SAP University Alliances

Authors Hans-Jrgen Scheruhn

Bret Wagner
Stefan Weidner

Materials Management (MM)

Product
SAP ERP 6.0 EhP7
Global Bike Inc.

Level
Beginner

Focus
Cross-functional integration
Materials Management
Version
2.30

In addition to the standard Materials Management slides, this

presentation includes links to the GBI enterprise model provided
by a team at Hochschule Harz in Germany led by Prof. Dr. HansJrgen Scheruhn.
The model is based on an architecture of four IT integration layers
which were created for the GBI curriculum using ARIS Business
Designer for SAP and are made available to the SAP UA
community using ARIS WebPublisher. All necessary licenses for
this project were provided by Software AG.
Each link in the presentation is indicated by the symbol
of all links can be found on the second last slide.

. A list

Last Update
August 2014

SAP AG

SAP ERP

Course Overview

Introduction to SAP
Navigation
Introduction to GBI
Sales & Distribution
Materials Management
Production Planning
Financial Accounting
Controlling
Human Capital Management
Warehouse Management
Project System
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Functionality

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

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Unit Overview

MM Organizational Structure
MM Master Data
MM Processes
- Procure-to-Pay Process

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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

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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

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SAP ERP

Global Bike Structure for Materials Management

Client

Global Bike

Global Bike Inc.

Dallas

San Diego

Global Bike Germany GmbH

Miami

Heidelberg

Hamburg

Raw Materials

Trading Goods

Trading Goods

Raw Materials

Trading Goods

Semi-fin. Goods

Finished Goods

Finished Goods

Semi-fin. Goods

Finished Goods

Finished Goods

Miscellaneous

Miscellaneous

Finished Goods

Miscellaneous

Miscellaneous

Company
Code

Plant

Storage
Location

Miscellaneous

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SAP ERP

GBI Enterprise Structure in SAP ERP (Logistics)

Shipping Point

DL00
RM00

Storage
Location

MI00

TG00

TG00

SF00

HD00
RM00

FG00

MI00

MI00

TO00
TG00

FG00

FG00

FG00

SD00

SF00

MI00

FG00

HH00

PE00

TG00

TG00

FG00

FG00

MI00

MI00

MI00

MI00

Central Purchasing Organization (global) GL00

Purchasing Org. US00

CA00

Purchasing Group North America

N00

Dallas

DL00

CC US00
Client GBI

Miami

MI00

S. Diego

Toronto

SD00

TO00

CA00

AU00

PO DE00
PGr Europe
E00

Heidelb.

HD00

CC DE00

Hamburg

HH00

Asia
A00

Plant

Perth

PE00

AU00

Company Code

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SAP ERP

MM Master Data

Vendor Master Data

Material Master Data
Purchasing Info Record
Condition Master Data
Output Master Data

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SAP ERP

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

Screen Diagram Vendor

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Vendor Master Views

Client Level
- Address
- Vendor Number
- Preferred Communication

General Data

Company Code Data

- Reconciliation Account
- Terms of Payment
- Bank Account

Company Code Data

Financial Accounting (FI)

Purchase Org Data

- Purchasing Currency
- Salesmans Name
- Vendor Partners

Purchasing Data
Materials Mgmt (MM)
Screen Diagram Vendor
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Vendor Master

General Information relevant for the entire organization:

Client XXX

Company Code specific information:

Company Code US00

Acc. Mgmt
Payment
Bank

Company Code DE00

Name
Address
Communication

Purch. Organization specific information:

Incoterms
Currency

Purch. Org. US00

Purch. Org. DE00

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SAP ERP

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

Screen Diagram Material

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SAP ERP

Material Master Views

Sales Data
Basic Data

Purchasing Data
Mat. Plan. Data
Material Master

Forecasting Data
Storage Data

Controlling Data

Quality Data
Accounting Data

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SAP ERP

Material Master

General Information relevant for the entire organization:

Client XXX

Sales specific information:

Name
Weight
Unit of Measure

Storage Location specific information:

Delivering Plant
Loading Grp

Sales Org. UW00

Sales Org. UE00

Stock Qty

Storage Loc. FG00

Storage Loc. TG00

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Purchasing Information Record

Framework for Purchase Order

- Contains the relationship
between a vendor and a
material

Can be created:
- Manually
- Automatically Quotations
- Automatically Purch. Orders

Purchasing
Information Record

Reporting
- Vendor Evaluation
Material Master

Vendor Master

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SAP ERP

Allows buyers to quickly determine:

-

Which vendors have offered or supplied specific materials

Info Records contain:

-

Purchasing Information Record

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

Data Model MM
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Master Data in Use

Purchase
Order
45......01

Material Master

Vendor Master

Purchasing
Information Record

Data Model MM
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Procure-To-Pay Process

Purchase
Requisition

Vendor
Selection
Purchase
Order

Notify
Vendor

Payment
to Vendor
Invoice
Receipt

Vendor
Shipment
Goods
Receipt
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SAP ERP

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

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SAP ERP

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

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SAP ERP

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)

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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.

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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
Quantity
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

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SAP ERP

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.
4512

Quote
Pur generate
Req.

RFQ

Vendor
1
Vendor
2
Quote
Vendor
3

Quote

Eval.
Reject
Letter

Document Flow
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SAP ERP

Quotation from Vendor

The quotation received by your company is a legally binding offer,

should decide to do business with the vendor, containing prices
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 vendors response in the RFQ you created.

Document Flow
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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
Price Level
Price History

Quality
Goods Receipt
Quality Audit
Complaints/Rejection level

Delivery

On-time delivery performance

Quantity reliability
Compliance with shipping instructions
Confirmation Date

You then must establish a scoring range (1 -100) and determine the weight
factors of scores for each.

