SAP GURU

VARANASI INDIA PVT. LTD.

SAP GURU INDIA

BUSINESS BLUE PRINT SAP (MM)
Prepared By – Prabhakant Tiwari

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INDEX
1. MATERIAL MANAGMENT 4
2. DEFINE 5
2.1 Company Code 5
2.2 Charts of Accounts 5
2.3 Plant 5
2.4 Purchase Organization 5
2.5 Purchasing Group 5
2.6 Storage Location 5
2.7 VAT 5
2.8 State Excise Duty 5
2.9 Custom Duty 6
3. ORGANIZATION STRUCTURE 7
3.1 Procurement Process 8
4. MATERIAL DATA 9
4.1 Material Master 9
4.1.1 Material Type 9
4.1.2 Number Range for Material Type 9
4.1.3 Material Valuation 9
4.1.4 Material Views 10
4.2 Vendor Master 10
4.2.1 Vendor Account Group 10
4.2.2 Number Range 11
4.3 Purchasing Info Record 11
4.4 Source List 11
5. PROCUREMENT 11
5.1 Purchasing requisition 11
5.1.1 Item Categories 12

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5.2 Request for quotation 12
5.2.1 Approval of quotation 12
5.3 Purchase order 12
5.3.1 Standard purchase order 12
5.3.2 Sub-contracting 13
5.3.3 Third party 13
5.3.4 Stock transfer order 13
5.4 Transition of purchase order 14
5.5 Contracts 14
5.6 Release of purchase order 14
5.6.1 Characteristic and class 14
5.6.2 Release code 14
5.6.3 Release group 15
5.7 Pricing group 15
6. VALUATION AND ACCOUNT DETERMINATION 16
6.1 Valuation 16
6.1.1 Valuation area 16
6.1.2 Valuation class 16
6.1.3 Account category reference 16
6.1.4 Valuation grouping code 16
7. INVENTORY MANAGEMENT & PHYSICAL INVENTORY 17
7.1 Inventory management 17
7.1.1 Goods receipt 17
7.1.2 Goods issue 17
7.1.3 Transfer postings 17
7.1. 4 Physical inventory postings 17
7.1. 5 Movement type 17
8. LOGISTIC INVOICE VERIFICATION 18
9. EXTERNAL SERVICE MANAGEMENT 18
10. T-CODE & DESCRIPTION 19

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1. MATERIAL MANAGMENT
Materials Management Module is where Key Sources like Materials and Vendors are defined in
the System

M
aterials is the central point of the business process in the company. This module
basically deals with the record and defining of Enterprise elements, Master date,
Purchasing data, Inventory Management & Physical inventory, Logistics Invoice
Verification, Valuation & Account Determination & External Service Management
etc.
The Overview
Here in Material Management Module we calibrate the system to understand various types of
materials that are used in the business process. Mapping different business processes like
Stock/Non stock item purchase, sub contracting, Stock transfers, services etc. It also configures
different purchase documents like PR, RFQ, PO, Contract and Schedule Agreement etc with or
without Release procedure. Logistics invoice verification for incoming invoice checking.

Configuration
Creating the types of materials, the types of sales, various types orders in respect to purchases
and sales, Storage locations, Configuring the Pricing Procedures are some the many important
configuration elements that are deals by a Material Management Consultant. In Addition
Material Management Consultant also looks after issue and receipt of goods, Posting, inventory.
The various reports that could be generated by a consultant are the key factors to depend on
when crucial decision-making is done. Material Management Consultant is responsible for one
of the crucial element of the sap implementation Material Master

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2. DEFINE
2.1 Company Code
The Company code is smallest organizational unit of external accounting for which a complete,
self-contained set of accounts can be created. This includes the entry of all transactions that
must be posted and the creation of all items for legal individual financial statements, such as the
balance sheet and the profit and loss statement.
Varanasi India Pvt. Ltd. is mentioned as Company in this document.

