CORPORATE STRUCTURE DEFINITION

The material master has a hierarchical structure resembling the organizational structure of a company. Some material data is valid at all organizational levels, while other data is valid only at certain levels. The organizational units are as follows:

Client Company Code Plant Storage location Purchasing organi ation Sales organi ation !arehouse num"er Storage type

Structure
The client is the top level. Several company codes can be assigned to it. In turn, several plants can be assigned to a company code, and several storage locations assigned to a plant. Plants must always be consecutively numbered for all company codes. Conse uently, plants assigned to different company codes cannot have the same number. !owever, the numbers of storage locations can be repeated, as long as they are assigned to different plants.

Integration
The following graphic representation contains a possible corporate structure:

Client
In commercial, organizational, and technical terms, a self"contained unit in an #$% System with separate master records and its own set of tables. & client can, for e'ample, be a corporate group.

Integration
(eneral material data applicable to the entire company is stored at client level. This includes, for e'ample, the material group, base unit of measure, material descriptions, and conversion factors for alternative units of measure.

Company Code
Definition
The smallest organizational unit for which a complete self"contained set of accounts can be drawn up for purposes of e'ternal reporting. This involves recording all relevant transactions and generating all supporting documents for financial statements such as balance sheets and profit and loss statements. & company code can, for e'ample, be a company or subsidiary

Integration
&ll data that is valid for a particular company code, as well as for the plants and storage locations assigned to it, is stored at company code level. This includes, for e'ample, accounting data and costing data if valuation is at company code level.

Plant
Definition
&n organizational unit serving to subdivide an enterprise according to production, procurement, maintenance, and materials planning aspects. It is a place where either materials are produced or goods and services provided.

Use
The preferred shipping point for a plant is defined as the default shipping point, which depends on the shipping condition and the loading condition. )or the placement of materials in storage *stoc+ put"away,, a storage location is assigned to a plant. The storage location depends on the storage condition and the placement situation. The business area that is responsible for a plant is determined as a function of the division. &s a rule, a valuation area corresponds to a plant.

Structure
& plant can assume a variety of roles: &s a maintenance plant, it includes the maintenance ob-ects that are spatially located within this plant. The maintenance tas+s that are to be performed are specified within a maintenance planning plant. &s a retail or wholesale site, it ma+es merchandise available for distribution and sale.

& plant can be subdivided into storage locations, allowing stoc+s of materials to be bro+en down according to predefined criteria *for e'ample, location and materials planning aspects,.

& plant can be subdivided into locations and operational areas. Subdivision into locations ta+es geographical criteria into account, whereas subdivision into operational areas reflects responsibilities for maintenance.

Integration
&ll data that is valid for a particular plant, as well as for the storage locations belonging to it, is stored at plant level. This includes, for e'ample, .#P data and forecast data.

Purchasing Organization
Definition
&n organizational unit subdividing an enterprise according to the re uirements of Purchasing. It procures materials and services, negotiates conditions of purchase with vendors, and is responsible for such transactions.

Structure
The form of procurement is defined by the assignment of purchasing organizations to company codes and plants. The following forms of purchasing e'ist: Corporate"group"wide & purchasing organization procures for all the company codes belonging to a client. Company"specific & purchasing organization procures for -ust one company code. Plant"specific & purchasing organization procures for a plant. .i'ed forms are possible, which can be replicated in the system by the use of reference purchasing organizations. & purchasing organization can utilize the more favorable conditions and contracts of the reference purchasing organization that has been assigned to it.

Integration
&n e'ample of corporate structure with purchasing organization is given in the following graphic representation:

Sales Organization
Definition
&n organizational unit subdividing an enterprise according to the re uirements of Sales. It is responsible for selling materials and services.

Structure
& sales organization can be subdivided into several distribution chains which determine the responsibility for a distribution channel. Several divisions can be assigned to a sales organization which is responsible for the materials or services provided. & sales area determines the distribution channel used by a sales organization to sell a division/s products.

