PO, set NO M text option
2. If you are not selecting the above option, system will display both the texts
in PO
• Info update indicator WILL NOT update the info record. It will update the
information.
• The updated details can be seen at Info list (ME1L/M/P)
• These data will be displayed as default data while creating the purchasing
documents. It can be edited at purchasing document level.
• Info record can be created
- manually
- automatically from Quotation / Outline agreements / Purchase orders, if info update
indicator is selected while creation
• If you want to maintain conditions in Info record, you have to maintain it
MANUALLY.
• Auto-updated info records will NOT BE HAVING the pricing conditions
(ONLY final price will be retained)
Info update indicator
If we are fixing this info update indicator, system will copy the data and conditions
maintained.
If we fix
A – System will update the data WITH or WITHOUT PLANT
B – System will update WITH PLANT
C – System will update WITHOUT PLANT
For Quotations/ Contracts/ Scheduling Agreements and Conventional POs
- If BLANK selected, Info record will not be updated
o A – If an info record exists at Plant level, it is updated. Otherwise, info
record at Purchase Organization will be updated
o B – If Plant conditions are allowed for the Plant, an info record at Plant got
updated
o C - IF Plant conditions are not necessary, for the Plant, info record at
Purchase Organization level will be updated.
The info update Indicator can be set at PO
If we fix
BLANK – No update
TICK – System will update the info record as per the settings in
Customizing ( node –Conditions > Define condition at Plant level)
BLANK – Conditions allowed WITH or WITHOUT PLANT
+ - Only PLANT BASED Conditions will be updated
- - NO-PLANT BASED CONDITIONS are allowed.
For Enjoy transactions (PO- ME21N)
 If just one (With or without Plant) exists, record will updated.
 If NO info record exists, PLANT Level info record will be CREATED
Page 22 of 161

 If 2 info record (1 with Plant and 1 without Plant) exists, WITH PLANT info
record will be updated
Info update scenarios
1. If Info record already exists
1. Quotation – Time dependent conditions and other supplementary conditions are
adopted
2. Scheduling Agreement – Is set as last document. Order price history is updated
3. Contract – None
4. Purchase Order – Is set as last document. Order price history updated
2. If Info record NOT exists
1. Quotation – Time dependent conditions and other supplementary conditions are
adopted
2. Scheduling Agreement – Is set as last document. Order price history is updated
3. Contract – Time dependent conditions and their supplementary conditions are
adopted
4. Purchase Order – Is set as last document. Order price history updated
Structure of Info Record
1. General Data – Vendor data, Order unit, etc.
2. Purchasing Organization Data 1 –
Control data – Delivery time, Minimum quantity, etc
Price & Conditions – Gross price, discount, etc.
Statistics – PO History, PO statistics, etc.
Text – Texts are maintained here, can be called up in PO
3. Purchase Organization / Plant Data
Control, Price, statistics, texts
4. Purchase Organization data 2
Here you will get the reference document number on which the info record
is created/ updated. This option is available only if the record is created with
reference to a purchasing document.
In other words, if an info record is created manually, the last PO data will be
updated in Info record at purchasing data 2
• Purchasing Info Record is valid for PLANT / PURCHASE ORGANIZATION
• While creating a PO, system first search for info record with PLAN&PURCHASE
ORGANIZATION combination for price, if it is not available in the system, it will
search for data with PURCHASE ORGANIZATION only.
• Purchasing Info record is suggesting prices in 2 ways :
a. Conditions – conditions are included, if info record is prepared manually.
b. If info record does not contain conditions, then the system will select the
price of last Purchase Order.
• We can define the conditions of last PO by customizing
a. Are always copied
b. Not to be copied when prices are entered manually
c. Never copied
Info Record CANNOT be deleted by normal archiving program run. It can be deleted by
the system administrator
Page 23 of 161

Data can be displayed from Info record screen through ENVIRONMENT are
 Material
 Vendor
 RFQ/ Quotation
 QM Info record
 Last Document
 Quotation price history
 Order price history
Through EXTRAS we can display
 Administrative data
 Source List
 Taxes
 Vendor Evaluation
 Statistics
We can reach Buyers Negotiation sheet (for Vendor & Material) from Info record
We can have 4 different info record for a material & vendor – for standard/ Consignment/
Subcontracting/ Pipeline
TEXTS
Header Texts: Header Text/ Header memo (Internal)/ Supplementary texts
Item Texts - Item Text (CAN copy from Info Record/ Material Master)
- Delivery Text
Inserting texts from material master record
3 options of linking material master record and purchase documents.
Relevant settings are to be made in each TEXT TYPE in customizing. The indicator in the
status column shows the nature of linkage.
Option 1 - The Text is copied . Indicator status in column – NONE
It is then independent of the text in Material Master. Changes in the text in Material Master
have NO INFLUENCE on the text in the document.
Option 2 - The Text is displayed only. Indicator status column – N
Text can not be adopted
Option 3 – The Text is offered for copying. Indicator in status column – X
It can be copied via Header or item
The path is Texts > Adopt text (in requisitions) Go to > Texts > Adopt text.
The changes made in material master will also be adopted in the document until such time
as you can copy the text.
Page 24 of 161

