MM Knowledge

Master Data
Vendor Master

Vendor account group = * Field Selection (Based on account group, Company codes, Activity (T code) )

(One-time vendor doesn’t have address and bank details)

(Reconciliation Account is only for reporting of liabilities of company and invoice amount will be credited into
subledger account called as Vendor Account no itself)

* Number Range (Internal or External)- assign to Account group Simply

(Number range can be created and simply assign to account group)

* Partner Schema (Partner Role)

(SAP predefined partner role can be identified in our own Lang for Ex: LF is identify as VN in Eng.)

(Partner schema is grouping of partner roles and maintain at 3 levels<Pur.org, Sub range, Plant>) for every account
group)

Material Master:

(Create storage location automatically for plant & Movement type basis at the time of good receipt it will

create storage location data automatically in material master based on this configuration)

Material Type: * Number Rane Assignment (External no assignment), *Field Reference key, * Type of Procurement
(Int or Ext), *Material Views, *Price Control,

* Quantity update/Value update.

(Price control Mandatory Check control it will not change the Price control in material master once its been set).

Info Record

Info record nothing but maintain the relationship b/w vendor and material combination, for example each vendor
has each terms and conditions for each material.

Info record we can maintain: * Current and future prices (gross price, Freight, Discounts), Delivery data (Plan delivery
time), *Tolerances,

* Vendor data (Vendor material no and vendor material group)

* Purchase Order Text (It will flow to Po and Output also)

Info Record Can be maintain in 3 levels * General Data *Purchase Org Data * Plant

If suppose PO has no Material No (Service), it will create Info Record based on Material Group

Info Record can be created Manually (Me11) or Automatically by Info Update Indicator in Quotation, Po, Outline
agreement.

In quotation: By having Info Update Indicator Time dependent condition will copy into Info Record
In Po/Scheduling Agreement: By having, it will simply update the info record only based on the previous Document
no created.
In Contract: Info record not exist it will be created or else nothing happens.

Regular Vendor in Info record is used for Source of Supply (Fixed Vendor) and can be used in Source Determination,
have to activate Regular Vendor at Plant Level (OLME- Source determination- define Regular vendor).

Source List
Source list can be created in Info record & outline agreement, Source list we can source of supply for the particular
plant for particular period of time. Here we can block vendor from sourcing and to Block the material for external
Procurement only jus maintains the validity period only and leave the source of supply.
Alternatively, a source list can be generated for a material or group of materials in a plant via Transaction ME05
We can make source list mandatory for plant wise also in customization (OLME-Source list-plant level) l
Quota Arrangement
Quota Arrangement exist for a material that has a highest priority during source determination.
Quota Arrangement can be used for Internal/External Procurement and Special Procurement like Consignment,
Subcontracting, Stock Transfer.
For Quota Arrangement, Info record and Source List is mandatory and Quota usage and Source List Check mark also
have to be maintained in material master.
Quota Vendor has been selected based on Quota Rating
Quota Rating: Quota Allocated quantity + Quota base quantity/Quota. Which vendor getting lowest Quota rating
will be chosen automatically in PR.
If we add Additional vendor in Quota Arrangement , we need to maintain base quantity manually or automatically for
the vendor by clicking EDIT-Base Quantity – (Individual Cal or Collective Cal) or else Until this vendor’s Quota
Rating matches with any one of the vendor’s Quota rating system will automatically choose this additional vendor as
source of supply.(Newly Added vendor’s quota rating is always Zero in order to avoid that maintain quota base
quantity)
If Quota have same rating, system will pick vendor based on maximum quantity.

Procurement Process:
Item Category:
Item category only represents the Type of Procurement process. Item Category available based on the
Account Type. i.e., Stock Transfer Document Type only having “U” item category.
Item Category have a control over Accnt Assignment, Good Receipt and Invoice Verification and their working
process.
If the Info Update indicator is set in quotations, all of the conditions of the RFQ are copied into the purchasing info
record. This info record data is then populated each time you create a PO for the same supplier and material
combination.

 Order Acknowledgement Required indicator can be set in Material Master and Vendor master. (Without
acknowledgement details are entered in the PO, Migo can’t be saved)
Order Acknowledgement will help in MRP for materiel available in required dates.

Direct Material Procurement is procurement of Stocks and Indirect Material Procurement is Procuring of Consumable
materials. Indirect Materials for procured for a cost center and posted into Cost center G/l acnts as a expense and the
material is not valuated in the Inventory management becz material is directly posted into consumption acnts.
. Storage Location is not necessary as materials are directly consumed.
Stock is valuated for the Procurement with Accnt Assignment category Project & Sales order.
As Standard behavior, if we choose Multiple acnt assignment system will automatically set the GR Non-Valuated
Indicator and we can enable GR valuated for multiple acnt assignment via T Code: SFW5 and activate the Business
Function LOG_MM_MAA_1 like below
Service Procurement:
Based on Service Category (Purchasing, General Service, Plant maintenance, Software service, Basis service) all the
services are being done in sap.
Organizational status has been set for the Service like Basic, for CO, For Purchasing, For SD.
Further these Organizational statuses have been assigned to the service category with the Number Range.
Number range for the service master is being done with respect the Service Category.
We can do Source Determination & Default values based on Client and Pur.Org. If both has been maintained
Pur.Org data has highest priority. There we can maintain default Material Group, Unit of measure, Line increment.
Condition update indicator (Value flow from Condition record) has been set for purchase order, Quotation, Purchase
requisition has been enabled or disabled through this setup. But in the service entry sheet we can enable or disable
update indicator for the Any service Line item basis.
Consignment Procurement:
Consignment process needs Info record for Getting the value of Consignment goods to be paid since no price
(Condition Tab) has been maintained in the Purchase Order.
Consignment Settlement also not be done basis on PO. It is Fully basis on consuming the consignment or monthly
basis.
Subcontracting Procurement:
Subcontracting Process Accountings will be
Raw Material Price :
Raw Material Account Credit (BSX) –
Raw Material Consumption Account Debit (GBB) +
Finished/Semi Finished Price:
Finished/Semi Finished Material Account (BSX) +
Cost of Manufactured Goods (BSV) –
External Labor Price:
Labor charges will be posted into GR/IR Account. Becz vendor liabilities only be created at the time of Invoice Only
So, PO Net price (Labor Price) will be
GR/IR Account (WRX) –
External Labor Account Expense (FRL) +

Two Step Stock Transfer and Subcontracting PO: