sap mm process flow document

By SAP MM Consultant GANESH, Collabera Software Pvt Ltd, Bangalore

SAP MM Process Flow Document

Create Material: T – Code MM01

Select Organizational Views

The basic organization views are

1. Basic data 1 / 2

2. Sales organization data 1 /2

3. Purchasing

4. MRP 1/2/3/4 if required

5. Account data 1 / 2


Select organizational data Plant/Storage Location/sales Organization/Distributing

channel


Basic data 1 screen


The above screen shows the mandatory field required to create material which is

shown in Arrow Marks.

Basic Data 2 screen


Sales organization data 1 screen


Sales organization data 2 screen


General Plant screen


Required Mandatory fields are shown in arrow mark

Purchasing view screen


If Automatic PO required in Purchase then the parameter Auto PO marked as

mandatory shown in arrow mark.

MRP 1/2/3 views as shown in below screen shot. The arrow marks shows the

mandatory fields. If materials is under planning these MRP views are mandatory

for creating Material in SAP MM.

MRP View 1


MRP View 2


MRP View 3


Plant data View


Plant data 2 view


Accounting data view screen


In accounting data view Valuation class is mandatory to create Material which is

shown in above screen shot. Maintain Price like Standard Price or Moving

Average for Material in this view as shown


SAP System will ask for saving the date for creating Material Finished Product

say ‘YES’

And save the document


CREATING VENDOR: T – Code XK01

Vendor is mandatory for creating Purchase order in SAP MM. One who supplies

the materials/goods to the company is called vendor. The below screen shots

flow shows how to create vendor.


Marinating Vendor address


Reconciliation account is mandatory field in Vendor creation as shown in screen

shot

Select the required order of currency for India it is INR in the mark as shown in

screen shot.


After this screen entry you can able to create vendor with some number range

The basic Purchasing documents are required to create Purchase order is as

follows:

1. Material Master – MM01

2. Vendor Master – XK01

3. RFQ (Request for Quotation) – ME41

4. Info record – ME11


5. Source List – ME01

6. Purchase requisition – ME51

Creating Purchase Requisit ion T – code ME51N

Create PR for the material with Plant

Create Info Record – T-Code ME11 with the combination vendor and

Material


Creating Source List T- Code ME01

Create Source list for Material and Plant and enter validity date

Save the Source list

Creating RFQ (Request for Quotation) T – Code ME41


Enter quotation deadline in the above screen as shown

The Basic Flow of SAP MM Process

One of the main areas covered by MM module is Purchasing/Procurement. The

purchasing process is initially started when there is a requirement of

material/service from a user. If the material/service can not be obtained from

company’s internal resource, the responsible person of that company must find

the vendor/supplier which can provide it on the required date. The purchasing

process is ended when the payment processing to the vendor that supply the

material/service has been done.

In this post, I will explain about the basic of the purchasing/procurement process,

which usually known as Procurement Cycle as the following steps.


1. Determination of Requirements

In this step, there is a requirement of material or service, which must be

procured externally, from the user. The requirement must be recorded as

Purchase Requisit ion (PR) document in SAPMM.

Purchase Requisit ion (PR) is an internal purchasing document in

SAP ERP that is used to give notification to responsible department about

the requirement of material/service and to keep track of such requirement.

PR must contain clear information about the description and quantity of

the material/service, the required date, and other information.

PR can be created directly in SAP MM module with ME51N t-code, or

indirectly by another SAP component, such as: materials planning,

maintenance order of PM module, production order of PP module, network

activity of PS module, etc. We have explained this in the previous article

about MM integration with other modules.

2. We can set in SAP that the PR must be approved or released before it can

be passed to the next step of purchasing processes. We have explained

about the PR Release Strategy in the previous article.

3. Determination of the source of supply

After the PR has been created (and released if needed) in the previous

step, the responsible department (usually purchasing/procurement

department of the company) must process it. The buyer of the

procurement department must determine the possible sources of supply of

the material/service specified in the PR.

With ME57 t-code, the buyer can check in the SAP whether the

material/service needed can be obtained from the existing outline

agreement (contract or scheduling agreement) documents or not. If there

is no existing outline agreement, the buyer can also check whether there

is an existing info record documents (which contain information about the

http://www.sapstudymaterials.com/2009/10/mm-integration-sd-pm-ps-fi-wm-qm.html

http://www.sapstudymaterials.com/2008/08/purchase-requisition-pr-release.html


price and delivery conditions of the material/service agreed with vendor in

the last Purchase Order/PO) that still can be used(valid) as a reference to

create new PO to the same vendor.

If there is no valid info record at that time, the buyer can create Request for

Quotation (RFQ) documents to one or some prospective vendors. The buyer

can access the procurement history of the material/service specified in the PR,

so he can see which vendors that have provided it to the company before. He

can also create the RFQ to the new prospective vendor that might have never

provided the material/service to the company before.

