Introduction SAP R/3 – MM

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

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 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

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

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 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 System
client 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.
inventory mgmt.
QM 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
• currency • purch. order handling organization

 accounting data • invoice entry client wide or

• bank account
• invoice verification for each
• acc. maintenance
• payment • payment handling company code
 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 Record
each view is maintained by 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 purchasing req. planning SD
production 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