SAP Materials Management Assignment

Name : _______________________________ Roll No. :__________

Group Code : ______________________________

Points to note while doing the assignment:

1. Enter your group code wherever _ _ is mentioned.
2. We have taken Blue star as an example to go through the assignment experience. All
values are in Indian Rupees. But we have taken the existing Purchasing organization
which is created in Germany with Eur as currency. Throughout the assignment assume
that all products are sold and purchased in Eur’s instead of INR. Please do not use INR
anywhere even by mistake. You would face an error.
3. We trust you as adults and future managers. But in case we find two assignments with
the same document numbers, both the students would get a straight zero irrespective
of who copied from whom. This is not negotiable so please take care.
4. We expect that you would not require any help or support while doing the exercise.
And therefore we would expect that you do not ask queries to the faculty team unless
you are stuck up in a way that you cannot proceed without the faculty team
intervention. Appropriate marks would be deducted for each query asked. You are
free to seek help from your peer group.
5. We wish that you enjoy the assignment and in the process learn.

Blue Star's foray into manufacturing was a modest effort at producing ice candy machines in
the 1940s, at first from a small office in Forbes Street at Colaba in Mumbai. It was only in the
mid 1960s that Mohan T Advani expanded Blue Star's manufacturing base by buying a factory in
Thane, then a distant suburb in Mumbai.

The second plant was built in 1980 in Bharuch in Gujarat to manufacture water coolers, deep
freezers and bottle coolers.

In the late 1990s with the software boom driving the economy, investments in manufacturing
sector were dwindling. Manufacturing facilities started become an unviable proposition. As a
result, a lot of manufacturing units had to be closed down. However Blue Star management was
convinced that manufacturing would be an important driver in the value chain and was
important for the company to be successful in the longer run.

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A new and exciting chapter began with the inauguration of a world-class factory in Dadra in July
1st, 1997. The project at Dadra was incorporated with state-of-the-art technologies, quality
standards and manufacturing process with consultations from Rheem USA.

After the success of Dadra, Blue Star has been able to transplant the manufacturing philosophy
and attitude to the other factories at Thane and Bharuch as well.

The two fundamental transformations of Blue Star's manufacturing took place in improving
operational efficiencies and quality improvement resulting in competitiveness in terms of price
and delivery. Blue Star remained competitive in the market where prices of air-conditioning
products fell constantly since the late 1990s. The introduction of world class manufacturing
facilities coupled with IT, automation and an overall positive morale amongst the employees
resulted reduction of manufacturing cost.

With the addition of Himachal Plant in 2005, which was built with in-house expertise, Blue Star
has been able to meet the increasing market demand. Himachal plant has the advantage of
scale of operations and also enjoys tax benefits.

Wada facility is the most recent one set-up by the Company. With a plot size of around 36
acres, this facility is planned to eventually be Blue Star’s largest manufacturing facility. Wada
factory is a state-of-the-art facility and follows world-class manufacturing practices.

Blue Star's five modern manufacturing facilities coupled with a robust product development
team and a significant contribution from the original equipment manufacturers and export
market has given Blue Star a cutting edge in manufacturing.

Purchasing Organizations

Blue star has its Corporate office and Procurement department sitting at Mumbai. All the
purchase orders are released from Mumbai. The Material requirement planning is also run at
Mumbai office for all the 5 plants. Blue star follows centralized procurement and therefore they
have one purchasing organization sitting at Mumbai. Assume the purchasing organization to be
1000

Purchasing group

Purchasing group is a group of people who specialize in procuring similar type of the materials.
We would take 000 as our purchasing group.

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Plant

Plants of Blue Star Plants to be used

1000
1100
1200
1300
1400

Plant is any location where you run Material Requirement Planning and therefore it could be a
manufacturing location, warehouse or a stockyard. In the Blue star scenario the above
mentioned locations are the places where the products of Blue star are manufactured and
therefore they are the plants of the organization. Materials can be procured and sold through
these facilities

Storage Location

We would take the storage location where the material would be stacked as 0001. We are not
configuring the detailed warehouse management system where the exact location can be
traced like door, rack, storage type, storage bin, etc.