2.2 Charts of Accounts

This is a list of all G/L accounts used by one or several company codes.
For each G/L account, the chart of accounts contains the account number, account name, and
the information that controls how an account functions and how a G/L account is created in a
company code.

2.3 Plant
A plant is an organizational logistics unit that structures the enterprise from the perspective of
production, procurement, plant maintenance, and materials planning. A plant is manufacturing a
facility or branch with in a company.

2.4 Purchase Organization

A purchase Organization is an organizational level that negotiates conditions of purchase with
vendors for one or more plants. It is legally responsible for completing purchase contracts.

2.5 Purchasing Group

A purchasing group is the key for a buyer or group of buyers responsible for certain purchasing
activities.

2.6 Storage Location

A Storage location is a Storage area comprising warehouses in close proximity. Material stocks
can be differentiated within one plant according to storage location.

2.7 VAT
Type of tax introduced by Govt. of India, and has been implemented by many states including
Uttar Pradesh where Varanasi India Pvt. Ltd. operates from

2.8 State Excise Duty

As per the provisions of the Uttar Pradesh State Excise Act, the company is filing an application
to take the approval of State Excise Department, for using the excisable inputs in the
manufacturing activity by remitting the applicable duty on the assessable value of the proposed
finished product. This approval needs to be taken before the commencement of the
Manufacturing Activity. The said application shall contain all the details of “products to be
manufactured” and “Quantity in each batch” during a given period of time. In case, the company

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produces more quantity in a batch than that was mentioned in the approved application, then
company shall remit the excise duty on the differential quantity. If the quantity produced in a
batch is less than the approved one, the refund of unutilized excised duty from the department
cannot be claimed. The produced units shall absorb the said unutilized excise duty amount. The
company considers the normal loss while making the application and accordingly mentions the
estimated quantity in each batch.

2.9 Custom Duty

Duty levied by the government when a material is imported to India from abroad.

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3. ORGANIZATION STRUCTURE
COVESTRO (CLIENT)

COVESTRO INDIA PVT. LTD. (COCODE - 0612)

PLANT

NOIDA (C1NO) ANKLESWAR (C2AL) PROJECT (C3BU)

STORAGE LOCATION STORAGE LOCATION STORAGE LOCATION

SL-01 SL-02 SL-01 SL-02 SL-01 SL-02

CENTRAL P. ORG. P. ORG. P. ORG. P. ORG. P. ORG.

COCN CO01 CO02 CO01 CO01

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3.1 Procurement Process

Requirment of
User Department

Requirement
Purchase Req.
of MRP

Maintain
RFQ
Quotation

PO Comparison of
Creation/Change Quotation for

Release Strategy

Goods Receipt

Invoice To Finance for

Verification Payment

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4. MATERIAL DATA
4.1 Material Master
Material master contains information of all the materials that a company produces & procures
stores & sales. It is the company’s central source for retrieving material specific data.

4.1.1 Material Type

The following material types are used in PL01 & PL02

Material Types Description

ROH Raw Material
Semi finished
HALB materials
LIEH Returnable Packing
FERT Finished Product
NLAG Non Stock Items
ERSA Spare Parts
PIPE Pipe Line Material
DIEN Service

4.1.2 Number Range for Material Type

All materials are having external number ranges, each material number contains 10 digits in
which first four letters represents the material type and the remaining 6 digits tell the sequence
number of that material type.

Material Number Range

Types From To
ROH RAWM000001 RAW0000099
HALB SEMF000001 SEMF000099
LIEH RTRP000001 RTRP000099
FERT FINP000001 FINP000099
NLAG NONI000001 NONI000099
ERSA SPRP000001 SPRP000099
PIPE PIPE000001 PIPE000099
DIEN SERV000001 SERV000099

4.1.3 Material Valuation

In PL01 & PL02 materials are valuated according to material type.

