Materials Management (MM) : Curriculum: Introduction To ERP Using Global Bike

Materials Management (MM)
Curriculum: Introduction to ERP using Global Bike

Teaching material - Information
i Teaching material - Version
 3.1 (July 2017)
 Software used
• SAP ERP 6.08
 Model
• Global Bike
 Prerequisites
• No Prerequisites needed
© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 131

Module Information
Authors
 Bret Wagner
 Stefan Weidner
Target Audience
 Beginner

Module Information
Learning Objectives
You are able to

 name some functionalities of the MM module.
 define the central organizational structures of the MM module.
 summarize the master data which is most important for the MM module.
 explain a standard purchasing process.

Functionality
 Inventory Management
 Purchasing
 MRP
 Physical Inventory
 Valuation
 Service Master
 Invoice Verification
 Product Catalogs

Agenda
 MM Organizational Structure
 MM Master Data
 MM Processes
• Procure-to-Pay Process

MM Organizational Structure (Materials Mgmt.)
 Client
• An independent environment in the system
 Company Code
• Smallest org unit for which you can maintain a legal set of books
 Plant
• Operating area or branch within a company
 Manufacturing, distribution, purchasing or maintenance facility
 Storage Location
• An organizational unit allowing differentiation between the various stocks of a material in a plant
© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. Slide 136 136
MM Organizational Structure (Purchasing)
 Purchasing Organization
• The buying activity for a plant takes place at the purchasing organization
• Organization unit responsible for procuring services and materials
• Negotiates conditions of the purchase with the vendors
 Purchasing Group
• Key that represents the buyer or group of buyers who are responsible for certain purchasing activities
• Channel of communication for vendors
Global Bike Structure for Materials Management
Global Bike Client
Company
Global Bike Inc. Global Bike Germany GmbH Code
Dallas San Diego Miami Heidelberg Hamburg Plant
Raw Materials Trading Goods Trading Goods Raw Materials Trading Goods
Storage
Semi-fin. Goods Finished Goods Finished Goods Semi-fin. Goods Finished Goods Location
Finished Goods Miscellaneous Miscellaneous Finished Goods Miscellaneous
Miscellaneous Miscellaneous
Global Bike Enterprise Structure in SAP ERP (Logistics)
Shipping Point DL00 MI00 SD00 TO00 HD00 HH00 PE00
RM00 TG00 TG00 TG00 RM00 TG00 TG00

Storage SF00 FG00 FG00 FG00 SF00 FG00 FG00
Location
FG00 MI00 MI00 MI00 FG00 MI00 MI00
MI00 MI00
Central Purchasing Organization (global) GL00

Purchasing Org. US00 CA00 PO DE00 AU00
Purchasing Group North America PGr Europe Asia

N00 E00 A00
Dallas Miami S. Diego Toronto Heidelb. Hamburg Perth Plant

DL00 MI00 SD00 TO00 HD00 HH00 PE00
CC US00 CA00 CC DE00 AU00 Company Code
Client Global Bike
Agenda
 MM Master Data
 MM Processes

MM Master Data
Vendor Master Data
Material Master Data
Purchasing Info Record
Condition Master Data
Output Master Data
Vendor Master Data
 Vendor Master
• Contains all the necessary information needed to business with an
external supplier
• Used and maintained primarily by the Purchasing and Accounting
Departments
• Every vendor MUST have a master record
Vendor Master Views
 Client Level
• Address
• Vendor Number
• Preferred Communication
General Data
 Company Code Data

• Reconciliation Account
• Terms of Payment Company Code Data
• Bank Account Financial Accounting (FI)
 Purchase Org Data
• Purchasing Currency
• Salesman’s Name Purchasing Data
• Vendor Partners Materials Mgmt (MM)
Vendor Master
General Information relevant for the entire organization:
Name
Address
Client XXX Communication
Company Code specific information: Purch. Organization specific information:
Acc. Mgmt Incoterms

Payment Currency
Company Code US00 Bank
Purch. Org. US00
Company Code DE00 Purch. Org. DE00
Material Master Data
 Material Master
• Contains all the information a company needs to manage about a material
• It is used by most components within the SAP system

 Sales and Distribution
 Materials Management
 Production
 Plant Maintenance
 Accounting/Controlling
 Quality Management
• Material master data is stored in functional segments called Views
Material Master Views
Sales Data
Basic Data Purchasing Data
Mat. Plan. Data
Material Master Forecasting Data
Storage Data
Controlling Data Quality Data
Accounting Data
Material Master
General Information relevant for the entire organization:
Name
Weight
Client XXX Unit of Measure
Sales specific information: Storage Location specific information:
Delivering Plant Stock Qty

Loading Grp
Sales Org. UW00 Storage Loc. FG00
Sales Org. UE00 Storage Loc. TG00
Purchasing Information Record
 Framework for Purchase Order

• Contains the relationship between a vendor and a material
 Can be created:
• Manually
Purchasing
• Automatically – Quotations Information Record
• Automatically – Purch. Orders
 Reporting
• Vendor Evaluation
Material Master Vendor Master
Purchasing Information Record
 Allows buyers to quickly determine:

