SAP MM Bootcamp

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1

SAP MM Bootcamp

(Insert session dates here)

DAY 1DAY 1

SAP Materials Management (MM)

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At the end of the course, participants will be able to:

Explain SAP Materials Management (MM) functionality and how the module integrates with other modules Describe the MM organization structure, master data, and common business transactions

Perform basic MM business transactions Perform basic MM configuration

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Prepared by : Raj Kumar .A SAP-MM QM CONSULTANT

Ground

Ground Rules Rules

Participate - Ask questions!

Learn From Everyone’s Comments

Please Turn Off Cellular Phones

Honour Time Schedule

Relax and Have Fun!

Introduce Yourself

Name, Operating Group, Location

Your SAP MM Bootcamp Objective/s

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SAP Familiarisation Guide

SAP Navigation Assistance

SAP Quick Reference Guide

Provides transaction codes and description

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Where does the course fit in Delivery Method (ADM) for SAP

https://methodology.accenture.com/finder/Scenarios/homepage/m_accenturedeliverymethods.asp#sap_group.xml

3100 Design Application

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Basic Procurement Day 1 Introduction to SAP , Material Master, Vendor Master Day 1

Requisition, Purchasing, Basic configuration, Agreements,

RFQ, Quotation Day 2

Quota Arrangements, Release Strategies, Service

Procurement Day 3

Valuation, Acc. Determination, Inventory Mgmt Day 4

Special Procurement Day 5

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Agenda – Day 1

TOPIC TIME

Course Introduction 09:00 – 09:30

Basic Procurement Philosophy 09:30 – 10:00

Procurement in IT Systems 10:00 – 10:30

BREAK 10:30 – 10:45

The SAP Requisition to Pay Cycle 10:45 – 11:00

Introduction to SAP 11:00 – 11:15

Introduction to SAP / Log On 11:15 – 11:30

Introduction to IMG 11:30 – 11:45

SAP Enterprise Structure 11:45 – 12:15

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

Master Data Overview 13:15 – 13:45

Master Data 13:45 – 14:45 Exercise 2.0 14:45 – 15:15 BREAK 15:15 – 15:30 Exercise 2.0 (Continued) 15:30 – 15:45 Vendor Master 15:45 – 16:45 Exercise 3.0 16:45 – 17:30

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Definition

The process of obtaining services, supplies, and equipment from a vendor is called Procurement.

The procurement department or the purchase department within an organization normally manages the majority of purchasing.

Exceptions may lie in large industrial complexes where procurement may also be handled by engineering, or third party outsourced companies.

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Basic Procurement Philosophy



Introduction to Procurement (…Cntd)

For organizations Procurement is the acquisition of goods or services at the

best possible price, in the right quantity, at the right time, in the right place.

The complexity of procurement is trying to “get the balance right”, for example:



Organizations try to keep inventory levels at a minimum due to the costs

associated with high levels of inventory, but at the same time it is very costly

to stop production due to shortages in raw materials for example.



Getting the lowest price for a product or service is always important, but the

balance between product availability, quality, and vendor relations can be

more important.

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

The Procurement Lifecycle

In most modern organizations the Procurement lifecycle has the following

steps:

1. Information Gathering

:

If the potential customer does not already have an established relationship with sales/ marketing functions of suppliers of needed products and services, it is necessary to search for suppliers who can satisfy the requirements.

2. Supplier Contact

:

When one or more suitable suppliers have been identified, Requests for Quotes (RFQ), Requests for Proposals (RFP), Requests for Information (RFI) or Requests for Bids (RFB) may be advertised, or direct contact may be made with the suppliers.

3. Background Review

:

References for product/service quality are consulted, and any requirements for follow-up services including installation, maintenance, and warranty are investigated.

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Basic Procurement Philosophy



The Procurement Lifecycle (…Cntd)

4. Negotiation:

Negotiations are undertaken, and price, availability, and customisation possibilities are established. Delivery schedules are negotiated, and a contract to acquire the products or services is completed. The contract is a mutually binding legal document.

5. Fulfilment:

Supplier preparation, shipment, delivery, and payment for the products or services are completed, based on contract terms. Installation and training may also be included.

6. Consumption, Maintenance and Disposal:

During this phase the company evaluates the performance of the products or services and any accompanying service support, as they are consumed.

