Material Management Overview

Section 1 (MM Org Structure)

MM Organizational Structure Master Data Purchase Cycle

Reporting and Analysis

Organizational Elements Definition

In the SAP R/3 System:
Organizational elements are structures that represent the legal and/or organizational views of an enterprise

You can design your company structure based on your business processes The organizational elements form a framework that supports all business activities

Organizational Elements
The SAP R/3 Procurement business process uses the following R/3 organizational elements:
Company code Plant Storage location Purchasing organization Purchasing group

Company Code A company code represents an independent accounting unit; for example, a company within a corporate group.
Balance sheets and Profit & Loss statements, required by law, are created at the company code level.

COMPANY CODE

Plant
A plant is an organizational unit within a company. A plant produces goods, renders services or makes goods available for distribution. A plant can be one of the following types of locations:
Manufacturing facility Warehouse distribution centre Regional sales office Corporate headquarters

Storage Location Storage locations are organizational units that allow the differentiation of material stocks within a plant.

Storage Location 0001 Storage Location 0002 Storage Location 0003

Storage Location 0004

Purchasing Organizatio n/Group

A purchasing organization purchases materials and services for the plants. To help the buyer to identify his work, every buyer is represented by a separate purchasing group.

Organizational Elements

Company Code

DCME

Purchasing Org 0020

Plant

DCME

SLOC

SLOC
0020

SLOC
0030

SLOC
0040

Storage Location

0010

Purchasing Organization

Purchasing group 1

Purchasing organization 1
Purchasing group 2

Purchasing organization 2

Plant 1

Plant 2

Plant 3

Plant 10

Section 2 (Master Data)

MM Organizational Structure Master Data Purchase Cycle

Reporting and Analysis

Procurement Master Data

Important master data in the Procurement process includes:

Material Master Vendor Master Purchasing Information Records

Master Data: Material Master

The material master contains all data required to define and manage material. It integrates data from manufacturing, sales and distribution, purchasing, accounting and other departments. The material master is used as a source of data for purchase order processing throughout the procurement cycle.

Material Master Primary Views

Engineering/ design
St

Purchasing

MRP Stocks in plant/ storage location Accounting

Sales

A B

Work scheduling

Material Master

Storage

Vendor Master
The vendor master includes all data necessary for processing business transactions and corresponding with vendors. Information is shared between the accounting and purchasing departments. Data is grouped into three categories.

General data Accounting data Purchasing data

Purchasin g Informatio Purchasing information records describe the supply relationship n Record for a material and a vendor
Data includes:
Material number Vendor number Vendor-specific data on deliveries, delivery tolerances, and pricing and text

During purchase order entry, data can be proposed from the purchasing information record to the order
Material number Vendor number Vendor-specific data

Section 3 (Purchase Cycle)

MM Organizational Structure Master Data Purchase Cycle

Reporting and Analysis

Procurement Environment

Purchase Order

8. Payment

Requirements 1.determination

2.

Vendor invoice

Source determination RUHR TRUCKING

7.

Invoice verification

5.

Order follow-up

4 .

3. Vendor
Order Processing

selection

6.

Goods receipt inventory management

Purchase Requisition
The Procurement Process
Purchase Requisition for Goods/ Services
Purchase Requisition
10 20 30

Purchase Order
Purchase Order
10 20 30

Goods Receipt

Invoice Processing
Vendor invoice

Planning, Reporting, and Analysis

Purchase requisitions: Request or instruction to the purchasing department to procure a certain quantity of a material or service on or by a certain date. Are created directly by a requesting department or automatically via material requirements planning (MRP). Are internal documents not used outside the company.

Purchase Requisition Processing

MRP

Direct Entry Purchase Order

Purchase requisition

Release strategy

Determine source of supply

Creating a Purchase Default data for line items Requisition Delivery dates, purchasing groups, plant, etc.
Maintain line item data on overview screen
Materials, quantities, delivery dates, purchasing group, etc.

Maintain account assignment (if required)

Cost center, G/L accounts, asset number, etc.

Check data

Save

The Procurement Process

Purchase Requisition for Goods/ Services
Purchase Requisition
10 20 30

Purchase Order
Invoice Processing
Vendor invoice

Purchase Order
Purchase Order
10 20 30

Goods Receipt

Planning, Reporting, and Analysis

Purchase orders:

Represent the formal approval of a purchasing transaction with a vendor. Identify the following items such as:

Vendor Material and quantity ordered Price and terms Delivery date and location

Purchase Order
Standard Direct Entry or Purchase requisition
Purchase requisition

Purchasing Order Processing

Statistics Order history

Stock material Consumable material Service

Account assignment
(cost center, asset, internal order)

The Procurement Process

Purchase Requisition for Goods/ Services
Purchase Requisition
10 20 30

Goods Receipt
Invoice Processing
Vendor invoice

Purchase Order
Purchase Order
10 20 30

Goods Receipt

Planning, Reporting, and Analysis

Goods receipts record the inward movement of goods or materials by:

Verifying the receipt against the order. Valuating material at purchase order price.

Creating material and accounting documents to record the event. Updating the purchase order history. Providing basis for invoice verification.

Goods Receipt for Stock Material

Purchasing documents
Items 1. 2. 3.
RUHR RUHR TRUCKING TRUCKING

Goods Receipt

Vendor

Warehouse/stores

Entering the goods receipt increases the inventory level of a material that is procured for stock.

Results of a Goods Receipt Posting

G/L accounts:

Accounting document Stock account Consumption account GR/IR account Material document
Goods Receipt Posting

Stock quantity Consumption statistics

Point of consumption Cost center Order

Goods receipt slip

Purchasing data: Order item Order history

The Procurement Process

Purchase Requisition for Goods/ Services
Purchase Requisition
10 20 30

Purchase Order
Purchase Order
10 20 30

Goods Receipt

Invoice Processing (1) Invoice

Processing
Vendor invoice

Planning, Reporting, and Analysis

Invoice verification: Matches the vendors invoice to the purchase order and the goods received. Matches price, and quantity.

Updates the purchase order and its history. Updates accounting information.

Invoice Verification Environment

G/L accounts: G/L accounts

Purchase order
Vendor invoice

Assets Cost centers Projects Orders

Posting an invoice in the R/3 System
updates purchasing and accounting data

Invoice Verification

Vendor invoice
Goods receipt Material master

Vendor master
Conditions

Invoice verification accesses data from purchasing, inventory management, material master, and vendor master files.

The Procurement Process

Purchase Requisition for Goods/ Services
Purchase Requisition
10 20 30

Purchase Order
Purchase Order
10 20 30

Goods Receipt

Invoice Processing (2) Invoice

Processing
Vendor invoice

Planning, Reporting, and Analysis

Invoice payment: Selects invoices for payment based on the payment terms in the vendor master or purchase order. Generates payment for released invoices. Updates accounting information.

Vendor Payment

Vendor

Bank

Financial Accounting

1000

Payment program

1000

Motor Sports International

Released invoice

PP
Purchase requisition

Procurement Integration FI FI

Purchase Requisitions

Goods Receipt

Invoice Verification

Released invoice

Section 4 (Reporting)

MM Organizational Structure Master Data Purchase Cycle

Reporting and Analysis

Reporting and Analysis

Standard Reporting provides List of Purchase Orders by:

Vendor Material Account assignment Material Group Purchase order number

General Analysis Order Value Analysis Inventory Transaction Analyses

Immediate job in hand (As-Is preparation)

Immediate job in hand (As-Is preparation) Contd..

Immediate job in hand (As-Is preparation) Contd..

Immediate job in hand (As-Is preparation) Contd..

Thank You
Thank You