The customization available for each purchasing document. PO/ PR/ Contract in following
nodes
- Define Text type for header Text
- Define copying rule for header text
- Define text type in Item text
- Define copying rule for item text
We can copy a text from a Vendor master to any of the purchasing document.
The procedure is as follows
Text types for Purchase Organization Texts
Define Text Types for Purchasing Organization Texts
In this step, you define text IDs for the part of vendor master records that applies to specific
purchasing organizations. You can enter a text giving information on the vendor for each
text ID when you maintain master records.
Actions
1. Enter a text ID.
3. Select the "Text relevant" indicator. The text is offered when you maintain or display
the purchasing data of a vendor master record.
header texts.
master record.
CONDITIONS
Are stipulations agreed with vendors concerning prices, discounts, surcharges, etc..
We can create conditions in
- Quotations
- Info Records
- Outline agreements
- Purchase Orders
Conditions in PO are TIME INDEPENDENT and others are Time DEPENDENT
System will ask for VALIDITY for TIME DEPENDENT conditions.
Time dependent Time Independent
Conditions Conditions
1. Info Record YES NO
2. Quotation Depends on Doc Type Depends on Doc Type
3. Sch. Agreement Depends on Doc Type Depends on Doc Type
4. Contract YES NO
5. Purchase Order NO YES
Page 25 of 161

 We can specify both time dependent and Time Independent conditions at Header
level and Item level EXCEPT Info Record. The setting is at Document level
 In Info record, conditions are stored at Info record level.
 For Time Dependent conditions, we can create
1. Supplementary conditions
2. Validity Periods
3. Scales
4. Upper and Lower Limits
If we are creating a new condition type, should be assigned to an access sequence to link
with Pricing Procedure
If the conditions are on header level of the document, then it is applicable for items in that
document, but if it is at item level, it is applicable for that particular item only.
Conditions in Purchase Order DEPEND on DOCUMENT TYPE.
Conditions are prepared in a PO are at the level of document type
Conditions can be created for a Vendor/ for a Plant/ for Purchasing.
Header conditions – Applicable for all items as per % or Value
Item conditions – applicable for specific items - % or Value
Group conditions – Applicable to all items but distributed proportionately as per the
quantity/ value
CONDITION TECHNIQUE
Up to 3.1H version, Time independent conditions are referred as Document conditions and
Time dependent conditions are referred as Master conditions.
Condition Type and condition category - Example
Condition category Assigned to condition type (Std system)
H- Base Value PB00 (this must exist in all pricing procedure
except stock transfer)
B- Delivery Cost FRA1
N –Non de-ductable input tax NAVS
E – Cash Discount SKTO
G – Moving average Price P101
Condition types used in standard system (examples)
PB00 -Price - Gross Price (With access sequence-0002)
RB00 - Discount/ Surcharge - Absolute discount
ZB00 - Discount/ Surcharge – Absolute Surcharge
FRB1 - Discount/ Surcharge – Absolute Freight
ZOA1 - Discount/ Surcharge - % Duty amount Customs
Page 26 of 161

SKTO - Discount/ Surcharge – Cash discount
NAVS -Taxes - Non de-ductable input taxes
Standard pricing procedure in SAP is RM000 used for Purchasing
Purchase Requisition Prices
• If the material is WITH material master record, the price will be displayed for
Purchase requisition from the material master, even if we are maintaining a separate
price in Info record. But the vendor will be populated from the Info record.
• If the material is WITHOUT material master record, we have to maintain the price
manually during the creation of PR, if required.
• While preparing RFQ, DO NOT mention/ indicate Plant so that the same RFQ can
be referred for other plants also.
VENDOR CONFIRMATIONS
Vendor confirmations can be of
• Order acknowledgements
• Loading or Transport confirmations
• Shipping Notifications
ASN – Advanced Shipping Note
If the order conformation types are customized, and it is MRP relevant, it appears in Stock
Requirement List.
• We can post Goods Receipt against acknowledgement, if permitted entries are
assigned in Customization – Confirmation Control
• We can enter a confirmation in PO or SA
• We can have an EDI arrangement with Vendor, against EDI acknowledgements are
checked for Quantity, Date and Price
• Partial acknowledgement through EDI updates the PO/ SA possible
• We can do dunning procedure through confirmation control key and we can fix the
mandatory days for confirmations.
• Pre-requisite – Conformation Control KEY
RELEASE PROCEDURE
Release procedure can be WITH & WITHOUT Classification
Release procedure WITHOUT Classification is available ONLY for PR
Class & Characteristics
Maximum 8 release codes are allowed in a Release procedure
Page 27 of 161

Changeability after the start of a release procedure
Case 1 – Insignificant changes – NOT required a fresh release (below the value limit)
Case 2 -Significant change with % limit – No fresh release, if correct the PO
Case3 – Significant changes – New Fresh release required
MANUFACTURER PART NUMBER
Pre-requisites
1. Settings in Customizing
2. Creation of Material Master record with material type HERS
3. Define Manufacturer part profile
4. Create master record for manufacturers/ Plants
5. PO should be with MPN material
6. Info record
7. Texts in PO can be maintained
VENDOR EVALUATION
• Vendor Evaluation is done at Purchase Organization level
• It uses the master data of
1. Material Master
2. Vendor Master
3. Purchasing Info Record
Main Criteria & Sub-criteria
Main Criteria
Price, Quantity, Services are generally used main criteria
Over all Score of Vendor
Main criteria
Manual
Semi-auto
Auto
Page 28 of 161
1 2 3
1
2
3