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

The Procurement Lifecycle (…Cntd)

7. Renewal:

When the products or services have been consumed and/or disposed of, the contract expires, or the product or service is to be re-ordered, company experience with the products or services is reviewed. If the products or services are to be re-ordered, the company determines whether to consider other suppliers or to continue with the same supplier.

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Basic Procurement Philosophy



Basic Procurement Activities

What Materials or Services are required?

The form or electronic transmission used to inform the purchasing department that purchased items or

services are needed for a business purpose

When the requisition is approved it becomes a Purchase Order. A PO typically includes item, quantity, price, discounts, vendor information, and

ship-to information

The material is received. Condition and quality are verified / The invoice is received from the vendor.

Determination of Requirement Requisition Purchase Order Goods Receipt / Invoice Received Invoice Verification / Vendor Payment

Reconciliation of the invoice and the purchase order is accomplished /The Vendor is paid

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

Direct Vs. Indirect Procurement

Based on the consumption purposes of the acquired goods and services,

procurement activities are often split into two distinct categories. The first

category being direct, production-related procurement and the second being

indirect, non-production-related procurement.



_{Direct procurement occurs in manufacturing settings only. It encompasses}

all items that are part of finished products, such as raw material,

components and parts. Direct procurement, which is the focus in supply

chain management, directly affects the production process of

manufacturing firms.



Indirect procurement activities concern “operating resources” that a

company purchases to enable its operations. It comprises a wide variety of

goods and services, from standardised low value items like office supplies

and machine lubricants to complex and costly products and services like

heavy equipment and consulting services.

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Agenda – Day 1

TOPIC TIME

BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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Procurement

Determinatio n of requirement Selection of vendors from the vendor database PO processing PO Monitoring Goods Receipt Invoice Verification Payment

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1. Determination of Requirements

Materials requirements are either identified by users or automatically by the IT system of the organization & passed on to the Purchasing department via Purchase requisitions.

2. Source Determination

The IT System helps you identify potential sources of supply based on old orders and existing longer-term agreements with the vendor. This speeds the process of creating requests for quotation (RFQs), which can be sent to vendors.

3. Vendor Selection and Comparison of Quotations

After receiving the Quotations from the invited vendors, the purchasing department compares them and chooses the most appropriate vendor to complete the order.

4. Purchase Order Processing

The Purchasing system takes up input data from the requisition and the quotation to help the user create a purchase order. As with purchase requisitions, the user can generate POs or have the system generate them automatically.

Procurement in IT Systems

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Purchase Order Monitoring

The buyer (or Purchasing Officer) can check the status of the PO i.e. if the goods or invoices have been received. Generally Procurement IT systems can also be configured to automatically check PO progress and to issue reminders or expediters at predefined intervals.

Goods Receipt

Goods receiving personnel (normally warehouse personnel) can confirm the receipt of goods simply by entering the PO number into the system. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods.

Invoice Verification

Vendor invoices are checked for accuracy of prices and contents. Buyers can also specify permissible value tolerances for invoices.

Payment Processing

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Procurement in IT Systems

Types of Procurement

Procurement for Stock vs. Consumption External vs. Internal Procurement

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Procurement for Stock

A stock material is a material that is kept in stock. These materials are kept in stock once received from the vendor. The stock of this material keeps on increasing or decreasing based on amount of the quantity received or issued.

To order a material for stock, the material ‘must’ have a master record in the system.

Procurement for Direct Consumption

When procurement is for direct consumption, the user must specify the consumption purpose. By entering an account assignment (for example, a cost center).

To order a material for consumption, the material ‘may’ have a master record in the system.

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Prepared by : Raj Kumar .A SAP-MM QM CONSULTANT Procurement for Stock With Mat.Master Record Account Assignment Automatic Acc.Assgt Data from Mat.

Master

Stock Account

Procurement for Consumption With Mat.Master Record

Enter Acc. Ass. Category

Manual Acc. Assgn Data Entry Required

Consumption Acc. Cost Centre Asset Without Mat. Master Record

Procurement in IT Systems



Types of Procurement

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Material Number can be used, but is not mandatory

Account Assignment Category mandatory

Posting to Consumption Account

Inventory Quantity will not be updated

Procurement for Stock _{Procurement for Consumption}

Material Number is Required

No Account Assignment Category

Posting to Stock Account

Inventory Quantity will be updated

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Types of Procurement

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External Procurement

Is the process of procuring goods or services from external vendors.

