Key User Training - MM

MM OverviewRecordingRequirementsPlacement ofordersFollow up forordersVendor InvoiceVerificationInventoryValuationMaterialReceiptsStockAdjustmentsMaterialIssuesMaterialsManagement

The Procurement ProcessPlanning, Reporting & Analysis

Purchase OrderMasterDataVendorAnotherPlantPurchasing

Goods ReceiptGoodsReceiptAreaAnotherPlantVendorAccountingDocument

Invoice ProcessingPurchaseOrder10203040MaterialDocumentInvoice VerificationMasterDataPaymentProcessing

Procurement Types

Consumable MaterialConsumable materials are materials or services that are procured directly for an account assignment object.

Inventory Management is not carried out.

Examples of consumable materials are: office materials, computer systems, grease, welding rods.

The system automatically updates consumption of materials with a material master record.

Account Assignment ObjectsPurchasingDocumentAccountAssignmentA/c AssignmentCategories

Account Assignment (contd..)ReceiptsReceipts directly postsconsumption againstdepartment.ConsumingDepartmentIssuesConsumingDepartmentIssue is not required.

Procurement for Stock MaterialsEntry of material number required.

No account assignment category.

Posting to stock accounts.

Quantity and value updated in the material master.

Moving average price is updated.

Procurement for ConsumablesEntry of material number not required, but is possible.

Account assignment category mandatory.

Posting to consumption accounts.

Consumption update for materials with material master only.

Scope of Inventory Management

Integration of Inventory Management

Material Movements in IM

Types of Stocks

Goods Receipt for Stock Materials

Effects of Goods Receipt

Goods Issue

Effects of Goods Issue

Stock TransfersLogical

Effect of Transfer PostingsNo accounting postings created normally (except in certain specific cases)

Stock quantity reduced in one location / stock type and increased in the other.

Material document is created for every transfer to record the stock movement.

Data in SAPTransactionsPlacing Orders, Material Receipts / Issues, CreatingProduction Orders, Booking Vendor Invoices

Data in SAP (contd)Master Data

Central Repository, used by various departments.Created once and changed if required.Transactions use these data repeatedly.Examples :Material Master, Vendor Master, BOM, Routings

Transaction Data

Created when a transaction is carried out.Record of the details of a transaction.Reports use the transaction data.Examples : Purchase Orders, Production Orders, Material Receipts.

Material Master StructureVarious departments use the material master for their day to day activities.Various departments need different data for the same material.

Org. Levels in Material MasterFor the same material, different data is to be maintained, depending onorganizational levels

Org. Levels (contd)MaterialMasterBasic DataPurchase TextSales TextPurchasingPlanning (MRP)Work SchedulingSales Gen. DataSales Org Data

Material master data is organized at various Organizational levels.

Material Master : ViewsBasicDataSalesDataPurchasingDataCostingDataAccountingDataPlanningDataStorageDataSchedulingDataMaterialMaster

Material Type

Control using Material Type

Material Types (contd)

Material GroupsGroups the materials as per some common defined criteria. Some typical examples are Plastic Components, Rubber Components, Iron & Steel.

Must be entered in purchasing documents if purchasing is done without any material master.

Can be used for analysis / reporting in Purchasing / Inventory.

Can be used to setup approval (release) procedures for Purchase Requisitions.

May be changed in the material master, but distorts the analysis.