• Which vendors have offered or supplied specific materials
 Info Records contain:

• Data on pricing and conditions
• Last purchase order
• Tolerance limits for deliveries
• Specific lead times
• Availability periods
• Vendor Evaluation data
 Serves as default information for Purchase Orders
Master Data in Use
Purchase
Order
45......01
Material Master Vendor Master
Purchasing
Information Record
Agenda
 MM Master Data
 MM Processes

Procure-To-Pay Process
Purchase Vendor
Requisition Selection
Purchase
Order
Notify
Payment Vendor
to Vendor
Invoice Vendor
Receipt Shipment
Goods
Receipt
Purchase Requisition
 Internal Document instructing the purchasing department to request a specific good or service for a specified
time
 Requisitions can be created two ways:
• Directly - Manually
 person creating determines: what, how much, and when
• Indirectly - Automatically
 MRP
 Production Orders
 Maintenance Orders
 Sales Orders
Requisition Sourcing
 Once the requisition has been assigned a source of supply it can be released for processing
 There are a variety of ways that a purchasing department can process a requisition to determine the appropriate
Source of Supply:
• Internal Sourcing Requirements
• Source List
• Outlined Agreement
• RFQ
Internal Sourcing
 The requisition for materials could be satisfied by sources within our company.
• It is possible that a plant within your firm could represent a potential source of supply for the material needed (centralized
warehouse)
• If an internal source is identified the requirement is covered by an internal procurement transaction (stock transport order)
Source List
 A source list is a record that specifies the allowed means for procuring a material for a certain plant within a
given time period.
• If the list contains a sole source the system will assign the vendor to the requisition.
• If several options exist the system will display a list of vendors for you to choose from.
• If no source has been established the system will revert to search information records and outline agreements.
Outline Agreement
 Requisitions can be satisfied through existing longer-term purchasing agreement
 These agreements are subdivided into:
• Contracts
 Consists of items defining the individual materials, material groups, or services with prices and in many cases quantities
o Quantity
o Value
• Scheduling Agreements
 Total quantity of material is spread over a certain period in a delivery schedule, consisting of line items indicating quantities and their
planned delivery date
Request for Quotation
 If nothing exist in the system we may need to submit a request for quotation to our vendors. An RFQ is an
invitation to a vendor by a Purchasing Organization to submit a bid for the supply of materials or services
• The accepted quotations will generate Purchasing Information Records
• Perform Quotation Price Comparisons
• Finally Select a Quotation
P.O.
Quote 45…12
Vendor
Pur generate 1
RFQ Quote Eval.
Req.
Vendor
2 Reject
Quote Letter
Vendor
3
Quotation from Vendor
 The quotation received by your company is a legally binding offer, should decide to do business with the vendor,
containing price’s and conditions for the materials specified in the RFQ for a predefined period of time.
• In SAP the RFQ and the Quotation will be become a single document, you will enter the vendor’s response in the RFQ you
created.
Vendor Evaluation once Identified
 Vendor evaluation helps purchasing evaluate vendors for sourcing while also enabling the company to monitor
vendor relationships through performance scores and criteria you put in place.
• Supports a maximum of 99 main criteria and 20 sub criteria for each main:
 Price
o Price Level
o Price History
 Quality
o Goods Receipt
o Quality Audit
o Complaints/Rejection level
 Delivery
o On-time delivery performance
o Quantity reliability
o Compliance with shipping instructions
o Confirmation Date
• You then must establish a scoring range (1 -100) and determine the weight factors of scores for each.
Purchase Order
 A purchase order is a formal request to a vendor for a specific material or service under the stated conditions
 Purchase Orders can be created manually

• Reference a Purchase Order
• Reference a Purchase Requisition
• Reference a RFQ/Quotation
• Without Reference
 Purchase Orders can be create automatically
Purchase Order
 A purchase order can be used for a variety of purposes,

the item category (procurement type) defined in the PO
will dictate the use of the order and the process that the
order will follow:
• Standard
 Stock or Consumption
• Services
• Subcontracting
• Third-Party
• Consignment
Purchase Order Structure
Header
Vendor Date
Doc. Number Currency
Terms of Payment PO Price
Item Overview
Purchase Materials Price/UofM

Order Quantities
Delivery Date
45......01
Line Item
PO History Tolerances
Line Price
Delivery Schedule
Purchase Order Output
 Once a Purchase Order has been created the vendor needs to be notified
• Printed
• E-mail
• EDI
• Fax
• XML
 There are a variety of forms that aid in the purchasing process and are generated from the Purchase Order
• Purchase Order Output
• Order Acknowledgement Forms
• Reminders
• Schedule Agreements
Goods Receipt
Purchase
Order
45......01
Notify Vendor
Vendor
Goods
Receipt Shipment
Goods Receipt
 Goods movement in which we accept goods into our system
 If materials are delivered against a Purchase Order we will reference that Order
• Determine if we got what we ordered
• System can purpose data for us from the PO
 Material, quantity
• Purchase Order History is update with the receipt
• Updates Physical Inventory
• Updates Inventory G/L Account
Material Movements
 When a goods movement takes place it is represented by a Movement Type