Sub criteria
(At Info Record Level)
Scoring range is defined in customizing
Weighting keys – 2 Types – Equal weighting & Distributed weighting
Sub-criteria in NOT having any weighting keys
Calculation type – Manual/ Semi auto/ Automatic – for sub-criteria
In automatic calculation, we have to define sub-criteria for each main criteria otherwise
system can not calculate the overall score.
In Manual scoring score for sub-criteria are entered manually and calculates the score of
main criteria accordingly (maintain Vendor evaluation transaction – ME61)
In semi automatic scoring, user enters the scores of sub-criteria via info record and the
system calculates the scores of sub-criteria as per the setting and populates the score of
main criteria. Transaction Code – ME63
In fully automatic scoring, scores of the sub-criteria will taken from Info record(no manual
entry) and that will populate to sub-criteria and finally to main criteria. Transaction Code –
ME63
Procedure
We can maintain a maximum of 99 Main criteria and 20 Sub-criteria for a Vendor
Evaluation resulting to a combination of 1980 combinations for vendor evaluation
IMG Settings & Transactions
IMG Settings
SAP Customizing Implementation Guide/ Materials Management / Purchasing/ Vendor
Evaluation
Step1: Define Weighing keys- Different Weighing keys are required if we want to consider
different weighing (%) for a set of criteria to be evaluated while maintaining vendor
evaluation for different kind of vendors. Like Service vendors, RM vendors etc. Here we
create weighing keys as per our requirement.
Standard are 01-Equal weighing; 02-Unequal weighing
Step2: Define Criteria: Define the criteria by which the system computes scores for
vendors. 99 criteria allowed. SAP recommends a maximum of 8
Then go to sub criteria of particular criteria and define the sub criteria applicable for that.
Specify the scoring methods whether they are manually, semi-automatically, or
Page 29 of 161
a b c a
b c

automatically. There are particular scoring methods defined in standard system for standard
sub criteria. By these scoring methods only the system will be able to calculate the scores
for the specified period. The maximum no. of sub criteria allowed for main criteria is 20.
Step 3: Define scope list: scope lists are defined for usage in generation of ranking lists for
vendors. System will consider the sequence list of main criteria mentioned for a scope list.
ie. Weightages are considered in that sequence while ranking.
Step 4: Define purchasing organization data for Vendor Evaluation
Include your purchase organization in the list, and then go to details. Mention the best score
(100 possibly) and Applicability period (the past period which should be considered for
vendor evaluation by the system). If any factory calendar is there attach here.
Step 5: Go to main criteria of your organization. Here you have to mention what are the
main criteria you are considering for your P Org from the list of total main criteria.
Ticking the manual Maintenance enables to enter the score manually for the main criteria
while maintenance of vendor evaluation for a particular vendor (if required)
Step 6: Go to Sub criteria of a main criteria. Here you divide the % of total weightage for a
criteria among sub criteria according to your choice (if it 1.1.2 then it is 25%, 25%, 50%).
Tick manual maintenance to provide option for a manual maintenance while maintaining
Vendor Evaluation.
Step 7: Weighing for your purchase organization.
Here you mention how the weightage is given to particular main criteria for a given
weighing key (for all the weighing keys created by you.)
According to this only the total weightage(say 100) is distributed among various main
criteria for particular weighing key.
Step 8: Point scores for the main criteria
Here points are allocated according to variances for automatic sub criteria. System will
give points to sub criteria according to this, during processing the data for evaluation.
System defined will be there.
Easy Access:
Mater Data should be maintained through the below path to start the vendor Evaluation
process for the particular Vendor.
Logistics/Materials Management/Purchasing/Master Data/Vendor Evaluation
1. Maintain – ME61: Here we enter the Vendor code and Purchasing Organization
2. Then enter the corresponding weighing key and press enter ,you will see the
weightings allocated for main criteria
Page 30 of 161

3. Now go to Edit on the screen and click the auto new revaluation. The system
calculates the scores and gives the overall score. Save the same.
4. You will have the option of changing the scores manually for criteria and sub
criteria if you have set the same while configuration. Once you have changed
manually and press enter the scores will get updated then save the same.
5. ME 63 – Automatic New evaluation: Here you can do automatic evaluation without
going to ME61.But you cannot do any manual corrections in this case.
6 PROCUREMENT OF CONSUMABLE MATERIALS
Account assignment category determines which category of accounts is to be debited in
G/L accounting.
Categories are:
A – Asset
K – Cost centre
P – Project
F – Production Order
C – Sales Order
U – Unknown
• Consumable materials that are procured directly for consumption against an account
assignment object
• It is NOT managed in value based in Inventory management
• System updates the consumption in material master, if master data is available.
• Examples are NLAG/ UNBW/ DIEN
NALG – Non Stock Material
UNBW – Non-valuated stock material
DIEN – Services procured externally
• If we select consumable material as material type in Material Master, it controls
- Procurement type (Internal / External)
- Account postings
Page 31 of 161

