1. SAP R/3 Materials Management Module1 1

2. Materials Management Procurement Inventory Management Warehousing
Material Master
Materials Planning
Hazardous Materials Management

3. Organizational Elements
Organizational elements are structures that represent the organizational views of an enterprise.
Company structure is designed based on business processes.
The organizational elements provide a framework that supports all business activities. 2

4. Organizational Elements for the Procurement Process
Company Code
Plant
Storage Location
Purchasing Organization
Purchasing Group 3

5. Company Code A company code represents an independent accounting unit.
Balance sheets and Profit and Loss statements, required by law, are created at the company code level 4

6. Plant
A plant is an organizational unit within a company. It produces goods, renders services, or distributes goods.
A plant can be one of the following types of locations:
Manufacturing facility
Warehouse distribution center
Regional sales office
Corporate headquarters 5

7. Storage Location
Storage locations are organizational units that allow the differentiation of material stocks within a plant. 6

8. Purchasing Organization and Groups
Decentralized with a separate organization for each plant.
Centralized, one organization for all plants.
Hybrid - multiple organizations buy for multiple plants.
Groups can be a further division of purchasing responsibility and/or structure. 7

9. Material Master
The material master contains all data required to define and manage material. It integrates data from engineering, manufacturing, sales and distribution, purchasing, accounting, and other departments.
The material master is used as a source of data for purchase order processing throughout the procurement cycle. 8

10. Material Master - View(s)
The R/3 system allows selection and maintenance of the data that is relevant to a particular department.
To create a view, the view must be selected on the “Select View(s)” screen before the material data is entered.
Users are responsible for creating and maintaining the view(s) of the materials that are relevant to their departments. 16

11. Material Master - Industry Sector
Industry sector determines the type of industry to which the material will be assigned.
Industry sector information determines:
which screens will appear and in what sequence
what industry-specific data will appear 17

12. Material Master - Maintenance
Defaults - speeds entry of data by using the most frequently used organizational levels and views as default values. These defaults are user-specific and may be overridden.
Reference Material - speeds entry by copying pertinent data from existing material master records.
Profiles - speeds entry by copying standard data created in a profile into a selected view.
Collective entry of storage locations - speeds creation of additional storage locations by adding multiple locations at one time.

13. Material Master - Material Type
Groups material with same basic attributes
Determines:
which department views are maintained
whether changes in material quantities are updated
whether internal or external procurement is allowed
which general ledger accounts are updated

14. Vendor Master
The vendor master includes all the data necessary for processing business transactions and corresponding with vendors.
Information is shared between the accounting and purchasing departments.
Data is grouped into three categories:
general data
accounting data
purchasing data 9

15. Basic Procurement Process
Requirements determination - purchase requisition
Source determination - RFQ and quotation
Vendor selection
Order processing - purchase order
Order follow-up
Goods receipt and inventory management
Invoice verification
Payment 10

16. Purchase Requisitions
Internal document
Requesting a certain quantity of material or service on a certain date
Can be created:
Manually
Automatically (MRP, sales orders, etc.)
Release approval procedures can be established

17. Purchase Requisition Sources
Manually created by user department
Automatically created by:
Planning (MRP, MPS)
Plant maintenance
Production orders
Sales orders

18. Processing Purchase Requisitions
Create purchase requisition (manually or automatically)
Determine source of supply
Release procedure (optional)
Allocate vendor and process

19. Creating a Purchase Requisition
Default data for line items
delivery dates, plants, purchasing groups, etc.
Maintain line item data
materials, quantities, delivery dates, etc.
Maintain account assignment (if required)
cost center, G/L accounts, project number, etc.
Check data
Save

20. Purchase Requisitions - Menu Paths
Create: Logistics -> Materials management -> Purchasing -> -> Requisition -> Create
Change: Logistics -> Materials management -> Purchasing -> -> Requisition -> Change
Display: Logistics -> Materials management -> Purchasing -> -> Requisition -> Display

21. Purchase Requisitions – Transaction Codes
Create: Logistics -> Materials management -> Purchasing -> -> Requisition -> Create
Change: Logistics -> Materials management -> Purchasing -> -> Requisition -> Change
Display: Logistics -> Materials management -> Purchasing -> -> Requisition -> Display

22. Purchase Orders Purchase orders are: Purchase orders identify:
a formal request to provide materials or services
an internal planning and tracking tool
Purchase orders identify:
vendor
material and/or service
quantity and price
delivery dates
terms of payment

23. Purchase Order Structure
Header - information specific to the entire purchase order
vendor
currency
payment terms

24. Purchase Order Structure
Line item details
account assignment
delivery schedule
materials/services quantity
price
description
item category