Products

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Business Associates

In keeping with its win-win approach, Blue Star treats its vendors as not just suppliers, but as
business partners and tries to build long term associations that are profitable both to the
suppliers and to Blue Star. In line with this thought, Blue Star has entered into long term
arrangements with its key suppliers, many of whom are world leaders. For instance, Blue Star
sources its Switchgears from Siemens, Compressors from Danfoss of Netherlands and
Refrigerant from DuPont. General Electric Corp of USA provides Motors, while Hanbell of
Taiwan supplies Screw Compressors. Copeland of USA assists in System Design.

Over the years, Blue Star has built a strong network of suppliers around it. Not only that, the
company also helps in the development of its smaller suppliers by providing various business
related and technical inputs to them. For instance, since the vendors are also manufacturers,
they will benefit from some of the good manufacturing practices that Blue Star adopts. Blue
Star has educated a number of small vendors on the importance of ISO certification and
encouraged them to get certified within a certain time period.

This approach has greatly boosted the morale of vendors and firmly bonded them with Blue
Star. Also, it ensures that the suppliers walk side-by-side with Blue Star on the path to growth.

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This project is the latest offering from the G.S. Group, which is headed by the dynamic and
progressive Mr. G.S. Gupta. The Group has to its credit a roster of successful projects in the
twin cities of Hyderabad and Secunderabad.

The Group awarded the air-conditioning of the Hyderabad Central mall project to Blue Star. Its
brand equity in the market, reputation for timely execution of fast-track projects, excellent
project management capabilities and maintenance of stringent quality measures helped Blue
Star bag this prestigious Rs 4-crore order.

Project Scope
Blue Star’s project scope spanned the air-conditioning of the shopping mall and theatre at
Hyderabad Central

Equipment supplied for the shopping mall and kitchen ventilation included:

 10 nos. Blue Star air cooled reciprocating chillers

 5 nos. Bottled Water Dispensers

Equipment supplied for the theatre included:

 2 nos. Blue Star air cooled reciprocating chillers
 5 Water Coolers

The Delivery of the above requirement is expected within 1.5 months period from the date of
placing the order.

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 1. Create Material Masters for the following Materials (Finished Products and Raw
Materials)

Product
Product Components Components (Raw
(Finished
(Finished (Raw Materials) Materials) Image
Goods)
Goods) ID Description
Description
ID

COM_ _ _ Compressor
Air Cooled
ACRC_ _ _ Reciprocating
Chillers
COND_ _ _ Condenser tube

BH_ _ _ Bottle holder

Bottled Water
BWD_ _ _
Dispensers

FAU_ _ _ Faucets

COM_ _ _ compressor

SSB_ _ _ Stainless Steel body

WC_ _ _ Water Coolers
COND_ _ _ condenser

FAU_ _ _ Faucets

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 1. Navigation to create Finished Product

SAP menu Logistics → Materials management → Material master →

Material → Create (special) → Finished product

Transaction code MMF1

Use the following details to create the above mentioned finished products:

Views to be selected: Basic Data 1, MRP 1, MRP 2, MRP 3, Accounting 1

Material Name ACRC_ _ BWD_ _ _ WC_ _ _

Air Cooled Reciprocating Bottled Water
Description Water Coolers_ _ _
Chillers_ _ _ Dispensers_ _ _
Unit of
EA EA EA
Measure
Material
00103 00103 00103
Group
Gross Weight /
20 KG 15 KG 30 KG
Net Weight
MRP Type PD PD PD
MRP
000 000 000
Controller
Lot Size EX EX EX
Minimum Lot
1 1 1
Size
In House
5 Days 5 Days 5 Days
Production
Planned
5 Days 5 Days 5 Days
Delivery Time
Schedule
000 000 000
Margin Key
Safety Stock 100 100 100
Availability
02 02 02
Check
Value Class 7920 7920 7920
Price Control S S S
Standard Price 20000 12000 14000

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2. Navigation to create Raw Material

SAP menu Logistics → Materials management → Material master →

Material → Create (special) → Raw Material
Transaction code MMR1

Use the following details to create the above mentioned Raw Materials:

Views to be selected: Basic Data 1, Purchasing, MRP 1, MRP 2, MRP 3, General Plant Data/
Storage 1, Accounting 1