Material Valuation Paramaters

IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamYou can create a request for quotation to determine the source of supply for a material or service. After sending the requests for quotation to the desired vendors, you can enter the quotation received.You can compare the quotations received using a price comparison list. You can then select the most favourable quotation and convert it into a purchase order. If required, the R/3 system generates rejection letters for quotation not accepted.For goods receipt referencing a purchase order, the system compares the goods receipt quantity with the purchase order quantity. You can set under delivery and over delivery tolerances in the purchase order.In Invoice Verification, you enter the vendor invoices received and check the contents and prices for accuracy. If a purchase order is referred to during verification, the system checks the accuracy of the contents using information in the purchase order and goods receipt.Key User Training (MM)IBM MM TeamA purchase order is a formal request to a vendor to supply certain goods or services under the stated conditions.Purchase orders can be created without reference, or with reference to a purchase requisition, a RFQ or another purchase order.When you enter the purchase order data, the system suggests values to use. For example, the ordering addresses, as well as the terms of payment and freight (Incoterms) are suggested from the vendor master record. If you have maintained a material master for a certain material, the material groups, amongst other things, are suggested for you. If a purchasing info record already exists in the system, a default price is copied to the purchase order.The purchase order is either sent to a vendor or you carry out a stock transport order in another plant belonging to your company or group. With a stock transport order, you can take into account the associated freight costs in the purchase order.Key User Training (MM)IBM MM TeamPosting a goods receipt to stock with reference to a purchase order has a number of advantages for you, including:the goods receiving department can check whether the goods delivered are what was actually ordered.the system suggests data in the purchase order when you enter the goods receipt (for example material ordered, quantity) which makes it easier to enter the goods receipt and check overdeliveries and under deliveries when goods arrive.The purchase order is updated with the deliveries and purchasing department can generate reminders for overdue deliveriesWhen a goods receipt to warehouse is posted, a material document is created that contains information such as the material delivered and the quantity delivered. The storage location in which you place the material into stock in the associated plant is recorded.In transaction relevant for material valuation, at least one accounting document is created which records the effects the material movement has on the value of the stock.Key User Training (MM)IBM MM TeamIn Materials Management, the procurement process is completed by Invoice Verification. The invoices and credit memos are entered and checked for accuracy of the contents and prices. However, payment related transactions are carried out only in Financial Accounting (Accounts Payable). Only information is passed on to FI by Invoice Verification. Thus, it is a link between Materials Management and external or internal accounting.When you enter an invoice with reference to a purchase order, the system suggests data from the purchase order and the goods receipt for the purchase order, for example, vendor, material, quantity still to be invoiced, terms of payments and so on.If there are variances between the purchase order or goods receipt and the invoice, the system warns the user and blocks the invoice for payment, if necessary.Posting the invoice completes the process of Invoice Verification. The purchase order history is updated and Financial Accounting can pay the open invoice item.Key User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamWhen you create a material master record, you must assign the material to a material type. The latter defines certain attributes of the material and has important control functions.The material type defines the procurement type for a material, for example. The procurement type indicates whether the material is produced in-house, procured externally or both.Together with the plant, the material type determines the inventory management requirement for a material. That is to say, it determines,whether changes in quantities are updated in the material master record.Whether changes in the value of the material are also updated in the stock accounts of FI.Furthermore, the material type determines which accounts are to be posted when a material enters or leaves the warehouses or stores.The standard material types NLAG and DIEN are available for materials that cannot or are not intended to be stored (kept in stock) and for simple services respectively:NLAG - non-stock material is material that is not stored but is used or consumed immediately.DIEN - Services are procured externally.Since they obviously cannot be stored, they are also regarded as being consumed immediately. A material master record belonging to this material type can always contain purchasing data.Key User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamKey User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)IBM MM TeamIn the R/3 system, the external procurement is structured in the following way:Determination of requirements: The user department can pass a requirement for materials to the purchasing department manually, via a requisition. If you have set a MRP procedure for a material in the material master, the R/3 system generates a requisition.Determination of source of supply: The R/3 system supports the buyer responsible in many different ways when determining the source of supply.You can use determination of the source of supply to create requests for quotations (RFQs) and then to enter the quotations.Vendor Selection: The system supports you during vendor selection by comparing the prices of the different quotations. By comparing quotations, you can establish, for example, the most favourable vendor. You can also send rejection letters from this option.Purchase Order Processing: When you enter purchase orders, the system provides support by referencing the requisitions or the RFQs.Purchase Order Monitoring: The buyer can monitor the processing status of the purchase order at any time online. The buyer can, for example, determine whether goods receipt or invoice receipt has been done for a given item in the purchase order. The system also helps in generating reminder letters to the vendors.Goods Receipt: By referencing the purchase order, one can compare the goods being received against the goods ordered, also checking for the delivery tolerances.Invoice Verification: Vendor invoices can be checked for accuracy of prices and quantities by comparing these with those of the PO and goods receipt.Payment Processing: Financial Accounting normally deals with this. However, the inputs are received from Invoice verification.Key User Training (MM)