MATERIAL MANAGEMENT

SAP MM is one the largest functional module in SAP. This module mainly deals with the
Procurement Process, Master Data (Material & Vendor Master), Inventory Management,
Valuation of Material & Account Determination, Material Requirement Planning, Invoice
Verification etc.
SAP MM (Material Management) is one of the important modules in SAP ERP software and MM
application module supports the procurement and inventory functions occurring in day-to-day
business operations. This MM module contains many aspects such as purchasing, goods receiving,
material storage, consumption-based planning, and inventory. SAP MM is integrated with other
SAP modules such as Finance and Controlling (FICO), Sales and Distribution (SD), Quality
Management (QM), Plant Maintenance (PM), Production Planning (PP), and Warehouse
Management(WM).
The SAP MM module has two important master data - material and vendor. Broadly, the
various levels that can be defined for a SAP MM implementation are: Client, Company Code,
Plant, Storage Location and Purchase Organization.

The SAP MM module covers all tasks within the supply chain, including consumption-
based planning, planning, vendor evaluation and invoice verification. It also includes
inventory and warehouse management to manage stock until usage dictates the cycle should
begin again. Electronic Kanban/Just-in-Time delivery is supported
Overview of SAP MM module
Materials Management module in SAP consists of several components and sub-
components. The most prominent and widely used are Master Data, Purchasing and
Inventory.

 ENTERPRISE STRUCTURE:
Define Company:-Company is the organizational unit for which individual financial
statements can be drawn according to the relevant commercial law. A company can comprise of
one or more company codes. A Company has local currencies in which its transactions are
recorded. All company codes within a company must use the same transaction Chart of accounts
and the same Fiscal Year. Creation of company in sap is optional.

Path to Define Company in SAP:-

SAP IMG Path: – SPRO –> Implementation Guide for R/3 Customizing (IMG) –> Enterprise
Structure –> Definition –> Financial Accounting –> Define Company

Transaction code to “Define Company in SAP”:- OX15

Steps for creation of a Company: –

Step 1:- Enter Transaction Code SPRO in the commend field and press enter on the Keyboard

Step 2:- Next Customizing execute project screen select SAP Reference IMG

Step 3:- After Selecting SAP Reference IMG, a new screen IMG Path will be displayed. Select
Define Company execute icon for creating a company
Next Screen will be displayed after selecting the define company execute icon

Step 4:– Now select new entries icon to create a new company and enter the company details

The following details are to be entered for creating a new company

1. Enter 6 character alphanumeric code key that represents the group of company
2. Enter name of your company.
3. In the Detailed information update the address – Street name, PO Box#, Postal code, City.
4. Enter Country Code of the company
5. Enter language key
6. Enter local currency for the company (also known as Company code currency)
7. Click on Save icon or CTRL+S after updating the required information

Thus new Company is created in SAP.

Define credit control area:-

Transaction Code to Define Credit Control Area – OB45

IMG Menu Path:-

SPRO –> Implementation Guide –> Enterprise Structure –> Definition –> Financial Accounting
–> Define Credit Control Area
Update the required data

1. Credit Control area: - Enter four digits credit control area code

2. Currency: – Update currency of the credit control area.

3. Credit limit: - Update credit limit amount for the customers.

4. Click on save icon to save the new credit control area

Define Company Code: – Company Code in SAP is the smallest organizational unit of
Financial Accounting for which you draw individual financial statements like Balance Sheet and
Profit & Loss Account for purpose of external reporting. The Creation of company code in sap is
mandatory.

PATH: - IMG Reference –> Enterprise Structure –> Definition –> Financial Accounting –> Edit,
Copy, Delete Company Code

Transaction code to Define company Code: - OX02

Steps to Define Company Code: –

Step 1:- In next screen select Edit, Copy, Delete check Company Code

Step 2:- The below screen displays after selecting Edit, Copy, Delete Company Code (Define
Company Code)

We can create company code by selecting above two options. By selecting first option copy,
Delete, company code all the configuration and tables get copied automatically along with
assignments. Shown in below slides,
Here we are creating company code manually configure all the assignments by selecting second
option Edit Company Code Data. Double click on Edit Company Code Data

Step 3:- Double click on company code and update the following details
1. Update the company name

2. In Additional Data update the details of City

3. Country

4. Local Currency of company

5. Language.

After updating Address enter Click on save icon

Thus the company code exam is created in SAP.

Maintain controlling area: – The purpose of this activity is to define the organizational
element, i.e. Controlling Area, which is used with in Controlling. ‘Controlling Area’ is the
central organizational structure in ‘controlling’ (CO) and is used in cost accounting. Cost centers,
and product hierarchy and profit centers/ profitability segments are used to classify the
controlling area

Steps to Create Controlling Area in SAP CO

Transaction Code: – OX03

IMG Menu Path: – IMG Reference –> Enterprise Structure –> Definition ->Controlling –>
Maintain controlling Area.