Material
COM_ _
Name COND_ _ _ BH_ _ _ FAU_ _ _ SSB_ _ _
_
Bottle Stainless
Compres Condenser Holder Faucets Steel
Description
sor _ _ _ Tube _ _ _ ___ ___ Body _
__
Unit of
EA EA EA EA EA
Measure
Material
00103 00103 00103 00103 00103
Group
Gross and
Net
5 KG 1 KG 8 KG 5 KG 2 KG
Weight /
Unit
Purchasing
000 000 000 000 000
Group
MRP Type PD PD PD PD PD
MRP
000 000 000 000 000
Controller
Lot Size EX EX EX EX EX
Planned
Delivery 15 20 5 10 10
Time
Schedule
000 000 000 000 000
Margin Key
Safety Stock 200 200 200 200 200
Availability
02 02 02 02 02
Check
Value Class 3000 3000 3000 3000 3000

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 Price
S S S S S
Control
Moving
2500 1500 1800 2200 1200
Price

3. Create Material BOM

Navigation to Create a Bill of Material

SAP menu Logistics → Production → Master Data → Bills of material →

Bill of material → Material BOM → Create
Transaction code CS01

Use the following details to create the Bill of Material:

 BOM Usage : 1 (Production).

ACRC_ _ BWD_ _ _ WC_ _ _

Item Component Qty Component Qty Component Qty
Category
L COM_ _ _ 1 BH_ _ _ 1 COM_ _ _ 1
L COND_ _ _ 4 FAU_ _ _ 2 SSB_ _ _ 1
COND_ _ _
L 4
FAU_ _ _
L 2

4. Display Materials as per material Group and Login ID

Navigation
SAP menu Logistics Production Process Process Order 
Environment  Master Data  Material Master  Other
 Materials List
Transaction code MM60

Material : *_ _ _
Plant : 1000
Material Group : 00103
Execute

(A) Attach a print screen of the Material List.

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5. Display Material BOM

Navigation
SAP menu Logistics Production Master data  Bills of material 
Reporting  Material BOM
Transaction code CS11

 Materials : <enter your material number>

 Plant : 1000
 BOM Application : PP01 (Production –general)
 Execute

(B) Attach a print screen of the Material BOM of Materials : ACRC_ _ _, BWD_ _ _ and
WC_ _ _

6. As there is no stock, the raw materials have to be procured for the production of finished
goods. Various vendors have to be contacted for the most effective price.

7. Create Vendor masters for Siemens_ _ _, Danfoss_ _ _, Hanbell_ _ _ centrally for company
code 1000 ,purchasing organization 1000 , Account Group KRED, Country DE, Region 09 ,
reconciliation account 160000 , payable immediately, Currency EUR.

Record the system message:

Vendor Number for Siemens : ________________________

Vendor Number for Danfoss : ________________________

Vendor Number for Hanbell : ________________________

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8. Review Vendor List

Navigation
SAP menu Accounting  Financial Accounting  Accounting Payable
 Information System  Reports for accounts payable
accounting Master data  Vendor List
Transaction code S_ALR_87012086
 Company Code : 100
 Search Help ID: A [Vendors (General)]
 Select Search Help
 Search Term : ___

 Execute

(C) Attach a print screen of Vendor List

Bill Of Material (BOM) Chart

BWD_ _ _
ACRC_ _ _
WC_ _ _

COM_ _ _ COND_ _ _ BH_ _ _ FAU_ _ _ COM_ _ _ SSB_ _ _

Independent Requirements for the material ACRC_ _ _, BWD_ _ _ and WC_ _ _ are
given below:

Material Period Independent

Requirements

ACRC_ _ _ Week 45/Current year 12

BWD_ _ _ Week 45/Current year 5

WC_ _ _ Week 45/Current year 5

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9. Create Independent requirements for material

Navigation
SAP menu Logistics  Production  Production Planning  Demand
Management  Planned Independent Requirements 
Create
Transaction code MD61

Create Planned Independent Requirements for the following materials:

Field Material Material Material

Select Material and ACRC_ _ _ BWD_ _ _ WC_ _ _

Enter

Plant 1000 1000 1000

Version 00 00 00

Planning Period W (week) W (week) W (week)

