SAP University Alliances

Authors Bret Wagner

Stefan Weidner Materials Management (MM)

Product
SAP ERP 6.0 EhP7
Global Bike Inc.

Level
Beginner

Focus
Cross-functional integration
Materials Management

Version
2.40

Last Update
June 2015

© SAP SE
 SAP ERP Course Overview

 Introduction to SAP
 Navigation
 Introduction to GBI
 Sales & Distribution
 Materials Management
 Production Planning
 Financial Accounting
 Controlling
 Human Capital Management
 Warehouse Management
 Project System
Page 5-2
 SAP ERP Functionality

 Inventory Management
 Purchasing
 MRP
 Physical Inventory
 Valuation
 Service Master
 Invoice Verification
 Product Catalogs

Page 5-3
 SAP ERP Unit Overview

 MM Organizational Structure
 MM Master Data
 MM Processes
- Procure-to-Pay Process

Page 5-4
 SAP ERP MM Organizational Structure (Materials Mgmt.)

 Client
- An independent environment in the system
 Company Code
- Smallest org unit for which you can maintain a legal set of books
 Plant
- Operating area or branch within a company
• Manufacturing, distribution, purchasing or maintenance facility

 Storage Location
- An organizational unit allowing differentiation between the various
stocks of a material in a plant

Page 5-5
 SAP ERP MM Organizational Structure (Purchasing)

 Purchasing Organization
- The buying activity for a plant takes place at the purchasing
organization
- Organization unit responsible for procuring services and materials
- Negotiates conditions of the purchase with the vendors
 Purchasing Group
- Key that represents the buyer or group of buyers who are responsible
for certain purchasing activities
- Channel of communication for vendors

Page 5-6
 SAP ERP GBI Structure for Materials Management

Global Bike Client

Company
Global Bike Inc. Global Bike Germany GmbH Code

Dallas San Diego Miami Heidelberg Hamburg Plant

Raw Materials Trading Goods Trading Goods Raw Materials Trading Goods
Storage
Semi-fin. Goods Finished Goods Finished Goods Semi-fin. Goods Finished Goods Location
Finished Goods Miscellaneous Miscellaneous Finished Goods Miscellaneous

Miscellaneous Miscellaneous

Page 5-7
 SAP ERP GBI Enterprise Structure in SAP ERP (Logistics)

Shipping Point DL00 MI00 SD00 TO00 HD00 HH00 PE00

RM00 TG00 TG00 TG00 RM00 TG00 TG00

Storage SF00 FG00 FG00 FG00 SF00 FG00 FG00
Location
FG00 MI00 MI00 MI00 FG00 MI00 MI00
MI00 MI00

Central Purchasing Organization (global) GL00

Purchasing Org. US00 CA00 PO DE00 AU00

Purchasing Group North America PGr Europe Asia

N00 E00 A00

Dallas Miami S. Diego Toronto Heidelb. Hamburg Perth Plant

DL00 MI00 SD00 TO00 HD00 HH00 PE00
CC US00 CA00 CC DE00 AU00 Company Code

Client GBI
Page 5-8
SAP ERP MM Master Data

Vendor Master Data

Material Master Data

Purchasing Info Record

Condition Master Data

Output Master Data

Page 5-9
 SAP ERP Vendor Master Data

 Vendor Master
- Contains all the necessary
information needed to business
with an external supplier
- Used and maintained primarily by
the Purchasing and Accounting
Departments
- Every vendor MUST have a
master record

Page 5-10
 SAP ERP Vendor Master Views

 Client Level
- Address
- Vendor Number
General Data
- Preferred Communication
 Company Code Data
- Reconciliation Account
- Terms of Payment
Company Code Data
- Bank Account Financial Accounting (FI)
 Purchase Org Data
- Purchasing Currency
Purchasing Data
- Salesman’s Name
Materials Mgmt (MM)
- Vendor Partners

Page 5-11
 SAP ERP Vendor Master

General Information relevant for the entire organization:

Name
Address
Client XXX Communication

Company Code specific information: Purch. Organization specific information:

Acc. Mgmt Incoterms

Payment Currency
Company Code US00 Bank
Purch. Org. US00

Company Code DE00 Purch. Org. DE00

Page 5-12
 SAP ERP Material Master Data

 Material Master
- Contains all the information a
company needs to manage about
a material
- It is used by most components
within the SAP system
• Sales and Distribution
• Materials Management
• Production
• Plant Maintenance
• Accounting/Controlling
• Quality Management
- Material master data is stored in
functional segments called Views

Page 5-13
SAP ERP Material Master Views

Sales Data

Basic Data Purchasing Data

Mat. Plan. Data

Material Master Forecasting Data

Storage Data

Controlling Data Quality Data

Accounting Data

Page 5-14
SAP ERP Material Master

General Information relevant for the entire organization:

Name
Weight
Client XXX Unit of Measure

Sales specific information: Storage Location specific information:

Delivering Plant Stock Qty

Loading Grp
Sales Org. UW00 Storage Loc. FG00

Sales Org. UE00 Storage Loc. TG00

Page 5-15
 SAP ERP Purchasing Information Record

 Framework for Purchase Order

- Contains the relationship
between a vendor and a
material
 Can be created:
- Manually
Purchasing
Information Record
- Automatically – Quotations
- Automatically – Purch. Orders
 Reporting
- Vendor Evaluation

Material Master Vendor Master

Page 5-16
 SAP ERP Purchasing Information Record

 Allows buyers to quickly determine:

- Which vendors have offered or supplied specific materials

 Info Records contain:

- Data on pricing and conditions
- Last purchase order
- Tolerance limits for deliveries
- Specific lead times
- Availability periods
- Vendor Evaluation data
 Serves as default information for Purchase Orders

Page 5-17
SAP ERP Master Data in Use

Purchase
Order

45......01

Material Master Vendor Master

Purchasing
Information Record
Page 5-18
SAP ERP Procure-To-Pay Process

Purchase Vendor
Requisition Selection
Purchase
Order

Notify
Payment Vendor
to Vendor

Invoice Vendor
Receipt Shipment
Goods
Receipt

Page 5-19
 SAP ERP Purchase Requisition

 Internal Document instructing the purchasing department to request

a specific good or service for a specified time
 Requisitions can be created two ways:
- Directly - Manually
• person creating determines: what, how much, and when
- Indirectly - Automatically
• MRP
• Production Orders
• Maintenance Orders
• Sales Orders

Page 5-20
 SAP ERP Requisition Sourcing

 Once the requisition has been assigned a source of supply it can

be released for processing
 There are a variety of ways that a purchasing department can
process a requisition to determine the appropriate Source of
Supply:
- Internal Sourcing Requirements
- Source List
- Outlined Agreement
- RFQ

Page 5-21
 SAP ERP Internal Sourcing

 The requisition for materials could be satisfied by sources within

our company.
- It is possible that a plant within your firm could represent a potential
source of supply for the material needed (centralized warehouse)
- If an internal source is identified the requirement is covered by an
internal procurement transaction (stock transport order)

Page 5-22
 SAP ERP Source List

 A source list is a record that specifies the allowed means for

procuring a material for a certain plant within a given time period.
- If the list contains a sole source the system will assign the vendor to
the requisition.
- If several options exist the system will display a list of vendors for you
to choose from.
- If no source has been established the system will revert to search
information records and outline agreements.

Page 5-23
 SAP ERP Outline Agreement

 Requisitions can be satisfied through existing longer-term

purchasing agreement
 These agreements are subdivided into:
- Contracts
• Consists of items defining the individual materials, material groups, or
services with prices and in many cases quantities
– Quantity
– Value
- Scheduling Agreements
• Total quantity of material is spread over a certain period in a delivery
schedule, consisting of line items indicating quantities and their planned
delivery date

Page 5-24
 SAP ERP Request for Quotation

 If nothing exist in the system we may need to submit a request for

quotation to our vendors. An RFQ is an invitation to a vendor by a
Purchasing Organization to submit a bid for the supply of materials
or services
- The accepted quotations will generate Purchasing Information Records
- Perform Quotation Price Comparisons
- Finally Select a Quotation

P.O.
Quote 45…12
Vendor
Pur generate 1
RFQ Quote Eval.
Req.
Vendor
2 Reject
Quote Letter
Vendor
3

Page 5-25
 SAP ERP Quotation from Vendor

 The quotation received by your company is a legally binding offer,

should decide to do business with the vendor, containing price’s
and conditions for the materials specified in the RFQ for a
predefined period of time.
- In SAP the RFQ and the Quotation will be become a single document,
you will enter the vendor’s response in the RFQ you created.

Page 5-26
 SAP ERP Vendor Evaluation once Identified

 Vendor evaluation helps purchasing evaluate vendors for sourcing while

also enabling the company to monitor vendor relationships through
performance scores and criteria you put in place.
- Supports a maximum of 99 main criteria and 20 sub criteria for each main:
• Price
– Price Level
– Price History
• Quality
– Goods Receipt
– Quality Audit
– Complaints/Rejection level
• Delivery
– On-time delivery performance
– Quantity reliability
– Compliance with shipping instructions
– Confirmation Date
- You then must establish a scoring range (1 -100) and determine the weight
factors of scores for each.

Page 5-27
 SAP ERP Purchase Order

 A purchase order is a formal request to a vendor for a specific

material or service under the stated conditions
 Purchase Orders can be created manually
- Reference a Purchase Order
- Reference a Purchase Requisition
- Reference a RFQ/Quotation
- Without Reference
 Purchase Orders can be create automatically

Page 5-28
 SAP ERP Purchase Order

 A purchase order can be used for

a variety of purposes, the item
category (procurement type)
defined in the PO will dictate the
use of the order and the process
that the order will follow:
- Standard
• Stock or Consumption
- Services
- Subcontracting
- Third-Party
- Consignment

Page 5-29
SAP ERP Purchase Order Structure

Header
Vendor Date
Doc. Number Currency
Terms of Payment PO Price
Item Overview

Purchase Materials Price/UofM

Order Quantities
Delivery Date
45......01
Line Item
PO History Tolerances
Line Price
Delivery Schedule

Page 5-30
 SAP ERP Purchase Order Output

 Once a Purchase Order has been created the vendor needs to be

notified
- Printed
- E-mail
- EDI
- Fax
- XML
 There are a variety of forms that aid in the purchasing process and
are generated from the Purchase Order
- Purchase Order Output
- Order Acknowledgement Forms
- Reminders
- Schedule Agreements

Page 5-31
SAP ERP Goods Receipt

Purchase
Order
45......01

Notify Vendor

Vendor

Goods
Receipt Shipment

Page 5-32
 SAP ERP Goods Receipt

 Goods movement in which we accept goods into our system

 If materials are delivered against a Purchase Order we will
reference that Order
- Determine if we got what we ordered
- System can purpose data for us from the PO
• Material, quantity
- Purchase Order History is update with the receipt
- Updates Physical Inventory
- Updates Inventory G/L Account

Page 5-33
 SAP ERP Material Movements

 When a goods movement takes place it is represented by a

Movement Type
- Movement types are three-digit keys used to represent a movement of
goods
• 101 – goods receipt into warehouse
• 103 – goods receipt into GR blocked stock
• 122 – return delivery to vendor
• 231 – consumption for a sales order
• 561 – initial entry of stock

 Destinations for Receipt of Goods

- Warehouse – Unrestricted, Quality, Blocked
- Quality
- Goods Receipt Blocked Stock

Page 5-34
 SAP ERP Effects of a Goods Receipt

 When a Goods Movement for the receipt of goods takes place a

series of events occur
- Material Document is Created
- Accounting Document is Created
- Stock Quantities are Updated
- Stock Values are Updated
- Purchase Order is Updated
- Output can be generated (GR slip / pallet label)

Page 5-35
 SAP ERP Invoice Processing

 Incoming Invoices are reference against a Purchase Order to verify

their content, prices, and arithmetic.
 If discrepancies arise between the purchase order or goods receipt
and the invoice the system with generate a warning or an error
- Depending on system configuration the difference could cause the
system to Block the Invoice
Purchase order
- Target quantity
- Target price

Invoice receipt Goods receipt

- Actual price - Actual quantity

Page 5-36
 SAP ERP Invoice Processing

 When an invoice is saved it applies the liability from the Goods

Receipt of our Purchase Order to a Vendor

 Upon verification the:

- Purchase Order is updated
- Material Master is Updated (MAP)
- Accounting Document is created

 Once the Invoice has been posted the verification process is

completed and the payment process is initiated within Financial
Accounting

Page 5-37
 SAP ERP Payment to Vendor

 Can be done automatically or manually

- Post Outgoing Payment vs. Payment Program

 Elements of the Payment Transaction:

- Payment Method
- Bank from which they get paid
- Items to be Paid
- Calculate Payment Amount
- Print Payment Medium

 Process will create a financial accounting document to record the

transaction

Page 5-38
 Goods Receipt / Invoice Receipt
SAP ERP
Reconciliation Account

Purchase requisition No impact on

Financial Accounting (FI)
Purchase order
Materials Management (MM)
and Financial Accounting (FI)
Goods receipt via automatic account
assignment

Inventory GR / IR
Dr Cr Dr Cr
$100 $100

Page 5-39
 Goods Receipt / Invoice Receipt
SAP ERP
Reconciliation Account

Amount owed is
Invoice receipt assigned and transferred to
vendor account payable

GR / IR Vendor A/P
Dr Cr Dr Cr
$100 $100

Page 5-40
SAP ERP Vendor Payment

Amount owed is paid to

Bank vendor and account payable
is reduced

Bank Vendor A/P

Dr Cr Dr Cr

$100 $100

Page 5-41
SAP ERP FI – MM Integration Point

Goods Invoice Payment

Receipt Receipt Program
AP
Inventory GR / IR (Vendor) Bank
Dr Cr Dr Cr Dr Cr Dr Cr

$100 $100 $100 $100 $100 $100

Page 5-42