Internal Procurement

Refers to trade happening between the different entities of the same organization.



Types of Procurement

External vs. Internal Procurement

Procurement in IT Systems

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There are 3 basic forms of external procurement generally supported by the Purchasing component of IT systems.

 One-time purchase orders

 Longer-term contracts with the subsequent issue of release orders

 Longer-term scheduling agreements and delivery schedules



Types of Procurement

External vs. Internal Procurement (…Cntd)

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One-Time Purchase Order

You use one-time orders for materials or services that you order irregularly. You can reference a purchase requisition, RFQ, or another PO when creating a one-time order.

Contract and Release Orders

For materials that are being ordered regularly and in large quantities, we can negotiate a deal with the vendor for pricing or conditions & record then in a contract.

In a contract you also specify the validity date.

Scheduling Agreement

If a material is ordered on a regular basis and is to be delivered according to an exact time schedule, then you set up a scheduling agreement. This method of procurement is

typically used when Just-in-Time deliveries are required from the vendor (for example, in the automobile industry).

Procurement in IT Systems



Types of Procurement

External vs. Internal Procurement (…Cntd)

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Large corporate organizations may own multiple separate businesses or companies. Each of these companies maintains a complete bookkeeping system with separate Balance Sheets and Profit & Loss Statements and hence when trade occurs between them it needs to be recorded.

Key activities:

 Creating a Purchase Order at the receiving Company

 Creating delivery and billing documents at the issuing Company (This is an inter company billing document; Pricing takes place as normal)

 Posting the goods receipt at the receiving Company (The material stock increases and an accounting document gets created)

 Posting the invoice receipt at the receiving Company (The invoice is checked with reference to the purchase order)



Internal Procurement

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Procurement in IT Systems

Sometimes companies also need to record and monitor stock movements between its own entities e.g. production facilities.

Key activities:

 Creating a stock transport order in the receiving entity

 Generating a delivery document in the delivering entity

 Picking the material in the delivering entity

 Posting an issuing document in delivering entity

 _{Posting a receipt document in receiving entity}



Types of Procurement

External vs. Internal Procurement (…Cntd)

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BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

Master Data 13:45 – 14:45 Exercise 2.0 14:45 – 15:15 BREAK 15:15 – 15:30 Exercise 2.0 (Continued) 15:30 – 15:45 Vendor Master 15:45 – 16:45 Exercise 3.0 16:45 – 17:30

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Agenda – Day 1

TOPIC TIME

BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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Is the process that includes from the requisition determination until the payment of the correspondent invoice. It is comprised by the following SAP documents:

Material Management (MM)

Accounts Payable (AP)

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General Ledger (GL)

Project System (PS)

PP

Req. Req. Determ. Determ. Purchase Purchase Requisition Requisition Purchase Purchase Order Order Goods Goods Receipt Receipt Invoice Invoice Verification

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Is the process which helps users determine the material/services requirements. Requirements can be based on customer demand, which drives the production planning process, or requests from within the organization.

Material Management (MM)

Accounts Payable (AP)

General Ledger (GL)

Project System (PS)

PP

Req. Req. Determ.

Determ. _RequisitionPurchase Purchase _Order _ReceiptGoods _VerificationInvoice Payment

The SAP Requisition to Pay process

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A Purchase Requisition is a request to Purchasing to procure a certain quantity of a material or a service so that it is available at a certain point in time. It is not essential for creating a PO. It can also be created automatically by running the MRP in the PP module.

Material Management (MM)

Accounts Payable (AP)

General Ledger (GL)

Project System (PS)

PP

Req. Determ. Purchase Purchase Requisition Requisition Purchase Order Goods Receipt Invoice Verification Payment

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A Purchase Order is a formal request to a vendor to supply or provide goods or services at a certain point in time with a certain quantity, under the agreed terms and conditions.

Material Management (MM)

Accounts Payable (AP)

General Ledger (GL)

Project System (PS)

PP

Req. Determ. Purchase Requisition Purchase Purchase Order Order Goods Receipt Invoice Verification Payment

The SAP Requisition to Pay process

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Goods Receipt is the term used to describe an increase in warehouse stock due to receipt of goods from external vendors of from internal stock transfers.

Material Management (MM)

Accounts Payable (AP)

General Ledger (GL)

Project System (PS)

PP

Req. Determ. Purchase Requisition Purchase Order Goods Goods Receipt Receipt Invoice Verification Payment

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Is the verification of the data on the invoice sent by the vendor against the goods receipt and the original purchase order. This ensures that the goods received match the cost and quantity requirements of the purchase order and the vendor’s invoice.

Material Management (MM)

Accounts Payable (AP)

General Ledger (GL)

Project System (PS)

PP

Req. Determ. Purchase Requisition Purchase Order Goods Receipt Invoice Invoice Verification Verification Payment

The SAP Requisition to Pay process

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Once the invoice is posted, the payment is made on the basis of the payment terms and conditions defined in the purchase order. It is processed through Accounts Payable in the FI module.

Material Management (MM)

Accounts Payable (AP)

General Ledger (GL)

Project System (PS)

PP

Req. Determ. Purchase Requisition Purchase Order Goods Receipt Invoice

Verification PaymentPayment

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Agenda – Day 1

TOPIC TIME

BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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SAP stands for “Systems, Applications and Products in data processing". SAP is the worlds third-largest independent software provider.

SAP was founded by 5 former IBM employees in 1972 and head quartered in Walldorf, Germany.

SAP is the global market leader in ERP and in collaborative & inter-enterprise business solutions

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

mySAP Enterprise resource planning



mySAP Supply chain management



mySAP Customer relationship management



mySAP Product life cycle management



mySAP Supplier relationship management

Introduction to SAP

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Aerospace & Defense Automotive

Banking Defense & Security

Engineering, Construction & Operations High Tech

Healthcare Higher Education & Research

Industrial Machinery Chemicals

Consumer Products Life Sciences

Higher Education & Research Industrial Machinery & Components

Life Sciences Logistics Service Providers

Media Mill Products

Health Care High Tech

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Mining Oil & Gas

Postal Services Professional Services

Public Sector Railways

Retail Telecommunications

Utilities Wholesale Distribution

Introduction to SAP

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Small and medium business solutions mySAP all-in-one

SAP business one

New dimension products

Strategic enterprise management Advanced planner and optimizer Enterprise buyer profession edition Business information warehouse

mySAP technology SAP NetWeaver

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Introduction to SAP

SAP R/3 main modules are

Financial Accounting (FI)

Controlling (CO)

Materials Management (MM) Sales & distribution (SD)

Production Planning and Execution Process (PP) Logistics execution (LE)

Quality Management (QM) Project Systems (PS) Plant Maintenance (PM) Customer Service (CS) Human Resources (HR)

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R/3

Client / Server

ABAP/4

IS Industry Solutions MM Materials Mgmt. PD Personnel Development SD Sales & Distribution PP Production Planning QM Quality Manage-ment PM_Plant Maintenance FI Financial Accounting CO Controlling TR Treasury PS Project System WF Workflow EC Enterprise Controlling_IM Investment Management PA Personnel Administration

SAP has several layers. The BASIS System is the heart of the data operations and should

not be evident to higher level or managerial users. Other customising and

implementation tools exist also. The heart of the system from a manager’s viewpoint is

the application modules.



SAP Application Modules

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Agenda – Day 1

TOPIC TIME

BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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(47)

Introduction to SAP Log On

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Command Field

Application Tool Bar Title Bar Standard Tool Bar

Menu Bar

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Introduction to SAP Log On

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

Function of F1 and F4 field help

F4

F1

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Introduction to SAP Log On

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BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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Introduction to IMG

When a client purchases the SAP, it comes in a CD very similar to any software

that we buy off the shelf. When SAP is first installed, SAP comes with some

standard set up. Example of those set up are company code 0001, plant 0001 etc.

These setup do not necessary meet the client requirement.

In the build phase of a project, SAP system is customized according to the

requirement of the client which are identified in the design phase.

In SAP, customizing is performed through the Implementation Guide (IMG).

Note that customizing is different from master data or transactional data.

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Agenda – Day 1

TOPIC TIME

BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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Client

Compan

y Code

Plant

Storage

Location

Pur Org

Pur

Groups

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An independent unit in R/3 system that contains its own set of master data and table contents It is not a legal entity but is more technical in nature

SAP Enterprise Structure



Client

An Independent accounting unit within the client.