- Requirement in Inventory Management
Consumption is directly posted to consumption account
Inventory Management is NOT based on Value basis
Stock Vs Consumable
Stock Consumable
1. Entry of Material Number Required Possible but not required
2. Account assignment not required Mandatory
3. Account postings to Stock account Consumption account
4. Mat. Master up-dation Qty, Value& Qty & Consumption
Consumption are updated
5. MAP Adjusted Not applicable
Purchase Requisition for Consumable Material
• Can be by manual or though automatic- through MRP run/ PM order/ Sales order
• Can use account assignment U (Unknown) in PR. But to be confirmed in PO
• If material master is available, system will take the price from it otherwise we have
to enter manually.
• Multiple account assignment is possible in PR
BLANK – No multiple account assignment
1 – Distribution on Quantity basis
2 – Distribution on Value basis.
• Goods Receipts are NON-VALUATED for consumable goods.
Procedure for SPLIT VALUATION - transactional
1. While creating the material master select valuation category and save it.
2. Again go to Material master, while entering system will ask for Valuation type in
accounting view. Enter the valuation class, price and save.
3. Again go to material master and repeat the procedure for 2nd
valuation type.
4. The valuation type for each valuation category is fixed in customizing
BLANKET PURCHASE ORDERS
• Used for procuring consumables and services
• Validity is a must. Generally for longer periods. Fixed at Header level
• Limits at item level
• Purchase Order document type FO (Framework Order) is used for this.
• Invoice receipt is periodic and settled for each invoice
• NO Goods Receipt or Service Entry Sheet
Page 32 of 161

• Account assignment is NOT Mandatory while creating PO- U (Unknown) can be
used in PO
• Item Category – B is used
• Multiple account assignment is permitted while Invoice verification
• Validity periods are checked by the system during Invoice verification
• Can be linked with Budget control
• PO History is updated ONLY after Invoice verification
• If the limit of a PO is increased during the invoice verification, system allows the
postings BUT blocked for payment on “variance” reason
Page 33 of 161

7 EXTERNAL SERVICES PROCUREMENT
Procurement cycle – Flow
1. Determination of requirements
2. Creation of service specification
3. Source Determination
4. Vendor selection
5. RFQ (Bid evaluation)
6. Comparison of Quotations
7. Creation of service Order
8. Purchase Order monitoring
9. Service Entry
10. Service acceptance
11. Invoice verification
12. Release of Payments
Service Master
• Master record creation- description of service, UoM, etc.
• Can attach price through conditions
• Conditions can be maintained at
- At Service level (Market price/ Estimate)
- At Service and Vendor level
- At service, Vendor and Plant level
• Service is procured for direct consumption.
• Account assignment ‘U’ (Unknown) is accepted at PR level, not in PO
• Materials are procured at Item Level, but Service is procured BELOW item level.
• Item category ‘D’ is used for Service POs
• Provision of unplanned expenses and total limit at item level
• Release procedure is possible for Service Entry Sheet
• Service Entry Sheet is made with respect to PO
• Invoice verification also done with respect to PO
• PO History is updated after Invoice verification
• Service Entry sheet updates FI/ CO.
• Complex service specification can format through outline levels
• Can assign any number of service lines to each item level
• AC03 – Creation of Services, ML 81N – Service Entry Sheet
2 ways of specifying services
1. As a Planned Service – With description/ Qty/ and Price
Page 34 of 161

2. Unplanned service – With Value & limits
Master Records in Service Management
1. Service Master Record
2. Master Conditions for Services
3. Standard Service Catalogue (SSC)
4. Model Service Specification (MSS)
• In Service Master Record, we fix the information like – Service No., Service
category, Description, Basic UoM, Material group, Valuation class, etc
• In master conditions of services, Terms of Payment, Validity period, Scales,
Supplementary conditions.
It can be maintained in Master records/ contracts & in purchasing documents
Header conditions CAN NOT be maintained in RFQs and SES
• In contracts we are allowed to maintain header conditions for the FIRST outline
level. These are copied to all outline levels and CANNOT be changed
• In case of PR/ PO, conditions are UPDATED for a SERVICE.
• But for Quotation and PO, the service Master conditions are updated for a Vendor
WITH or WITHOUT PLANT
In customizing (Source determination & default values), we can set the following
indicators for the Client & purchase Organization level.
1. For CLIENT
• Service condition update indicator –
- as default in PR
- as default in Quotations
- as default in POs
2. For PURCHASE ORGANIZATION
 Set service condition update indicator – Quotations
 Default in POs
Maintaining Service Conditions
1. In Service Master
2. In purchasing documents
3. Updating conditions in Master record through conditions in
purchasing documents.
 Condition Update indicator for Purchasing document is set in
customizing
Page 35 of 161