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Material Types Moving Average Price Fixed Price

ROH X
HALB X
LIEH X
FERT X
NLAG X
ERSA X
PIPE X
DIEN X

4.1.4 Material Views

Material Types Basic Data Sales MRP Purchase Store Accounting

ROH X X X X X
HALB X X X X X
LIEH X X X X
FERT X X X X
NLAG X X X X X
ERSA X X X
PIPE X X X X
DIEN X X X X

4.2 Vendor Master

The vendor master contains information on vendors from whom a company procures materials
or services. Business transactions are posted to vendor accounts and managed using these
documents. Data in vendor master record control how transaction data is posted and processed
for a vendor. The vendor master record also contains all the data required to do the business
with vendors.

4.2.1 Vendor Account Group

Vendor account group is classifying feature in vendor master that determines

 The type of number assignment

 A number range for assigning account numbers
 Which fields are displayed and whether their entry is optional or required when
You enter or change vendor master data.

Vendor Account Group Description

0001 Main Vendor

0002 Goods Supplier
0003 Plant
OTVN One Time Vendor

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4.2.2 Number Range
Internal number ranges are used.

Number Range
Vendor Account Group
From To
110000 119999
0001
0002 120000 129999
0003 130000 139999
OTVN 140000 149999

4.3 Purchasing Info Record

Vendor and material information is stored in SAP in the form of purchase info record. Info record
will have the following key data.
 Material Info Record
 Material Code
 Vendor Code
 Purchasing Organization
 Info Category (standard, sub-contracting, pipe line)

4.4 Source List

 To define a source of supply as fixed. Such sources count as preferred sources over a
certain period of time.
 As an aid in selecting the preferred source during the source determination process.
 To block the external procurement of a material with respect to a particular vendor for a
specified period of time.

5. PROCUREMENT
5.1 Purchasing requisition
At Varanasi India Pvt. Ltd. internal number range will be used for PR documents, these will be
identified basing on the document types of PR.
Numbr Range
IN SAP Description Documet Type
From To
NB Standard STD 100000000 100999999
FO Framework FRM 110000000 110999999
RV Outlinne Agreeent AGR 120000000 120999999

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5.1.1 Item Categories

 Standard ()
 Sub Contracting (l)
 Stock Transfer (U)
 Service (D)
 Third Party (S)

5.2 Request for quotation

Document type for this will be AN
Number range for this document --- 20000000 ---29999999

The vendor pricing and different pricing conditions can be entered in the maintenance of the
Quotation document.

5.2.1 Approval of quotation

Through the price comparison screen SAP ranks all the quotations based on the price. The
other details such as delivery date and the related information is also displayed the entire
quotation of the vendors also can be viewed from the same screen.

The decision to select/reject a vendor can be based on the price comparison list generated by
the system and by checking the vendor’s technical competency (specifications, delivery terms,
free sample inspection), which will be done outside the system.

Once the vendor is selected the price can be updated in the info record from the price
Comparison list by selecting the info record indicator.

5.3 Purchase order

In Varanasi India Pvt. Ltd. plant wise procurement is as follow

TYPE OF PROCUREMENT

Standard SUBCONTRACTING Third Party Stock Transfer

C1NO X X X X
C2AL X X X X
C3BU X X X X

5.3.1 Standard purchase order

The approved requisitions can be converted to a purchase order, if there is a preferred vendor
or if there is an existing contract. By using with reference functionality, a single PO can be

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created with multiple requisitions. Individual requisitions will be represented as separate line
items in the PO to maintain the reference of the PR.

5.3.2 Sub-contracting
 Order Processing
In a sub-contracting purchase, the normal purchase order is raised with a sub
contracting item category indicator L. SAP allows creation of the purchase order
without creating a RFQ also.
 Issue of components
 Receipt of the final product
Once the vendor sends the final product, it will be received against the sub-contract
purchase order. The system will copy the quantity of the final product and the
components mentioned at the time of the PO in the goods receipt document. Based on
the consumption quantity mentioned by the sub-contractor or the transferred quantity,
the components quantity will be adjusted in the Goods Receipt document before posting.