Each has its own P&L account and Balance Sheet

Setup is done by the Finance team

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_{Financial Accounting -> Financial Accounting Global Settings -> Company Code -> Enter Global} Parameters (OBY6)

 Financial Accounting -> Financial Accounting Global Settings -> Fiscal Year -> Maintain Fiscal Year Variant (OB29)

 Financial Accounting -> Financial Accounting Global Settings -> Fiscal Year -> Assign Company Code to a Fiscal Year Variant (OB37)

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Prepared by : Raj Kumar .A SAP-MM QM CONSULTANT A unit under the company

All operation within the company take place here (e.g. Manufacturing, Sales, Storage Unit, Administration Building)

It is usually mapped to a physical location even though “virtual” ones can also exist

Plant setup in SPRO:

SAP Enterprise Structure



Plant

_{Enterprise Structure -> Definition -> Define, copy, delete, check plant (SPRO)}

_{Enterprise Structure -> Assignment -> Logistics – General -> Assign plant to company} code (OX18)

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The storage location is an organizational unit that allows the differentiation of material stocks within a plant.

Physical Inventory is carried out at storage location level.

Storage location codes can be repeated under a different plant

Storage Location setup in SPRO:

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Responsible organizational unit for procuring materials / services

Procures the material / service for one or more plants within the company

Purchasing Organization setup in SPRO:

SAP Enterprise Structure



Purchasing Organization

Enterprise Structure -> Definition -> Materials Management -> Maintain purchasing organisation (OX08)

_{Enterprise Structure -> Assignment -> Materials Management}

Assign purchasing organization to company code (OX01) (optional) _{Assign purchasing organization to plant (OX17)}

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Centralized purchasing (corporate-wide purchasing) Purchasing org is not assigned to any company code. Any plant can purchase through this one purchasing org.



Different forms of purchasing

Company-specific purchasing

A purchasing org is assigned to a company code.

Any plant from that company can purchase through this one purchasing org.

Plant-specific purchasing

A purchasing org is assigned to a plant (and not to company code)

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The groups which are responsible for day to day buying in the purchasing organization

Purchasing Group setup in SPRO:

SAP Enterprise Structure



Purchasing Groups

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ASPL ASPL BDC BDC MDCMDC BDC1 BDC1 BDC2BDC2 MDC1MDC1 MDC2MDC2 Bay11

Bay11 Bay12Bay12 Bay21Bay21 Bay22Bay22 Bay31Bay31 Bay32Bay32 Bay41Bay41 Bay42Bay42

PURB

PURB PURMPURM

PURA PURA CLIENT COMPANY PLANT STORAGE LOCATION PURCHASE ORGANIZATION REF PURCHASE ORGANIZATION

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Define here

Assign here

SAP Enterprise Structure

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Client :

SPRO > IMG > Enterprise Structure > Definition > Financial Accounting > Define Company > New Entries

Company Code :

SPRO > IMG > Enterprise Structure > Definition > Financial Accounting > Edit, Copy, Delete, Check Company Code > Copy, Delete, Check Company Code

Controlling Area :

SPRO > IMG > Enterprise Structure > Definition > Controlling > Maintain Controlling Area > Maintain Controlling Area



Configuration

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Plant :

SPRO > IMG > Enterprise Structure > Definition > Logistics General > Define , copy, delete , check plant > copy, delete , check plant

Storage Location :

SPRO > IMG > Enterprise Structure > Definition > Materials Management > Maintain Storage Loc ( w.r.t plant ) > New Entries

Purchase Organization :

SPRO > IMG > Enterprise Structure > Definition > Materials Management > Maintain Pur. Org >New Entries.

SAP Enterprise Structure



Configuration

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SPRO > IMG > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to Company

SPRO > IMG > Enterprise Structure > Assignment > Controlling> Assign Company Code to Controlling area

SPRO > IMG > Enterprise Structure > Assignment > logistics General > Assign Plant to Company Code

SPRO > IMG > Enterprise Structure > Assignment > Materials Mgmt > Assign P.Org to Co . Code

SPRO > IMG > Enterprise Structure > Assignment > Materials Mgmt > Assign P.Org to Plant

SPRO > IMG > Enterprise Structure > Assignment > Materials Mgmt > Assign Standard P.Org to Plant

SPRO > IMG > Enterprise Structure > Assignment > Materials Mgmt > Assign P.Org to Reference P.Org

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SPRO > IMG > Logistics General > Material Master > Basic Settings >Maintain Co.Code for Materials Mgmt

SAP Enterprise Structure

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BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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SAP Enterprise Structure

Exercise 1.0

Configuration: Display a Company Code

Configuration: Display a Plant

Configuration: Display a Storage Location

Configuration: Display a Purchasing Organization

Configuration: Display an Assignment of Plant to Company Code

Configuration: Display an Assignment of Purchasing Organization to Company Code

Configuration: Display an Assignment of Plant to Purchasing Organization

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BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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Agenda – Day 1

TOPIC TIME

BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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SAP R/3 operates “real time”, placing the responsibility of data integrity on all users.