Standard Service Catalogue
Details to Service type, service type to SSC
We can transfer external SSC to R/3 system which is having same Unit of Measure.
Model Service Specifications
For PRs to purchase organization, Fixed Vendor, Contract through configuration
External Service Procurement is also can have:
1. Release procedure
2. Value limits for unplanned services
3. Vendor evaluation
4. ERS
Service specifications can be created for
1. Purchasing documents
2. SES
3. MSS
4. Maintenance Service Plan
5. WBS element / Project plan
6. Sales Order
WE CAN NOT MAINTAIN LIMITS IN RFQ/ QUOTATION/ CONTRACTS
The difference between MSS and SSC is
We can copy services from both to service orders, but if we copy from SSC, we can
not edit it, but in case of MSS we can select and edit it
Account assignment in services
Specifying the account assignment for the services at the time of their initial procurement is
optional. Account assignment category is at document item level.
-‘U’ (Unknown is accepted
- Multiple account assignment is accepted
- Distribution is also possible
Invoice verification of services (SES)
In Vendor master we have to specify, GR based IV/ ERS/ Service based IV
Global Percentage Bidding (GPB)
It is a procedure of bidding used in procurement of external services ONLY.
Pre-requisites are
1. Document type AB in RFQ
Page 36 of 161

2. Calculation schema – MS0002 (with condition types –KR01 –
header discount & KZ01 – Header Surcharges
Process
1. Create RFQ with document type –AB.
Maintain price per service and send to Vendors
2. Vendors will not quote any price for each service, But they will indicate a %
addition or Deletion with respect to the price shown in RFQ.
This % can be at Per Outline level or for the uppermost outline level (total)
- INVOICING PLAN and BLANKET POs are possible with Services
OUTLINE AGREEMENTS
It’s a long term purchasing agreement with a Vendor concerning the supply of materials
or the performance of services according to the pre-determined conditions.
These are valid for a certain period of time and cover a pre-defined total purchase
QUANTITY and VALUE
Outline Agreements - 1. Contracts
a. Value (WK)
b. Quantity (MK)
c. Centrally agreed Contracts
d. Distributed Contracts
2. Scheduling Agreements
a. LA
b. LPA
c. LU
• Contracts are with Release Orders and Scheduling agreements are with Delivery
schedule
• Release Order is a Purchase Order reference to a Contract
CONTRACTS
• NO DATES
• PR > RFQ > Contracts (manual)
• VALIDITY PERIOD is to be indicated in the Header
• In Quantity contract, the target quantity and purchasing conditions are to be
maintained for EACH item
Page 37 of 161

• Item category M & W are permitted in Contracts (M- Material Unknown & W-
Material group)
• Item category M – Similar materials with SAME PRICE, but different material
numbers. Material numbers are to be specified in release order.
• Item Category W – Material belonging to the same material group, but with
DIFFERENT PRICE.
• W can be used in VALUE CONTRACTS ONLY
• M & W are NOT ALLOWED in Release Orders
• Account assignment –U (unknown) is permitted in contracts but NOT in release
orders
• Release order documentation contains the statistics for an item. It is updated
automatically and used for monitoring the contract
• Single and multiple account assignments are allowed in contracts
Centrally agreed contracts – For many Plants in a purchase organization. In this case DO
NOT MAINTAIN PLANT. In this case individual release orders can be issued Plant-wise
against the contract. Partner functions are also possible.
Using Plant conditions, we can specify separates prices and conditions for each receiving
Plants.
Distributed Contracts (DK) – Contracts at different Plants operating on different (ERP)
systems which are accessible through ALE
SCHEDULING AGREEMENTS
Long term agreement with a vendor to supply material as per pre-defined condition.
• Pre-defined PERIOD and QUANTIRY (NO VALUE)
• PR > RFQ > Scheduling Agreement.
• Centrally agreed S.As can be prepared.
• M, W and U are not allowed in Scheduling Agreements
• Details of delivery date and quantity are maintained through Delivery schedules
• Schedule line can be created automatically through MRP run, but for this
1. Define Scheduling agreement as a Source of supply for the material.
2. Auto schedule line selection source list Select option 2 in MRP Column (in
Me01)
3. Auto schedule line must be allowed in MRP system
Types of Scheduling Agreements:
1. Type LA – Document type - LP
Agreement + Delivery Schedule
2. Type LPA – Document type – LPA
a) Agreement + Delivery Schedule + Forecast Schedule + Release
documentation
b) Agreement + Delivery schedule + Forecast schedule + Release
documentation + JIT Schedule + Release documentation
Page 38 of 161

3. Type – LU – Stock transfer scheduling agreement
FRC (forecasting) Schedule gives a medium term overview of requirements
JIT Schedule gives the requirements in near future. JIT schedule can be prepared daily/
Hourly basis.
• Release documentation requirement is SET by fixing release documentation
indicator in Customizing
• For JIT scheduling, JIT is Indicator to be set in Material Master record
• We can post a Goods receipt against a scheduling agreement directly in MIGO
Creation Profile
1. Optional data from Vendor master record
2. Release creation profile is for each scheduling item
3. It is customized on a Plant specific basis
4. It determines the periodicity of SA release and aggregation of schedule line
quantities
5. Tolerance limits are in release creation profile (RCP) and set it during
customizing
Aggregation schedule – Total scenario in a specific time period
Firm, Trade off & Planning Zones –
1. FIRM ZONE – Immediate – Vendor can go ahead with manufacturing. The
Purchaser is liable for total quantity
2. TRADE OFF ZONE – Near future requirements. Vendor can go ahead with
mobilization of requirements. But the liability is limited to the purchased raw
materials/ semi finished goods
3. PLANNING ZONE – No liability by the Purchaser
Firm and trade off zones details are forwarded to the Vendor along with FRC and JIT
Schedules for getting more clarity of Scheduling Agreement.
The procedure is
A. At IMG level –Maintain release creation profile against your Plant. Here you are going
to maintain
1. General Parameters like Creation strategy for JIT & FRC Schedules
2. Aggregation Horizon – Daily or monthly aggregation in Days for both JIT & FRC
3. Creation periodicity – Daily/ Weekly/ Monthly for JIT & FRC
4. Tolerance profile, etc
B. Transaction level
1) Create Scheduling Agreement – ME31L. Attach the creation profile in the Scheduling
Agreement at Item > More functions > Additional data
Please see that the Material Master is having tick for JIT Schedule &
2) Maintain Delivery schedule – ME 38
3) Create the release documentation – ME84. Select FRC & JIT Schedule and process and
see that FRC and JIT Schedules are created
4) If you want to see the schedules, go to ME9E
Page 39 of 161