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SAP ERP

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

Data Model MM
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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

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Purchase Order Structure

Header
Vendor
Doc. Number
Terms of Payment

Date
Currency
PO Price

Item Overview
Purchase
Order
45......01

Materials
Quantities
Delivery Date

Price/UofM

Line Item
PO History
Line Price
Delivery Schedule

Tolerances

Screen Diagram Purchase Order

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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

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Goods Receipt
Notify Vendor
Purchase
Order
45......01

Vendor

Goods
Receipt

Shipment

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SAP ERP

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

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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

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SAP ERP

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)

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SAP ERP

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
- Actual price -

Goods receipt
- Actual quantity -

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SAP ERP

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

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SAP ERP

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

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SAP ERP

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

Goods receipt

Inventory

GR / IR

Dr

Dr

$100

Cr

Cr
$100
Posting Diagram MM
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SAP ERP

Goods Receipt / Invoice Receipt

Reconciliation Account

Amount owed is
assigned and transferred to
vendor account payable

Invoice receipt

GR / IR
Dr
$100

Cr

Vendor A/P
Dr

Cr
$100
Posting Diagram MM
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SAP ERP

Vendor Payment

Amount owed is paid to

vendor and account payable
is reduced

Bank

Bank
Dr

Cr
$100

Vendor A/P
Dr

Cr

$100

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SAP ERP

FI MM Integration Point

Goods
Receipt
Inventory
Dr

$100

Cr

Invoice
Receipt
AP
(Vendor)

GR / IR
Dr

$100

Payment
Program

Cr

$100

Dr

$100

Cr

$100

Bank
Dr

Cr

$100

Posting Diagram MM
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SAP ERP

Overview of ARIS models (MM)

[slide number] [slide title] [model name assigned] [level of abstraction (1-4)]

5-7

Global Bike Structure for Materials Management: GBI Structure Materials Management(1-3)

5-7

Global Bike Inc. and Global Bike Germany GmbH: GBI Org Chart US/DE (1-3)

5-8

GBI Enterprise Structure in SAP ERP (Logistics): GBI System Organization Units(1-3)

5-10 Screen Diagram Vendor: Mask Diagram (MD) Create Vendor: Address / XK01(4)
5-11 Screen Diagram Vendor: Mask Diagram (MD) Create Vendor: Address / XK01(4)
5-13 Screen Diagram Material: MD Create Trading Goods: Basic Data 1 / MMH1(4)

Levels of abstraction (1-4)

(1) Core level
(2) Overview level
(3) Detailed level
(4) Document level

5-14 Material Master Views : eEPC Create Material Master for Trading Goods(3)
5-14 Basic Data and other : MD Create Trading Goods: Basic Data 1 / MMH1(4)
5-17 Data Model MM: Data Model Purchase Info Record (3)
5-18 Data Model MM: Data Model Purchase Info Record (3)
5-19 Procure-To-Pay Process: Value added Chain Diagram GBI_MM(2)
5-19 seven eEPCs of GBI_MM like Purchase Requisition(3) and Data Model Integration MM FI(3)
5-20 Purchase Requisition: eEPC Create Purchase Requisition(3)
5-25 Request for Quotation: eEPC Evaluate Quotations on Price(3) and Document Flow
5-26 Quotation from Vendor: eEPC Maintain Quotation from Vendor(3) and Document Flow
5-28 Purchase Order: eEPC Create Purchase Order referencing an RFQ(3) and Data Model MM
5-30 Screen Diagram Purchase Order: Attribute Allocation Diagram Purchase Order(4)
5-32 Notify Vendor: eEPC Create Purchase Order Referencing an RFQ (3)
5-32 Purchase Order: Information Carrier Diagram GBI Document Flow(3)
5-32 Goods Receipt: eEPC Create Goods Receipt for Purchase Order(3)
5-33 Goods Receipt: eEPC Create Goods Receipt for Purchase Order(3)
5-36 Invoice Processing: eEPC Create Invoice Receipt from Vendor(3) and 3 more eEPCs
5-38 Payment to Vendor: eEPC Post Payments to Vendor(3)
5-39: Posting Diagram MM: Information Carrier Diagram FI-MM Integration Point(3)
5-40: Posting Diagram MM: Information Carrier Diagram FI-MM Integration Point(3)
5-42: Posting Diagram MM: Information Carrier Diagram FI-MM Integration Point(3)
All assigned models and its objects are linked to each
other. This enables the model user to horizontally navigate
(via Object Occurrences) within one level of abstraction and
to vertically navigate (via Object Hierarchy) between the 4
levels of abstraction.

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SAP ERP

Information Models Covering 4 Levels of IT Integration

Execution in SAP ERP

Presentation

Take GBI User Rolls and interact

with GBI Processes via SAP GUI :

Functions

Execute GBI Processes :

Kunde

(Org. units / Positions / Rolls/ User) :

Process View

Order of entire case study

Value added Chain (VAC) : LA 1 and 2

Single case study processes

Event driven process chain : LA 3

Execute GBI Transaction :

All content of case studies at a glance

Data

Organizational View
Level of Abstraction (LA) 1 to 3

Rolle
Process-Owner

Processes

Model Presentation in ARIS

GBI Data In- / Output :

Function View
Function Tree : Level of Abstr .1 to 3

Data View

Entire SAP ERP document flow

Information carrier diagram : LA 3

Description SAP ERP mask structure

Mask diagram : Level of Abstraction 4

All SAP ERP master & transaction data

Entity Relationship Diagram : LA 3

All SAP ERP organizational units

Org. Chart : Level of Abstraction 1- 3

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