Request for Quotation (RFQ) is an external purchasing document

that usually used as bidding process invitation. RFQ is sent by a company

to the prospective vendor to request the vendor to provide a quotation

which contains information about the price and delivery conditions, terms

of payment, etc that the vendor formally agree in case it is appointed to

provide the material/service to the company.

In the RFQ, the buyer must include the information about the

material/service needed from the vendors (can be copied from the PR),

the latest submission date of the quotation, the preferred term of delivery,

term of payment, currency, etc.

4. Vendor Selection

If in the previous step, there are some outline agreements or info record

documents that can be used as references to create a PO, the buyer can

select or choose which vendor that will be appointed to provide the

material/service at this time.


If there is no outline agreement or info record documents that can be used

as references to create PO, in the previous steps, the buyer will send the

RFQ documents to one or some vendors. The vendors will send their

quotations which include the information about the price, delivery terms,

terms of payment, etc that they offered to the company. The buyer can

input that information into SAP with ME47 t-code. With ME49 t-code, the

buyer can compare the offering of all vendors that have sent their

quotation. The comparison can be used to determine which vendor should

be appointed to provide the material/service to the company.

SAP ERP can also create rejection letters to the vendors that are not

selected as the supplier of the material/service.

5. PO Processing

In the previous step, the buyer has selected the vendor which will provide

the material/service needed in PR. In this step, the buyer creates a

Purchase Order (PO) based on the PR and the reference document

(that can be an outline agreement, an info record, or a quotation).

Purchase Order (PO) is a legally binding document that issued by a

company to a vendor which contains information about description,

quantity, delivery date, agreed prices, terms of delivery, and terms of

payment for material or service the vendor will provide to the company.

6. POMonitoring

After the PO has been sent to the vendor, the buyer has the responsibility

to monitor whether the vendor delivers the material/service at the right

time on the right place. The buyer can monitor whether the

material/service has been received by the person responsible (such as the

warehouse man) online with PO history function in the PO document. If

the warehouse man or anyone else has received the material/service and

posted the Goods Receipt/Service acceptance document, the PO history


will be updated in a real-time basis.

SAP ERP can also has a functionality to give the reminder to the buyer if

the PO item has not been GR in the specified period in respect of the

delivery date agreed with vendors.

7. GoodsReceipt

When the vendor delivers the material or perform the service, the

responsible person of the company must perform the goods receipt

(GR) or service acceptance (SA) transaction. The GR/SA will update

the PO history. If the PO item is an inventory material, the GR will

increase the stock level of the material.

When we perform the GR for the PO item for the first time, SAP will

propose the quantity to be GR as the PO order quantity. Depends on the

delivery terms agreed with the vendor, the vendor might deliver the

material partially. We can post the GR partially too, so when the next

material delivery is received, SAP will propose the quantity to be GR as

the remaining quantity that has not been GR yet.

8. InvoiceVerification

After the vendor delivered the material/service; it will send the invoice to

the person responsible in the company.

Invoice is a formal document issued by a vendor to the company to

request the payment for the material or service that the vendor has

already provide to the company according to the terms of payment agreed

in the PO. An invoice is usually attached with the delivery note (goods

receipt) document.

The person responsible, usually an accounting staff, will perform the three

way matches. He will check whether the invoice information (such as

price, terms of payment, etc) is the same with the PO, and whether the PO

item has been received (GR/SA). If yes, then he will post the Invoice


Receipt (IR) transaction in MM module. The IR transaction will credit the

account payable of the vendor which specified in the "pay to" partner

function in the PO.

9. PaymentProcessing

After the IR transaction has been posted, the vendor’s account payable

will increase and the company must process the payment to that vendor

as stated in the terms of payment of the PO. The payment transaction will

be performed in FI module. After the payment has been posted, the

vendor’s account payable will be debited and the cash or bank account

will be credited.

In the next article I will explain the 1st step of the procurement cycle in more

details: The Determination of Requirement. You can get alert when I post new

article if you subscribe

Create Purchase order: T- Code ME21N

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Maintain the basic parameters to create Purchase order like,

Plant/Material/Vendor/Net Price/Organization data/ Invoice Tax code/PR

number/RFQ Number/ PO Document Type/Currency as shown in the arrow

marks in screen shots.


Maintain the Tax Code in invoice at Item details.

Save the Purchase order.

Goods Receipt: T –Code MIGO

Create Goods Receipt for the Purchase order and check by using tick mark

button and save the document.


Check Item OK. And Post the GR


Enter the Purchase order number for Goods Receipt

The Display of the Material document is shown in the below screen shot

sap mm process flow document

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