Material Master:-

3 aspects:-

- Understand Material Life cycle (below screen)

- Role of different departments

- important fields in Material Master

- a physical good or a service

- usually alpha-numeric or numeric

Material can be discontinued at country level or sales org level. For e.g. IPHONE 5 may be discontinued
in USA (replaced by IPHONE 6) but it is available in India.

Material Type

Dictates the way the material behaves (the views the material type allows).

FERT – Finished Goods

DIEN – Services
In customer master, you have only 3 views (general, sales, and company code) but material master has
many views/departments (Material is used by many departments).

Minimum views (7 types) you need to know:-

1> Basic data (1 & 2)

2> Sales : Sales org data 1

3> Sales : Sales org data 2

4> Sales : General/Plant data

5> MRP1

6> General Plant data / Storage 1

7> Accounting 1

8> Warehouse Management 1

9> Purchasing

BASIC DATA:-

Material Name, Base Unit of Measure, Material group (to group materials)

Old Material number – if client used some other material number in the legacy system.

External Material Group – Old Material group

Division

Lab / Office – If research facility for the material is available

Product Hierarchy

X-plant material status

Gross weight (with packaging) / Net weight etc. -> Used in Logistics -> needed in freight calculation if
your company does handling. Else, if you are shipping material via FedEX, then it helps in freight
estimations. But how can you provide an estimate to the customer…what will be the freight cost? From
weight, you can provide freight costs.

EAN / UPC Number – European Article number / Universal Product Code -> universally recognized
product codes – mainly used in consumer industry. For e.g. Iphone. But for large generators for Power
Company, this field is not relevant (because they are not consumer oriented).

Additional Data Tab

- Maintain different UoM.

- Maintain different material descriptions in different languages. (This will be picked while printing
Sales orders, delivery and invoices etc.)

Sales: Sales Org 1 data:-

Sales Unit of Measure
Delivering Plant – may be different from manufaturing plant/storage plant etc.

Dchain-Spec.Status -> if you want to discontinue the material (validity from date).

Tax for the material -> Nontaxable may be for some research materials (which Govt wants to promote),
all service materials are not taxed in USA.

Min. Order quantity, Min. delivery quantity -> Applicable to all the customers.

Note – While creating any master data, it is always better to hit ENTER to move to other view, do not
click on the individual views.

Item category group & Material groups (1-5).

Availability check, Loading group, Profit center.
MRP Type = ND means No Planning.
Below all related to Purchasing not sales:-

Valuation Class -> The valuation class is a group of materials with the same account determination.The
valuation class determines the G/L accounts that are updated as a result of a valuation-relevant
transaction or event such as a goods movement. It is part of MM-FI intergration. It allows posting the
stock values of materials of same material type to different G/L accounts and to post the stock values of
materials of different material types to the same G/L account.

What is valuation -> Say you want to sell your house and its inventory (clothing, fridge, TV etc) and go to
out of the country. Then it says… what is the total valuation of your property.

Price control -> can be Standard price or Moving average price -> this is related to the cost of the
material (VPRS condition type).

When to use standard price? Say, you are manufacturing a product and you set that price to 10$. In this
case, valuation will be the standard price.

When to use the Moving price? Say you are purchasing a product from 3 vendors at different prices.
Then, the valuation will be the weighted average of all the purchases.

Material Extension: - (Use MM01 not MM02)

1> For different views

2> For different organizational units

Initially, Purchasing or Inventory department creates the general view of Material master and then pass
that material to other departments to extend it.

Material Master grouping & Categorization:-

Based on Material group:-

That means… You can’t have a material group specific to a sales organization. Once you set the material
group, it remains the same for all the sales orgs.

Based on Sales Material group:-

Above single material group is not sufficient to group the material under different categories. Why?

Above screen shows, one laptop can be grouped under category (1) Laptop, (2) 15’ screen size group and
(3) AMD processor group. Here, a single material group will not be sufficient.

Sales Material Groups (5 fields) -> Specific to Sales org. It means… In different sales orgs, these fields may
be different. For example, If Apple sells many products in USA and sells very less products in India, then
in India they can have a very simplified version of material groups where as in USA they can have a fully
blown functionality of this. This will help in reporting.

Based on Product Hierarchy:-

Even Sales Material Groups are not enough. Why? -> It has a flat structure not a hierarchical structure.

Why is the need of hierarchical structure? -> Very useful to roll up and drill down.

E.g. what is the revenue generated by overall HP Desktop,

What is the revenue generated by HP DT for AMD processor,

What is the revenue generated by HP DT for AMD processor of 15” screen.

You can have a different product hierarchy at Basic data level and Sales org level.

How to set up Product Hierarchy?

18 characters long where first 5 char represents first level, next 5 represents 2 nd level and last 8
represents last level. Three level hierarchy is given by SAP. However, it can be modified (5, 3, 3, 3, 4)
using ABAP customization. Max. You can opt for 6 levels.
After F4, select one entry but don’t click on “Choose” rather click on “Next Level” till you hit the last
level. At last level, you can select “choose”.

If you want to stop at first level, then do not want to drill down (into more fier details), then also you can
do that.

Configurations:-

Material Groups
Sales Material groups

Product Hierarchy
First Level
Save it and go back till below screen and again enter level 2 & level 3.

Second Level

Preceding category (Level 1) has to be cretaed before current level (Level 2) else it willl raise an error.

See above -> Level 2 is automatically determined as you press enter.

Third Level