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MM OVERVIEW

Contents
Topics Overview and Org. Structure Material Master Purchasing Master Data Procurement Inventory Management/ Valuation Invoice Verification/Valuation Automatic Account Determination

Overview and Organizational Structure

Definition: Logistics
NCPDM (US National Committee on Physical Distribution Management) : "..physical distribution management .. is .. the integration of one or more activities for the purpose of planning, implementing and controlling the efficient flow of raw

materials, in-process inventory and finished goods from point of origin to point of consumption..."

Resource Management in Logistics


Capital
long-term

Investment

Expense/costs

Cash
short-term

Capital resources
Logistics chain Procurement
Purchase orders materials
services

Production
Warehouse

Sales
Warehouse Sales orders
products services

Distributions

Vendor

Material resources

Customer

Capacity resources

Overview of MM
Material requirements planning
External procurement Internal procurement

Purchasing

Production

Invoice verification Invoice receipt

Goods receipt Inventory management

Warehouse management

Master data
Material Batch Vendor G/L accounts Customer Storage bins . . .

Goods issue

Transfer posting

Internal and external accounting

Sales and distribution

Procurement Process
Order Invoice

MRP

?
7

Invoice verification

Requirement determination

Goods receipt and 6 inventory management

Materials management

MM

Source determination

Order

Order follow-up
5 4

Vendor selection

Order processing

Organizational structures in R/3


Organizational units
Company Controlling areas Sales organizations Purchasing organizations

Company codes Valuation areas Plants Storage locations/batches/special stocks

Invent. mgmt w/o warehouse mgmt


Company Code

Plants

0001

0002

0003

Storage locations

0001

0001

0002

Invent. mgmt with Warehouse mgmt


Company Code

Plants

0001

0002

Storage locations Warehouse numbers

0001

0088 001

0088

0002

Storage types

001

005

Storage bins

05-04-03

05-04-04

Valuation
Client

Company codes

0001

0002

Plants

0001

0002

0003

Example for Valuation


Company codes

0001

Plants
VAL. AT CO.CODE VAL. AT PLANT

Plant 1

Depot

125/ BAG 125/ BAG

125/ BAG 150/ BAG

Accounting
Client

Company codes

0001

0002

0003

Business area 0001

Business area 0001

Business area 0002

Example for Business area


IRIL

Rajashree cement

Grasim

Cement

Cement

Textile

B.A. Cement

B.A.Textile

Purchasing Organization
Company (Group)
0001

Company codes

0001

0002

Purchasing organizations

0001

0002

0003

Plants

0001

0002

0003

0004

Organizational Entities in Purchasing


Purchasing group 1

Purchasing group 2

Purchasing organization 1
Purchasing organization

Purchasing organization 2

Plant 1

Plant 2

Plant 2

Plant 10

Material Master

Material master record


General data Material number Description Units of measure Technical data

Plant-specific data

Valuation

Warehouse Management system data Unit of measure Palletting instruction

Sales-specific data Delivering plant Sales texts

Valuation price MRP/type Planned delivery time Valuation procedure Valuated quantity Purchasing group Batch indicator

Storage locationspecific data Storage time Stockfields

Forecast data Consumption data

Units of measure
Base unit: Piece

16

72

Box
(unit of issue)

Crate
(order unit)

Pallet
(sales unit)

Material data maintenance: accounting


Valuation class

MART ROH HALB HIBE

Allowed values 3000 3010 7920 3000

Maintenance of material data


Price control

Standardprice control: Valuation of standard price from the material master record

Moving average price control: Final delivered price (such as purchase order price) influences the valuation price

Purchasing Master Data

Purchasing Master Data


The Vendor

The vendor
Purchasing

purch ase order

Bank
DEUTSCHE MARK DEUTSCHE MARK

Payment

DEUTSCHE MARK

Material

Vendor
Invoice
order account

? =
Goods receipt

Invoice verification

Organizational levels of vendor master record


General data

Purchasing organization data

Company code 001 data


Company code

Vendor master record


General data Address Communication Valid for the whole group

Purchasing data Order currency Incoterms Minimum order value

Valid for one purchasing organization

Accounting data Bank data Payment transactions Account management

Valid for the whole group or for one company code

Account group
One-time account Account group

Type of number assignment

Interval for number assignment

Field selection

Control account
Invoice

You Vendor
Invoice

Enter invoice

Accounts payable Vendor A "Parallel"