Information in SAP is always current

 No time lag between data entry and data availability

Reports and data displays available online

 Reports can be run in foreground or background

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SAP Master Data Overview

SAP R/3 operates using “real time” data that can be categorised as master or transactional data.

Master Data

 Basic informational data created centrally and used in nearly all applications

 For example, a Vendor is data that is used in creating contracts, purchase orders, and payments

 Remains constant over time, although some master data may need to be updated

Transactional Data

 Data associated with the processing of a business transaction

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Vendor Master Data

 Unique repository of all the relevant information from the vendors.  It’s divided in three categories or views:

 General data: contains mostly the legal information from the vendor, for example address, legal name, ABN number, etc.

 Company Code data: contains all the information related to a specific company code. For example: account information, etc.

 Purchasing data: this is maintained for each purchasing Organization. For example the currency, incoterms, etc.

Purchasing Info Record

 This is vendor-specific data on a certain material. For example, delivery time and purchase price.

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SAP Master Data Overview

Material Master Data

It is an enterprise’s main source of material-specific data. It is used in all areas of logistics in the SAP R/3 system.

Since different user departments within an enterprise work with one material, and each department enters different information relating to it, the data in a material master record is subdivided according to area of use. Each user department thus has its own view of a material master record.

The data screens used to process material master records can be subdivided into the following types:

 Main data: these are the views for the individual user departments, such as basic data, materials planning, accounting, sales, purchasing, and so on.

 Additional data: these are the views on which you find additional information such as alternative units of measure, material short descriptions, and consumption values. Purchasing data: this is maintained for each purchasing organization. For example the currency, incoterms, etc.

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Material

Master

Data

Purchasing

Info

Record

Vendor

Master

Data

When you create a purchasing document, SAP R/3 supports you with the data entry by providing you with the default values taken from existing master records.

PO Header Vendor X Items 10 Material A 20 Material B 30 …

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Agenda – Day 1

TOPIC TIME

BREAK 10:30 – 10:45

Exercise 1.0 12:15 – 12:30

LUNCH 12:30 – 13:15

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What is Material Master ?

How is the Material master used in all the departments ? How is it useful in creating Purchase Orders?

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The material master record contains the information on all the materials that a company procures or produces, stores or sells. The material master record is a company’s main source of material specific data. It is used by all components in the R/3 logistics system.

Material Master Record Basic data Materials planning Stocks in Plant/ stor Loc Accounting Storage Warehouse Mgmt Purchasing S & D Work scheduling Quality management Forecasting Classification

Material Master



_Introduction

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Integration of all material data in a single database, prevents the problem of data redundancy. Data contained in material master records is required for many functions within the R/3 logistics system, for example:

Purchasing data for ordering

Inventory management data for posting a goods movements and managing physical inventory Accounting data for material valuation

MRP data for material requirements planning

Since the material master is used and maintained by different user departments, the material master is subdivided according to area of use, and thus each user department in a company has its own view of a material master record.

(83)

Some material views are valid for all organisational levels, while some are valid only for certain levels.

Data at client level is data valid for the whole enterprise (e.g. material number, material group, unit of measure, …)

Data at plant level is valid within a plant and all storage locations belonging to that plant (e.g. purchasing data, forecasting data, work scheduling data, …)

Data at storage location level is only valid for a particular storage location (e.g. storage bin description, picking area, …)

Material Master

(84)

When creating or editing a material master data, the user goes through a number of screens.

In the initial screen the user enters the material number, industry sector and material type. In the second screen the user specifies the user department views to be processed. The third screen prompts the user for organisational data.

Material data is then entered in the data screens.

Note: Screen sequence can be changed.



_{Material Master Record: Screens}

Material (Industry sector) (Material type) Organizational levels Plant Sloc … User department views Basic Data Purchasing Data screens

(85)

The Industry Sector and Material Type fields on the initial screen are mainly control fields i.e. they control the screen sequence, views and fields in the data screens of the material master record.

