SAP MM /WM - Overview

Dilip Sadh

Procurement Cycle Workshop - Objectives
 Describe the basic business process of Procuring Materials and Services in the SAP R/3 System.  Discuss the integration points in procurement to Financial Accounting and Inventory management.  Discuss the reporting and analysis tools used in the procurement cycle.  Discuss the Company’s procurement process.

 Communicate scope expectations.

SAP modules
SD : Sales & Distribution MM: Material Management WM : Warehouse Management PP : Production Planning SD MM PP Logistics QM PM IS QM : Quality Management PM : Plant Maintenance HR WF : Workflow IS : Industry Solutions Human Resources FI FI : Financial Accounting FI-AM : Assets Management CO : Controlling PS : Project System

Finance

CO
AM

SAP
PS

WF
Global tools

Modules in PROJECT MM module

SD MM PP QM PM

FI

CO AM PS WF

SAP
IS HR

MM Materials Management

MM is a component of Logistics in SAP that focuses on inventory management, warehouse management, vendors and purchases.

MM overview
Material planning
Purchasing
External procurement

Production
Internal procurement

Invoice verification

Goods receipts Inventory management

Storage areas management

MM MASTER DATA
•Materials •Batches •Vendors •Purchasing info record •Source list

Invoice entry

Goods issue Stock transfers

Financial accounting

Sales

Procurement Cycle Workshop

Agenda
Attendees:
 Business Managers, Process Owners

Topics:
 Master Data
 Procurement Process Overview  Reporting

Procurement

Organizational and Master Data Business Process for Procurement

Reporting and Analysis

Procurement

The primary SAP R/3 application modules that support the Procurement process include:
 Materials Management
  

SD
Sales & Distribution

FI
Financial Accounting

MM
Materials ManagePP ment Production Planning

CO
Controlling

AM

Purchasing Goods Receipts Invoice verification
QM
Quality Management PM Plant Maintenance

R/3
Client / Server ABAP/4
IS
Industry Solutions

Fixed Assets Management

PS
Project System

WF
Workflow

 Financial Accounting
 

HR

Human Resources

Payment processing

Materials Valuation

Organizational Elements

The SAP R/3 Procurement business process uses the following R/3 organizational elements:

COMPANY CODE

Company Code

Plant

Storage Location

Purchasing Organization

Purchasing Group

Master Data

The following master data is used in the Procurement cycle:
 

Material Master

Vendor Master

Master Data: Material Master

 The material master record 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

t

MRP Stocks in plant/ storage location Accounting

Sales

A B

Work scheduling

Material Master

Storage

Material Master Organizational Levels

General data General data Material number Description Units of measure

Client

Plant

Plant-specific data Planning data Manufacturing data Purchasing data Valuation data

Storage Location locationspecific data specific data Storage Location Stock quantities Stock quantities

Master Data: 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

Procurement

Organizational and Master Data Business Process for Procurement

Reporting and Analysis

Procurement Environment

1. Requirements
Purchase Order

8.

Payment

Determination

2.

Vendor invoice

Source Determination
RUHR TRUCKING

?

7.

Invoice Verification

3. Vendor

Selection

6.

Goods Receipt and Inventory Management

5. Order Follow-up

4. Order Processing

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 Requisition

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

Purchase Order
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 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 Processing

Purchase Order
• Standard

Statistics Order History

Direct Entry or Purchase Requisition
Purchase Requisition

Stock Material

Consumable Material Service

Account Assignment
(cost center, asset, internal order)

Processing Purchase Orders

Purchase requisition

Reference document

Contract

Vendor One-time vendor

Purchase order
10 20

30

Goods Receipt
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

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 (2nd part of 3-way match).

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
Goods Receipt Posting

Stock Quantity Consumption Statistics

Material Document

Point of Consumption Cost center Order

Goods Receipt Slip

Purchasing Data: Order item Order history

Material Movements Through IM and WM

 Material Movements Flow:
  

Transfer Requirement (TR) Transfer Order (TO) Confirm Transfer Order

Invoice Processing (1)
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

Invoice verification:

Matches the vendor’s invoice to the purchase order and the goods received (3rd part of 3-way match). 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 SAP 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.

Invoice Processing (2)
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

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

Procurement Integration
PP
Purchase requisition

FI

FI

Purchase Requisitions

Goods Receipt

?

Invoice Verification

Released invoice

Procurement

Organizational and Master Data Business Process for Procurement

Reporting and Analysis

Reporting and Analysis

Standard Reporting provides List Displays by:
    

Vendor Material Account assignment Material Group Purchase order number

 General Analysis  Order Value Analysis  Inventory Transaction Analyses

Logistics Information System

Logistics Information Library
Sales Information System Purchasing Information System Shop Floor Information System

Logistics Information Systems

Inventory Controlling

R/3

Sales and Materials Production Distribution Management Planning (SD) (MM) (PP)

Logistics Processing Systems

Thank you for your kind attention!

Dilip Sadh

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