MATERIAL MANAGEMENT

Organizational levels involved in MM:1) Client2) Company Code3) Plant4) Purchasing Organization5) Purchasing Group

Client:A grouping or combination of legal, organizational, business and/or administrative units

with a common purpose.

Company Code:This level represents an independent accounting unit within a client. Each company

code has its own balance sheet and its own profit and loss statement.

Purchasing Organization: Purchasing organization is responsible for procurements for one or more plants and it negotiates the pricing and delivery terms with vendors. Purchasing organization is a legal entity for all purchasing activities.

Plant:Plant is a place where materials are produced or goods and services are provided

Storage Location:It is a physical location within a plant where inventory is stored.

Process Flow in MM:1) Determination of requirements2) Source Determination (for pricing)3) Vendor selection and Comparison4) Purchase Order processing5) Purchase order follow up (monitoring)6) Goods receiving and inventory management7) Invoice verification8) Payment processing

External Procurement in MM:There are two types of external procurement in MM:

1) Procurement for Stock (material master record is a must)2)Procurement for direct consumption (material master record may or may not be

present.FI is also involved as accounting is done)

Organization of Purchasing Organization within an organization can be done in two ways:

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1) Centralized (i.e. only one for whole organization) 2) Distributed (many for one organization)

How purchasing documents are differentiated in SAP:- Using document types.

Purchase document numbering:Numbering a purchasing document is done in two ways:

1) Internally by the system2) Externally based on user requirement

Master Data in MM:Master Data in MM involves:

1) Material Master2) Vendor Master3) Purchasing Master Data

a. Purchasing Info Recordsb. Source Listc. Quota Arrangement

What is Material Master Data?It is a central master record for logistics. It is a central repository for all the material of the organization. One master record is liked to various modules like SD, QM, PP, FICO, and EHS.

What does Material Master Data contain?1) General Data2) Plant Data3) Material Planning and Control ( i.e. MRP)4) Purchasing Data5) Sales and Distribution Data6) Accounting and Costing Data7) Warehouse Data (Storage)8) Forecasting9) Quality Management Data

What are the organizational levels possible for a material master record from purchasing view?

1) Client level (MARA)- General Material Data is involved2) Plant level (MARC)3) Storage Location level (MARD)

Material Numbering:1) Internally (by the system)2) Externally (based on user requirement)

What are the TCODES for Material Master Data?MM01 – Create Material MasterMM02 – Change Material Master

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MM03 – Display Material Master

What is Vendor Master Data?Vendor Master contains the list of all the vendors that supply an enterprise. It is maintained for two reasons:

1) Maintenance of Accounting Data2) Maintenance of Purchasing Data

What does Vendor Master Data contain?It contains information about

1) General Data2) Company Code Data3) Purchasing Data

For each vendor.

What is the prominence of an account group?Each vendor is assigned to an account group. An account group determines

1) number assignment2) partner determination schemas3) to check whether a one time vendor is involved

What are the partner roles in MM?1) Vendor2) Ordering address3) Goods Supplier4) Invoicing party

What are material types?The material type identifies the characteristics of a material that are important with regard to Accounting and Inventory Management. A material is assigned a type when you create the material master record.

What are general standard material types?1) Raw Material2) Semi Finished3) Finished4) Trading Goods5) Spare Parts

What are the TCODES for Vendor Master Records?XK01 – Create Vendor MasterXK02 – Change Vendor MasterXK03 – Display Vendor Master

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What does Purchasing info records contain?These records basically contain material vendor relationships. It contains information about Vendor Price, Material No, Delivery terms, and payment terms. The records get updated automatically when a purchasing transaction takes place.

What are the TCODES used to work with purchasing info?ME11 – Create Purchasing Info RecordME12 – Change Purchasing Info RecordME13 – Display Purchasing Info Record

What is the data that is maintained under purchasing info records?1) General Data2) Control Data3) Texts4) Prices and Conditions5) Price History

What are the different units that can be applied for a material?1) Base unit of measure2) Sales unit3) Order unit4) Unit in which material is transferred to production plant etc..,

What are pricing condition master records?As name indicates it is used to calculate price for a material. It involves pricing procedures, condition records, condition tables and access sequences.

What is source list?The source list is a master record which specifies the possible sources of supply for a given material.

What are the TCODES used for source list?ME01 – To create and change the source listME03 – Display the source list

MM DOCUMENT FLOW:

1. Purchase Requisition2. Request for Quotation3. Price Comparison 4. PO Generation5. Order Monitoring

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6. Order Acknowledgement7. Goods Receipt8. Invoice Verification9. Payment Processing

Purchase Requisition: TCode ME51N

Purchase requisition is an internal document which is generated while raising an indent to procure a quantity of material so that it is available at a certain point of time.

Request for Quotation:TCode ME41 (Create RFQ)

ME47 (Maintain Quotation) ME49 (Compare RFQ)

Transfers the request defined in the requisition for materials to the vendors to submit their quotation for the supply of materials for the performance of services.

Price Comparison:TCode ME49

All the quotations that are sent by different vendors will be evaluated here and the vendor selection process will be done.

Purchase Order :TCode ME21N

It’s a request from the organization to a vendor to deliver the quantity of materials or to perform services at a certain point of time.

Order Monitoring:Material wise ME2M

Vendor wise ME2L

Contract:Contract is a type of outline agreement or long term buying arrangement. It’s a

commitment to procure the materials from vendor as and when required during a certain overall time frame.

Scheduling Agreement: It’s an outline agreement against which materials are procured at a series of predefined points in time over a certain period.

Generally this component is used if the company wants a longer term purchasing arrangements with vendor regarding the supply of materials.

Consists of lines indicating the individual quantities with their corresponding planned delivery dates.

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Goods Receipt:TCode MIGO

A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to an increase in warehouse stock.

Goods issue A goods issue (GI) is a goods movement with which a material withdrawal or material issue, a material consumption, or a shipment of goods to a customer is posted. A goods issue leads to a reduction in warehouse stock.

Stock transfer A stock transfer is the removal of material from one storage location and its transfer to another storage location. Stock transfers can occur either within the same plant or between two plants.

Transfer posting A transfer posting is a general term for stock transfers and changes in stock type or stock category of a material. It is irrelevant whether the posting occurs in conjunction with a physical movement or not. Examples of transfer postings are:

• Transfer postings from material to material • Release from quality inspection stock • Transfer of consignment material into company's own stock

Invoice Verification:TCode MIRO

Tables that are commonly used in MM:MAKT Material Descriptions MARA General Material Data MARC Plant Data for Material MARD Storage Location Data for Material MAST Material to BOM Link MBEW Material Valuation MKPF Header- Material Document MSEG Document Segment- Material EBAN Purchase Requisition EKKO Purchasing Document Header

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EKPO Purchasing Document Item LFA1 Vendor Master (General section) LFB1 Vendor Master (Company Code)

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