Professional Documents
Culture Documents
Knowledge Sharing
PREPARED BY
AKASH L. HIWALE
INDEX
SR.NO TOPIC Page.no.
1. Enterprise structure: 4
Define
a. Plant
b. Purchase Org
c. Storage Location
d. Purchase group
Assignment 7
a. Plant to company code
b. Plant to Purchase organization
c. Purchase org to company code
2. Master Data 8
Material Master (MM01/02/03) 9
Vendor Master (XK01/02/03) 19
Info Record (ME11/12/13) 25
Source List (ME01/02/03) 29
3. (P2P) Procure to pay cycle 31
Purchase requisition (ME51N/52N/53N)
Request for Quotation (create-maintain-compare) (ME41-ME47-ME49)
Purchase Order (ME21N/22N/23N)
Goods Receipt (MIGO)
Invoice Receipt (MIRO)
4. Automatic Purchase Order (ME59N) 43
5. External service Procurement 48
Service master (AC01/02/03)
Service Purchase order (ME21N)(K)(D)
Service Entry Sheet (ML81L)
Invoice verification (MIRO)
6. Quota Arrangement (MEQ1/Q2/Q3) 51
1. ENTERPRISE STRUCTURE
Every organization has some framework or structure according to which the whole business
runs. An enterprise in the structure that represents an enterprise in SAP ERP system. It is subdi-
vided into various organizational units which, for legal reasons or business-related reasons, are
grouped together.
An enterprise structure defines various levels in an organization. These levels are placed accord-
ingly to some hierarchy shown below in flow diagram, each levels has some specific functionality
associated with it, which in a combined way describes the working of an organization.
CLIENT: 800
P.ORG: T010
A01 T01
A02 T02
A03 T03
Plant is an organizational unit within a company where activities take place. A plant will
produce goods and make goods available for the company.
It is a unit having manufacturing facility, warehouse distribution center, or a regional sales
office within logistic. It subdivides enterprise in different aspects.
2. Master Data
In Every organization is very essential to have master data of each and every activity to be orga-
nized centrally for all modules and departments too.
Also we can say it’s a data with its all specifications it stored in our system, and it can be used by
the system to gather information while creating PO and service, contract, scheduling agreement
etc.
From point of view of material management it includes material master and vendor master files
at the core of procurement, inventory management, and invoice verification.
Master Data
BUM, order unit, mat grp. Address, control, communication datavendor data purchase order UOM
Company code data Accounting info payment
Purchasetransaction
org data control-pln delivery, tole
Purchase view (plant level) Quota usage
Purchasing
key, reminder,
Data purchasing
Source list,
data
auto
order
PO. currency,
Pur.related
price Grp. data
MRP (Plant) Reorder point, Plant delivery
payment
time,terms
Accounting (Valuation area)
Since there are different departments in an enterprise and each department works on some
specific material, they will enter different information regarding their material. So, each user
department has its own view of material maser record. The data screen that is used to cre-
ate material master can be divided into two categories.
Define Industry
Type
Assigning Num-
ber range
Create Material
Define Material Type- (MM01): Check Con- figurations
1)RAW 2)Semi 3) Finished
Main Data
Additional Data:
Basic data Purchasing data Accounting data
Material description Currency
PATH: Logistic generalfield selectiondefine industry sector and industry sector field
Material types
Materials with some common attributes we have to put together for that we have to create material
types we have some common material types within system those are below
Material type is very important in material master in every aspect; it has control over Below
points :
Material views selection
Field selection
Price control
Procurement types
Valuation class etc.
Field Control
Procurement Control
Views Control
4) Valuation Control
1) Field Selection
In this section we define whether the material field is hidden, display, mandatory or optional in
maintainance, we can customize this according to clients requirment.
We can see here for selection group 175 there are no. of fields is assigned.
So for this field refrence according to field selection group Purchasing group, currency key
fields are optional without entering to that field we can save material without any error.
In this example we can see with refrence to T-CODE MM01/02 we should have to maintain
Price control indicator whther it is standard or moving average price but for MM03 that entry
is only for display.
As per our configuration price control is mandatory showing here without this field we could not precede further
2) Procurment Control: In this field we can see that we can control for TFIN- Finished for TESLA
material type we can by only external purchase order, there is no inhouse production is available for
this particular material type.
This is simple use of this Procurnment control Field
3) Material Views control: Every Material has different attributes and uses for specific of
particular department,Basic view, Purchasing view, accounting view with these three views we
can run entire purchase order cycle but for manufactring company point of we have to take
MRP view likewise from the point of view of sales we can sales view For my finished material I
need only these views because my material is not manufactured within my plant to take MRP
view for planning the material.
4) Valuation Control: In this field we have to maintain price control whether it is standard or
moving average price and with help of account assignment category we can define valuation
class to particular material type. I have selcted standard price for this material type, hence that
will automatically trigger while creating material as well as respect to AAC valuation class took
automatically by the system.
Number ranges
When we create a material master record, every material is recognized by a unique
number that is known as the material number. We can assign a number to a
material through two ways
External number assignment − While creating a material, you have to enter your own
number (containing alphabets or digits), and that should be unique.
Internal number assignment − While creating a material, you need not enter any
number. The system automatically generates a unique number to that material.
