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SAP MM Organizational data

The client is a commercial, organizational unit within the R/3 System, with its own data, master records, and set of tables.From a business perspective, the client forms a corpor The client is a commercial,organizational unit within the R/3 System, with its own data, master records, and set of tables.From a business perspective, the client forms a corporate group


The company code is the smallest organizational unit for which you can have an independent Accounting department within external Accounting. A company code represents an independent accounting unit, for example, a company within a corporate group (client). A plant is an organizational logistics unit that structures the enterprise from the perspective of production, procurement, plant maintenance, and materials planning.


plant is a manufacturing facility or branch within accompany plant can be one of the following types of locations:
A) Central delivery warehouse
B) Regional sales office
C) Manufacturing facility
D)Corporate headquarters
E) Maintenance plant


When creating a new plant, you can use the plant copying function. When you use this function, the system processes the entry in the plant table and in all dependent Customizing and system tables in which the plant is included as a key. The storage location is an organizational unit that allows the differentiation of material stocks within a plant. Inventory Management on a quantity basis is carried out at storage location level in the plant.


Physical inventory is carried out at storage location level. The client is uniquely defined in the system by a three-digit alphanumeric key.A unique four-digit alphanumeric key in the client defines the organizational levels company code and plant. A unique four-digit alphanumeric key in the plant uniquely defines the storage location. Organizational structures are assigned to each other. For example, several plants may be assigned to one company code. However, a plant can be assigned to one company code only in the R/3 System.


Valuation Area
The valuation area is the organizational level at which material is valuated. Plant and company code are two possible valuation areas in the R/3 System.When stock is valuated at plant level, you can valuate a material in different plants at different prices. When you valuate stock at company code level, the valuation price of a material is the same in all of a company’s plants (that is, in a company code).SAP recommends that you valuate material at plant level. Valuation at plant level is mandatory if you want to use either of the Production Planning or Product Cost Accounting components, or if your system is a Retail system.


Caution: Defining the valuation level in Customizing is a fundamental setting, and is very difficult to reverse.A purchasing organization is an organizational level that negotiates conditions of purchase with vendors for one or more plants. It is legally responsible for completing purchasing contracts.A purchasing group is the key for a buyer or group of buyers responsible for certain purchasing activities.The purchasing organization is responsible for the company’s purchasing requirements.


Purchasing organization
You can incorporate purchasing into the company structure by assigning the purchasing organization to company codes and plants. This means that you can determine whether purchasing is organized centrally or decent rally in your company. You can have a combination of centralized and decentralized purchasing organizations.In plant-specific procurement, a purchasing organization is responsible for procuring materials for one plant only.You can set up a cross-plant purchasing organization for each company code.


This purchasing organization procures material and services for all plants assigned to the company code.If you want to organize purchasing on a cross-company-code basis, you cannot assign a company code to the purchasing organization in Customizing. When you create a purchase order, for example,the system asks you to enter the company code for which you want to procure the material. Determination of requirements: The user department responsible can manually pass a requirement for materials to the Purchasing department via a purchase requisition.


MRP Procedure
If you have set a MRP procedure for a material in the material master, the R/3 System automatically generates a purchase requisition. Determination of the source of supply: The R/3 System helps the buyer determine possible sources of supply. You can use determination of the source of supply to create requests for quotation (RFCs)and then enter the quotations. You can also access existing purchase orders and conditions in the system.


Vendor selection: The system simplifies the selection of vendors by making price comparisons
between the various quotations. It automatically sends rejection letters.


Purchase order processing: The system facilitates data entry by providing entry aids when you are
entering purchase orders.


Purchase order monitoring: The buyer can monitor the processing status of the purchase order online
at any time and can determine whether goods or an invoice have been received for the relevant
purchase order item. The system also supports reminder procedures.

Goods receipt: The system compares the goods receipt quantity with the purchase order quantity.

Invoice verification: Vendor invoices are checked for accuracy of prices and contents.

Payment processing: Financial Accounting normally deals with vendor payments.


