SAP S/4 HANA L1 – Materials Management

08.February.2024

MM Overview 3/20/2024 Page 1

An HCC Group Company
Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 2

An HCC Group Company
Objective

• Provide basic overview of MM module to URC team members of Materials

Management discipline.
• Focus on general concepts in the module as per standard SAP.

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 4

An HCC Group Company
SAP Modules

PS
• Project Systems (PS)

• Finance & Controlling(FICO)

PM FICO
SAP S4/
• Materials Management (MM)
HANA
Public • Plant Maintenance (PM)
Cloud

• Sales and Distribution (SD)

SD MM

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 6

An HCC Group Company
Materials Management Overview

SAP MM is one of the most important module which includes :

• Purchase Requisition (Indent)

• Quotation
• Purchase Order/Service Order
• Goods Receipt/Service Entry Sheets
• Inventory Management
• Master Raw Materials , Finished Goods etc.

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Materials Management Overview

PS
• Organization Structure & Master Data

• MIGO Functions and Features

PM FICO • Material Procurement

SAP S/4
• Service Procurement
HANA Public
Cloud • Inventory Concepts and Process

• Reservation, Goods Issue, Transfer Posting

• Transfer Posting
SD MM • Reports

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 9

An HCC Group Company
Organization Structure - MM
• Organization structure is a structure / foundation, which supports various business
transactions and reporting requirements of organization

Client

Company Purchasing Purchasing

Code Organization Group

Plant 1 Plant 2 Plant 3

Storage Storage Storage Storage Storage Storage

Location 1 Location 2 Location1 Location 2 Location1 Location 2

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MM Organizational Elements

Purchasing Org:
Plant: Organizational unit responsible Purchasing Group:
for procuring materials and Buyer/Group of Buyer
Organizational unit
services for one or more Plants
where goods and
within the same or across
services are provided,
Company
Material Planning and
Inventory valuation is
done.

Storage location
Place where materials are stored within the plant
i.e. store, Sub Store

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MM Organizational Elements
Purchasing group I,
Purchasing group II, ....

Company Code

Plant A Plant B

Central Purchasing Organization across Plants

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 13

An HCC Group Company
Master Data

• Material master/Product Master

• Vendor Master

• Purchasing Info records

• Source List

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Master Data-Material Master/Product Master

• Material master
– Material master record contains all information about the materials i.e., company
procures, manufactures, stores and ships. The data stored in the material master is
not only used by material management but also by other application components such
as Inventory management (IM), Financial Management (FI) etc.

• Important views
– For Raw Materials: Basic, Purchase, Accounting, MRP
– For Finished Goods: Basic, Purchase, Sales, Accounting, MRP
– Raw Material will be on MAP price control, Finished Goods will be standard price
control.

• Internal Numbering/External Numbering depends upon material type level

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 Material Type and Material Group

Material Types
Materials with some basic attributes are grouped together
and assigned to a material type. This allows you to manage
different materials in a uniform manner in accordance with
your company’s requirement. For example: Building
Materials, Construction Aids, Spares, Production Materials
etc..,

Material Groups
Material group is next level hierarchy for a material type.
Materials with some common attributes are taken together
and they are assigned to material group. Example for
Building Materials Type: Cement, Reinforcement Steel,
Material Structural Steel etc..,
Material Group Material
Type
Building
Reinforcement Steel
Material
Structural steel ISMC 125
Plate 10 mm

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Views in a Material Master

Basis Data Warehouse Mgmt

Plant /Stor Loc.

Purchasing
Stock

Product/Ma
Classification terial Sales & Distribution
Master
Record

Accounting Quality Management

Storage

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Product/Material Master

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Product/Material Master

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Master Data – Vendor Master
• A vendor master is created for every business partner from whom you purchase goods and
services.

• This is the enterprise main source of vendor specific data. This data will include
information on vendors from which a company can procure, or it can sell.

• Vendor Master Record will contain information like vendor's name, address.

• Three types of data can be maintained in the vendor master record

– General data (maintained at client level)
– Accounting data (maintained at company code level)
– Purchasing data (maintained at purchasing organization level)

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Master Data – Vendor Master

General Data
Address, Communication, Control Data,
Bank Information

Company Code Data

Account Information, Payment Transactions ,
Vendor Master
Correspondence, Withholding Tax
Record

Purchasing Organizations Data

Purchasing Data
Partner Roles

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Vendor Master- Vendor Account Group

Vendor Groups

Domestic Vendor
V001

V002

V003
Foreign Vendor

V004

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Master Data – Vendor Master

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Master Data – Vendor Master

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Master data - Purchasing Info Records

• The information linking a specific vendor with a specific material is called a Purchasing
Info Record. This data is proposed into the various purchasing documents when they are
being created. They can be created manually or automatically.