SOURCE DETERMINATION
Source can be a Vendor or an Outline agreement.
By Source list, we are defining preferred or allowed sources for a material.
By Quota, we are specifying the share of total requirement over a specified PERIOD from
each SOURCE.
Source determination at PR level
• If the material is with master record, during creation of PR, Prices will be taken
from the material Master, EVEN IF, we maintain a different price in Info record.
But the vendor will be selected from Info record
• Case. Source list is maintained for Vendor A & Info record is for Vendor B
While creation of PR, system will select A as the source, if the source list selection
is opted in the material Master, otherwise, B will be selected.
• For fixing a Vendor in a source list, the info record for that Vendor is TO BE
maintained.
• If we have maintained a source list for a material we have to select that Vendor for
placement of PO. So check the requirement display before maintaining a Source list
for a material.
• INFO RECORD is a MUST for automatic source determination at PR level.
• Source determination function is available ONLY for PR
SOURCE LIST
• Allowed/ Preferred/ Blocked sources of Supply for a MATERIAL in a PLANT for
a PERIOD (Validity)
• MRP Indicator in Source list considered while material Planning
• If source list requirement is defined at Plant level, then system will not allow
creating a purchasing document without Source list.
• Source list can be for a Material (at Material Master) or Plant (at customizing)
• Source List analysis – List out materials which are NOT having source list in the
Plant
• ONLY ONE FIXED Source is allowed fro a material within a Validity period
• Source list can be maintained –Manually/ From Outline Agreement / From
Purchasing Info Record/ Automatic generation.
• Source list can be made referral (of another material)
• If the selection of source list is auto, we can have single or collective procedure.
Can be from Out line agreement/ Info record
• We can create a Source list for a MATERIAL GROUP (for contract – W)
• EXCLUSION INDICATOR – Set for excluding a source in the source list
Page 40 of 161

QUOTA ARRANGEMENT
The Quota indicates the % age of total requirement that are to be procured from each of the
various sources over a CERTAIN PERIOD OF TIME.
• Validity period is mandatory for Quota arrangement
• Quota can be provided for various procurement types
• Quota arrangement indicator is to be fixed in Material Master and is defined in
customizing to update quota allocated quantity progressively
• Quota arrangement is NOT suggested, if the quota allocated quantity>= maximum
quantity
• Quota rating = (Quota – allocated quantity + Quota base quantity)/ Quota
• Qr = (Q-Qa +Qb)/ Q
• The source with lowest quota rating represents the effective source (even ZERO)
• If more than one sources having quota rating zero (or equal), the one with highest
quota is the effective source.
• Quota base quantity is used for regulate the new entry of a Vendor in Quota
arrangement (Give him a higher quota base quantity on entry to quota)
Quota Splitting (ONLY through Planning Run)
• If a PR is created manually is subjected to quota arrangement, the requirement
WILL NOT split.
• Splitting among different sources is carried out, if a Lot size procedure for which
the splitting quota indicator has been set is assigned to the requested material in
Material master. This will be achieved through the Lot size procedure. For all lot
size procedures, quota will not split. Set at customizing. The quota splitting
indicator is set for each lot size procedure as per the requirement in Customizing.
Page 41 of 161

• The order dictated by Quota can be OVERRIDE by PRIORITY INDICATOR
• Priority Indicator prioritizes among the quota
• The prioritization is fixed in Quota screen
• Splitting of Quota is through planning run ONLY and for lot sizing procedures,
which is having quota splitting
• If the quota allocated quantity and quota rating have NO SIGNIFICANCE if the
quota is SPLITTING.
• Lot sizes are calculated on the basis of quotas. We can view Quota arrangement
from MRP list (MD04)
• Minimum splitting quantity- The residual quantity above which only quota splits.
The quantity below this quantity, system will assigns a single source
• Maximum quantity – Quantity that can be allocated to a source. If the allocation
reaches this quantity, system will not consider this as a source.
• If the requirement crosses the maximum lot size, system proposes several lots with
maximum lot size.
• The minimum and maximum lot size maintained in Quota arrangement item,
OVERRIDES the entries in the material Master record on preference and are valid
solely for the assigned source.
• The minimum and maximum lot size maintained in Material Master applicable to
ALL SOURCES
The PRIORITY in Source determination
1. Quota Arrangement (First which is having priority in Quota)
2. Source List
3. Scheduling Agreement/ Contracts
4. Info record
Page 42 of 161