5.3.3 Third party

Order processing
In Varanasi India Pvt. Ltd., manufacturing plant is having third party process. As per the
requirement from the sales department (sales order) a standard purchase order created with
account assignment 1 & item category S. These purchase orders are sent vendors who are
approved only.

Receipt of Third Party Stock

No stock is received against purchase order into receipt storage location in our plant but we will
Get the acknowledgement from the customer about the same.

Vendor will send the invoice to us for the payment.

5.3.4 Stock transfer order

In VARANASI INDIA PVT. LTD., manufacturing plant procures components from the C1NO, the
procurement is done with billing.

Vendor master and customer master will be created to manage intra business unit purchases
and will be handled through stock transport order procedure of SAP.

Procurement Process
When the goods are received at the receiving business unit, a goods receipt will be posted
against the delivery document of the issuing plant. The goods are posted to Unrestricted Use
Stock.

Invoice is entered in the receiving plant against the stock transfer order of the receiving plant.
The required reconciliation accounts will be done in the financial module with the defined
Account groups of internal vendors.

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5.4 Transition of purchase order
Purchase orders will generally be sent through electronic - mail and hard copy by output device
Settings.
Summary of Purchasing Document Types

Document Document Type Allow Item CategoriesInternal / External

Standard stock
Standard PO NB Transfer sub contract Internal
Third Party
Stock Transfer UB Stock Transfer Internal

5.5 Contracts
Central purchase organization will create the contract after arrival of the total requirements of
Individual plants after negotiations with vendors. Referring to the contracts individual purchase
organizations will raise the Release order as per the Plant requirement.
There are two types of contract.

Description Doc. Type

Value Contract WK
Quantity Contract MK

5.6 Release of purchase order

5.6.1 Characteristic and class
 The parameters VALUE, PLANT, PURCHASING GROUP, COST CENTRE
AND DOCUMENT TYPE are main criteria to release the purchase order, these
Can be created as characteristics in SAP
 These characteristics are grouped into classes

5.6.2 Release code

The release code is a two-character ID allowing a person to release (clear, or
Approve) a requisition or an external purchasing document. In Varanasi India Pvt. Ltd. the
release of PO has four releasing authorities, these authorities can be created as release codes
in SAP.

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Release Code Release Authority
01 Purchase Officer
02 Asst. Manager – Purchase
03 Purchasing Manager
04 Purchasing Manager

5.6.3 Release group

All the releasing authorities are grouped in one group. And the class is assigned to the release
group.
Release Group Name of Release Group
PO PO Release Group
Value / Plant <= 100000 (INR) > 100000 (INR)
Purchasing Asst. Purchasing Asst.
Asst. Manager Purchasing Asst. Manager Purchasing
C1NO
Manager-Purchasing Manager-Purchasing
Plant Head
Purchasing Asst. Purchasing Asst.
Asst. Manager Purchasing Asst. Manager Purchasing
C2AL
Manager-Purchasing Manager-Purchasing
Plant Head
Purchasing Asst. Purchasing Asst.
Asst. Manager Purchasing Asst. Manager Purchasing
C3BU
Manager-Purchasing Manager-Purchasing
Plant Head

5.7 Pricing group

We define access sequence and condition types in purchasing conditions and assign these
condition types in the pricing procedure.

Schema Group
Schema group allow you to group together certain purchase organizations that uses the same
Calculation schema, we can also use them to group together vendors for whom the same
Calculation schema is valid.

Description for
Schema group Schema group Pricing
Pricing
purchase org. vendor Procedure
Procedure

Domestic
SCPO All Vendors RM0000
Procurement

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6. VALUATION AND ACCOUNT DETERMINATION

6.1 Valuation
6.1.1 Valuation area
All materials are valuated at plant level only. Each material is assigned to valuation class while
creation of its master record.