G/L accounting Payables Vendor

Purchasing Master Data


Info Record

Purchasing info records


Piece Piece % %
Conditions Conditions

Info record Vendor A Info record Info record Consumable material M2 Info record Vendor B Info record Service S1 Stock material M1

USD USD

Material

Data in the purchasing info record


General data Vendor data Origin data Order unit Texts

Control data Delivery time Minimum quantity Tolerances

Prices and conditions Gross price Discounts Freight

Price history Purchasing statistics Changes

Pricing
Pricing procedure RM000

1 1

Purchase order Vendor 123 Purchasing organization 2000 Item 10 PB00 Price 120 pcs $99

2 2 3 3

1.Price 2.Discount

PB00 RA00

Condition type: PB00 Access sequence: PB01 Access sequence: PB01 1. Outline agreement 2. Vendor/material/ organizational level 3. Vendor/material group/ organizational level Records for condition type No valid record exists Valid record exists $100 for $99 for $98 for

5 5

4 4

Scale1 pcs
100 pcs 200 pcs

Conditions
Pricing procedure Condition type

Gross price Discount % Net price: Fixed freight charge +

PB00 RA01 FRA1

Effective price:

Calculation type Scale basis Price/quantity scale

Purchasing Master Data


Source List

Source list

1.1.95 - 30.6.95

1.7.95 - 31.12.95 Vendor 1 fixed

Source list
Vendor 1 allowed Vendor 2 allowed Vendor 3 allowed

Material M1 Plant 0001

Procurement

Procurement
Procurement Environment

External procurement environment


Source list Requirements determination RFQs Purchase Quotations Quota arrangement requisition

Outline agreement

Source determination Vendor selection Purchase order history

Piece Piece % % Conditions Conditions USD USD Info record Invoice receipt

Purchase order

Goods receipt

Purchasing documents
Purchase requisition RFQ

Purchase requisition

RFQ

?
Purch.order

Quotation

Quotation

Quotation

Purchase order

31. Contract

1.

Release order

Scheduling agreement

Purchasing document

Structure of a purchasing document


Document header

ocument ocument

General data General data statistics statistics Messages Messages Conditions Conditions

Item 1
General data Conditions Texts Schedule line

Additional data for item 1


Purchase order history

Item 2
...

Additional data for item 2

...

...

Item category
Purchasing document
A B C

Item Account assign. category category

Account assignment type


Purchasing document
A B C

Item type

Acct.assign. type

Procurement for stock


Purchasing document(s) Item: no account assignment category

Warehouse
Goods receipt

Goods issue

Material

Production

Vendor

Procurement for consumption


Purchasing document(s) Item: with account assignment category

Goods receipt

Production

Vendor
Material

Procurement
Consumption-driven MRP

Consumption-driven MRP
Requirements planning Net requirements calc.

Forecasting

Lot sizing Scheduling

A Material

Material master

Purchasing

Inventory management

Reorder Point Procedure


Stock Lot size

Reorder level

Safety stock

Reorder point

Delivery date

Time

Replenishment lead time

Procurement
Processing Purchase Requisitions

Purchase requisition
Department MRP

Requisition

Requisition

Purchasing

Purchase requisition processing


MRP Direct entry

Purchase requisition Determine source of supply Release

Vendor

o.k.
Allocate and process
RFQ Purchase order

Release Release order order

Procurement
Processing Vendor Inquiry / Quotations

Request for quotation/ quotation


RFQ 1 RFQ 2

Requirements known. Procure from which source?