• System carries out source determination during Planning run
• PR items that have been assigned a source of supply can be converted to PO with
function of “automatic generation”, provided selection of Automatic PO in Material
Master and Vendor Master.
• If a material is NOT having master record, the MATERIAL GROUP is considered
for source determination
• We can block a Source at Vendor Master (XK05)
• If we want to block some materials/ services of that Vendor, we have to block these
items at Source list (ME01)
• For suggesting source during the creation of PR/ PO/ OA, The Source List + Info
Record to be maintained
• In SPRO we can fix quota arrangement usage indicator depending on our
requirements on purchasing documents (PR/ PO/ OA/ Prodn Order/ MRP or its
combinations)
• QUOTA is NOT relevant, if we are using MRP
Regular Vendor - Supplier/ Source at corporate level – CLIENT LEVEL
Fixed Vendor can be specified in Source List – PLANT LEVEL
Regular vendor is set in General data of Info record, so we can not fix another vendor as a
regular vendor in Source List or Quota Arrangement
The quota arrangement indicator defines the quota usage combinations in the
functionalities in
1. In Purchase Orders
2. In Scheduling agreement delivery schedules
3. In Planned orders
4. In Purchase requisitions &
REPORTING
o Analysis of master data and documents
o SCOPE OF LIST parameters determine which data is for a Document (eg. BEST
for PO)
o Scope of list parameters are set in Customizing
o We can fix variants for frequently used parameters
Logistics Information System (LIS)
SAP logistics offers a range of application oriented information system with standard
interface. All LIS have same type of data retention.
Examples – SIS (sales), PURCHIS (Purchasing)
Page 43 of 161

OLAP
Data Warehouse
OLTP
OLAP – On Line Analytical Processing (Business Intelligence)
Data Warehouse – Structure
OLTP – On Line Transaction Processing (LIS updating)
In OLTP information can be from any system
In OLTP – Analysis and report level
Reporting in LIS
- Standard analysis – ABC analysis/ classification
- Advanced analysis technique
- EWS (Early Warning System)
- Flexible Analysis
Reporting – Types
1. Standard Reports – In-built in SAP R/3 system
2. Reporting via info systems – LIS/ FIS, etc
3. Reporting via info systems with separate data base and toll – EIS/ BIW
The physical Tables in SAP Information system are information structures. They have a
typical structure. The object is to be analysed in real business scenario, go to info structures
as evaluation groups in the form of characteristics.
In statistical information, one characteristic, such as Vendor / customer/ material is
segregated. Organizational elements such as valuation area/ Plant/ Pur group/ storage
location are also used as characteristics in info structures. Time base is an important option
in aggregation. The system updates the logistics key figures for each characteristic
combination and periodicity.
Page 44 of 161

8 AUTOMATED PROCUREMENT PROCESSES
Purchase Purchase Goods Invoice
Requisition Order Receipt Receipt
Material Automated Shipping ERS
Planning PO Notification
- Material Master Auto PO indicator Order ackn. ERS Indicator in
- Source List in Indicator in Vendor master
- Sch. Agreements V. Master PO (GR based IV)
M. Master
Info record
Page 45 of 161

9 OPTIMIZED PURCHASING
No RFQ/ QTN/ Comparison
MRP
User Depts.
Sources from source list, Price from Info record.
Available functions of optimized purchasing are:
1. Ordering of assigned requisitions
2. Automatic PO generation
3. Assignment & processing requisitions
4. Ordering with source determination.
• The transaction ME25 (PO for Vendor Unknown) is used for optimized
purchasing. We can generate automatic PO through this transaction
Pre-requisite for automatic PO generation for optimized purchasing are – Selection of
Automatic PO in Vendor Master record & Material master record.
If you want to have storage location data to be defaulted from Material Master, in MRP2
view, enter a storage location in the filed “storage location for EP” (EP-External
Procurement). This will be defaulted in PO. But we cannot default a storage location
against a document type.
USER PARAMETER – EVO
• Allows to specify default values for certain fields and functions for each user
• It is done at customizing using parameter ID. (ID EVO)
USER PARAMETER (EFB)
• Allows defining authorizations for certain functions during purchasing.
• Done at customizing. Parameter ID – IDFEB
• It can control complex purchase functions and allows the delegation.
a) Parameter NDR = X (upper case letter!) has the effect that the Print indicator is always
set when you enter a goods receipt.
b) Using parameter ND9, define the individual user groups for printer determination by
plant/storage location/user group.
Page 46 of 161
Purchase Requisition
Material
Quantity
Delivery Date
SOURCE
Source List
Quota
Vendor evaluation
PURCHASE ORDER
Vendor
PRICE
INFO RECORD

c) Output device in the fixed values (for print parameter S)
•
ORDER ACKNOWLEDGEMENTS
• Vendor acknowledgements – Allows more precise planning.
• Can set conformation Control key in the PO at item level.
• We can configure type of acknowledgements
• If it is specified a certain order acknowledgement, Goods receipt CAN NOT be
posted with out confirming it in PO
• We can post GR with respect to these order acknowledgement selected in the PO.
EVALUATED RECEIPT SETTLEMENT (ERS)
• If vendor is not submitting the invoice/ invoice is not available, we can create
invoice within the system by ERS and we can settle the invoice
• It is created against a Good receipt. Invoice and message to the vendor is created by
the system
• We CAN NOT process PLANNED DELIVERY COSTS with ERS
Pre-requisites for processing ERS are
1. Selection in Vendor Master
2. Info record selection
3. GR based IV
4. Tax code of PO and Info record should be the same
5. Customizing – Selection of ERS for the company code
Procedure
Create PO with the material and Vendor
Enter GR
Go to MRRL for ERS
Page 47 of 161