6.1.2 Valuation class

Grouping of similar accounting requirement materials for automatic determination of G/L
accounts is called valuation Class.

6.1.3 Account category reference

Grouping of valuation classes for the purpose of automatic account determination is called as
account category reference.

In Varanasi India Pvt. Ltd. the following valuation classes and account category references are
defined.

Material Types Valuation Class Description Acc. Catg. Reference

ROH 3000 Raw Material 001
HALB 7900 Semi finished materials 002
FERT 7920 Finished Product 003
NLAG 9000 Non Stock Items 004
DIEN 3400 Service 005

6.1.4 Valuation grouping code

Grouping of valuation areas for the purposes of automatic account determination

Valuation
Valuation Area
Grouping Code
C1NO 001
C2AL 001
C23BU 001

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7. INVENTORY MANAGEMENT & PHYSICAL

INVENTORY
7.1 Inventory management
7.1.1 Goods receipt
A goods receipt (GR) is goods movement with which the receipt of the goods from a vendor or
from a production is posted. A goods receipt leads to increase in the stock in the storage
location.

7.1.2 Goods issue

A goods issue is a goods movement with which a material withdrawal or material issue, a
material consumption, or a shipment of goods to customer is posted. A goods issue leads to
reduction in warehouse stock.

7.1.3 Transfer postings

A transfer posting is a general term for stock transfers and changes in stock type or stock
category of a material. It is relevant whether the posting occurs in conjunction with a physical
movement or not.

7.1. 4 Physical inventory postings

After user decides to carry out physical count, user will have to create physical inventory
document, enter the count and post the difference (excess/shortage). At the time of posting the
difference the system will generate the material document. For valuated stocks accounting
document will also be generated.

7.1. 5 Movement type

Movement type describes the type of stock posting in inventory. It represents whether the
posting in stock is against goods receipt or goods issue. The important movement types are

 101 − Goods receipt for purchase order or order.

 103 − Goods receipt for purchase order into GR blocked stock.
 201 − Goods issue for a cost center.
 261 − Goods issue for an order
 301 − Transfer posting plant to plant in one step
 305 − Transfer posting plant to plant in two steps - placement in storage
 311 − Transfer posting storage location to storage location in one step
 313 − Stock transfer storage locations to storage location in two steps - removal from
storage.

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8. LOGISTIC INVOICE VERIFICATION

It is in Logistics Invoice Verification that incoming invoices are verified in terms of their
content, prices, and arithmetic. When an invoice is posted, the invoice data is saved in the
system. The system updates the data saved in the invoice documents in Materials
Management and Financial Accounting.

Process Decided
There will be two types of invoice verifications, one for the vendor who has supplied the
material and the other are for freight/ delivery cost / services.
Invoice verification will be performed with reference to a Purchase Order or a Delivery
Note, based on provision created at the time of Goods receipt. Invoice verification can
be done after goods receipt. Any cost, which needs to be loaded on the inventory, should be
incorporated in the purchase order as a part of price.

9. EXTERNAL SERVICE MANAGEMENT

External Services Management provides a basic process for the procurement of externally
performed services. This basic process comprises the following functionality

Service master records in which descriptions of all services that may need to be procured can
be stored. In addition, a standard service catalog (SSC) and model service specifications (MSS)
are available.

A separate set of service specifications can be created for each concrete procurement project in
the desired document (e.g. PM maintenance plan or maintenance order; PS network; MM
purchase requisition, RFQ, contract, purchase order, or service entry sheet).

 External Services Management offers two basic ways of specifying services:

1 - As planned services with description, quantity, and price.

By “planned services” we mean services whose nature and you know scope at the start of a
procurement project or transaction.

At the time the services are requested, the individual specifications are entered either with the
aid of a service master record or directly as short and long texts. Price and quantity are
specified in
both cases.