Integration
& sales organization is always assigned to one company code. The accounting data of the sales organization is entered for this company code. & distribution chain can act for several plants. The plants can be assigned to different company codes. If the sales organization and plant are assigned to different company codes, an internal billing document is sent between the company codes before the sales transactions are entered for accounting purposes. &n e'ample of corporate structure with sales organization is given in the following graphic representation:

Storage Location, Warehouse Num er, Storage !ype

Definition
Storage Location
&n organizational unit allowing the differentiation of material stoc+s within a plant. &ll data referring to a particular storage location is stored at storage location level. This applies mainly to storage location stoc+s.

Warehouse Num er
&n alphanumeric +ey defining a comple' warehousing system consisting of different organizational and technical units *storage areas,. &ll material data specific to warehouse management and relating to a particular warehouse number is stored at warehouse number level. This includes, for e'ample, data on palletizing, stoc+ placement, and stoc+ removal.

Storage !ype
& physical or logical storage area that can be defined for a warehouse in the 0arehouse .anagement *0., system. It consists of one or more storage bins. Storage types differ according to organizational and technical criteria. The following are typical e'amples of storage types that can be defined using the 0. system: (oods receipt area (oods issue area Pic+ing area !igh rac+ storage area

&ll material data specific to warehouse management and relating to a particular storage type is stored at storage type level. This includes, for e'ample, fi'ed storage bins as well as ma'imum and minimum storage bin uantities.

Use
The warehouse number and storage type are of relevance only if your company uses the 0. system.

Integration
Several storage locations can be assigned to a plant. !owever, only one storage location per plant can be assigned to a warehouse number. Storage locations assigned to different plants can be managed under the same warehouse number. !ere too, only one storage location per plant can be assigned to the warehouse number. 1ne warehouse number may e'ist for several physical warehouses, these being represented as storage types in the 0. system. 1ne storage type groups together several storage bins. & storage bin is the smallest physical unit the system can address.

& plant may have storage locations that are not managed using the 0. system.

&n e'ample of corporate structure with storage locations, warehouse numbers, and storage types is given in the following graphic representation:

"" consumption ased planning

"#P and Lot$Sizing Procedures "#P Parameters %orecast Parameters "aintaining Parameters Using Profiles Carrying Out the %orecast %orecast #esult Significance of the "aterial %orecast for "aterials Planning Carrying Out the Planning #un Planning #esult Current Stoc&'#e(uirements List Planned Orders "aintaining the Planning %ile %orecast %ormulae

"rp and lot sizing procedure

The central role of material re uirements planning is to monitor stoc+s and, in particular, to automatically generate order proposals for purchasing and production *planned orders, purchase re uisitions, or delivery schedules,. This target is achieved by using various materials planning methods which each cover different procedures. Consumption"based planning procedures are straight forward materials planning procedures with which you can achieve set targets with relatively little effort. Therefore, these planning procedures

are used in areas without in"house production and$or in production plants for planning both 2" and C"parts and operating supplies. The type of order proposal which is automatically generated during materials planning depends on the procurement type of the material. )or materials that are produced internally, a planned order is always created. )or materials procured e'ternally, the .#P controller has the choice between creating a planned order or a purchase re uisition. If he decides to create a planned order, he must then convert it into a purchase re uisition and ma+e it available for the purchasing department. The advantage of creating a planned order is that the .#P controller has more control over the order proposals. It is only once he has chec+ed the planned orders and then converted them into purchase re uisitions that the purchasing department can order the material. If he creates a purchase re uisition in the first instance then it is immediately made available to the purchasing department, which then ta+es over the responsibility for material availability and warehouse stoc+s. Since re uirements planning is usually carried out at plant level, all available stoc+ in the plant *from now on described as available warehouse stoc+ , is ta+en into account during planning. !owever, stoc+s from individual storage locations can be e'cluded from re uirements planning or they can be planned independently. Such stoc+s are then not included in material re uirements planning at plant level. 1n the other hand, consignment stoc+s from the vendor are always included in .#P.