• Movement types are three-digit keys used to represent a movement of goods
 101 – goods receipt into warehouse
 103 – goods receipt into GR blocked stock
 122 – return delivery to vendor
 231 – consumption for a sales order
 561 – initial entry of stock
 Destinations for Receipt of Goods

• Warehouse – Unrestricted, Quality, Blocked
• Quality
• Goods Receipt Blocked Stock
Effects of a Goods Receipt
 When a Goods Movement for the receipt of goods takes place a series of events occur
• Material Document is Created
• Accounting Document is Created
• Stock Quantities are Updated
• Stock Values are Updated
• Purchase Order is Updated
• Output can be generated (GR slip / pallet label)
Invoice Processing
 Incoming Invoices are reference against a Purchase Order to verify their content, prices, and arithmetic.
 If discrepancies arise between the purchase order or goods receipt and the invoice the system with generate a
warning or an error
• Depending on system configuration the difference could cause the system to Block the Invoice
Purchase order
- Target quantity
- Target price
Invoice receipt Goods receipt

- Actual price - Actual quantity
Invoice Processing
 When an invoice is saved it applies the liability from the Goods Receipt of our Purchase Order to a Vendor
 Upon verification the:

• Purchase Order is updated
• Material Master is Updated (MAP)
• Accounting Document is created
 Once the Invoice has been posted the verification process is completed and the payment process is initiated
within Financial Accounting
Payment to Vendor
 Can be done automatically or manually

• Post Outgoing Payment vs. Payment Program
 Elements of the Payment Transaction:

• Payment Method
• Bank from which they get paid
• Items to be Paid
• Calculate Payment Amount
• Print Payment Medium
 Process will create a financial accounting document to record the transaction
Goods Receipt / Invoice Receipt
Reconciliation Account
Purchase requisition No impact on

Financial Accounting (FI)
Purchase order
Materials Management (MM)
and Financial Accounting (FI)
Goods receipt via automatic account
assignment
Inventory GR / IR
Dr Cr Dr Cr
$100 $100
Goods Receipt / Invoice Receipt
Reconciliation Account
Amount owed is
Invoice receipt assigned and transferred to
vendor account payable
GR / IR Vendor A/P
Dr Cr Dr Cr
$100 $100
Vendor Payment
Amount owed is paid to

Bank vendor and account payable
is reduced
Bank Vendor A/P
Dr Cr Dr Cr
$100 $100
FI – MM Integration Point
Goods Invoice Payment

Receipt Receipt Program
AP
Inventory GR / IR (Vendor) Bank
Dr Cr Dr Cr Dr Cr Dr Cr
$100 $100 $100 $100 $100 $100

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Materials Management (MM)

Curriculum: Introduction to ERP using Global Bike

i Teaching material - Version

 3.1 (July 2017)

© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 131

© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 132

You are able to

© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 133

© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 134

© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 135

Global Bike Client

Dallas San Diego Miami Heidelberg Hamburg Plant

Shipping Point DL00 MI00 SD00 TO00 HD00 HH00 PE00

RM00 TG00 TG00 TG00 RM00 TG00 TG00

Central Purchasing Organization (global) GL00

Purchasing Group North America PGr Europe Asia

Dallas Miami S. Diego Toronto Heidelb. Hamburg Perth Plant

Client Global Bike

© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 140

Vendor Master Data

Material Master Data

Purchasing Info Record

Condition Master Data

Output Master Data

 Company Code Data

General Information relevant for the entire organization:

Company Code specific information: Purch. Organization specific information:

Acc. Mgmt Incoterms

Company Code DE00 Purch. Org. DE00

• Contains all the information a company needs to manage about a material

• It is used by most components within the SAP system

• Material master data is stored in functional segments called Views

Basic Data Purchasing Data

Mat. Plan. Data

Material Master Forecasting Data

Controlling Data Quality Data

General Information relevant for the entire organization:

Sales specific information: Storage Location specific information:

Delivering Plant Stock Qty

Sales Org. UE00 Storage Loc. TG00

 Framework for Purchase Order

Material Master Vendor Master

 Allows buyers to quickly determine:

 Info Records contain:

 Serves as default information for Purchase Orders

Material Master Vendor Master

© 2017 SAP SE / SAP UCC Magdeburg. All rights reserved. 151

 Requisitions can be created two ways:

 Requisitions can be satisfied through existing longer-term purchasing agreement

 These agreements are subdivided into:

 Purchase Orders can be created manually

 Purchase Orders can be create automatically

 A purchase order can be used for a variety of purposes,

Purchase Materials Price/UofM

 Goods movement in which we accept goods into our system

 When a goods movement takes place it is represented by a Movement Type

 Destinations for Receipt of Goods

Invoice receipt Goods receipt

 Upon verification the: