SAP MM Organizational Levels in Procurement Process

SAP MM Organizational Levels in Procurement Process

In SAP system organizational levels are structures that represent the organization views of a company. We can describe levels as given below:

• Client 
• Company code 
• Plant 
• Storage location 
• Purchasing Organization

Client

The Client is the highest hierarchical level unit within a SAP system. We can say that it represents an Enterprise. We can also say that within this Enterprise, there might be more than 1 companies, which leads us to the next level, Company Code. It is represented in the system by a 3-digit numeric key.

Company Code

A Company Code is the organizational unit that allows you to structure your enterprise from a financial accounting perspective. It represents an independent unit producing its very own balance sheet, e.g a company within an Enterprise (Client). It is represented in the system by a 4-character alphanumeric key. This includes the entry of all events that require posting to the accounts and the creation of a complete audit trail for balance sheets and profit and loss statements. A company code represents an independent unit producing its own balance sheet, for example, a company within a corporate group (client).

Plant

The plant is an organizational unit where Operations are concerned. When I say operations, I mean Production, Procurement, Materials Planning and Maintenance locations. It is represented in the system by a 4-character alphanumeric key.

Storage location

The storage location is an organizational unit where we differentiate stocks of materials within a warehouse/plant. If further breakdown is required, we can use Storage Bins. It is represented in the system by a 4-character alphanumeric key.

Purchasing Group

Purchasing Group is a key to identify a buyer or a group of buyers responsible for a particular type of purchase. It is however not related to other units in the company structure.

Purchasing Organization

A Purchasing Organization is a unit which is responsible for the procurement of services/materials, and condition negotiations with vendors.

For SAP ERP Training or SAP Organizational Levels in Procurement Process Module Training please visit the links. 

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MM Inventory Management

Inventory Management 

Inventory Management in SAP (SAP MM-MI) deals with goods. Actually the process of Procurement starts with collecting the business requirement for goods and goes to getting the goods from Vendors in SAP MM.

Once received; Goods have to be place on premise of the company in order to be accessible for consumption or reselling. Here Inventory Management helps dealing with Goods Placement and management of SAP Stocks

The key points about inventory management are as follows:

• Inventory management deals with management of stock either on value or quantity basis.
• Planning, entry and keeping records of all goods movement comes under inventory management.
• Goods movement will create a document that will update all stock quantity and value in inventory that is known as material document.
• Material document will be referred by a document number and document year.

Inventory management deal with the following terms which are as follows:

• Movement Type
• Goods Receipt
• Reservation
• Goods Issue

Movement Type:

Movement type describes the type of stock posting in inventory. It represents the posting in stock is due to which type of order like whether stock is posted against goods receipt or goods issue.

Goods Receipt:

Goods receipt is the phase in which the material is received by the ordering party and the condition and quality are verified. Depending upon the movement type stock is posted in inventory with the help of goods receipt. Goods receipt will show increase in warehouse stock.

Reservation:
Sometimes, stock need to be blocked in advance so that it can be available at a particular point of time. This is known as reservation. Reservation ensures that stock is available and it can be used when required. Reserved quantity can be viewed by TCode MMBE. Provide the material number and plant.

Goods Issue:
Goods issue means moving stock out of inventory that may be due to several reasons like withdrawing of material for sampling or returning the goods back to vendor. So, goods issue will result in decrease in quantity in warehouse.

For SAP  ERP Training or SAP Inventory  Management  Module Training please visit the links.

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SAP MM Master Data

What is Master Data?

Master data is the core data that is used as a base for any transaction. If you are producing, transferring stock, selling, purchasing, doing physical inventory, whatever your activity may be, it requires certain master data to be maintained.                                                                                      Example of Master Data

• Material master data 
• Customer master data 
• Vendor master data
• Pricing/conditions master data 
• Warehouse management master data (storage bin master data).

