SAP SCM: Module 1 Overview

In SAP SCM (Supply Chain Management), Module 1 typically includes the foundational
processes that drive demand, sales, procurement, manufacturing, and warehouse
management. These processes are crucial to ensuring smooth and efficient operations within
a company's supply chain. Below, I'll provide a detailed breakdown of the key functions
involved in Demand, Sales, Procurement, Manufacturing, and Warehouse Processing
within SAP.

1. Demand Management

Demand Management involves forecasting customer demand for products or services,

ensuring the organization can plan effectively to meet that demand.

Key Functions in Demand Management:

 Forecasting:
o Use historical data and statistical forecasting models (like moving average or
exponential smoothing) to predict future demand for products.
o SAP APO Demand Planning (DP) module helps generate accurate demand
forecasts that can be passed to other parts of the business, like production and
procurement.
 Planning:
o The Demand Management module is responsible for translating the demand
forecast into a planned independent requirement (PIR).
o These requirements are communicated to the Production Planning and
Procurement departments to ensure sufficient stock.

Steps for Forecasting and Demand Planning:

1. Define the Planning Area and Planning Books in SAP APO.

2. Create a forecast model to generate demand predictions.
3. Input historical data to create a demand forecast using statistical methods.
4. Adjust the forecast based on business inputs from sales, marketing, or other
departments.
5. Transfer forecasted demand data to SNP (Supply Network Planning) or Production
Planning.

2. Sales

Sales processes in SAP are typically handled in the SAP Sales and Distribution (SD)
module. The focus is on creating and managing sales orders, pricing, delivery, and invoicing,
ensuring that the customer’s order is fulfilled in a timely manner.

Key Functions in Sales:

  Sales Order Creation:
o Sales orders are created based on customer requests, and they are tracked in
SAP SD.
o TCode: VA01 is used to create sales orders.
 Pricing:
o SAP SD integrates pricing conditions and customer-specific pricing, including
discounts, tax, and surcharges.
 Delivery and Shipping:
o After the order is confirmed, the Warehouse will initiate the picking, packing,
and shipping process.
o TCode: VL01N is used to create delivery documents.
 Invoicing:
o Once goods are shipped, invoices are generated for customers.
o TCode: VF01 for invoice creation.

Steps for Sales Processing:

1. Create Sales Order using VA01.

2. Define pricing conditions and apply to customer orders.
3. Check the availability of products based on stock or production schedule.
4. Ship the products to the customer using the delivery process in SAP SD.
5. Generate an invoice after delivery and update financial records.

3. Procurement

Procurement involves the process of obtaining raw materials, goods, and services needed for
production or resale. In SAP, the Materials Management (MM) module is responsible for
handling procurement processes.

Key Functions in Procurement:

 Purchase Order Creation:

o The procurement process starts with creating a purchase order (PO) to request
materials or services from vendors.
o TCode: ME21N is used for PO creation.
 Goods Receipt (GR):
o Once the material is delivered, a Goods Receipt is recorded in SAP to update
inventory levels.
o TCode: MIGO is used for GR transactions.
 Invoice Verification:
o After goods receipt, the invoice received from the vendor is matched with the
PO and GR to ensure accuracy.
o TCode: MIRO is used for invoice verification.
 Vendor Management:
o SAP helps manage vendor data, track performance, and optimize the
procurement process.
o TCode: XK01 is used to create vendor master records.
Steps for Procurement Process:

1. Create Purchase Order using ME21N.

2. Receive the material and confirm receipt using Goods Receipt (MIGO).
3. Verify the invoice against the purchase order using MIRO.
4. Pay the vendor based on the terms defined in the purchase order.

4. Manufacturing

Manufacturing is managed primarily within the Production Planning (PP) module of SAP.
This module focuses on planning, scheduling, and controlling the production process to
ensure that products are made on time and according to specifications.

Key Functions in Manufacturing:

 Production Order Creation:

o A production order is generated to initiate manufacturing. The order specifies
what product is to be produced and when.
o TCode: CO01 is used to create production orders.
 Material Requirements Planning (MRP):
o MRP is a process that calculates the materials required to produce goods,
based on demand forecasts and sales orders.
o TCode: MD01 is used for MRP runs to plan procurement and production needs.
 Capacity Planning:
o Ensures that production resources (e.g., machines, work centers) are available
to meet production demands.
 Production Confirmation:
o After the product is manufactured, the production confirmation is recorded to
update inventory levels and production statistics.
o TCode: CO15 is used for production confirmations.