Internal number range can be defined by following the STEPs given below −
PATH: IMG ⇒ Logistic General ⇒ Material Master ⇒ Basic Settings ⇒ Material Types ⇒
Define Number Range for Each material Type
T-Code: MMNR
Material group is a wider range of material type. Materials with some common attributes
are taken together and they are assigned to a material group. For example: We have some
materials that are to be packaged, so the material type can be electrical or food products,
but we can group these material types and put them in the packaged material group. Follow
the STEPs given below to create a Material Group.
Path IMG ⇒ Logistic General ⇒ Material Master ⇒ Settings for Key Fields ⇒ Define Mate-
rial Groups
T-Code: OMSF
Below shown I have made different materials with respect to my industry type, material
type and configured field selection for my plant T020.
T-CODE: MM60 for list of materials
Vendor master data contains vendor’s name, address, bank account no. etc.
Create Vendor
Define Vendor Define Number
Account group ranges
After filling all necessary details such as name of account group, general data, and field
Status. Click on save button. Vendor account group will created.
Number Range
PATH: Logistic generalBusiness PartnervendorConrolDefine Number ranges for
vendor master record
Creation of vendor
T-C ODE: XK01-create,
General Data: General data is maintained at client level and it is valid for all
Organizational levels.
T-VODE: MKVZ
Purchasing info
record
1) General Data
-vendor data
-order unit of
measure
2) Purchase org Da-
ta
-Control planned
-Delivery
-Tolerance
-Net price
3) Conditions
Price related data
T-CODE: ME11
P.org level- For Each plant assigned to p.org For Plant specific
Info record for Special procurement types
1) General Data: it contains vendor data and purchase order unit of measure.
2) Purchase org Data: Planned delivery, tolerance limit we can maintain in this
3) Conditions
Here we can maintain conditions like gross price, discount, surcharge and freight etc. for particular
material and vendor for specific period of time
VENDOR-9114
MAT- 748
VENDOR-101046
From above figure we can see for one particular material I have two source of supply (vendor)
And I have different price, delivery time, tolerances as per data provided by both the vendor
From below figure we can see that how info record data like Net price, Planned Delivery date, Condi-
tion can be trigger automatically once we put vendor and material combination.
Source list
The combined information of material and vendor is maintained in record is called purchase
info record. But a particular material can be ordered from different vendor time intervals,
this information stored in source list.
Importance of source list
Source list includes a list of possible source of supply for material at particular time period.
Specifies time period of ordering material from a given vendor.
Source list can be copied from one plant to another.
T-C ODE: ME01
If the requirement of particular material is large and our single ven- dor cannot fulfill that requirement at that time we can assign an- other v
Fix vendor: Above we can see I have maintained three vendors for my material 748 at plant
level and fixed 101046 vendors now, then while creating purchase requisition system will
automatically give me this vendor for this particular period of time
If I tried to give put different vendor, system is showing me this warning massage
Block vendor: Now I again went to source list and block the 101048 vendor
This time system showing me error massage that vendor is blocked by source list
MAT: A1 MAT: A2
PLANT T020
P.Org try to find material in the stock if not available then P.Org star
INVOICE VERIFICATION (MIRO) In this STEP accounting department verifies the invoice in
coordination with plant and purchase department
PAYMENT TO VENDOR
After verifying the invoice Accounting department do the
payment to the vendor
Purchase Requisition
To understand different scenarios I have created Purchase requisition for all 7 material and to
some material I have assign source of supply in PR and I took some material to generate RFQ by
not assigning source of supply in PR and with combination I have created Purchase order.
Below we can see that I have assigned source of supply to item no: 10 i.e. (material 748 will be
taken from vendor 101046 only.)
As we can see for item no 20, 30, 40 I have not assigned any source, hence I can decide it after
Quotation from vendors.
For other materials i.e. item no: 50, 60, 70 there is only single source so that is automatically
will be assigned once I enter on assign source of supply.
10 748 Assigned
20 749 Not
30 750 Not
40 719 Not
50 733 Assigned
60 735 Assigned
70 736 Assigned
Request for quotation is a form of invitation that is sent to the vendors to submit a quota-
tion indicating their pricing and terms and conditions.
It contains details about goods and services, quantity, date of delivery, and date bid on
which it is to be submitted.
Quotation is reply by vendor response to request for quotation.
With reference to PR I have these materials now and I will select which I have not assigned
source of supply and adopt those materials.
For selected material now I have to send Request to vendor for those three materials, as
shown below
RFQ Maintain
Now I am going to maintain Quotation (Price) I have gathered from vendor.
T-code: ME47
RFQ Comparison
We can compare Quotation of different vendors in this STEP
T-code: ME49
10 748 10104
6
20 749 10104
6
30 750 10104
6
40 719 10104
8
50 733 101049
60 735 101049
101048
70 736
PURCHASE ORDER
Purchase order is the formal and final confirmation of the requirement that is sent to ven-
dor to supply material or services.
A purchase order includes important information such as name of material its correspond-
ing plant, details of purchasing organization with its company code, name of vendor, and
delivery date
A purchase order can be created by following STEPs
Path: Logistic Material- ManagementPurchasingCreatevendor/supplying Plan
Known
T-CODE: ME21N-create, ME22N-Change, ME23N- Display
I have created Purchase orders with reference to PR as well as RFQ as shown in snapshot
below we have added the numbers of PR and RFQ with their item number.