?
Vendor 1 Vendor 2

Quotation 1

Quotation 2

Price comparison list

Purchase order

Rejection

Entering an RFQ
1 1
Item list
Vendor 1
Inquiry 1

2 2

Vendor 2

Inquiry 2

Purchasing document

Issuing output
Output

Printer

EDI

Fax

Reprint

Reminder

Rejection

Order acknowledgement check

1 1

Processing Quotations: Example


Enter price and pricing conditions
Vendor A Quotation for RFQ 1 Item 10 Gross price: 400/t Discount: $50 Vendor B Quotation for RFQ 2 Item 10 Gross price: 400/t Surcharge: 50% Vendor C Quotation for RFQ 3 Item 10 Gross price: 400/t Fixed costs: $40

2 2Compare quotations using price comparison list


Steel 2 t Price Quotation 1 Quotation 2 Quotation 3 Mean value quotation 350/t 480/t 520/t 450/t

3 3 Create info record or reject quotation


Vendor A - Order Mat. Qty Price Steel 2t 350/t Vendor C, B - RejectionThank you for your offer. Unfortunately, we cannot place an order at this time .....

Procurement
Processing Purchase Orders

Processing Purchase Orders


Purchase requisition RFQ Reference document

Contract

?
Vendor
Purchase order Order history

Pcs Pcs

% %

Conditions Conditions

One-time vendor

Info record

$ $

Contract
Contract request Reference RFQ Reference contract Purchase requisition

Contract

Release order

1 1
Vendor

2 2

Scheduling Agreements
Purchase requisition RFQ Reference scheduling agreement Purchase requisition

Scheduling agreement

Einstellungen Einstellungen Schedule lines

1 1

Vendor

2 2

PROCUREMENT OF EXTERNAL SERVICES

Inventory Management/Valuation

Inventory Management
Goods Movements

Inventory management
Old system Vendor In-house production

Goods receipt

Transfer posting Warehouse 1 Warehouse 2

Goods issue

Scrapping

Consumption

Documents for goods movements


Warehouse
A Material

Goods movement

Material document

Accounting document

Material Valuation Levels


Material valuation levels

0001

Company code Valuation area

Plant

Split Valuation: Structure


Plant Plant 0001 Material 1 Valuation Valuation area Material Valuation category Quantity Mvg. av. price 0001 1 H 100 5.20

Valuation type Italy Quantity 40 V - price 4.00

Valuation type France Quantity 60 S - price 6.00

Storage location

Stor. loc. 0001 Quantity 30

Stor. loc. 0002 Quantity 70

Batch

Italy Quantity 10

France Quantity 20

Italy Quantity 30

France Quantity 40

Updating the stock situation


Stock situation On a quantity basis Material master Special stocks Stock fields per plant, storage location and special stock On a value basis G/L accounts

Debits and credits per company code, period and, possibly, business area

Entering material documents


Material document item

Account determination Consumption update Movement type Quantity update Indicator for printout Field selection

Analyses in inventory management


Analyses

Stocks overviews
Stock per material Plant stock availability Reqs./stock list Warehouse stock list

Material movement list

Inventory control
ABC-Analyses Stock value Range of coverage Slow-moving items/ inventory turnover Standard analyses

Inventory Management
Processing Goods Receipts with Purchase Order Reference

Purchase Order Views in Inventory Management


Purchase order
Header $ Conditions Conditions Output 01/01/95 10/01/95 30/03/95 Schedule lines

Statistics
General Purchase order history Changes

Vendor Texts Items

Account assignment

Texts

Determining the purchase order during GR


Goods receipt for purchase order
Manual

Purchase Manuell order

Matchcode List of open purchase orders by - vendor - material - delivery plant

Stock types for goods receipt


Goods receipt blocked stock

Unrestricted-use stock Warehouse Vendor


Co n su mp ti o

Stock in quality inspection Blocked stock

Account assignment object


Cost center Order ......

Posting procedure for goods receipt (example)


Stock account Stock value GR/IR clearing

Price differences

Update for goods receipt

Inventory Management
Processing Goods Receipt w/o Reference

GR w/o Reference to a Purch. Order or Production Order

Preplanning

Goods receipt Initial entry of stock balance Without purchase order Without production order Goods receipt of by-products Delivery free of charge Returns from customer

without purchase order without production order

Inventory Management
Processing Stock Transfer / Transfer Postings

Transfer posting
Transfer posting

Stock transfer

Miscellaneous transfer postings

From plant to plant

From storage location to storage location

From material to material

From QM to unrestricted use

From consignm. stores to warehouse

Valuation in the Case of Stock Transfer

Issuing plant

100 pcs

Receiving plant

Standardprice 2.00 Moving average price 2.00

(a) (a) (b) (b)