Steps for Manufacturing Process:

1. Create Production Order using CO01.

2. Use MRP (MD01) to determine material and capacity requirements.
3. Confirm production completion using CO15.
4. Post goods receipt (GR) once production is completed, updating the inventory.

5. Warehouse Processing

Warehouse processing focuses on managing the storage, movement, and handling of

materials in warehouses. SAP’s Warehouse Management (WM) module ensures that stock
is accurately tracked and efficiently managed.

Key Functions in Warehouse Processing:

  Goods Receipt (GR):
o When items are delivered to the warehouse, a Goods Receipt is recorded to
update stock.
o TCode: MIGO is used to post GR entries.
 Inventory Management:
o Inventory levels are managed by tracking stock movements and monitoring
quantities.
o TCode: MM03 allows viewing material stock.
 Stock Transfers and Picking:
o When fulfilling sales orders, products are picked from the warehouse and
transferred to the shipping area.
o TCode: LT01 is used to create a transfer order for warehouse movements.
 Packing and Shipping:
o The final goods are packed and sent to customers after the picking process.
o TCode: VL01N is used for creating delivery documents.

Steps for Warehouse Processing:

1. Post Goods Receipt using MIGO to update inventory.

2. Create Transfer Order using LT01 to move stock in the warehouse.
3. Pick and pack materials based on sales orders.
4. Ship goods using the delivery process and generate shipping documents (VL01N).

Integration Between Modules

 Demand and Sales Integration:

o The forecasted demand from Demand Planning (DP) feeds into Sales and
Procurement processes, ensuring that the right products are available for
customers.
 Sales and Procurement Integration:
o Sales orders drive procurement requests if inventory is insufficient. Similarly,
procurement schedules help fulfill sales orders efficiently.
 Manufacturing and Warehouse Integration:
o Manufacturing processes (Production Orders) are linked to warehouse
processes. When products are manufactured, goods are moved to storage and
eventually picked and shipped to customers.
 Procurement and Warehouse Integration:
o Procurement processes update inventory once goods are received in the
warehouse, ensuring material availability for manufacturing or sales orders.

Conclusion

This module of SAP SCM—encompassing Demand, Sales, Procurement, Manufacturing,

and Warehouse—is designed to streamline supply chain processes. By integrating these
different functions, SAP enables organizations to optimize inventory, enhance order
fulfillment, and improve the overall efficiency of the supply chain. Each module supports
decision-making through real-time data and facilitates the flow of materials and information
between various departments.

SAP SCM: Module 2 - Forecasting Overview

In SAP SCM, Forecasting is a crucial component of demand planning that helps businesses
predict future demand for materials or products. It involves generating forecasts based on
historical data, customer-specific inputs, and planned independent requirements (PIR).
Accurate forecasting is essential for aligning production, procurement, and sales processes
with future market demand.

This module covers the following aspects of forecasting:

1. Material Forecast
2. Customer-Specific Forecasts
3. Planned Independent Requirement (PIR)

1. Material Forecast

A Material Forecast is used to predict the future demand for a specific material or product
based on historical sales or demand data. This forecast helps organizations anticipate the
required stock levels for production and procurement planning.

Key Features:

 Historical Data Analysis:

o Forecasting methods are based on historical sales data, seasonality, trends, and
cyclic patterns.
 Statistical Methods for Forecasting:
o Common statistical forecasting models in SAP include Exponential
Smoothing, Moving Average, Linear Regression, etc. These models help
predict future demand based on past trends.
 Forecast Horizon:
o The forecast horizon defines the period for which the forecast is made (e.g., 6
months, 12 months).
 Forecast Profiles:
o Forecast profiles are defined in SAP to specify the method (e.g., moving
average) and the key figures used in the forecast (e.g., sales quantity, sales
value).