Material master data:

Material master data, the basic details on materials an enterprise procures externally or produces in-house. The unit of measure and the description of a material are examples of the data stored in a material master record. Other SAP Logistics components also access the material data.

The material master database (often referred to simply as the “material master“, and comprising all the individual material master records stored in the system) contains descriptions of all materials that an enterprise procures, produces, and keeps in stock. It is the central repository of information on materials (such as inventory levels) for the enterprise.

The integration of all material data in a single materials database eliminates the problem of data redundancy and permits the data to be used not only by Purchasing, but by other applications (such as Inventory Management, Materials Planning and Control, Invoice Verification, and so on).

Vendor master data                                                                                                                          called as Information about external suppliers. The vendor’s name and, the currency the vendor uses, and the vendor number (stored in the SAP system as an account number) are typical vendor data.

The vendor master database contains information about the vendors that supply an enterprise. It consists of a large number of individual vendor master records, each containing the relevant vendor’s name and address as well as data such as:

• The currency used for ordering from the vendor
• Terms of payment
• Names of important contact persons (sales staff)

In Accounting, the vendor represents an account payable, the vendor master record also contains accounting information, such as the relevant control account (reconciliation account) in the general book keeping system.

For SAP ERP Training or SAP Master Data Module Training please visit the links.

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SAP MM Procurement Process (Procure to Pay)

SAP Procurement Process (Procure to Pay)
Procure to Pay: is an integral part of any business. Businesses need to procure material and or services, this procurement can be in-house (internal) or from external source. In this session we will be taking a look at external procurement.
The procurement process cycle is triggered by requirements either from MRP or Request of the material or service from a business process, followed by vendor selection, purchase order, receipt of goods, vendor payment.

Purchase Orders (PO)

Purchase Order is a legal and confirmed document between the organization and the vendor or supplier for procurement of material and or services. The document contains the vendor information, material or service required, quantity, price per unit, date of delivery.

Goods Receipt (GR)

Based on Purchase Order, the goods shipped by vendor ships are recorded in the system and the process is termed as goods receipt (GR). 

When goods receipts are posted against a purchase order, the quantity & value of inventory is affected and at the same time a liability towards the vendor is created.

Invoice Verification & Vendor Payment

On receipt of goods against a purchase order, the vendor presents an invoice for payment of delivery of goods or services rendered. The invoice received is posted in the system and on verification of the invoice against the purchase order, accounts payable will release the payment to vendor.

For SAP ERP Training or SAP Procurement Process Module Training please visit the links.

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SAP MM: Materials Manaement Course Outline

SAP  Course Outline

Introduction

Starting with procuring materials for the organization via a purchase order, materials management also deals with the movement of materials within and between various departments. MM supplies raw materials and other components for production. Once products are produced, the software enables stocking the materials in the warehouse, ready to ship when there is a need. The SAP software records a financial transaction (most of the time) when goods are moved into/within/outside the organization. Vendors submit invoices and are paid at a later date (depending on the payment terms), thereby completing the procure-to-pay cycle. Alex recalled that they called it a source-to-pay cycle at FLW.

Content

Procurement process

• Purchase requisitions
• Orders
• Request for quotation
• Procurement for stock
• Procurement for direct consumption
• Procurement via subcontracting
• External services
• Reporting

Master data

• Material master
• Vendor master
• Purchasing info record
• Source list
• Quota arrangement
• Messages

Procurement optimization

• Contracts
• Scheduling agreements
• Invoicing plans
• Release procedures
• Purchasing document configuration

Inventory management

• Goods receipt
• Goods issue
• Stock transfer
• Reservations
• Consignment
• Physical inventory
• Availability check
• Movement types
• Messages

Evaluation and account determination

• Material valuation
• Price control
• Account determination
• Split valuation

Material requirements planning

• Reorder point planning
• Lot size calculation
• Planning run
• Planning results
• Logistics invoice verification
• Invoices
• Credit memos
• Automatic settlement
• Invoice verification in the background
• Subsequent debits
• Freight invoices
• Blocked invoices
• GR/IR clearing account maintenance

Enterprise structure and material master configuration

• MM organizational levels
• Material type
• Field selection

SAP Solution Manager

• Overview of SAP Solution Manager
• Implementation 
• experience sharing

For SAP ERP Training or SAP MM Module Training please visit the links.