A number of different Industry Sectors and Material Types exist in standard SAP R/3, when companies need more they can define these in Customising according to their own requirements.

Material Master



_{Initial Screen}

Industry Sectors

(86)

Materials with the same basic attributes are grouped together and assigned to a material type. This allows the organisation to manage different materials in a uniform manner in accordance with the company's requirements.

Number assignment Procurement type Field selection User departments Account determination Control ... Raw materials Semi-finished products Finished products



_{Initial Screen}

Material Type

(87)

Material Master



_{Initial Screen}

• Material Type (…Cntd)

Example:

Can be produced in-house or procured externally

Produced in-house only Procurement type Basic Data 1 Basic Data 2 Accounting 1 Accounting 2 Forecasting … Basic Data 1 Basic Data 2 Purchasing Warehouse Management 1 Warehouse Management 2 …

Which screens are displayed and in which order

2000000000 – 2100000000 1000000000 - 1100000000

Number Range Interval

Internal or external number assignment (i.e. System or user)

Internal Number Assignment (i.e. System) Number assignment

Material Type B Material Type A

(88)



_{Initial Screen}

• Material Type (…Cntd)

Along with the plant, the material type determines a material's inventory management requirement; that is, whether the system updates quantity changes in the material master record or updates changes in value in the stock accounts in Financial Accounting.

(89)

Like material type, the industry sector has a control function in SAP R/3 When you create a material master record, the industry sector defines:

which screens are displayed and in which order

which industry specific fields are displayed in each screen

In customizing , you can define new industry sectors and maintain field reference for field selection control according to your company- specific requirements. The Industry sector assigned to a material cannot be changed later.

Selection Screen Control Field selection Chemical Industry Pharmaceutical Ind.

Material Master



_{Initial Screen}

• Industry Sector

(90)



_{User Departments Views - Main Data}

• Basic Data

• Classification

• Accounting

• Costing

• Forecasting

• Materials Requirement Planning (MRP)

• Purchasing

• Stocks, Plant and Storage Location

• Sales

• Production Resources/Tools

• Quality Management

• Storage

(91)

Material Master



_{User Departments Views - Main Data (…Cntd)}

• Basic Data:

On this data screen, the user enters data that is also used by other user departments

• Classification:

Classes allow companies to classify materials with the same characteristics. A material

can be assigned to one or more classes. Classification data is valid for the whole

company.

• Accounting:

Besides other accounting data, users normally enter data relevant to valuation in the

current period here, and companies can manage accounting data on company code

level or plant level.

• Costing:

Besides costing data, users can also define valuation data on this screen. This data is

identical with that on the Accounting screen. In most cases, it will already exist on the

Costing screen because it has already been entered on the Accounting screen. If it is

entered on the Costing screen first, it will appear on the Accounting screen as default

values that can be overwritten. Costing data is managed at plant level.

(92)



_{User Departments Views - Main Data (…Cntd)}

• Forecasting:

On the Forecasting screen, users have the following options:

Users can access the screens on which consumption values and forecast values

are entered as a basis for the initial calculations.

Users can directly execute an individual forecast for a material. Starting from the

maintained forecast parameters, users can simulate the forecast in several dialog

steps.

The forecast values are updated only when the material master record is saved. The

MRP parameters Reorder point and Safety stock, which are based on the forecast, are

adjusted dynamically at the same time.

Forecasting data is maintained on a plant level.

• Materials Requirement Planning (MRP):

MRP is planned at plant level, however if users need to enter data specific to a storage

location, they must also specify the storage location concerned. You must specify a

storage location if you want a material to be included in storage location MRP. Storage

locations are considered as independent units for MRP purposes.

(93)

Material Master



_{User Departments Views - Main Data (…Cntd)}

• Purchasing:

Not all purchasing data is plant-specific. As a result, the data displayed depends on

whether the user enters a plant or not.

• Stocks, Plant and Storage Location:

After material master record has been created, users can select the following data

screens in the Select View(s) dialog box for displaying the stocks held at a particular

plant or storage location:

Plant stock

Storage location stock

Other User Department Views:

Sales

Production Resources/Tools

Quality Management

Storage

(94)



_{User Departments Views - Main Data}

Basic Data

Important Fields:

Material Description:

Text containing up to 40 characters that describes the material in more detail.