Purchase Requisition
Purchase requisitions are internal documents you use to request your Purchasing department to
procure a particular quantity of a material or a service for a particular date.Purchase requisitions are either created manually by the department responsible or automatically by MRP. When you create a purchase requisition for materials that have a material master record, the R/3 System supports you when you enter data by transferring data in the material master record into the purchase requisition. Purchasing converts the purchase requisition into a request for quotation (RFQ), purchase order,or outline agreement.


After establishing that a material or service is required, the Purchasing department needs to convert the purchase requisition into a purchase order. The R/3 System can support the Purchasing department using the requests for quotation in the source determination. First, you enter a request for quotation for the relevant material or the required service. You can enter the request for quotation manually or with reference to a purchase requisition. The second option has the advantage that the information already in the purchase requisition is copied directly to the request for quotation. Then you allocate the required vendors to the request for quotation.


The system determines the address from the data in the respective vendor master record.You send the RFQs to the chosen vendors, who then send their quotations or rejection letters. You enter the quotations along with the conditions and delivery dates they contain with reference to the corresponding RFQ. You can determine the most favorable items or quotation by means of a quotation comparison.You also have the option of saving as purchasing info records the conditions of quotations in which you are interested.


A purchase order is a formal request to a vendor to supply certain goods or services under the stated conditions. You can create purchase orders without reference, or with reference to a purchase requisition, a request for quotation, or another purchase order. When you enter the purchase order data, the system suggests default values. For example, it suggests the ordering address, as well as the terms of payment and freight (incoterms) from the vendor master record. If you have maintained a material master for a given material in the R/3 System, the system suggests the material short text or the material group, for example. If a purchasing info record already exists in the system, the system copies a price proposal to the purchase order. You either send the purchase order 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.


Note: For more information about stock transport orders, refer to the Materials Management
documentation on the topic of Inventory Management: Special Stocks and Special Forms of
Procurement in Materials Management.

Posting a goods receipt to stock with reference to a purchase order has a number of advantages for you,


Including:The goods receiving point can check whether the delivery is the same as the purchase order data, that is, whether the goods that were ordered have been delivered.The system suggests data from the purchase order when you enter the goods receipt (for example,items and quantities). This makes it easier to enter the goods receipt and check over deliveries and under deliveries when goods arrive.Among other things, the purchase order history is automatically updated as a result of the deliveries.The Purchasing Department can send a reminder about late deliveries.


When you post a goods receipt to the warehouse, the system creates a material document containing information such as the material delivered and the quantity delivered. The system also records the storage location in which you place the material into stock in the plant concerned.In transactions relevant for material valuation, the system creates at least one accounting document,which records the effects of the goods movement on the value of the stock.


In Material ls Management, the procurement process is concluded by the invoice verification process,during which invoices and credit memos are entered and the contents and prices are checked for accuracy. However, payment and evaluation of invoices is not part of Invoice Verification; the appropriate information for these tasks is passed on to other departments. Invoice Verification therefore creates 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 receipts for the purchase order (for example, vendor, material, quantity
still to be invoiced, terms of payment, and so on).


If there are discrepancies between the purchase order or goods receipt and the invoice, the system warns the user, and depending on how the system is configured, blocks the invoice for payment. The posting of the invoice completes the invoice verification process. The system updates the purchase order history and Financial Accounting initiates payment for the open invoice items.Invoice Verification creates a link between Materials Management and external or internal accounting.


A purchase order is a formal request to a vendor to supply you with goods or services at the conditions stated in the purchase order. You specify in the purchase order whether the material is delivered for stock or for direct consumption (for example, cost center, asset or project). The goods receipt and invoice verification are usually carried out on the basis of the purchase order.You can minimize data-entry time by creating purchase order items with reference to an existing purchase requisition, RFQ or purchase order. You can also enter a purchase order without reference to preceding documents in the system.If you want assistance choosing a vendor when you create the purchase order, you can use the source determination function in the R/3 System.


The system suggests possible vendors on the basis of the defined sources of supply (outline agreements, info records) and, if required, on the basis of other master data (source list entries, quota arrangements). You can determine the current processing status for each purchase order item. For example, you can determine whether goods receipts or invoice receipts have already been posted for an item. You can display the follow-on documents (material document and invoice document) from the purchase order history screen.Like other purchasing documents in the R/3 System, the purchase order consists of a document header and one or more items.The document header contains information that refers to the entire purchase order.


