Unit 12

MATERIALS MANAGEMENT (MM)

- Transactions -

Business Process Integration

MM

SAP AG and The Rushmore Group, LLC 2007

July 2007

Transaction Data
Includes internal and external exchanges that

describe business activities Unlike master data, aggregate transactional data is dynamic each transaction is unique

SAP AG and The Rushmore Group, LLC 2007

July 2007

Materials Management (MM)

SD MM
Materials Mgmt. PP Production Planning Sales and Distribution

FI
Financial Accounting

CO
Controlling

SM

ERP
HR
Human Resources

AM
Fixed Assets Mgmt. EC Enterprise Controlling

Service Mgmt.

QM
Quality Mgmt.

PM

Plant Maintenance

Client / Server Integrated Business Solution WF

IS
Industry Solutions

PS

Project System

Workflow

SAP AG and The Rushmore Group, LLC 2007

July 2007

Procurement Process
(Procure-to-Pay)

Purchase Requisition

Purchase Order

3-Way Match Payment to Vendor Invoice Receipt

Notify Vendor

Vendor Shipment Goods Receipt

July 2007

SAP AG and The Rushmore Group, LLC 2007

Basic Procurement Process

Requirements Determination - Purchase

Requisition Vendor Selection Order Processing - Purchase Order Order Tracking Goods Receipt and Inventory Management Invoice Verification Payment
SAP AG and The Rushmore Group, LLC 2007 July 2007

Purchase Requisitions
Internal document

Requesting a certain quantity of material or service on a certain date

Can be created:
Manually Automatically (Materials Requirements Planning

(MRP), sales orders, etc.)

Release approval procedures are optional

SAP AG and The Rushmore Group, LLC 2007

July 2007

Purchase Requisitions Sources

Manually created by user department
Office supplies Projects Prototype materials

Automatically created by
Planning (Material Requirements Planning (MRP),

Master Production Schedule (MPS)) Plant Maintenance Production Orders Sales Orders
SAP AG and The Rushmore Group, LLC 2007 July 2007

Purchase Requisitions Processing

Create purchase requisition (manually or

automatically) Determine source of supply Release procedure (optional) Assign vendor and process

SAP AG and The Rushmore Group, LLC 2007

July 2007

Purchase Requisitions Creating

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, General Ledger accounts, project

number, etc.

Check data Save

SAP AG and The Rushmore Group, LLC 2007

July 2007

10

Purchase Orders
Purchase Orders are:
A formal request to a vendor 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

SAP AG and The Rushmore Group, LLC 2007

July 2007

11

Purchase Order Structure Header

Header - information specific to the entire

purchase order
Vendor Currency

Payment terms

SAP AG and The Rushmore Group, LLC 2007

July 2007

12

Purchase Order Structure Line Items

Line item details
Account assignment
Delivery schedule Materials or services quantity

Price
Description Item category

SAP AG and The Rushmore Group, LLC 2007

July 2007

13

Purchase Order
Request for Quotations

Purchase Order
Order Acknowledgment

SAP AG and The Rushmore Group, LLC 2007

July 2007

14

Purchase Order Output Format

Printed and mailed

E-mail
Electronic Data Interchange (EDI) Faxed (hardcopy or electronic) eXtensible Markup Language (XML)

SAP AG and The Rushmore Group, LLC 2007

July 2007

15

Goods Receipt
Goods receipt with reference to a purchase

order
Copy data from purchase order Delivery notification

Invoice verification
Updates purchase order history Inventory update

Automatic update of General Ledger (G/L) accounts

SAP AG and The Rushmore Group, LLC 2007

July 2007

16

Goods Receipt (continued)

You can search for the purchase order number

with
Material number, vendor number, etc.

SAP AG and The Rushmore Group, LLC 2007

July 2007

17

Goods Receipt Destinations

Stock - given a storage location, can be posted

to three different stock statuses

Unrestricted-use Quality inspection Blocked stock (valuated)

Consumption - can be assigned a recipient or

unloading point Goods receipt for blocked stock - updates inventory, but material is not valuated (conditional acceptance)
SAP AG and The Rushmore Group, LLC 2007 July 2007

18

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

General Ledger (G/L) stock or consumption accounts

are updated Fields are displayed during document entry

SAP AG and The Rushmore Group, LLC 2007 July 2007

19

Goods Receipt Movement Types (continued)

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

SAP AG and The Rushmore Group, LLC 2007

July 2007

20

Goods Receipt Account Postings

Inventory account is debited at standard price

Goods Receipt/Inventory Receipt (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

SAP AG and The Rushmore Group, LLC 2007

July 2007

21

Goods Receipt Effects

Purchase Order (PO) history and Purchase Order

(PO) updated Material Master - stock and value updated Notification of goods receipt issued (optional) Transfer request to Warehouse Management system (if active)

SAP AG and The Rushmore Group, LLC 2007

July 2007

22

Goods Receipt Effects (continued)

Material and financial documents created and/or

updated Stock and consumption accounts updated Inspection notification in Quality Management (QM) - if active

SAP AG and The Rushmore Group, LLC 2007

July 2007

23

Invoice Verification
Matches the vendors 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

SAP AG and The Rushmore Group, LLC 2007

July 2007

24

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

SAP AG and The Rushmore Group, LLC 2007

July 2007

25

3-Way Match for Payment

Purchase Order Payment Program Invoice Receipt Verification
Debit Credit

Goods Receipt

SAP AG and The Rushmore Group, LLC 2007

July 2007

26

Accounts Payable Settlement 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

SAP AG and The Rushmore Group, LLC 2007

July 2007

27

Goods Receipt / Invoice Receipt Reconciliation Account

Purchase requisition
Purchase order No impact on Financial Accounting (FI) Materials Management (MM) and Financial Accounting (FI) via automatic account assignment GR / IR Dr Cr $100

Goods receipt

Inventory

Dr
$100

Cr

SAP AG and The Rushmore Group, LLC 2007

July 2007

28

Goods Receipt / Invoice Receipt Reconciliation Account

Invoice receipt

Amount owed is assigned and transferred to vendor account payable

GR / IR

Vendor A/P Dr Cr $100

Dr
$100

Cr

SAP AG and The Rushmore Group, LLC 2007

July 2007

29

Vendor Payment
Amount owed is paid to vendor and account payable is reduced

Bank

Bank

Vendor A/P

Dr

Cr
$100

Dr $100

Cr

SAP AG and The Rushmore Group, LLC 2007

July 2007

30

(FI MM) Integration Points

Goods Receipt
Inventory
Dr Cr Dr

Invoice Receipt
GR / IR
Cr Dr

Payment Program
Bank
Cr Dr Cr

AP (Vendor) $100 $100

$100

$100

$100

$100

SAP AG and The Rushmore Group, LLC 2007

July 2007

31

Automatic Account Assignment

Debit posting $100 BSX - inventory posting to trading goods inventory Credit posting $100 WRX goods receipt posting to GR/IR account 310XXX

account 201XXX

SAP AG and The Rushmore Group, LLC 2007

July 2007

32

Unit 12 Exercises
100. Create Purchase Order for Slick Pens

101. Create Purchase Order for Premier Pens

102. Create Purchase Order for Promotions, Ltd. 103. Create Goods Receipts for Purchase Orders 104. Create Invoice Receipts from Vendors

105. Post Payment to Vendors

106. Display Vendor Line Items

SAP AG and The Rushmore Group, LLC 2007

July 2007

33