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SAP MM Material Manaement

Materials Management (MM)

Starting with procuring materials for the organization via a purchase order, materials management also deals with the movement of materials within and between various departments. MM supplies raw materials and other components for production. Once products are produced, the software enables stocking the materials in the warehouse, ready to ship when there is a need. The SAP software records a financial transaction (most of the time) when goods are moved into/within/outside the organization. Vendors submit invoices and are paid at a later date (depending on the payment terms), thereby completing the procure-to-pay cycle. Alex recalled that they called it a source-to-pay cycle at FLW.

SAP MM Module Process Flow                                                                                   

• Determination of Requirements
• Source Determination
• Vendor Selection
• PO Processing
• PO Follow-up
• Goods Receiving and Inventory Management
• Invoice Verification

    

SAP Business Process

The features of SAP MM system are as follows:

·        SAP MM is one of themodules of SAP that deals with material management and inventory management.

·        Material Management process ensures that there is never a shortage of materials or any gaps in the supply chain process of the organization. SAP MM speeds up the procurement and material management activities making the business run smoother with complete time and cost efficiency.

·        It deals with managing the materials (products and or services) resources of an organization with the aim of accelerating productivity, reducing costs and increase improvement and at a similar time be versatile to accommodate changes in day to day life.

·        It deals with the Procurement Process, Master Data (Material & Vendor Master), Account Determination & Valuation of Material, Inventory Management, Invoice Verification, Material Requirement Planning etc.

Introduction to Master Data in SAP

What is Master Data?

Data stored in SAP R/3 is categorized as

• Master Data and
• Transactional Data.

Master data is the core data that is used as a base for any transaction. If you are producing, transferring stock, selling, purchasing, doing physical inventory, whatever your activity may be, it requires certain master data to be maintained.

Example of Master Data

• Material master data
• Customer master data
• Vendor master data
• Pricing/conditions master data
• Warehouse management master data (storage bin master data)

The ones we will focus in MM module are material master and purchase info record.

Organizational Structure of SAP MM

·          Client

·        Company Code

·        Purchase Organization

·        Storage Location

·        Purchasing Group

SAP MM Organization Structure

Client

It is a highest of organization unit that contains of tables, master data, etc. In real time Sap basis consultant creates new SAP clients other than existing clients.

Company Code

Company code is a separate legal entity or separate accounting department of an

Organization. All the financial statements like profit and loss account, business

 Balance sheets, etc.. Are prepared at company code level.

Plant

Plant is a location where the logistics activities such as production, services and maintenance facilities are performed.

Purchasing Organization

Purchase organization is a physical organization unit which is responsible of goods and services for an organization from the vendors.

Storage Location

Storage location is the sub division of plant where the materials are maintained and stored.

Purchasing Group

It is a groups of persons or employees who are responsible with the materials that are being purchased in the organization. Purchase groups are assigned to a respective material master.

How to Change Material Master Data (MM02, MM03) in SAP

It may be needed to change certain option in our material master (due to the organizational changes, or changes in processes). We cannot use MM01 as that is the transaction code used only for creating views that are not maintained for certain material. In this case, we need to use MM02and MM03 transaction codes.

In SAP transactions ending with 01 are for creating, ending with 02 for editing/changing, and the ones ending in 03 are used for viewing data without possibility to change it.

Introduction to Purchasing & Purchase Requisition in SAP

Purchasing is a component of SAP MM module and its process can be roughly depicted in below diagram.

For more details about sap erp training and sap MM training please visit : www.asipt.net/sap-erp-training

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