Examples of this:
Include the document currency, the document date, and the terms of payment. The item part of the document contains data describing the materials or services ordered. You can
maintain additional information for each item (for example, delivery schedules or item-based text). In a purchase order, you can procure materials or services for all plants attached to your purchasing organization.


For large volumes of data new screens are available in which the data is represented in table format.
You have the option of determining the layout and size of the individual fields on a screen yourself.
Horizontal and vertical scroll bars are available for navigation purposes
The following screens are displayed using this technique:
Purchasing: – Item overview screens in purchasing documents and requisitions
Schedule line overview screen
A) Multiple account assignment screens in purchasing documents and requisitions
B) Overview screen for order acceptance/fulfillment confirmations
C) Release documentation (scheduling agreement)
D) Overview screens in source list
E) Overview screens in quota arrangement
F) Overview screen for sources of supply
G) Invoice Verification: – One view of the item list.
H) External Services: – Service entry sheet Service specifications
I)MRP: – Stock requirement list


The item category defines whether an item requires and/or can have a material number, account
assignment, goods receipt, and/or invoice receipt. The item categories displayed depend on the
document type. In Customizing, you can define which item categories are allowed for which
documents.The items categories that are defined include the following:
Standard: Used for materials that are to be procured externally.


Subcontracting: The finished product is ordered from a vendor. The components that the vendor
needs to manufacture the finished product are entered as “material to be provided” items.

Consignment: The vendor makes material available, which you then manage as consignment
stock. A liability only arises when material is withdrawn from consignment stock, not when the
stock is placed in the consignment stores.


Stock transport orders: The material is transferred from one plant to another.

Third-party order: The ordered material should be delivered directly to a third party (for example,
a customer). The vendor sends your company an invoice for the material.


Note:A) Subcontracting, consignment, stock transfer orders and third-party orders are covered in the
Materials Management documentation on Inventory Management: Special Stocks and Special Forms
of Procurement in Materials Management.

B) You can issue purchase orders, changes to purchase orders, and order acknowledgements as
messages via printer, fax, EDI or e-mail.
C) You can configure which header texts and item-based texts the system issues. The header text is
printed at the top of the purchase order and contains general information. Item texts describe a
purchase order item in more detail. You can also include and issue standard texts.


Note: You will find more detailed information about outputting purchasing documents in the
Materials Management documentation on Purchasing: Entering Texts, Print Functions and
Information Transmission.


End to End MM process

Create Company Code – FI function
MM – PRocess
Create Plant
Assign Company code to Plant
Create Purchasing Group
Create Purchasing Org
Assign Company code to Purchasing Group
Create or review document types for PO, Req, Quotation
Create or review Field Status variant PO, Req, Quotation
Create document number ranges PO, Req, Quotation
Create Custom Text header PO, Req, Quotation
Create account determination
Create Release strategy
Create Message determination
Create Vendor account Group
Create Material Account Group
Create Material Type
Create or modify Conditions
Create Custom pricing procedures
Create Any Configurable material
Create MRP Group and MRP configuration


Create Vendor – XK01
Create Material – MM01
Only for Materials with MRP
Maintain MRP profile for Material
Reorder point Planning, forecast based or Time based
Run MRP – MD01
Review Stock Requirement list MD04
Non MRP – Materials
Create Manual Requisition – ME51n
Non Production Material
Interface Requisitions from SRM
All Materials
Review Requisitions – ME53N
Research Vendor in Ariba or other portals
Create RFQ /Quotation – ME41
Complete Vendor Selection
Create outline agreements – ME31K ( Qty or Value )
Create Scheduling agreement – ME31L ( if applicable )
Assign Source and process – ME57
Create PO automatically – ME59N
Release PO ME29N
Review PO – ME21N
Good Receipt – MIGO
Review Stock – MMBE
Invoice Receipt – MIRO
Created Reservation – MB21
Goods Issue – MB1A
Transfer Posting – MB1B
Stock Transport order (STO)


Create Service Master – AC03
Create a Service PO – ME21N ( Item category D )
Create Service entry Sheet – ML81N
Invoice Receipt – MIRO