Standardprice 3.00 Any moving average price

Stock plant 01 Stock plant 01 (( a )) a (( b )) b 200.00 200.00 200.00 200.00

Expense // revenue Expense revenue from stock transfer from stock transfer 100.00 100.00

Stock plant 02 Stock plant 02 300.00 300.00 200.00 200.00

Inventory Management
Processing Goods Issues

Goods issues
From warehouse
Goods issue

From consignment stores Issue

Consumption Cost center Asset Sales Order Sampling Scrap

Effects of goods issue


Material document Accounting document G/L account. Stock account Consumption account ... Goods issue Reservation Order Stock quantity Consumption statistics ... Point of consumption: Cost center Order ... Warehouse mgmt: Transfer order Quality management: Inspection lot

Posting method for goods issue


Stock account Stock value

Consumption account

Update on goods issue

Special Stocks and Special Procurement Types


s s s s s s s s

Consignment Subcontracting Stock Transfer with Stock Transport Order Third party processing Returnable Transport Packaging Pipeline handling Sales order stock Project Stock

Companys Own Special Stock


s s s

Stock of material provided to Vendor Consignment stock at Customer Returnable packaging stock at Customer

Companys Own Special Stock


Managed at plant level
s s

Stock types Unrestricted use stock Quality inspection stock

Externally-Owned Special Stocks


s s s s

Vendor Consignment Returnable Transport Packaging Sales order stock Project Stock

Externally-Owned Special Stocks


Managed at Storage location level
s

Stock Types Unrestricted Use stock Quality inspection Stock Blocked stock

Inventory Management
Physical Inventory

Physical Inventory Procedures


s s s s

Periodic inventory Continuous inventory Cycle counting Inventory sampling

Physical Inventory
s

Can be carried out for Companys own stock and Special Stock Inventory for Companys own stock and Special stock must be taken separately in different physical documents Physical inventory can be taken for Unrestricted-use stock in the warehouse Quality inspection stock Blocked stock

Physical inventory procedure


Create physical 1 inventory document Set blocking indicator
Print physical inventory document

Batch-Input

Batch-Input

4 Physical inventory document 5


List of differences

Arrange recount Change count 6

5a

5b

Post differences

Invoice Verification / Valuation

Types of invoice verification


Purchase order Purchase order

or

or
Vendor invoice

Goods receipt

Invoice verification

Invoice verification environment


Purchase order G/L accounts

Assets

---Goods receipt Material master

Invoice verification

Invoice document

Cost centers

Purchase order

Vendor master

Material master

Conditions

Invoice relating to purchase order Post


A XX B XX

Posting an invoice
GR/R account Vendor account

Doc. No. 51000123


Vendor GR/R 100100+

Material master
Moving average price Value

Purch. order history


Goods receipts Down payments Invoices

Variances
Goods receipt

Invoice 50 pieces Invoice

WE 40

Quantity

Purchase order $5

Price

at $6 Invoice 10 pieces = 250 g

Goods receipt 10 pcs = 200g 10 pcs = 200g

Order price quantity Invoice 10 pieces Invoice Date 26/11/95 = 2.5 kg

Purchase order = 2 kg 10 pieces at $20/kg Purchase order Planned delivery date 04/12/95

Tax
Material value + input tax

Company

Material value +Tax on sales/ Purchases

KMT

A A A

Vendor

Customer

Tax payable

Tax office

Invoice receipt postings


GR/R clearing Input VAT Vendor (control acct.)

Stock account Stock value

Price differences

) (

) (

Postings at Standard Price


Stock account (2) 200.00 GR / IR clearing account (3) 240.00 240.00 (2)

Exp. / revenue Price difference (2) 40.00 20.00 (3)

Vendor / general ledger 220.00 ( 3)

Event

Stock

Total value

Standard price 2.00 2.00 2.00

Moving av. price 2.00 2.20 2.10

(1) (2) (3)

Initial situation GR for purch. order: 100 @ 2.40 IR for purch. order: 100 @ 2.20
2.40 / pc 2.20 / pc

100 200 200

200.00 400.00 400.00

Purchase order price Invoice price

Postings at Moving Average Price


Stock account (2) (4) 240.00 240.00 20.00 ( 3 ) 550.00 ( 5 ) 10.00 ( 6 ) (3) ( 6) GR / IR clearing account 240.00 240.00 Vendor / general ledger 220.00 ( 3 ) 220.00 ( 6 ) 240.00 ( 2 ) 240.00 ( 4 ) Raw material consumption ( 5 ) 550.00

Exp.. / revenue Price difference 10.00 ( 6 )

Event
(1) (2) (3) (4) (5) (6) Initial situation GR for purch. order: 100 @ 2.40 IR for purch. order: 100 @ 2.20 GR for purch. order: 100 @ 2.40 Goods issue: 250 @ 2.20 IR for purch. order: 100 @ 2.20

Stock
100 200 200 300 50 50

Total value
200.00 440.00 420.00 660.00 110.00 100.00

Moving av. price


2.00 2.20 2.10 2.20 2.20 2.00

INVOICING PLANS
Facility to schedule Invoicing dates for planned procurement independent of goods and service receipts

Periodic Invoicing Plan

Partial Invoicing Plan

Account Determination Procedures for Automatic Postings in MM

Types of Account Determinations


SD SD MM MM PP PP FI FI CO CO

R/3AM AM Client/Server QA QA PS ABAP/4 WF PS PM PM WF


HR HR IS IS

MM

SD

Movement Type based Transactions Non-Movement Type based Transactions

Cond. Technique

Grouping Organizational Levels for Account Determination


Case: valuation area = plant
Valuation grouping code Plant Company code Chart of accounts

0001

0001 0002

0001 0002 0003 GKR

0002

0003 0004

0003

0005

0004

IKR

Grouping of Material Type - Valuation Class


Material type Account category reference Valuation class FERT 0001 HALB HAWA . . . ROH1 ROH2 0004 ROH3 ... 3200 0002 7900 3000 3010 3020 3030 3040 3100

0003

Grouping of Materials for Account Determination


Option 1: ROH
Mat 1 Mat 2

Option 2 ROH
Mat 1 Mat 2 Acct. 1 Acct. 1

Option 3 ROH
Mat 1 Mat 2 Acct. 1 Acct. 1 Acct. 2 Acct. 2

Acct. 1 Acct. 1

HIBE
Mat 3 Mat 4

Acct. 2 Acct. 2

HIBE
Mat 3 Mat 4

FERT
Mat 5 Mat 6

Acct. 3 Acct. 3

FERT
Mat 5 Mat 6

Acct. 3 Acct. 3

Procedure Part 1: Value String - Processing Keys


Inventory Management
Material

Invoice verification

Invoice verification ? =

posting record)

Transaction (Generalized

Value String

BSX BSX

WRX WRX

Processing keys

KBS KBS

300100 300100

191100 191100

G/L account number

425000 425000

Procedure Part 2: Processing Key - Rules


1
Transaction Processing keys for debit/credit posting

Processing Key (Transaction) Chart of accounts

Rules

Parameters on which account allocation depends

Procedure Part 3: Rules - Account Allocation


Processing Key (Selection of transaction) Selection of chart of accounts (Valuation grouping code) (Account grouping code) (Valuation class) Account number

Rules specify account determination key

Account Determination Procedure: Overview


Type of Transaction
Movement type based Transaction Non-movement type based Transaction

Material Master "Type of Material" Material Type Qty. Posting String


Account Categ. Reference

Plant

Step 1 or 2 Value Posting String

Company Code

Step 3

Processing Key (GBB)

Rules
Account modification Valuation Class Val. Grouping Code

Processing Key (AUF) Step 4 Chart of Account

Legend
Information derived from Transaction type Information derived from Material Master Information derived from the organiz. Structure Main Customizing area

G/L Account

Automatic Posting: Maintenance of the Settings


1
Selection of the valuation grouping code

2
Selection of the posting transaction

Allocation of the G/L account number(s) per valuation class (and account grouping code)