Steps to Configure Material Forecast:

1. Create a Forecast Model:

 o TCode: SPRO → Advanced Planning and Optimization (APO) → Demand
Planning → Define Forecast Models.
o Select statistical methods (e.g., Moving Average, Exponential Smoothing)
for your forecast.
2. Assign Forecast Profile to Material Master:
o Link the forecast model to the material master data to ensure that forecasting
methods are applied to the correct materials.
o TCode: MM02 → Enter the material and navigate to the forecast tab.
3. Forecast Run:
o Perform a forecast run using TCode: DP90 (Demand Planning Workbench) or
DP91 (Display Planning Results).
o Generate a forecast based on historical demand data for the selected materials.
4. Adjust Forecast Results:
o Review and adjust the forecasted demand based on business insights (e.g.,
marketing campaigns, special promotions).

2. Customer-Specific Forecasts

Customer-Specific Forecasts are tailored forecasts that focus on specific customer demand
patterns. They take into account the unique requirements of individual customers, their
purchasing behavior, and seasonal demand fluctuations.

Key Features:

 Customer Demand Patterns:

o Customer-specific forecasts are generated based on the customer's historical
orders or consumption data.
 Collaboration with Customers:
o The forecast can be adjusted based on collaboration with customers. For
example, customers may provide information about future promotions or
changes in demand.
 Integration with Sales Orders:
o Customer-specific forecasts often rely on actual sales orders to predict future
demand for that particular customer.
 Forecasting Methods:
o Similar to material forecasting, customer-specific forecasts also use statistical
models, but these are specifically based on a customer’s order history and
buying behavior.

Steps to Configure Customer-Specific Forecast:

1. Define Customer-Specific Forecast Profile:

o TCode: SPRO → Advanced Planning and Optimization (APO) → Demand
Planning → Define Customer-Specific Forecast.
o Define the forecast method that will be applied to customer orders (e.g.,
Moving Average, Exponential Smoothing).
2. Set Up Customer Master Data:
 oEnsure that each customer has proper master data defined in the SAP system.
oTCode: VD01 → Create customer master data.
3. Generate Customer-Specific Forecast:
o Create and run a forecast for each customer based on their historical demand
data.
o TCode: DP90 or DP91 can be used to generate customer-specific forecasts.
4. Collaboration with Customers:
o If applicable, integrate customer insights or inputs (such as order forecasts or
marketing plans) to adjust the forecast.
o This collaboration may involve manually adjusting the forecast or using SAP’s
collaborative tools to input changes.

3. Planned Independent Requirements (PIR)

Planned Independent Requirements (PIR) are forecasted demand quantities that are
independent of customer orders. PIRs are created to reflect future demand that is not tied to
specific sales orders but rather to general business needs (e.g., production requirements,
procurement needs).

Key Features:

 Independent of Sales Orders:

o PIRs are used for production or procurement planning and are created based
on forecasted demand, not on actual sales orders.
 Used for Production and Procurement Planning:
o PIRs help ensure that the organization has the right amount of materials or
products available to meet future demand.
 Integration with MRP:
o PIRs are used in Material Requirements Planning (MRP) to generate
procurement or production orders.
 Adjustable:
o PIRs can be adjusted based on actual sales data, customer requests, or other
business needs.

Steps to Configure PIR:

1. Create PIR for Material:

o TCode: MD61 to manually create PIR based on forecast data.
o Enter material, quantity, and date (the period for which the forecasted demand
is required).
2. Automatic Generation of PIR:
o TCode: MD71 can be used for automatic creation of PIRs based on forecast
data or material planning requirements.
o PIR can also be generated automatically through MRP (Material Requirements
Planning) using forecasted demand data.
3. Review and Adjust PIRs:
 o TCode: MD04 to display and adjust PIR for specific materials. PIR data can be
adjusted based on business insights and customer-specific needs.
4. Integrate PIR with MRP:
o Once PIRs are created, MRP runs (e.g., MD01) will use them to generate
procurement or production orders.
o PIRs serve as a critical input for MRP to ensure the required materials are
procured or produced on time.