""$purchasing Purpose
The #$% System consists of a number of components that are completely integrated with one another. This integration allows the various departments and units of an enterprise to share and maintain the same information. Purchasing is a component of .aterials .anagement *..,. The .aterials .anagement *.., module is fully integrated with the other modules of the S&P System. It supports all phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification. The Purchasing component has the following tas+s: 3'ternal procurement of materials and services 4etermination of possible sources of supply for a re uirement identified by the materials planning and control system or arising directly within a user department .onitoring of deliveries from and payments to vendors

(ood communication between all participants in the procurement process is necessary for Purchasing to function smoothly.

Integration

Purchasing communicates with other modules in the S&P System to ensure a constant flow of information. )or e'ample, it wor+s side by side with the following modules: Controlling )CO* The interface to the cost accounting system *Controlling, can be seen above all in the case of purchase orders for materials intended for direct consumption and for services, since these can be directly assigned to a cost center or a production order. %inancial +ccounting )%I* Purchasing maintains data on the vendors that are defined in the system -ointly with )inancial &ccounting. Information on each vendor is stored in a vendor master record, which contains both accounting and procurement information. The vendor master record represents the creditor account in financial accounting. Through P1 account assignment, Purchasing can also specify which ($5 accounts are to be charged in the financial accounting system. Sales and Distri ution )SD* 0ithin the framewor+ of materials planning and control, a re uirement that has arisen in the Sales area can be passed on to Purchasing. In addition, when a re uisition is created, it can be directly assigned to a sales order.

"me,ternal ser-ice management Purpose

.. 3'ternal Services .anagement *.. S#6, is an application component within the .aterials .anagement *.., module. It supports the complete cycl e o# "id in$itation% a&ard $order placement phase , and acceptance of services, as well as the invoice verification process.

%eatures
.. 3'ternal Services .anagement provides a basic process for the procurement of e'ternally performed services. This basic process comprises the following functionality: Ser-ice master records, in which descriptions of all services that may need to be procured can be stored. In addition, a standard service catalog and model service specifications are available. & separate set of ser-ice specifications can be created for each concrete procurement pro-ect in the desired document *e.g. P. maintenance plan or maintenance order7 PS networ+7 .. purchase re uisition, #)8, contract, purchase order, or service entry sheet,. o o Service specifications can include items representing materials in addition to those representing services or activities. 0hen creating voluminous sets of service specifications, you need not laboriously enter each individual service manually. Instead, you can ma+e use of

the referencing techni(ue and the selection function to copy uic+ly and simply from e'isting master data and documents. .. 3'ternal Services .anagement offers two basic ways of specifying services: o &s planned ser-ices with description, uantity, and price. 2y 9planned services9 we mean services whose nature and scope is +nown to you at the start of a procurement pro-ect or transaction. &t the time the services are re uested, the individual specifications are entered either with the aid of a service master record or directly as short and long te'ts. Price and uantity are specified in both cases. o &s unplanned ser-ices with the setting of a value limit only. 2y unplanned services, we mean services that cannot be specified in detail because their precise nature and scope are not initially +nown, or services which " for various reasons " you do not wish to plan. :nplanned services therefore have no descriptions. They are entered in the form of monetary limits. Services may be performed up to a value not e'ceeding these -alue limits. This allows you to e'ercise a degree of cost control in such situations. ;ou can analyze data already available in the system in order to find suitable sources of supply for certain services. ;ou can also carry out a bid invitation process and evaluate the bids submitted in response using the price comparison list function. ;ou can then award a contract to *or place an order with, the desired vendor. 4uring the phase of service performance *e'ecution of wor+,, various lists and totals displays enable you to retain an up"to"date overview of your service specifications, the progress of the wor+, and the costs being incurred. ;ou can record the performance of services or wor+ in ser-ice entry sheets. ;ou can indicate your acceptance of the wor+ set out in the entry sheets in various ways. )ollowing acceptance, the vendor/s in-oice can be verified and released for payment.