Reqmts date 45.2010 45.2010 45.2010

Planned qty 12 5 5

10. Run Master Production Scheduling for Finished Material

Navigation
SAP menu Logistics  Production  Production Planning  MPS 
MPS  Single-Item, Single-Level

Transaction code MD42

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 Create Master Production Scheduling for the following Materials:

Field Material Material Material

Material ACRC_ _ _ BWD_ _ _ WC_ _ _

Plant 1000 1000 1000

Req for safety stock(A)

Req for Production (B)

Total Req (A+B)

(D) Attach a print screen of MPS for all three Finished Goods

11. Run Material Requirements Planning (MRP) for Raw Material

Navigation
SAP menu Logistics  Production  MRP  Planning  Single-Item,
Single-Level

Transaction code MD03

Parameters to be used

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 Create MRP for the following Raw Materials:

Field Material Material Material Material Material

Material COM_ _ _ COND_ _ _ BH_ _ _ FAU_ _ _ SSB_ _ _

Plant 1000 1000 1000 1000 1000

Note down the following details of independent requirements:

Field Material Material Materi Material Material

al

Material COND_ _ _ COM_ _ _ BH_ _ FAU_ _ _ SSB_ _ _

_

Plant 1000 1000 1000 1000 1000

Req for safety

stock(A)

Req for Safety Stock ACRC: ACRC : BWD: BWD: WC:

Finished Products
WC : WC : WC:
(B)

Dep. Req based on ACRC: ACRC: BWD: BWD: WC:

MPS
WC: WC : WC:

Total Req

(E) Attach a print screen of MRP for all Raw Materials

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 Blue Star sends request for quotation to vendors Siemens and Hanbell for the same. The
deadline for receiving quotations is 2 days from today.

12. Create RFQ’s for the above scenario

Create a RFQ under the collective number CN_ _ for Vendor Siemens _ _ _ and Hanbell_
_ _ for all raw materials based on the MPR. RFQ validity period is 2 days from the
current date, purchasing organization 1000, Purchasing group 000, Delivery date is
current date + 15 days, collective number is B_ _ _.

Navigation
SAP menu Logistics  Materials Management  Purchasing 
RFQ/Quotation  Request for Quotation Create

Transaction code ME41

 (Save)
Record the system message:

RFQ Number for Vendor Siemens _ _ _: _________________

RFQ Number for Vendor Hanbell _ _ _ : __________________

13. Display RFQ List by collective number

Navigation
SAP menu Logistics  Material Management  Purchasing  RFQ/ Quotation
Request for Quotation  List Displays  By Collective Number

Transaction code ME4S

(F) Attach a print screen of RFQ List

14. Siemens sends the Quotation

You have received the quotation for your RFQ from vendor Siemens_ _ _. The
requirements of the quotation are as follows:

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Navigation
SAP menu Logistics  Materials Management  Purchasing 
RFQ/Quotation  Quotation  Maintain

Transaction code ME47

Material Name
COM_ _ _ COND_ _ _ BH_ _ _ FAU_ _ _ SSB_ _ _
Compressor Condenser Bottle Faucets Stainless
___ Tube _ _ _ Holder ___ Steel Body _
Description
___ __

Material Cost 2500 1500 1800 2200 1200

Conditions 000 000 000 000 000
RA01 3% 3% 3% 3% 3%
FRB1 100 100 100 100 100

15. Vendor Hanbell_ _ _ sends the Quotation

You have received the quotation for your RFQ from vendor Hanbell_ _ _. The
requirements of the quotation are as follows:

Material Name
COM_ _ _ COND_ _ _ BH_ _ _ FAU_ _ _ SSB_ _ _
Compressor Condenser Bottle Faucets Stainless
___ Tube _ _ _ Holder ___ Steel Body _
Description
___ __

Material Cost 2200 1300 1600 2000 1000

Conditions 000 000 000 000 000
RA01 3% 3% 3% 3% 3%
FRB1 150 150 150 150 150

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16. Compare Prices of both the vendors and select the vendor with the most effective price

Navigation
SAP menu Logistics  Materials Management  Purchasing 
RFQ/Quotation  Quotation  Price Comparison

Transaction code ME49

Note down the following details

Vendor Quotation No. Total Quotation Rank

Value

(G) Attach a print screen of price comparison

17. Send Rejection Letter to the vendor with high price.

(H) Attach a print screen of Rejection Letter

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18. Create Vendor Rebate
After the price simulation we have selected the _____________ vendor. The selected
vendor has offered to give rebate based on performance.

