SAP MM Introduction

Kah Wee
How ERP system works
PROS and CONS of ERP system
 PROS
 All information are available in system
 Easier for audit purpose
 Less paperwork
 Better Productivity
 Better Inventory management
 Ability to interface to and fro external parties

 CONS
 Expensive
 Security of data as all information are available in the system
Organizational units in MM
Company

Company codes Controlling Area

Plants Purchasing organizations

Storage locations
SAP MM
 MM is part of SAP logistics which helps to manage end-to-end
procurement and logistics business processes from requisitioning to
payment including;

 MM Procurement Process
 Inventory Management
 Invoicing
 Valuation and Account Assignment
 Material Requirements Planning (MRP)
 Reporting in SAP MM

• Various level that can be defined for SAP MM Implementation are

Client, Company Code, Plant, Storage Location and Purchasing
Organization

• 2 important master data in MM are Material and Vendor

SAP MM – Procurement
Process
 Master data
 Material master
 Vendor Master
 Purchase info record

 Purchasing
 Purchase Order
 Purchase Requisition
 Request for Quotation

 Special stocks
 Stock items
 Non – Stock / consumable items
 One time material
 Service orders, service entry sheet
 Subcontracting
 Stock transport order
SAP MM – Procurement
Process
 Source Determination
 Source List
 Source Determination

 Release procedures for purchasing documents (with/without classification)

 Creation of characteristics
 Creation of class
 Release groups, code, indicator, pre-requisites
 Release strategies
SAP MM – Inventory
Management
 Goods Receipt
 Goods issue
 Transfer posting
 Reservation
 Physical inventory

SAP MM – Invoicing
 Invoice posting
 Variances and blocking reasons
 Release block invoices
 Automatic settlements – Evaluated Receipt Settlement (ERS)
SAP MM – Valuation and
Account Assignment
 Material price change
 Material valuation type
 Configure automatic account determination

SAP MM – Materials
Requirements Planning (MRP)
 Planning Requirements
 Over all Procedures
 Planning Run
Overview of MM
Material requirements
planning

External procurement Internal procurement

Purchasing Production

Invoice Master data

Goods Warehouse
verification Material
receipt management
Batch
Vendor
Invoice
Inventory G/L accounts
receipt
management Customer
A Storage bins
B
.
Goods Transfer .
? issue posting
.

Sales and
Internal and external accounting distribution
 SAP MM – Procurement
Process Order Invoice MRP

?
7 Invoice verification Requirement determination
1

MM
Materials
Goods receipt and management
6 Source
inventory management 2
determination

Order

Order follow-up 3 Vendor selection

5
4 Order processing
Purchasing documents
Purchase
requisition

Purchase requisition

RFQ

RFQ ?
Purch.order

Quotation Quotation Purchase order

Quotation A ? B

Contract

Release order
 Procurement for stock
 Procurement for stock is characterized by the fact that the material is stored after goods
receipt, and the consumption of the material is entered in a separate step.

If material is procured for stock, the warehouse stock level of the material is increased by
entering goods receipt and reduced by entering goods issue.

 Procurement for consumption

 In the case of procurement for consumption, the material is regarded as consumed at
the time of goods receipt.

If a material is procured for consumption, the consumption purpose is defined by

purchasing (an account assignment category and further specifications such as cost
center or project number are entered).

If material is procured directly for consumption, no warehouse stock is created when

goods receipt is entered (and the stock value is not increased) but the consumption
statistics (and the consumption accounts in the accounting department) are updated
directly.
 SAP MM – Inventory
Management Company Code

Plants A001 AS01

Storage AA40 AS40 HAAB HUAV

locations

Warehouse numbers A40

Storage types 001 005

Storage bins 05-04-03 05-04-04

Inventory management is concerned with the flow of materials
within a company.
Goods movements are divided into goods receipts, goods issues, and
transfer postings.
When you enter a goods movement, the stock situation is updated both
on a quantity and value basis . In addition, material documents are
created to record each transaction.
SAP MM – Invoicing
or or
Purchase
order
Purchase Vendor
order invoice

Goods receipt

Invoice verification
?
In the case of order-based invoice verification, the
items in a purchase order are settled. A prerequisite for this is that
goods receipt has not yet been entered for the quantity invoiced when
invoice verification is carried out. Items from different purchase orders
can be settled together.

With invoice verification based on goods receipt, each

goods receipt is settled individually. The goods receipt must already
have been entered for the quantity invoiced. Different goods receipts
can be settled together. GR-based invoice verification must be
specified in the order item.
SAP MM – Valuation
Material valuation levels

0001

Company code Plant

Valuation area
In the material
master for a material with price control S, the
'Moving average price' is also displayed so you can determine the
difference between the acquisition price and the standard price.

Receipts are posted to the stock account with the receipt value Quantity *
Purchase order price. The moving average price is recalculated after every
transaction to correspond to the acquisition price.
 SAP MM – Materials
Requirements Planning (MRP)
Planning mark-out

Process
relevant to 31. 1.
MRP
Order
Material requirements
planning

Planned order
Opening period of
materials planning/
control

Purchasing Purchase
requisition
If a material requirement is automatically planned and
requirements planning is active in the plant, planning mark-outs are
automatically created when transactions relevant for materials planning
are carried out (goods issue, reservations, changes to the materials
planning data…)

Requirements planning can be carried out online or using

background processing.
Planned orders are proposals for the issue of purchase orders to satisfy
a requirement. In a separate step, they are converted into purchase
requisitions.
 Reorder Point procedure
Stock Lot size

Reorder level

Safety stock

Reorder point Delivery date Time

Replenishment
lead time
Implementation Milestones
• product evaluation
• implementation team member training
• design, as-is/to-be and gap analysis
• configuration and testing
• "go live"
• debugging and post-implementation support
• end-user training
• upgrades and/or maintenance
Commonly asked questions

 What is a Material Type?

 How do you create a material?
 How do you create a vendor?
 How do you define a Release Procedure for
PRs and POs?
 How are materials assigned to vendors
Useful links.
• www.sap-img.com
• www.sapfans.com
• www.erpgenie.com
The End

Kah Wee