Introduction SAP R/3 MM

Dr. Djamal Ziani

King Saud University
 ERP-Software: SAP R/3
Sales and Financial
Distribution SD FI Accounting
MM CO
Material
PP R/3 AM Controlling
Management
Client / Server
PS
QA ABAP/4
PM OC

HR IS
Components of Materials
Management

3
 Organizational Data
A hierarchy in which the organizational
units in an enterprise are arranged
according to tasks and functions
Are static data and are rarely changed
The definition of organization units is a
fundamental step, it is a critical factor in
how the company will be structured

4
Organizational Structures
Organizational Structures
Client
Company
Plant
Valuation Area
Storage Locations
Purchasing Organizations
Purchasing Groups

6
 Organizational Structures:
Client
The client is a unit within an SAP R/3
system that is self-contained both in legal
and organizational terms and in terms of
data, with separate master records and
an independent set of tables.
From a business viewpoint, the client
represents a corporate group, for
example.
Client: 3 numerical digits
 Organizational Structures:
Company & Company code
The company code is the smallest
organizational unit of external
accounting for which a complete, self-
contained bookkeeping system can be
replicated.
A company code represents an
independent unit producing its own
balance sheet, for example, a company
within a corporate group (client).
Company code = 4 characters
 Organizational Structures:
Plant
Lowest valuation area
Organizational level where Material
Requirements (MRP) runs
Generally used to describe a
production site, a distribution center
or centralized warehouse
May be a physical or logical unit

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 Organizational Structures:
Valuation Area
The valuation area determines at which
level a material is valuated (inventory
value is established)
SAP R/3 allows valuation at the company
code or plant level, but recommends
valuation area be set at the plant level.
Means each plant can have its own
material prices and account
determination

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 Organizational Structures:
Storage Location
Subdivision of a plant
Where materials are managed
(inventory management)
Raw Materials
Maintenance, Repair, and Other (MRO)
Finished Product
May be a physical or logical unit

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 Organizational Structures:
Purchasing Organizations
An organizational unit responsible for
procuring materials or services for
one or more plants and for
negotiating general conditions of
purchase with vendors.
The purchasing organization
assumes legal responsibility for all
external purchase transactions.
 Purchasing organization
material
group

purchasing organization purchasing group MG 0, 3

purchasing group MG 1, 4

purchasing group MG 2, 5

purchasing group MG 6
plant purchasing group MG 7, 8, 9
 Organizational Structures:
Purchasing Organization
Groups
The purchasing organization is further
subdivided into purchasing groups (buyer
groups), which are responsible for day-to-day
buying activities.

A purchasing group can also act for several

purchasing organizations.
Inventory Management with a
Warehouse Management
client
System 0001
0001 ABC
ABC inc.
inc.

company code 0001 Jones inc. 0002 Model Ltd.

purchasing organization 0001

0001 0002
0002 0003
0003
MM
distrib.-
plant center 0001
0001 0002
0002 0003
0003 0004
0004 0001
0001 factory

storage location 0001

0001 0002
0002 0003
0003 0004
0004

warehouse number 001

001

storage type 001

001 002
002 WM
storage bin (physical stock) 05-04-03
05-04-03 05-04-04
05-04-04
The Module MM Main
Functions
MM interdependencies to other
modules
Logistik
PP MM SD
production sales and
planning distrib.
material master
purchasing
requirements plan.

QM inventory mgmt. PM
quality invoice verification plant
management maintenance

FI CO AM
financial acc. controlling fixed assets mgmt.
 Basic Data
Master records - include information about
1. vendors
2. material and services to be procured
3. the relation between 1. and 2. (purchasing
info record)
e.g. prices / terms and conditions
bills of material for
production planning
purchasing
sales and distribution
withdrawal of Material
 Structure of the Vendor Master
sections
Record
utilization area of validity

General data
name
client wide
address
control data

purchasing request for quotation for each

terms and cond.
quotation processing purchasing
partner functions
purch. order handling organization
currency

accounting data invoice entry client wide or

bank account
invoice verification for each
acc. maintenance
payment handling company code
payment
 Create a Vendor
Creating Your Own Vendor Master Record

Usage
We recommend that you create your own vendor
master record for this scenario. If, however, you
prefer to use the reference vendor instead, it
could be that the order currency has already
been changed and this IDES scenario may no
longer work.

You create a German vendor in company code

1000, IDES AG Germany, to create purchase
orders and invoices denominated in euros.
 Create a Vendor

Procedure
1.Call up the transaction as follows:

Menu Path Logistics Materials Management

Purchasing Master Data
Vendor Central Create

Transaction Code XK01

.

Create a vendor
On the Create Vendor: Initial Screen, enter the following
data:

Field Data
Vendor Your own vendor (choose a
number between 1000 and
1999)

Company code 1000

Purch. organization 1000
Account group LIEF
Reference vendor 1080
Reference company code 1000
Reference purchasing 1000
organization
 Create a Vendor
On the Create Vendor: Address screen, enter the following data:

Field Data
Description Any
Search term Any, for example "euro"
Street/House number Any
Postal code/City 5-figure, numerical (any)
Country DE
Language DE
 Create a Vendor
1. Choose until you reach the Create Vendor: Accounting and
make sure that 160000 appears in the Reconciliation Account
160000 field.
2. Choose until the Create Vendor: Purchasing Data screen
appears.

3. On the Create Vendor: Purchasing Data screen, check that the

order currency is EUR.

4. Choose until the Create Vendor: Partner Functions screen

appears.
5. Choose until the Create Vendor: Partner Functions screen
appears.
6. Choose until the Create Vendor: Partner Functions screen
appears.
Create a Vendor
Create a Vendor
Create a Vendor
 Views on the Material Master
each view is maintained by Record
a certain user department of the firm

accounting: valuation- und calculation-specific information

requirements planning: information about material requirements
planning (e. g. reorder point)
purchasing: e. g. responsible purchasing group, order unit
engineering: technical information
storage: information about warehousing, material movements, ...
forecast: information about the forecasting of the material requirements
S & D: informationen about sales orders and price determination
Demo: Create Material
Master
Demo: Create Material
Master

Select the views: Basic data 1, Purchasing, Purchase Order

text, Gl. Plant Data/Storage 1, Accounting 1
Demo: Create Material
Master
Demo: Create Material
Master
Demo: Create Material
Master
Demo: Create Material
Master
Demo: Create Material
Master
 Demo: Create Material
Master

SAVE
 purchasing info record

info record
prices
terms & cond.
PO statistics
tolerance levels
date
quotation outline
agreement
order
 Purchasing Process
PO invoice
?
=
X X X

X X

invoice verification determination: requirements

vendor
X X X

X X outline agreem.

determination: source of supply

MM
goods received & vendor
vendor22

inventory mgmt. vendor

vendor11
?

PO
vendor selection
PO
PO

PO monitoring

purchase order processing

 Create Purchase Order (PO) vendor
vendor22

purch. order
1
vendor known

terms & cond.

purch. order
2 source list
outline
agrement info record
vendor not known
vendor

vendor
vendor22
3 purch. req. purch. order

assigned purchase
requisition exists
(from user department)
 Purchasing Process
Create a requisition
First release of requisition
Create RFQ (Request for Quotation) with
reference to requisition
Create PO (Purchase Order) with
reference to RFQ
Department receives material ordered
(GR)
Department pays invoice (MIRO).
 Purchase Requisition

Document generated by a user department

or storeroom-personnel to notify the
purchasing department of items it needs to
order, their quantity, and the timeframe. It
may also contain the authorization to
proceed with the purchase. Also called
purchase request or requisition.
 Request for Quotation

Is a standard business process whose purpose is

to invite suppliers into a bidding process to bid on
specific products or services. RFQ generally
means the same thing as IFB (Invitation For Bid)
 Purchase Order

Buyer-generated document that authorizes a

purchase transaction. It sets forth the
descriptions, quantities, prices, discounts,
payment terms, date of performance or
shipment, other associated terms and conditions,
and identifies a specific seller.
Create Purchase Requisition
Create Purchase Requisition
Create Purchase Requisition
In the item, enter your material, Plant= 1000, QT = 100
Create Purchase Requisition

Save your Purchase requisition

Take note of Purchase requisition number

Demo: Create Purchase
Order
 Demo: Create Purchase
Order
Open document overview: Click on document
overview button

Choose Selection variant list icon

Then select My purchase requisition, you will get

your purchase requisition listed

Click on adopt icon, your purchase requisition

will be copied to the purchase order (or you can
drag and drop it into the shopping cart)
Demo: Create Purchase
Order
 Demo: Create Purchase
Order
Enter your vendor, and price 30 euro and save
Posting an Order Entry (Goods
Receipt)
Logistics
MM
PP SD
production purchasing req. planning sales and
planning distrib.
goods receipt

inventory mgmt.

goods issue. transfer

posting
QM PM
quality inventory invoice plant
management controlling verification maintenance

FI CO AM
financial acc. controlling fixed assets mgmt.
Demo: Posting Order Entry (Goods
Received)
1. Use T_code : MIGO
2. Select Goods Receipt
3. Select Purchase Order
4. Enter PO number for goods to be received.
5. Hit "Enter"
Demo: Posting Order Entry (Goods
Received)
6. Enter Document date & posting date
7. Enter Header text (comment) if necessary.
8. Close detail data.
Demo: Posting Order Entry (Goods
Received)
9. Notice that movement data is "101"
10. If you only received first item, then Check the "OK" box for
first line item.therefore, the second item need not be processed
Demo: Posting Order Entry (Goods
Received)
11. If you only received 3 pcs out of 10 pcs of item one & 2 pcs out of 10
pcs of item two, then Check the "OK" box for both line item
12. Input actual quantity (3 & 2 pcs ).
13. Hit "Enter"
Demo: Posting Order Entry (Goods
Received)
14. Click "Check" button to find out if there is any error.
15. Check the "status" column .
. Green means OK . Yellow means Warning . Red means error
 Invoice Verification
input output
invoice verification
information information

actions:
orders
enter invoice
verify invoice
goods receipt
post invoice
update
master data: relevant data
(re-edit financial
material
invoice) accounting
vendors
accounts asset
management
terms & cond. cost accounting
 Create Invoice
Create Invoice using Tcode MIRO

Enter the Required details in all

Tabs

Enter the Purchase order no. and click on

Enter, to display the material details.
Create Invoice (contd..)

Click the check box, to calculate the Tax

Create Invoice (contd..)

Enter the Amount and click on save

Create Invoice (contd..)

Invoice is created
Demo: Invoice Verification
Using the tcode: MIRO"
Demo: Invoice Verification
Demo: Invoice Verification

net amount for

positions