Step 1:- Double click on maintain controlling Area

Step 2:-Select the new entries

1. Controlling area: - Company code and controlling area code can be same
2. Enter company code.
 1. Company code > controlling area: - Select 1.controlling area same as company code.
2. Save the information.

Define Plant:-

IMG Menu Path:-SPRO > SAP Customizing Implementation Guide (IMG) > Enterprise
Structure > Definition > Logistics – General > Define copy, delete, check plant

Transaction Code to Define Plant: - OX10

Step 1:- Follow the Menu Path as per below screen shot
Step 2:– Click on Define Plant

Step 3:- Click on New Entries

Step 4:- Enter new plant code and update the name of the Plant and press enter
Step 5:- Update the address of the plant and press enter

1. Enter the title of plant

2. Enter the name of plant
3. Enter the address of plant

Step 6:- After updating all mandatory fields click on save icon

Thus Plant was successfully configured in SAP

Define storage locations:-

Transaction code: - OX09

IMG Menu Path: - SPRO> SAP Customizing Implementation Guide >Enterprise Structure
Definition > Material Management > Maintain storage Location

Step 1:- Follow the menu path as per below screen shot and click on maintain storage location

Step 2:- Enter the Plant key where the storage location is to be maintained and press enter
Step 3:- Click on new entries for creation new storage location

Step 4:- Enter Key in Storage location and description of storage location

After updating the storage locations and click on save icon. Thus new storage locations are
configured.
Create Purchasing Organization in Step by Step

IMG Menu Path: - Customizing Implementation Guide > Enterprise Structure > Definition >
Material Management > Maintain > Maintain Purchasing Organization

T Code for Maintain Purchasing Organization: - OX08

Step 1:- Follow the menu path as per below screen shot for creating new purchase organization

Step 2:- Click on new entries

Step 3:- Update the following data and press enter

Purch.Organization:- Enter 4 digits Key that identifying the purchase organization

Purch. Org. descr. : - Update the description of the purchase organization, after that click on
save icon

Thus Purchasing Organization is successfully configured in SAP Material Management

Assign Company Code to Company:-

Menu Path:-SPRO –> IMG Reference –> Enterprise Structure –> Assignment –> Financial
Accounting –> Assign Company Code to Company

Transaction Code: - OX16

The following are the steps to assign the Company Code to Company

Follow the Path as per below screen shot

1. Enter the Position to identify that company code

2. After identify that company

3. Press ok

1. Assign company code to company

2. After assigning to the process you can save it.

Thus company code EXAM was assigned to Company EXAMPL

Assign company code to credit control area:-

Menu Path:-SPRO –> IMG Reference –> Enterprise Structure –> Assignment –> Financial
Accounting –> Assign Company Code to Credit Control Area

Follow the Path as per below screen shot

Select position to find that company code

1. Assigning company code to credit control area

2. Save it

Thus company code EXAM was assigned to credit control area EXCC
Assign company code to controlling area:

Menu Path:-SPRO –> IMG Reference –> Enterprise Structure –> Assignment –> controlling –>
Assign Company Code to Controlling Area

Follow the Path as per below screen shot

1. Select company code

2. Double click on assignment of company code, shown in below screen shot.

3. Enter new entries in below screen shot

1. Enter the company code
2. And save it.
Assign Plant to Company Code configuration steps:-

Transaction code Assign Plant to Company Code: - OX18

IMG Menu Path: - SPRO > SAP Customizing Implementation Guide (IMG) > Enterprise
Structure > Assignment > Logistics – General >Assign Plant to Company Code

Step 1:- Follow the Menu Path as per below screen shot

Step 2:- Click on New entries

1. Update Company code in company code field, and update plant code in plant field and
press enter
2. Click on save icon

Thus Plant is successfully assigned to Company code.

Steps to Assign Purchase Organization to Company Code:-

IMG Menu Path: - SPRO > SAP Customizing Implementation Guide (IMG) > Enterprise Structure
> Assignment > Material Management > Assign Purchase Organization to Company Code

T Code Assign Purchase Organization to Company Code: - OX01

Step 1:- Follow the IMG Menu Path and click on Assign Purchasing Organization to Company
Code

Step 2:- Click on Position and update the desired purchase organization code to find out

1. Update the company code in the Company Code field and press enter

2. Click on save icon

Thus successfully purchase organization is assigned to company code.

Steps for Assign purchase organization to Plant

IMG Path: - SPRO > SAP Customizing Implementation Guide (IMG) > Enterprise Structure >
Assignment > Material Management > Assign Purchase Organization to Plant

T Code for Assign purchase organization to Plant: - OX17

Step 1:- Follow the menu path as per below screen shot for Assign Purchase Organization to
Plant

Step 2:- Click on new entries

Step 3:- Update the following data and press enter

1. Update Purchase organization that you want to assign to plant, Update the Plant key

2. Click on save icon

Thus successfully Purchase Organization is assigned to Plant