2 - As unplanned services with the setting of a value limit only.

By unplanned services, we mean services that cannot be specified in detail because their
precise nature and scope are not initially known, or services which - for various reasons -
you do not wish to plan. Unplanned services therefore have no descriptions.

They are entered in the form of maximum values in the relevant currency. Services may be
performed up to a value not exceeding these value limits. This ensures an element of cost

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control.

10. T-CODE & DESCRIPTION

Transaction codes are the shortcut codes that take us directly to the screen desired. These
codes are provided in the command field. Some of the important transaction codes are as
follows.

Sr.No. T-Code & Description

1 OX15 - Create Company

2 OX02 - Create Company Code

3 OX10 - Create Plant

4 OX09 - Create Storage Location

5 OX08 - Create Purchasing Organization

6 OME4 - Create Purchasing Group

7 OX18 - Assign Plant to Company Code

8 OX0 - Assign Purchasing Organization to Company Code

9
OX17 - Assign Purchasing Organization to Plant

10 MM01 - Create Material

11 MM02 - Change Material

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12 MM03 - Display Material

13 MB51 - Material Document List

14 MMDE - Delete All Materials

15 MMNR - Define Material Master Number Ranges

16 XK01 - Create Vendor

17 XK02 - Change Vendor

18 XK03 - Display Vendor

19 ML33 - Create Vendor Conditions

20 ME11 - Maintain Purchasing Info Record

21 ME01 - Maintain Source List

22 ME51N - Create Purchase Requisition

23 ME52N - Change Purchase Requisition

24 ME53N - Display Purchase Requisition

25 ME41 - Create RFQ/Quotation

26 ME42 - Change RFQ/Quotation

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27 ME43 - Display RFQ/Quotation

28 ME31L - Create Scheduling Agreement

29 ME32L - Change Scheduling Agreement

30 ME33L - Display Scheduling Agreement

31 MEQ1 - Create Quota Arrangement

32 MEQ2 - Change Quota Arrangement

33 MEQ3 - Display Quota Arrangement

34 ME21N - Create Purchase Order

35 ME22N - Change Purchase Order

36 ME23N - Display Purchase Order

37 ME29N - Release Purchase Order

38 ME59N - Automatic generation of Purchase Order

39 MIGO - Post Goods Movement

40 MB01 - Post Goods Receipt for Purchase Order

41 OMJJ - Customizing: Define New Movement Types

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42 MIRO - Enter Incoming Invoice

43 MIRA - Fast Invoice Entry

44 MR8M - Cancel Invoice Document

45 MRBR - Release Blocked Invoices

46 OMR6 - Tolerance limits: Invoice Verification

47 MIR5 - Display List of Invoice Documents

48 MIR6 - Invoice Overview

49 MIR7 - Park Invoice

50 MRIS - Settle Invoicing Plan

51 AC02 - Service Master

52 ML81N - Create Service Entry Sheet

53 MRRL - Evaluated Receipt Settlement

54 MMB1 - Create Semi Finished Product

55 MMF1 - Create Finished Product

56 MMG1 - Create Returnable Packaging

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56 MMH1 - Create Trading Goods

58 MMI1 - Create Operating Supplies

59 MMK1 - Create Configurable Material

60 MMN1 - Create Non-Stock Material

61 MMBE - Stock Overview

62 MB52 - List of Warehouse Stocks on Hand

63 MB21 - Create Reservation

64 MBST - Cancel Material Document

65 MB5T - Stock in Transit

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© Copyright SAP GURU INDIA

The copyright in this work is vested in SAP GURU INDIA.

Please note and abide by copyright laws. This presentation is for educational

purposes only. All logos, photos and information etc., used in this

presentation are the property of SAP GURU INDIA.

SAP is a registered trademark of SAP AG in Germany and many other countries. We are NOT
associated with SAP.

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