10 MATERIAL REQUIREMENT PLANNING
Production Reservations Depts. requirements
Order
S&D Processing
Independent
Requirements
Demand Mgt.
Material Planning
Planned Order
Direct
Conversion
Purchase Requisition
Purchase Order/
Agreement
MPS – Master Production Scheduling
Pre-requisites for MRP
1. MRP should be activated for that Plant (In customizing)
2. Set-up Planning file (In customization)
3. Maintain MRP data in Material Master (Valid MRP types & Valid material status)
Page 48 of 161

MRP RPOCEDURES – Overview
MRP MRP
Procedures
Consumption based
Planning
Re-order point Forecast based Time based
Planning Planning Planning
Manual Automatic
CBP Vs MRP
- In CBP, Sales orders, planned independent requirements, etc are not considered
- In MRP, Sales orders, planned independent requirements are direct requirements
Consumption Based Planning (CBP)
• Used in areas WITHOUT in house production/ Manufacturing (external
procurements only).
• Is based on historical data and uses material forecasts & statistical procedure to
determine future requirements
• DO NOT refer any production plan
• Smooth and update inventory management is required for effective results
• NO dependent requirements are created for materials planning using any of the
CBP procedure (NO BOM)
The master data used in CBP are
a. PPC Planning calendar
b. Quota Arrangement Type – Allocation / Splitting
In CBP, Total Planning and Single item planning are executed on Single level
ONLY ONCE INDICATOR
It is fixed in the Quota arrangement
To avoid a situation, where more than 1 order proposal is created per requirement for a
source of supply, with max. Lot size, you can set only once Indicator
Page 49 of 161

PRIORITY FUNCTION
It is fixed while creation of quota arrangement
It defines the sequence of source of supply, irrespective of quota rating.
Priority indicator overrides quota
While source determination, system starts with SMALLEST number in the priority filed.
Once the priority sources are completed, then it will work as normal quota arrangement for
non-priority sources
Material Requirement Planning (MRP)
• It is especially useful for finished goods (Internal procurement)
• An MRP type indicator controls whether external requirements (Sales order or
manual reservations) are to be included
• NO past/ historical data considered
MRP Types
- It is the key which controls the MRP procedure to be used for planning run
- It controls the planning parameters must/ can be entered when maintaining the MRP
data in Material Master.
- MRP types are AP – External Planning
PD – MRP/ ND – No Planning
VV – forecast based
VB – Manual re-order point
RP – auto replenishment
MPS – Master production scheduling/ Time based planning, etc
MRP relevant data in material master
1. Basic data – Material/ UoM/ description
2. MRP data – MRP type/ delivery time/ lot size indicator/ MRP controller/
Scheduling margin key
3. Purchasing data – Purchase group/ GR processing time
4. Accounting data – Valuation class/ Valuation procedure/ valuation price
5. Plant storage data – MRP indicator for storage location / special procurement type
storage location
6. Forecast data – Consumption data
MRP Controller – Person or Depts. Responsible for materials planning
Page 50 of 161

- Procurement type – Internal/ external/ both
- MRP type – How the material is planned
- Lot size – Calculate the quantity to be produced/ procured
MRP Profile – A key in which we can store MRP parameters that do not depend on the
material master record or defaulting the frequently used MRP data to avoid data entry.
PLANNING RUN
MRP run types
1. Planning run for 1 Plant – On line (Total Planning)
2. Planning run for 1 Plant – Background (Total planning)
3. Planning run for 1 material – On line (Single item planning)
- Planning run can be for single plant or several plants
- Planning run can be for Single material (Single level) or BOM level (multi-
level)
Planning sequence
Low level code
- Low level code – The lowest level at which the material appears in a BOM
- A Material low level code is always greater than the low level code of all its
predecessors in all BOM
- Low level code controls the sequence of planning run (0,1,2..)
- We can DISPLAY the low level code in the material master from MRP1(Any view)
view by choosing the icon “Info on material”
Extent of planning run
Planning types
1. Planning all materials in a plant
Processing key for planning run – Planning of planning file – NEUPL
This case is used when we are running the planning run FIRST time
2. Material which undergoes changes (relevant to planning run)
Processing key for planning run – Net change planning – NETCH
Or Net change planning in Planning Horizon
This is the case for subsequent runs (after NEUPL/ NETPL)
- Planning horizon is set in customizing
- The planning horizon should at least span the time period in which sales orders are
received and contain delivery and total lead time of the material.
Page 51 of 161

Mm+documentation

Recommended

Recommended

More Related Content

What's hot

What's hot (15)

Mm+documentation