Here we can see that after entering the PR and RFQ Number the material and price is auto-
matically get generated
Note: It will apply only if there is same vendor, otherwise it will give you an error.
Similarly for other material and selected vendor with reference to PR and RFQ I have creat-
ed
Purchase Order for material 719 & 736 to vendor 101048
Similarly for other material and selected vendor with reference to PR and RFQ I have creat-
ed
Purchase Order for material 733 &735 to vendor 101049
Similarly I have done goods receipt for Material 719 & 736
Similarly I have done goods receipt for Material 733 & 735
Vendor Payment: And after verifying the invoice production, Purchase, Quality and other
departments, the accounting department pay to the vendor as per the term and conditions
had decided.
If I have number of purchase requisition of material from fix vendor then it takes a long time
to convert every PR into PO. So to overcome this problem SAP introduced the Automatic PO
creation Functionality.
STEP 1: In material master data, check box for Auto PO in the Purchasing View Should be checked
T-CODE: MM01
STEP-2:
In vendor master data, the Auto PO checkbox in the Purchasing View should be checked.
T-CODE: XK01
STEP-3:
A source list should exist for material with the same fix vendor.
T-CODE: ME01
STEP-4:
A valid Purchase info record (PIR) of material with the vendor must in the system.
T-CODE: ME11
Likewise I have maintained PIR for the Combination of Material 464920 and vendor 101048.
STEP-5 Create Purchase requisition
T-CODE: (ME51N)
Likewise I have created another two Purchase requisitions. For different vendors
T-CODE: ME59N
Planned Services − in planned services at the time of procurement specifications like quanti-
ty and price are known in advance. It means nature and scope of service is clear before pro-
curement.
STEP 1
PATH: LogisticMaterial ManagementService MasterServiceService master
AC01/AC02/AC03
STEP 2: Service Purchase Order, In SAP MM services are accomplished with the help of ser-
vice purchase order. The requirement of service with its description along with quantity is
given to third party in form of service purchase order. In service purchase order important
field is item category. For service, item category will be D. So, service purchase order can be
created by following the below STEPs.
We can add limits in purchase order because of that we can specify unplanned services as
well.
Example- At our Home I have an issue with my electric wiring and I have ordered Electrician
to come and check what is an issue but after investigation we found that we need some wir-
ing, sockets and all other Labors required, so I have to fix the price within limit how much
should be the service charge within limits also so that other charges comes under un-
planned services.
Service type Type of work Cost
Machine Maintenance
Planned service 100000 EUR
We need to maintain Limits in PO to get unplanned services, while creating Service Entry sheet
STEP 4: MIRO
Now, I have to pay to the vendors against the services which the vendor has provided to us by In-
voice verification.
6. Quota Arrangement
A particular material can be procured from different vendors depending upon the require-
ment. In this way, the total requirements of material are distributed to different vendors,
i.e., the quota is assigned to each source of supply this is known as quota arrangement.
Quota rating is used to determine the amount of material that is to be assigned to particular
source or vendor. The source with lowest quota rating is called valid source.
Quota rating = (Quota allocated quantity + Quota Base Quantity)/Quota
STEP1: Change material by selecting quota arrangement and source list in purchasing view.
1ST SCENARIO
STEP 5: Create PO
Hence, PO & PR placed to the vendor with LOWEST Quota rating, which are 100708 vendors
in this case.
2nd SCENARIO
For vendor 100709 we have maintained maximum quantity 1000 it means when I use quan-
tity 1000 or less then1000 than the system will take vendor 100709 for it.
STEP 5: Create PR
I have created PR for less than 1000 quantity, it automatically pick the 100709 Vendor but
when I changed quantity to more than 1000 as per quota arrangement it shows me warning
error that specifies vendor 100708 for more than 1000 quantity.
Understand relationship between, these three factors on the basis of quota arrangement
Same like above now we have created PR for more than 1000 quantity, it automatically pick
the 100708 Vendor but when I changed quantity less than 1000 as per quota arrangement it
shows me warning error that specifies vendor 100709 for less than 1000 quantity.
7. Outline Agreement
These are short term and long term and long term agreements with the vendor to supply
goods and services under certain conditions.
Vendor selection is an important process in the procurement cycle; vendor can be selected
by quotation process. After getting shortlisted a vendor, an organization enters into an
agreement with that particular vendor to supply certain items with conditions. Typically
when the agreement reached with that particular vendor, a formal contract is signed with
the vendor. So the outline agreement is a long-term purchasing with vendor
The terms of outline agreement are valid up to certain period of time and cover a certain
predefined quantity or value.
Outline Agree-
ment
Scheduling
Contract agreement
Value (WK) Quantity (MK) Without re- lease (LP) With release (LPA)
Business scenario
Before I had one plant Z005 with one purchasing organization i.e. (Z005) and I had a re-
quirement of materials (464802, 464804) on weekly basis with certain price from vendor
(101046) is supplying me that material from one year.
Now I have been expanded my business and I have total three plant now i.e. (Z005, Z006,
Z007), with one Purchasing organization (Z005) means I have centralized purchasing organi-
zation,
I want material (464802, 464804) for all three plants and so in this case I am going to nego-
tiating with vendor, because I have increased volume so I could negotiate with vendor to
reduce the price by saying that I am going to procure material with a quantity 4 times more
than before.
Then the vendor could offer me to make an agreement for a year or six month with better
terms, with better shipment service, better packaging, better price etc. that will be benefi-
cial for vendor and I too.
Purchasing Org-T010
Now
Validity Period 27/06/2021-27/06/2022
Z005
Plant Z006
Z007
sr.no. Material Monthly Requirement Price Total
Qty Total Value
1 464802(MK) 1200/Plant 150
2 464804(WK) 1200/Plant 180 43200 6480000
72000 12960000
Quantity Contract:
As per business Requirement I am going to create now a quantity based contract with de-
cided vendor.
T-CODE: ME31K/32K/33K (Create/Change/Display)
I have entered here my centralized purchase organization where my all three plants are assigned.
I am not going to put plant here because it will be than only plant specific and I want this contract for my three plants. I’ll goin
Header data: It includes all contract related data like company code, validity period, we can
also mention approximate value under the contract also we can decide terms of payment
agreed with vendor.
2) In this case system is showing me the price from info record which is not the negotiated price, which could be loss to company.
1) If I try to make a PO without reference to con- tract system will show me this type error. mes-
I’ve create PO with reference to out- line agreement tab than all the data automatically gather by system in PO.
But in this case we need to specify the plant oth- erwise we can’t proceed further. Then the con- tract will be plant specific onl
Header data: It includes all contract related data like company code, validity period, we can
also mention approximate value under the contract also we can decide terms of payment
agreed with vendor.
Purchase order with reference to Value and Quantity contract both in the same PO
Now I want to create purchase order with reference to value and quantity contract for a different plant, I can do that but vend
My plant and contract are different but vendor and purchase organiza- tion is same.
Material of different contract
Scheduling Agreement
An agreement between vendor and ordering company to deliver the predefined material
at predefined dates within a timeframe is known as scheduling agreement.
In case of contract we tell the vendor specify the vendor target quantity OR A target value,
but what is I have requirement of material on weekly at particular date of a week in that
case with replacement of contract we can do scheduling agreement with the vendor by
specifying the actual date and quantity.
In this case want material (464810) and I required this material on weekly basis at particular
date.
To avoid any delay in order and save my time from creating PO on weekly basis I will create
scheduling agreement.
STEP 1
Create scheduling Agreement
We have without release (LP) and with release (LPA)
T-CODE: ME31L/32L/33L (create/change/display)
With release
NOTE: For this document I am showing you only with release (LPA) only the difference in
without release we no need to release the document it releases automatically with date.
In case of scheduling agreement enter plant is must, because plant required that material at particular schedule.
STEP 2: Maintain Scheduling agreement we need to maintain it as per date of delivery and
quantity.
T-CODE: ME38
Our Scheduling Agreement but we can’t generate here it’s just for verify
STEP 3
Now I have to release it as per requirement.
T-C ODE: ME84
TABLE
CEKKO
T020_PLANT
FIELD: WERKS
T020_PURCHORG
FIELD: BSART Release
procedure
T020_NETVALUE Release
FIELD: GNETW group
ZP
Release
Code
Release Strategies
Release prerequisites T1-T4
Release indi-
cator
Release Statuses B- Block
Release Simulation R-Release
Classification
Note: In This document I have explained characteristic for plant and for order
value for other characteristic process is same
This data should be consider from table from ABAP Dictionary from SE11
Format and no. of decimal place should be like this while putting the values
This data should be consider from table from ABAP Dictionary from SE11
Likewise I have done it for Purchase organization and for purchase order doc-
ument type other Characteristics value
STEP 2
CLASS: Is a group of characteristics we can store at one place
I have assigned my three characteristics with the class: T020_CLASS
REALEASE PROCEDURE:
Release Group: A two-digit code assign to the class and group of release codes that can re-
lease a purchase document
I have created it as a ZP
Release Code: Specific two-character ID for the designed users to allow him to approve
/hold/reject the document
I have created T1, T2, T3, T4 and assigned it with release group ZP
These 4 codes I have used for ap- proval process and I can select maximum of 8 here.
Release Strategy:
While creating release strategy I have to enter
Approver Intervals
T1 0-500 EUR
T2 501-1000 EUR
T3 1001-2000 EUR
T4 2001-3000 EUR
Note: For this I am explaining only the last one others are same just change in the values
For 4tt approval
Cerate PO ME21N:
As I configured till 500-1000 EUR only two approvals should be there.
As I configured till 2000-3000 EUR only all (Four) approvals are should be there.
9. Vendor Evaluation
Vendor Evaluation is process which helps you to optimize your procurement process and
services on basis of factor decided by us.
In SAP Vendor evaluation is integrated with Material management due to fact that while we
purchase material, data i.e. Delivery date, Quality & quantities of material, Packaging are
taken from purchasing
Vendor Evaluation also utilizes basic Materials Management data, Inventory Management
data (such as goods receipts).
Vendor evaluation helps us to select identical source of supply by continue monitoring of
existing supply relationships, it also provide us accurate information on price, payment
terms, delivery date variances, etc. on the basis of this detailed information we can collabo-
ration with relevant vendor we can quickly solve procurement problems in an organization.
We can also check services we buy from vendor and monitoring them whether vendor
delivering services within timeframe and appraise quantity.
Vendor-A Score
(76)
W.F Main criteria W.K. Overall score
Sub criteria Selected
+
SC-1 GR Lots 40% Quality
= (SC1*40+SC2*60)
Quality
SC-2 Complaint
1
60%
50% Vendor-B Score
(65)
Rejected
Flow Diagram for Vendor Evaluation
Vendor Evaluation Semi-Auto For this method we need to define SUB CRITERIA
Methods
WEIGHTING KEY: We define weighting key for main criteria here if suppose we have main
criteria of price with weighting key 01 i.e. equal and for Quality with weighting key 02 i.e.
unequal
In vendor evaluation we have two types of criteria’s main criteria under which we have sub
criteria, both criteria we can define as per organizational requirements here below i have
shown both main criteria in which as per basic practices in an organization we have criteria’s
like price, quality, service, etc., henceforth we can define it as per organizational require-
ments
STEP 1:
Main criteria: I can define multiple main criteria to evaluate the vendor as per previous his-
tory with company and we can give score on the basis of that.
Here in this example I am considering four main criteria’s.
Main criteria’s
Sub Criteria: In the main criteria we can define sub criteria related to main criteria in below image
we can see the sub criteria’s
Main criteria
Sub criteria
NOTE: Likewise within all main criteria’s there are sub criteria’s. I have shown only for price
here.
These are the main criteria I required for my purchase organization as per requirement of
client
I have selected four for this particular example
For a plant T010 within main criteria I have given weighing to sub criteria
shown below.
Main Criteria Sub Criteria Weighing
Price Level 70
Price Price History 20
Market Behavior 10
GR Lots 40
Quality Shop floor Complaint 40
Purchase Org.(T010) Audits 20
On-time Delivery 60
Delivery Quality Reliability 30
Shipping Instructions 10
Service Reliability 100
For Price
For Quality
For Delivery
For Service
As I have to generate by semi-automatic method I have not entered value in the main crite-
ria. I will do it in sub criteria.
NOTE: We have to do this for each vendor to evaluate on the basis of these
criteria but for this particular example I am showing only for one vendor, for
other all is same just we need to change values
I have done that for three vendors
(9114, 101046, 101046)
For Price
For Quality
For Delivery
For Service
T-CODE: ME65
ASSI
Purchase Schema Group CALCULATION
ASSIGN P.Org (T020) ASSIGN
Org (T010) SCHEMA
Vendor (T2)
ASSI
Vendor
master
XK01
STEP
Creation of condition Table (M/03)
In Condition table we can add combination of field for making a condition records, with the
respect of which we need to perform pricing process.
For this particular example I have selected four fields.
T-CODE: (M/03)
A log to inform that my condition table (917) has been created successfully
STEP 3
Assign Condition table to Access Sequence
In this STEP we can see that which fields we have selected from condition table is now acti-
vated for table 917 and access T020.
STEP 1 STEP 2
STEP3
Condition Record
Company code
Condition plant Access
Table (917) Sequence (T020)
P.org
Vendor
Here we can see condition type I have created included in the list
STEP 8
Creation of vendor Schema in Calculation schema
PATH: Material managementPurchasing Conditions Define Price determination
Define Schema Group
For Schema Group for Vendor
STEP 9
Creation of vendor Schema in Calculation schema
PATH: Material managementPurchasing Conditions Define Price determination
Define Schema Group
STEP 10
Assignment of purchase schema to purchase organization
PATH: Material managementPurchasing Conditions Define Price determination
Define Schema Group
STEP 11
Assignment of vendor schema to vendor
STEP 8 STEP 9
STEP 12
ASSIGNMENT
STEP 11 STEP 10
Vendor XK01
P.Org (T010)
(101046)
NOTE: We have to maintain condition type with each vendor, for this example I am show-
ing only for T022 i.e. Freight in this case, for others it will be same.
In configuration I have entered manual tick for T021 due to that T021 is not show- ing here but I can enter it manually
Analysis Pricing In PO
Procurement process involves the cost of goods and services that needs to be paid to the vendor by
an organization. The cost being paid must be posted in an organization necessarily in a correct gen-
eral ledger (G/L) account. It is quite impossible to recollect and feed the correct GL account every
time during procurement. To avoid this inconvenience, the SAP system can be configured so that the
system will automatically determine the correct G/L account that needs to be posted. G/L account is
posted when goods receipt is dene as well as during clearing the invoices verification.
ACR
1010 VALUATION
AREA/PLANT
VALUATION CLASS
T010
MATERIAL TYPE VG CODE
TRAW TRAW 0001
T020
MATERIAL T030
(601)
OBYC CO.CODE:1000
400020
STEP 1
Valuation grouping code must be active
Valuation areas can be grouped together and can be assigned to one grouping code. For ex-
ample Different plants under one company code can be and vice-versa.
Before this valuation grouping code must be activated and this can be done by following.
2) General Ledger Account: General Ledger (G/L) account is unique record for each type
of asset, liability, equity, revenue and expense under plant/company
4) Transaction /Event Key: A three-character if which is assigned with the movement types
to make a relationship between movement types & general ledger (G/L) account. We can-
not change/add new event keys because those are standard
5) Valuation class: Is a group of materials with same account determination. It helps to seg-
regate G/L account on material type basis. We assign valuation class in material master rec-
ords
VALUATION
AREA/PLANT
T010
VG CODE
T020 CO.CODE:1000 CHART: INT
0001
T030
STEP 3
(PART 1) Define Account Reference
PATH: IMGMaterial ManagementValuation and account assignmentaccount de-
termination account determination without wizard Define valuation classes
T-CODE: OMWM
In this STEP we can define which valuation class is allowed for a material type
The Account category reference (ACR) is an artificial four digit code which allows us to link
material type with valuation class.