&s an alternative to this basic process, various accelerated and simplified processes are made available to you for use if desired in connection with specific procurement transactions.

Integration
.. 3'ternal Services .anagement is completely integrated into the .aterials .anagement system. The master data for the procurement of services can be stored in service master records, for e'ample, which subse uently provide default data for the purchasing documents. Service

specifications for a concrete procurement pro-ect are not created and processed separately each time *e.g. as bid invitation or contract specifications,, but entered directly in the purchasing documents *e.g ' in a re(uest #or (uotation% (uotation% purchase order or contract,. The following graphic demonstrates the degree of integration of .. 3'ternal Services .anagement:

The 3'ternal Services .anagement component is lin+ed to the S&P modules P. Plant .aintenance and PS Pro-ect System. &s a result, it is possible to create purchase re uisitions for e'ternal services within the framewor+ of maintenance measures or a pro-ect and then transmit them to Purchasing without incurring additional data maintenance wor+. The interaction of the #$% modules .., PS and P., C1 and )I saves time and effort and reduces the fre uency of errors. This is because data need be entered once only, after which it is available for all follow"on activities within a business process. An e)ample o# the integration o# ** and CO is purchase order commitments. The e'pected value of unplanned services is forwarded to C1 from within .. so that a commitment figure can be established and monitored. This enables the relevant budget for procurement measures to be prepared in good time.

In-entory "anagement Purpose

This component deals with the following tas+s: .anagement of material stoc+s on a uantity and value basis Planning, entry, and documentation of all goods movements Carrying out the Physical Inventory

%eatures
"anaging Stoc&s y .uantity
&ll transactions that bring about a change in stoc+ are entered in real time, as are the stoc+ updates resulting from these changes. ;ou can obtain an overview of the current stoc+ situation of any given material at any time. This, for e'ample, applies to stoc+s that: are located in the warehouse have already been ordered, but have not yet been received are located in the warehouse, but have already been reserved for production or a customer are in uality inspection.

If a further subdivision by lots is re uired for a material, one batch per lot is possible. These batches are then managed individually in the stoc+.

Special Stoc&s Inventory .anagement can manage various types of a company/s own special stoc+s and e'ternally"owned special stoc+s separately from standard stoc+. )or more information on special stoc+s, refer to *anaging Special Stoc+s.

"anaging Stoc&s y /alue

The stoc+s are managed not only on a uantity basis but also by value. The system automatically updates the following data each time there is a goods movement: uantity and value for Inventory .anagement account assignment for cost accounting ($5 accounts for financial accounting via automatic account assignment

The valuation area is the organizational level at which a material<s stoc+ value is managed. The valuation area can be plant level or company code level. In Inventory .anagement, wor+ is basically done at plant and storage location levels. 0hen you enter a goods movement, you only have to enter the plant and the storage location of the goods. The system derives the company code from the plant via the valuation area.

Planning, 0ntry, and Documentation of all 1oods "o-ements

(oods movements include both 9e'ternal9 movements *goods receipts from e'ternal procurement, goods issues for sales orders, and 9internal9 movements *goods receipts from production, withdrawals of material for internal purposes, stoc+ transfers, and transfer postings,. )or each goods movement a document is created which is used by the system to update uantities and values and serves as proof of goods movements. ;ou can print goods receipt$issue slips to facilitate physical movements and monitor the individual stoc+s in the warehouse.