25. Item Category Item category defines the form of procurement
Whether a purchase order requires:
material number
account assignment
goods receipt and/or invoice receipt
Examples:
subcontracting
consignment
stock transfer

26. Purchase Order Output Request for quotations Purchase order
Order acknowledgment

27. Purchase Order Output Format
Printed and mailed
EDI
Faxed (hardcopy or electronic)

28. Purchase Order - Menu Paths
Create: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Create
vendor known
vendor unknown
via requisition
Change: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Change
Display: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Display

29. Purchase Order – Transaction Codes
Create: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Create
vendor known
vendor unknown
via requisition
Change: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Change
Display: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Display

30. Goods Receipt Goods receipt with reference to a purchase order:
copy data from purchase order
delivery notification
invoice verification
updates PO history
inventory update
automatic update of G/L accounts
You can search for the PO number with:
material number, vendor number, etc.

31. Goods Receipt Destinations
Stock - given a storage location, can be posted to three different stock types:
unrestricted-use
quality inspection
blocked stock (valuated)
Consumption - can be assigned a recipient or unloading point
Goods Receipt Blocked Stock - updates inventory, but material is not valuated (conditional acceptance)

32. Goods Receipt - Movement Types
Movement types - stock transactions:
goods receipt
goods issue
stock transfer
Movement type determines which:
quantity fields are updated
stock types are updated
G/L stock or consumption accounts are updated
fields are displayed during document entry

33. Movement Type - Examples
101 - goods receipt for purchase order into warehouse/stores
102 - reversal of goods receipt for purchase order into warehouse/stores
122 - return delivery to vendor
501 - receipt w/o purchase order into unrestricted-use stock 8

34. Goods Receipt - Account Postings
Inventory account is debited at standard price
GR/IR clearing account is credited at purchase order price
Price difference account is debited (credited) with difference between standard price and purchase order price 16

35. Effects of a Goods Receipt
PO history and PO updated
Material master - stock and value updated
Notification of goods receipt issued (optional)
Transfer request to Warehouse Management system (if active)
Material and financial documents created and/or updated
Stock and consumption accounts updated
Inspection notification in QM (if active) 17

36. Goods Receipt - Menu Paths
Create: Logistics -> Materials management -> Inventory management -> -> Goods movement -> Goods receipt -> For purchase order ->
PO number known
PO number unknown
Change: Logistics -> Materials management -> Inventory management -> -> Material document -> Change
Display: Logistics -> Materials management -> Inventory management -> -> Material document -> Display

37. Goods Receipt – Transaction Codes
Create: Logistics -> Materials management -> Inventory management -> -> Goods movement -> Goods receipt -> For purchase order ->
PO number known
PO number unknown
Change: Logistics -> Materials management -> Inventory management -> -> Material document -> Change
Display: Logistics -> Materials management -> Inventory management -> -> Material document -> Display

38. Invoice Verification
Matches the vendor’s invoice to the purchase order and the goods receipt (3rd part of 3-way match)
Matches price and quantity
Updates the purchase order and its history
Updates accounting information

39. Invoice Payment
Selects invoices for payment based on the payment terms in the vendor master or purchase order
Generates payment for released invoices
Updates accounting information

40. Accounts Payable Payment Process
Determines:
open items to be paid
when they will be paid
bank from which payment will be made
payment medium
who will get paid
Payment process creates a financial accounting document to record the transaction 9

41. Invoice Processing - Menu Paths
Enter an Invoice: Logistics -> Materials management -> Invoice verification -> Invoice verification ->-> Document entry -> Enter invoice
Change: Logistics -> Materials management -> Invoice verification -> Invoice verification ->-> Further processing -> Change
Display: Logistics -> Materials management -> Invoice verification -> Invoice verification ->-> Further processing -> Display

42. Invoice Processing - Menu Paths
Payment Processing: Accounting -> Financial accounting -> Accounts payable ->-> Document entry -> Outgoing payment -> Post
View PO History Documents: Logistics -> Materials management -> Purchasing ->-> Purchase order -> List display -> By PO number

43. Invoice Processing – Transaction Codes
Enter an Invoice: Logistics -> Materials management -> Invoice verification -> Invoice verification ->-> Document entry -> Enter invoice
Change: Logistics -> Materials management -> Invoice verification -> Invoice verification ->-> Further processing -> Change
Display: Logistics -> Materials management -> Invoice verification -> Invoice verification ->-> Further processing -> Display

44. Invoice Processing - Menu Paths
Payment Processing: Accounting -> Financial accounting -> Accounts payable ->-> Document entry -> Outgoing payment -> Post
View PO History Documents: Logistics -> Materials management -> Purchasing ->-> Purchase order -> List display -> By PO number