Base Unit of Measure:

Unit of measure in which stocks of the material are managed. You define the base unit of measure and also alternative units of measure and their

conversion factors in the material master record.

Material Group:

Key used to group together several materials or services with the same attributes, and to assign them to a particular material group.

(95)

Material Master



_{User Departments Views - Main Data}

Accounting

Important Fields:

Valuation Category

Determines whether stocks of the material are valuated together or separately. Split valuation allows companies to valuate different stocks of the same material separately. In the case of split

valuation, this indicator also determines which valuation types are allowed, that is, the criteria by which stocks can be valuated.

Origin Quality Valuation Category Material A Split valuation allowed 1UOM x $75 = $75 2UOM x $90 = $180 1UOM x $100 = $100 Stock x Price = Value

Low Quality Average Quality High Quality Valuation Types

(96)



_{User Departments Views - Main Data}

Accounting (…Cntd)

Important Fields:

Valuation Class

•Valuation class is used to combine the materials for assigning G/L accounts, so that companies do not have to manage a separate stock account for each material.

•The valuation class allowed for a material depends on the material type and can be configured in customizing.

Price Control

Indicates the price control used to valuate the stock of a material. The following options exist:

•Standard price

•Moving average price

Valuation will be revisited in more detail on Day 4 of the boot

Material valuation Price control ( In material master ) “ S “

Standard price Moving average Price “ V “ Valuation class 300000 Accounting 1 Material Master Valuation Class 2 Valuation Class 1 Material Type 300100 Valuation Class Price Control

(97)

Material Master



_{User Departments Views - Main Data}

Purchasing

Important Fields:

Batch Management

Indicator specifies whether the material is managed in batches.

Automatic PO

Indicator specifying whether purchase orders are generated automatically when requisitions are converted.

Note: The indicator "Automatic POs allowed" must also be set in the master record of the vendor from whom the material is ordered.

Purchasing Value Key

Key defining the reminder days and tolerance limits valid, as well as the shipping instructions and order acknowledgment requirement of the material for Purchasing.

(98)



_{User Departments Views - Main Data}

Purchasing (…Cntd)

_{Important Fields:}

Quota Arrangement Usage

Is field controls how the total order quantity is calculated in the quota arrangement, and thus which source of supply is determined for the material at a particular point in time.

(Quota Arrangement will be discussed in detail on day 3 of boot camp)

Source List Requirement

Specifies whether the source list (List of available sources of supply for a material, indicating the periods during which procurement from such

sources is possible) must have been maintained in the case of external procurement for a certain

(99)

Material Master



_{User Departments Views - Additional Data}

Data screen that can be accessed from any view in a material master record by

(100)



_{User Departments Views - Additional Data (…Cntd)}

Additional data screens are:

• Descriptions

Companies can enter a description for a material master in different languages. However, only one description per language is allowed.

• Unit of Measure

Multiple units of measures can be entered for a material master, however a base unit of measure has to be specified (stockkeeping unit )and a conversion factor to that unit of measure must also be specified.

Base Unit of Measure = Piece

Order UOM = Box Sales UOM = Carton

(101)

Material Master



_{User Departments Views - Additional Data (…Cntd)}

• Additional EANs

An International Article Number (EAN) (or Universal Product Code (UPC) in the USA) is an

internationally standardized number uniquely identifying a material. It always refers to a specific unit of measure or type of packaging such as a pack of ten pieces or a box. For each unit of measure defined in a material master record, you can assign one or more EANs and specify packaging data (such as dimensions, volume, and gross weight).

• Document Management

A material may have various documents such as drawings and photographs assigned to it. The system differentiates between these documents by means of the document type. If the company uses SAP’s document management system, you can manage documents and assign existing documents to a material in the material master record. Document data is managed at client level.

(102)



_{User Departments Views - Additional Data (…Cntd)}

• Basic Data Texts, Inspection Texts, Internal Comments

Text are stored at client level, and can be entered in many languages though only one text is allowed per language.

Basic data text

This text can be used as per company’s requirement, for example, to store additional, general information on the material.

Inspection text

This text can be used to stipulate rules on the procedure to be followed for inspecting a material, or any special points to be observed.

Internal comment

This text can be used as per company’s requirement, for example, to store any specific points to be taken into consideration with regard to the material.