• Pricing conditions are maintained in the Purchasing Info record

• The purchasing info record contains information describing a delivery relationship for a
material and vendor.

• Data from the info record (such as prices, under delivery and over delivery tolerances, the
vendor's name for the material, and the VSR) is proposed when you create purchasing
documents.

• A material is assigned to a vendor sub-range (VSR) in the purchasing info record.

• An info record can be created manually or automatically by setting the ‘Info Update'
indicator when maintaining a purchasing document.

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Master data - Purchasing Info Records

Automatic
Maintain Maintenance
Manually From
Purchase Order

Info Update
Indicator

Info Record
-------- ------- --------------- ------ ----
------------ ------- ------- ------- ---- - - --
------- ---------- ----- ----- ------------ ----
------ ----- ------- ------ ------------ -- - -
- - - ----- ------ ---------- -- --- - ----- -
----- -------- -------- --------- -

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Master data – Source List

• Source list is used in the

administration of sources of supply.

• Source list specifies the allowed

(and disallowed) sources of a
material for a certain plant within
a predefined period.

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 28

An HCC Group Company
Procurement Cycle For Material

Material Purchase Release PR

Demand Requisition Approved PR
Planning (PR approval)

Quotation Quotation Quotation

Approved PR RFQ Creation Received Received Comparison

Selected Vendor PO Creation Purchase Order PO Approval Goods Receipt

Invoice
Verification
PR Type PO Type
•Material PR •Material PO
•Project PR •Project PO
•Maintenance PR •Maintenance PO
•Asset PR •Asset PO

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Material Management : Purchase Requisition

Purchasing

RFQ

Purchase
Manual Requisition

Purchase
Master Data Order

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Material Management : Request For Quotation

Purchasing

Purchase
Order

Vendor A
Source
PR RFQ Quotation
Of
Vendor B
Supply

Vendor C

Rejection
Letter
Master Data

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Material Management: Purchase Order

Purchasing

PR

Vendor
Purchase
Order

RFQ

Plant
Master Data

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Material Management : Purchase Order Format

Header Data

•Document Number
•Payment Conditions • Vendor
•Purchase Order • Currency
Date •……..

Purchase
Order
Item 10
10……………..
Item 20
20……………..
30…………….. Item 30

•Material Number • Delivery Date

•Short Text • PO Price
• Order Quantity •……..

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Purchase Requisition

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Purchase Requisition

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Maintain Quotation

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Maintain Quotation

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Supplier Quotation

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Compare Supplier Quotation

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Process flow Quotation

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Purchase Order

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Purchase Order

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Purchase Order

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Special Procurement Types
• In standard procurement, a customer purchases a material from a vendor and the material
is delivered to the customer. Upon delivery, the ordered goods become the property of the
customer.
• In a case of special procurement, the goods do not necessarily flow from the vendor to the
customer. In third-party processing, for example, the ordered material is delivered directly
by the vendor to a customer of the customer.
• The following special procurement types exist in the SAP System:
– Consignment
– Subcontracting
– Stock transfer using stock transport order
– Third-Party Processing
– Returnable transport packaging
– Pipeline Handling
• In subcontracting the user orders the end products from a vendor. The purchase order also
specifies which components the user will send to the vendor in order to manufacture the
end products.
• Consignment material is material that belongs to a vendor but is stored at the buyer's site.
The vendor retains ownership of the material until the buyer issues it from consignment or
transfers the material into its own stock.

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Subcontracting
Invoice
Purchasing Inventory Management
Verification

Purchase Order Storage Location Vendor Invoice

Own Company

SC Item Item
Comp…… (Performed
Comp……. Services)
GR of
Provision of
Finished Invoice
compo…
Material Verification
Subcontractor

Wait for the Settle the

provision of Provide the Material
Services
components Ordered
Performed

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Stock Transport Order

Storage
Sending Receiving
PurchaseLocation
Order
Plant
Plant Stock Transport Order
( STO )
Storage Location

STO release Stock

by authority Posting

GI against STO Stock in Transit GR against STO

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 47

An HCC Group Company
Service Procurement

PR Created

Invoice Verification
PR Approved

Payment To
Vendor Liability & Subcontractor
Expense Booking
Enquiry Update
/ Quote

RA Bill (Service
Entry Sheet)
Work Order

Service
WO Release
Performed

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Service Procurement
• Service items in purchasing documents are designated by the item category “D”.
• Services can have several line types in service specifications which determine how services
will be processed and verified.
• The service entry sheet is service procurement's answer to the goods receipt for material
procurement. It is used to confirm planned services and to enter unplanned services and
verify their value limits.
• The four steps for service verification are:
– Service specification
– Service entry
– Service acceptance
– Invoice verification
• The status of services can be monitored via the item details in the purchase order or
through the service entry sheet.

