SAP R/3

Materials Management
Module

Materials Management

Procurement
Inventory Management
Warehousing
Material Master
Materials Planning
Hazardous Materials Management

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.

Organizational Elements for the

Procurement Process

Company Code
Plant
Storage Location
Purchasing Organization
Purchasing Group

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

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

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

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.

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.

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.

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

Material Master - Maintenance

Defaults - speeds entry of data by using the most
frequently used organizational levels and views
as default values. These defaults are userspecific 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.

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

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

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

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

Purchase Requisition Sources

Manually created by user department
Automatically created by:
Planning (MRP, MPS)
Plant maintenance
Production orders
Sales orders

Processing Purchase
Requisitions

Create purchase requisition (manually or

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

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

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

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

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

Purchase Order Structure

Header - information specific to the entire
purchase order
vendor
currency
payment terms

Purchase Order Structure

Line item details
account assignment
delivery schedule
materials/services quantity
price
description
item category

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

Purchase Order Output

Request for quotations
Purchase order
Order acknowledgment

Purchase Order Output Format

Printed and mailed
EDI
Faxed (hardcopy or electronic)

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

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

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.

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)

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

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

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

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)

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

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

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

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

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

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

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

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

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