We have standard valuation classes with respect to the material type, I have copied them
and created valuation classes for material type and I assigned them to account category ref-
erence which I had created.
Standard Valuation Classes
1) Raw Material – 3000 2) SEMI-FINISHED – 3900 3) FINISHED -3920
I have created three valuation class for my three material type and assigned them to ACR
There is no direct configuration between material type and valuation class account assign-
ment elaborates which material types related materials can be choose the which valuation
class.
In this STEP I have assigned my material type with the account reference category, so
that valuation class will get automatically assign to valuation class.
ACR
1010
As r assignment valu-
pe class automatically
ati r here
on
trig
ge
Likewise I have done this for material type: TSEM and TFIN
VALUATION CLASS
TSEM
MATERIAL TYPE
TRAW
During material creation with MM01 system now asking me the particular valuation class
Scenario 3:
Now client has a requirment that they want multiple Material types for multipe valuation
class, So in that case I need to assign account catergory reference to another valuation
VALUATION CLASS
MATERIAL TYPE TFIN
TFIN
As per requirement here I have assign only one ACR to all three material types
In this case I also need to assign material type with the account category reference
During material creation with MM01 system now asking me to choose from these four
valuation classes.
Now we can see here as per the busi- ness requirement’s, for both the mate- rial types system is asking me same
NOTE: This is STEP to create movement type, but we do not make any changes or create any
movement type, because SAP has provided all the necessary movments types for the business as
per the requirments.
STEP 5
Automatic account posting
PATH: IMGMaterial ManagementValuation and account assignmentaccount de-
termination account determination without wizard Configure automatic postings
T-CODE:
G/L
Material
600
300000
303000
I have maintained G/L account 300000 for Transaction key BSX (Inventory post-
ing)
If I have not get this maintained than this type of error i could face while goods receipt.
This kind of accounting entries I can see after doing goods receipt in account-
ing documents.
I have maintained here material group (T010) with valuation class (TRAW)
As we maintain G/L account for T010 and for AAC here in PO G/L account triggers automatically
Finished Material
(1300016)
Plant/SLoc Plant/SLoc
(Z005) Raw Material (464823) (Z005)
Business Scenario:
My company is manufacturer of disc brake of two wheeler and four wheeler, within the my
premises I produce raw material of rotor (disc), wheel material, and brake pad and I want
this material to performed of drilling, boring and assembling activity from my vendor so in
that case I need to generate subcontracting process in my system.
Subcontractor
Raw Material Quantity Price Semi-Finished Material Quantity
Price
Rotor Disc (464822) 100 2000
Disc Brake Assembled
Wheel Hub (464823) 50 5000 50 5000
(1300016)
Brake Pad (464824) 50 3000
“A bill of Material (BOM) describes the different components that together create a prod-
uct.” It contains list of Raw material with quantity against which we can get a semi- finished
material
Semi-finished material
PO Order
quantity
In this STEP I use special MvT 541 to trans- fer company stock to vendor stock.
While posting goods receipt here system shows me how semi- finished material sends
Accounting Document
Material remains in the liability of the vendor until it withdrew from consignment stock. This
stock remains on the vendor’s hand until it gets transferred by transfer posting. The vendor
raises the invoice only after stock transferred into company stock.
Organization
Premises
Vendor Consignment
(101046) Stock
MvT: 101 K
Stock update
No value Update
MvT: 411 K
Stocks update Value update
Plant
(Z007)
MAT: 464855
Plant Z007
Material Number Quantity Price Vendor
Ball bearing 464855 72000 200 101046
Radial ball bearing 464856 36000 300 101046
STEP
Create consignment info record
T-CODE: ME11
This is prerequisites to maintain consignment info record with net price and Tax code.
For item cat K system is no ask me to put price and there is no condition tab is maintained because we are asking for stock only not payme
STEP 3
Post Good Receipt of consignment Purchase order
T-CODE: MIGO
Stock Overview
The special MvT 411 (K) is use for transfer posting from consignment to own stock.
Here in need to put the Quantity which I want to consume and consignment storage location.
Stock Overview
After transfer from consignment stock to own stock
T-CODE: MMBE
Consignment Settelment
In this STEP I’ve settled the consignment to pay to the vandor
Business Scenario:
Co. Code
1000
1) STO PR (U)
STO PO (UB)
4) GI/STO
(351)(-)
3) MIGO
FA BANGALORE VENDOR
PLANT (Z007) (101046)
2) STD PO
If suppose I have three plants which are located as above my Mumbai plant is a
Headquarter but has a less storage facility and my Pune plant having large
storage facility and nearby to Mumbai plant so less transportation is required
and my Bangalore plant is a production house and having huge storage as well
which can fulfill the storage requirements of all three plants and my all three
plant has a weekly requirement for a particular material, as shown above, my
Bangalore plant is the one who is dealing with the vendor which is located at
Chennai and, so Bangalore plant is has a requirement from both Pune and
Mumbai plant including all Bangalore plant has now high volume requirement
of material, which could help me to negotiate with the vendor in terms of
price, facilities, taxes, delivery, etc. and as I will also get a benefit for paying ex-
tra delivery charges in case of the vendor to plant because its plant to plant
stock transfer.
So for all the above processes I got a purchase requisition (STO) from my
Mumbai plant for a quantity of 1000 and Pune plant quantity of 2000 and my
Bangalore plant also has a requirement of 3000 so combined of three plants I
need to create a purchase order for the total quantity of 6000 and create
standard PO for my vendor after receiving the goods in the Bangalore plant,
whenever required I need to transfer it to the Pune location as Pune has stor-
age facility I will store it for Mumbai plant as well and whenever Mumbai plant
required that material I need to send it from Pune Plant to Mumbai plant by
Transfer posting.
Before proceeding further we need to understand difference between transfer posting and
stock transport order
We can do transfer posting for Nearby Mostly STO carried out only if the
as well as for far-away. distance is far away.
Now I have created Purchase Requisition for my both the plants with item category “U” for
stock transfer
When I put the item category “U” i.e. for stock transfer System ask me to put Supply plant.
System took all the information from PR; I just need to enter PO document type
In case of STO we can define delivery schedule over which we can’t do in case of transfer posting
Stock Overview
Here we can see from plant Z007 stock is removed but it is not in Z006 plant.
Here we can see for STO i.e. It’s an plant to plant transfer no accounting documents are generated.
Stock Overview
303 MvT For 1st STEP after this STEP the stock will go into transit.
Stock Overview
Procurement activities in every organization one of the important part is material valuation.
While creating purchase orders, material price is a mandatory field and it is automatically
determined. It happens because material valuation is maintained in the SAP system in mate-
rial master.
Material valuation represents integration between MM and FI modules, material valuation
is responsible for the updating of G/L accounts in financial accounting.
Use For certain materials, it is necessary to valuate the various stocks in a particular valua-
tion area separately. Reasons for this include:
1) Different origins of the material
2) Different grades of quality for the material
3) Different statuses for the material
4) Differentiation between in-house and external procurement
5) Differentiation between different deliveries
Account category
reference (0001)
Bangalore Material
(180 EUR) (464912)
Hyderabad (1)Valuation
(200 EUR) Category (Y)
Valuation
New Delhi class (3000)
(220 EUR)
For my Mumbai client, Who has a Production facility for HVAC Ducting material they pro-
cure some Raw materials like Aluminum from three different Vendors one is in Bangalore,
and second is at Hyderabad and the third is at New Delhi there is a difference in the quality,
delivery charges, state taxes, due to this reasons price of all three vendors are different and
because of that my client requires to have a different stock account as well as different val-
uation of stock for that material this requirement I can fulfill by using split valuation.
STEP-2
Create Global Valuation Category
Valuation Category is the criteria on which material is split valuated.
Here we can set whether under this valuation category in-house production or external procurement mandatory.
STEP-5
Activate valuation category for Plant Z005
Here we can see that by activating valuation category automatically valuation types are activated for plant.
STEP-6
Creation of material
T-CODE: MM01
Here while posting Goods receipt I have enter valua- tion type
1) There legal reasons due to which it is mandatory most of the time to conduct physical in-
ventory at least once in a year.
2) It is helpful for organization to have correct stock in system to match physical stock.
3) If correct stock is not maintained in a system that means there is wrong picture on the
financial aspects of the stock in possession.
4) Production planning required accurate MRP data of quantity of stock available for pro-
duction planning.
1) Periodic Inventory- This type is mostly use by organization, in this type physical inventory
of a material carried out once in a year.
2) Cycle Counting –This type carried out by organizations at regular intervals for particular
material, if organization has material which sell is frequently or has high value then organi-
zation could count it four times a year while material which organizations not use frequently
or has low value then for that material physical inventory carried out once in a year.
3) Continuous inventory – In this type a physical inventory is done for particular material at
specific date in a year so we can count some material on January and some on March so on.
4) Inventory Sampling- In this type organization may choose random material and do physi-
cal inventory count on them if there are small difference in quantity then others also con-
sidered as correct.
464822 50 0 52
STEP-1
Create Physical Inventory Document
T-CODE: MI01/MI02/MI03 (Create/Change/Display)
Posting block is use if there is a possibility that someone will do a posting while physical inventory is in progress.
We can see here for this material has not yet been counted.
For this material I had an open PO however if someone try to post document then this kind of error will face because we have
10 % of variance is allowed between our material’s actual stock and system stock.
As I enter physical quantity and actual quantity there is a difference more than 10% variance, system is show- ing me negative difference warnin
As it shows this message we can cross check or if we not made any mistake then we can by-
pass warning message.
STEP-3
Post differences
Negative difference
Purchasing View
Here we can see I have checked batch man- agement, source list, and Quota arrangement usage, and batch management
1) PD- If material requirement is like a routine in day of every week then this MRP type is selected.
2) ND-No Planning.
3) VB- Manual Reorder Point Planning. Both the reorder level and the safety stock level are defined
manually in the appropriate material master.
4) VM- Automatic Reorder Point Planning. The integrated forecasting program determine the both
the reorder level and safety stock level. Historical or past consumptions data are used by the system
to predefine future requirement. The forecast values are used by the system to work out reorder
level and safety stock level.
Here we can see no stock is available for this material so once we done MRP
Here we can see that once I try to convert planned order to PR on this screen system automatically took vendor 101046 however we
MD
T-CODE: ME59N
As I have maintained batch management for this material system cre- ated batch here.
CLASS_Z005
DIFFUSER_SIZE
SLOC
DIFFUSER_COLOUR PLANT
VENDOR
DIFFUSER_CFM
MATERIAL
Procedure
(Z005)
Plant Z005
Material Diffuser(8019)
Characteristics CLASS
Diffuser Size
1) 225*225mm
2) 300*300mm
3) 450*450mm
Diffuser_CFM 300mm
1) 200 1/M3
2) 312 1/M3
3) 450 1/M3
300mm
Client’s business requirement is to procure material (Diffuser) which has to be identify sepa-
rately with different specifications (Size, Shape, Colour) for that as a consultant we would
suggest to client to use batch management to separate material with its specification.
For her
Size
to pI’ve selected multiple values e so while cla
STEP-4
Creation of an ACCESS SEQUENCE
With new entries I have created Z005 as access sequence.
STEP-5
Create Sort Sequence
T-CODE: CU70
Within this sort sequence I have maintained characteristics which I had created and I can able to pro- vide sequence to charact
STEP-
Create Strategy types
Here I have assigned class, sort se- quence and access sequence to strategy.
STEP-
Define Search procedure
STEP-8
Prerequisites for including batches for material it is necessary to all stocks must be clear and
no open documents for that material.
T-CODE: MM01/MM02
For assigning class and character- istics it is necessary to extend material with classification view
Classification view
I’ve selected all the values of the character as per re- quirement.
Purchasing view
It’s mandatory to click checkbox on batch management to add this material for batches.
I have created batch manual- ly for material with these three particular
STEP-10
Create Purchase Order (PO)
T-CODE: ME21N
In the PO I maintained batch which I’ve created, from which vendor will understand which particular specifica- tion of this m
Stock Overview
T-CODE: MMBE
As I’ve not maintain batch in PO while goods receipt system will automatically generat
While receiving the goods, store in charge should maintain the particular specification in classification tab of batches otherw
Here we can see I have stock all three batches one which I have created and
There are two types of communication with the vendor via postal services and electronical-
ly. For output message, it dependence on different criteria that enables you to process and
send these message.
Condition table
(507)
Plant (Z005)
Assign
Assign
PurchaseOrder
(EF) (ME21N)
New Access sequence created as 0507 and assigned to condition table (507)
By selecting condition table one by one and click on fields and enter. I had entered into the structure
KOMP for item overview details and KOMK for Header field. Save and enter
STEP-3
Create Message Type
I have changed output type name to Z507 and assign it to access sequence.
We can copy Schema or we can directly include control data into standard schema
Here I have maintained combination which I had selected in condition table and I can assign in condition records.
Here we can see for combination of condition type which I had decided I entered in PO.
Document type: It controls over how the business process runs for a whole
document because of that it’s at the item level and it also controls over num-
ber ranges. Some of the standard document types are:-
NB Standard PO
UB Stock Transport order
FO Framework order
Item category: It specified how the line item behaves for a business process for
a particular material at that line item.
Standard
L Subcontracting
K Consignment
U Stock Transfer
D Service
This three are used by the functional consultant to model the business process.
I have to Copy the standard to create new for as per business requ
I have copied (NB) and Created new as (ZNBB) as per Clients requirements
AS I’ve Copied Doc- ument type all the Item Categories are also copied.
I’ve deleted Item category which not required for clients business requirements
Here we can see as per Con- figuration for Doc. Type I’ve created Item Categories.
Here I have make Storage Location as Required, So while creating PO that will be mandatory.
Here we can see system asking for SLoc without which we can’t save PO
LSMW is a tool that supports the transfer of data from non-SAP systems ("Legacy Systems")
to SAP R/3 systems. This can be a one-time transfer as well as a periodic one.
LSMW also supports conversion of data of the legacy system in a numerous way. The data
can then be imported into the SAP R/3 system via batch input, direct input, BAPIs or IDoc.
In simple Words: In big organizations we have to create more than 1000 of materials or
vendors in sap it’s too much time taking process to do this in within system to do this STEP
by STEP for each material or vendor, so SAP gives us provision to gather data which is in our
spreadsheets or word documents and direct get it into the SAP system.
DATA Preparatory
in Leg- acy sys- tem STEPs Field map- SAP
ping & rules DATA import System
Checklist LSM
STEPs of LSMW
In this screen, the Fields which is maintained in the Object Overview this fields I have main-
tained here. Source Filed is used to identify whether a certain record should go to the speci-
fied structure.
FROM SE11
STEP 5
In this STEP, we assign source fields to target fields and define how the field contents will be
converted.
As show in image, we can assign each field to target field and once all assignment done sys-
tem showing MAPING COMPLITED massage
STEP 07
STEP 08
Here we define which file we are going to use for current upload i.e. whether the file is on
Presentation server or application server.
STEP
In this, system read the File which we have uploaded. So system asks for permission so after
giving permission system will read Data.
STEP
STEP-11
In this STEP, System will convert all the Non SAP System Data into SAP DATA.
STEP
STEP 13
Once we Execute Batch input, all the converted Data indicated as a Batch Input.
Here we can see as per data migration vendor has been created
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