In$oice ,eri#ication

In-oice /erification in the S+P System

The S&P system is made up of several components lin+ed together so that different departments within a company can cooperate with one another. The Invoice 6erification component is part of the .aterials .anagement *.., system. It provides the lin+ between the .aterials .anagement component and the )inancial &ccounting, Controlling, and &sset &ccounting components. Invoice 6erification in .aterials .anagement serves the following purposes:

It completes the materials procurement process " which starts with the purchase re uisition, continues with purchasing and goods receipt and ends with the invoice receipt It allows invoices that do not originate in materials procurement *for e'ample, services, e'penses, course costs, etc., to be processed It allows credit memos to be processed, either as invoice cancellations or discounts

Invoice 6erification does not handle the payment or the analysis of invoices. The information re uired for these processes is passed on to other departments. Invoice 6erification tas+s include: 3ntering invoices and credit memos that have been received Chec+ing the accuracy of invoices with respect to contents, prices, and arithmetic 3'ecuting the account postings resulting from an invoice :pdating certain data in the S&P system, for e'ample, open items and material prices Chec+ing invoices that were bloc+ed because they varied too greatly from the purchase order

The high degree of integration in the S&P system allows these tas+s to be carried out smoothly and efficiently.

"" /endor 0-aluation

Purpose
The 6endor 3valuation component supports you in optimizing your procurement processes in the case of both materials and ser-ices.

Integration
In the S&P System, 6endor 3valuation has been completely integrated into the .. Purchasing component within .aterials .anagement. This means that information such as delivery dates, prices, and uantities can be ta+en from purchase orders. 6endor 3valuation also uses data from the 8uality .anagement component, such as the results of incoming inspections or uality audits. 6endor 3valuation accesses basic .aterials .anagement data, Inventory .anagement data *such as goods receipts,, and data from the 5ogistics Information System *5IS,. The 5IS data is stored in the information structure S=>%.

Customizing

2efore you can wor+ with the 6endor 3valuation component, the system settings must be maintained.

%eatures
Procurement of "aterials
The 6endor 3valuation component helps you select sources of supply and facilitates the continual monitoring of e'isting supply relationships. It provides you with accurate information on prices, and terms of payment and delivery. 2y evaluating vendors, you can improve your enterprise<s competitiveness. ;ou can uic+ly determine and resolve any procurement problems that may arise on the basis of detailed information and in collaboration with the relevant vendors.

Procurement of Ser-ices
;ou can chec+ the reliability of the vendors from which you procure services on a plant by plant basis. ;ou can determine whether the vendors perform the services within the specified timeframes and appraise the uality of the wor+ carried out.

Scores and Criteria

The standard S&P System offers you a scoring range from > to >== points, which is used to measure the performance of your vendors on the basis of five main criteria. ;ou can determine and compare the performance of your vendors in general terms by reference to their overall scores. The main criteria available in the standard system are: Price 8uality 4elivery (eneral service$support These four main criteria serve as a basis for evaluating vendors from whom you procure materials. 3'ternal service provision This main criterion serves as a basis for evaluating those vendors you employ as e'ternal service providers. ;ou can also define other or further main criteria, as re uired. ;ou can assign different weights to the individual criteria. The vendor/s overall score is computed ta+ing into account the weighted scores awarded for each of the main criteria.

The 6endor 3valuation System ensures that evaluation of vendors is ob-ective, since all vendors are assessed according to uniform criteria and the scores are computed automatically. In this way, sub-ective impressions and -udgments can be largely avoided. To create a detailed evaluation, each main criterion can be divided into several subcriteria. The standard system provides you with certain subcriteria which suffice as a basis for evaluation. ;ou can also define your own additional subcriteria. The scores for the subcriteria are calculated in different ways. Scoring "ethods

Scoring method )ully automatically Semi"automatically

Description Scores are calculated by the system on the basis of e'isting data. ;ou enter individual scores for important materials, or for the uality and timeliness of a service performed, yourself. The system then calculates the higher"level score from these. ;ou enter a blan+et score for a subcriterion per vendor.

.anually

;ou can decide yourself which of these methods to use.

+nalyses
The results of vendor evaluation are displayed in the form of analyses. )or e'ample, you can generate ran+ing lists of the best vendors according to their overall scores or ran+ing lists for specific materials. Changes to evaluations are recorded in logs, and you have the option of printing out evaluation sheets.