Navigation

Menu Path Logistics Material Management  Purchasing Master Data  Vendor

 Purchasing  Change (Current)
Trans Code MK02

Create a vendor rebate with the selected vendor.

Navigation

Menu Path Logistics Material Management  Purchasing Master Data 

Subsequent settlement Vendor Rebate Arrangements  Rebate
Arrangement  Create
Trans Code MEB1

Scale Value Rate

Blank 0.5% (this will Default)
5000 2.5%

 (Save)
Record the system message:

19. Display Vendor Rebate

(I) Attach a print screen of Vendor Rebate

20. Create PO with reference to the RFQ of the best supplier. While creating the purchase order
verify, whether the Info-update option (in Material Details Material DataTab) is selected to
create purchase info record automatically.

Purchase Order _____________________

Purchase Info Record ________________

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21. Check stock requirement List (Transaction Code MD04).

Material Stock Safety Stock Purchase order Purchase order

No. Qty
COM_ _ _
COND_ _ _
BH_ _ _
FAU_ _ _
SSB_ _ _

22. Do a Goods Receipt.

Navigation

Menu Path Logistics Material Management  Inventory Management Goods

Movement  Goods Receipt  For Purchase Order  PO Number Known

Trans Code MIGO

Record Goods Receipt Number: _______________________

23. Check stock requirement List (Transaction Code MD04).

Material Stock Safety Stock Purchase order Purchase order

No. Qty
COM_ _ _
COND_ _ _
BH_ _ _
FAU_ _ _
SSB_ _ _

24. After the goods Receipt, you are not sure the correct goods were delivered for material
Com_ _ _. Therefore, enter a conditional acceptance by receiving them into GR blocked
stock.

After confirmation they were deemed acceptable. Release the material from GR blocked
stock into quality inspection stock in storage location 0001 with reference to the purchase
order number.

Transfer this material from blocked stock into unrestricted- use stock

(J) Attach a print screen of Goods Movements

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25. The vendor has sent you his invoice for the delivery of goods. In addition the vendor has
included some additional cost of 100 EUR as handling charges.

Record Invoices Receipt Number: _______________________

(K) Attach a print screen of PO History

26. Settle the vendor rebate.

Navigation

Menu Path Logistics Material Management  Purchasing Master Data 

Subsequent Settlement  Vendor Rebate Arrangements  Rebate
Arrangement  Create Settlement Document  Via Report
Trans Code MEB4

(L) Attach a print screen

27. Create customer master for Hyderabad Central Mall:

 Account group : Sold-to party 0001

 Customer: : 10_ _ _
 Company code: : 1000
 Sales organization: : 1000
 Distribution channel: : 10
 Division: : 00
 City: : Hamburg
 Country: : DE
 Region: : 02
 Transportation zone : Enter appropriate Transportation zone (used for
route
determination)
 Reconcil. Acct: : Enter your A/R reconciliation account number
(140000)

Record the system message:

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28. Add initial stock

Navigation
SAP menu Logistics  Materials Management  Inventory
Management  Goods Receipt  Other
Transaction code MB1C
 Movement type : 561 (initial stock)
 Plant : 1000
 Storage Loc : 0001
 Enter
 Material : ACRC_ _ _
 Quantity(as per MPS) :
 Material : BWD_ _ _
 Quantity(as per MPS) :
 Material : WC_ _ _
 Quantity(as per MPS) :
 (Save)

Record the system message:

29. Create a sales order

Navigation
Logistics  Sales and Distribution  Sales  Order  Create
Menu Path
Trans Code VA01
 Enter Sold to party : <Enter your customer number>
 Material : <Enter all Materials one below the other>
 Quantity : <As per Requirement>
 Enter
Check the Conditions:
Item 10 – ACRC_ _ _ Record Net Value : ___________________
Item 20 – BWD_ _ _ Record Net Value : ___________________
Item 130 – WC_ _ _ Record Net Value : ___________________

Record the system message:

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