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Work Order

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Service Entry Sheet

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 52

An HCC Group Company
Inventory Management
• Inventory management deals with placing and handling stock received from vendors in
correct place within company’s premises. The key points about inventory management are
as follows :
– Inventory management deals with management of stock either on value or quantity
basis.
– Planning, entry and keeping records of all goods movement comes under inventory
management.
– Goods movement will create a document that will update all stock quantity and value
in inventory that is known as material document.
– Material document will be referred by a document number and document year.

• Inventory management deal with the following terms which are as follows:
– Movement Type
– Goods Receipt
– Reservation
– Goods Issue
– Transfer Postings

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Movement Type
• The movement types are defined as 3-character field in system. It is used to describe the
type of material movement that need to be performed. The movement type is used for all
type of goods movement in SAP (receipts, issues, transfers, reversal).

• The predefined movement types in SAP is between 100 and 899. The movement type 900
and upwards can be used for customized movement types.

• The important movement types in sap mm are as follows:

– 101 - Goods receipt for purchase order or order
– 103 - Goods receipt for purchase order into GR blocked stock
– 201 - Goods issue for a cost centre
– 221 – Goods issue for project
– 261 - Goods issue for an order
– 301 - Transfer posting plant to plant in one step
– 305 - Transfer posting plant to plant in two steps - placement in storage
– 311 - Transfer posting storage location to storage location in one step
– 313 - Stock transfer storage locations to storage location in two steps - removal from
storage.
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Goods Receipt Of Materials
• Following details captured during Goods receipt
– Delivery Note - Delivery Order
– Bill of lading - Enter Bill no from vendor / Transporter
– Truck Number in Header text
– Quantity of Material Received
– Storage location
– Goods recipient (Name of Recipient)
– Unloading point – (Location of Unloading)
– Text – Any Text

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Goods Receipt Of Materials

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Goods Receipt Of Materials

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Goods Receipt Of Materials

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Invoice verification

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Goods Issue Of Materials
W.B.S. Element

(Project Dispatch)
Post Goods issue Stock Transport Order

Stock For Issue

With GI cost gets

Cost Center booked

Goods issue means moving stock out of inventory that may be due to several reasons like
withdrawing of material for sampling or returning the goods back to vendor. So, goods issue will
result in decrease in quantity in warehouse.

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Goods Issue Of Materials

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Transfer Posting
• The movement of stock from one location to another location, physically or logically, is a
transfer posting. e.g. (Storage location to Storage location, In quality inspection to
Unrestricted use, Plant to plant)

• SAP defines these movements by movement types.

• Stock transfer between Storage Locations & Plants can be one step or two step

• The two steps stock transfer allows you to track the stock ‘in-transfer' between the issuing
plant and the receiving plant.

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Physical Inventory
• SAP supports the following physical inventory procedures:
– Periodic Inventory
– Continuous Inventory
– Cycle Counting
– Inventory Sampling

• Physical Inventory can be carried out for the following stock types
– Unrestricted Use
– Quality Inspection
– Blocked Stock

• A Physical inventory document is created to record the results of a physical inventory.

• Once actual counts are entered into a physical inventory document, the values are posted
online, resulting in creation of SAP material & accounting documents.

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Agenda
Click to edit Master title style

- Objective

- SAP ERP Modules

- Material Management Overview

- Organization Structure

- Master Data

- Material Procurement

- Service Procurement

- Inventory Management

- Reports

MM Overview 3/20/2024 Page 64

An HCC Group Company
Reports

• There are many SAP standard reports available within SAP for purchasing. The 3 types are
listed below:
– List display
– General Analysis
– Order Value Analysis.

• A report must be started,or executed. In many cases, the SAP System automatically
executes a report.

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Reports- Materials/Product List

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Reports- Vendor’s List

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Reports-Purchase Requisitions List

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Purchase Order Report

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Reports - Material Stock

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Inventory report

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 Thank You

MM Overview 3/20/2024 Page 72

An HCC Group Company