SAP R/3 Materials Management Module

1. SAP R/3Materials Management Module

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.

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

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

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

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

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.

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.

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.

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

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

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

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: • 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

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

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)

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

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