Integration Across Forecasting Processes

 Material Forecasts and PIRs:

o Material forecasts drive the creation of Planned Independent Requirements
(PIR), which in turn influence procurement and production planning.
 Customer-Specific Forecasts and PIRs:
o Customer-specific forecasts help refine PIRs for materials required to fulfill
customer orders. A higher volume of demand from a key customer could
increase the PIR for specific materials.
 Sales Orders and PIRs:
o Actual sales orders can modify the PIRs created through demand forecasts.
For example, a sudden increase in customer orders can reduce the need for
forecasted demand from PIRs, shifting focus to fulfilling actual orders.

Conclusion

Module 2, focusing on Forecasting in SAP SCM, helps businesses predict future demand for
materials, products, and customer-specific needs. Accurate forecasting is vital for ensuring
sufficient stock levels, minimizing shortages, and optimizing production schedules.

 Material Forecasts rely on historical data to predict demand for specific materials.
 Customer-Specific Forecasts consider individual customer behavior and input to
refine demand predictions.
 Planned Independent Requirements (PIR) help organizations forecast demand that
is not tied to specific customer orders, driving procurement and production planning.

By integrating these forecasting processes, SAP SCM ensures that demand planning is
aligned with production and procurement schedules, enhancing overall supply chain
efficiency.

Let me know if you need further clarification on any of these concepts or steps!

SAP SCM: Module 3 - Order to Ship Process Overview

The Order to Ship Process is a critical sequence of events in the SAP system that starts with
the creation of a sales order and ends with the shipment of goods to the customer. This
module covers the essential steps involved in creating sales orders, managing demand,
processing delivery documents, and ensuring efficient shipping and inventory management.
Below is an overview of each step in this process:

1. Create a Sales Order

The first step in the Order to Ship process is the creation of a Sales Order. This document
captures the details of a customer’s purchase request, including the products, quantities, and
delivery dates.

Steps to Create a Sales Order:

1. TCode: VA01 – Create Sales Order.

2. Enter Sales Area Information: Specify the Sales Organization, Distribution
Channel, and Division.
3. Customer Information: Enter the Customer ID or search for the customer.
4. Sales Order Items:
o Material: Enter the materials (products) requested by the customer.
o Quantity: Specify the quantity ordered.
o Delivery Date: Define when the goods need to be delivered.
5. Pricing and Conditions:
o The system will automatically apply the customer’s pricing conditions (e.g.,
discounts, surcharges).
6. Availability Check: The system checks product availability based on current stock
levels or production plans. If the material is available, the order will proceed; if not,
the system may suggest a delivery date based on stock availability.
7. Order Confirmation: Once the sales order is created, you can confirm the order and
provide an acknowledgment to the customer.

Sales Order Document Example:

 Sales Order Number: 10001234

 Customer: Customer ABC
 Items: Material 1, Quantity 10; Material 2, Quantity 5
 Delivery Date: 2025-03-01
 Price: $500

2. Demand Management

Demand Management in SAP involves forecasting and managing the anticipated customer
demand. Once the sales order is created, it impacts demand management by defining planned
independent requirements (PIRs) that can be used for material procurement and production.

Key Functions in Demand Management:

  Sales Order Impact on Demand:
o The sales order automatically updates Demand Management with the
customer's requirements, impacting planned independent requirements (PIRs)
for the material.
 PIR Creation:
o A Planned Independent Requirement (PIR) is created based on the sales
order for materials that are not in stock or need to be produced.
o TCode: MD61 is used to manually create or adjust PIRs.
 MRP Run:
o The PIR is used during Material Requirements Planning (MRP) runs to
determine if production or procurement orders need to be created to fulfill the
sales order.
o TCode: MD01 (MRP Run) can be initiated to calculate material requirements.

Steps for Managing Demand Based on Sales Orders:

1. Sales Order Creation (as described above).

2. MRP Check: Once the sales order is created, MRP checks whether additional stock
or production needs to be planned.
3. Adjustments to PIRs: If needed, PIRs are adjusted for specific materials based on
the sales order volume or customer request.
4. Procurement/Production Plan: The system may generate procurement orders or
production orders to fulfill the demand.

3. Documents and Basic Functions in Delivery Processing

After the sales order is created and demand is planned, the next step is to generate the
delivery document. Delivery processing includes all tasks related to preparing the product
for shipment.

Key Delivery Documents in SAP:

 Delivery Document (Outbound Delivery): This document specifies that goods are to
be shipped to the customer based on the sales order.
o TCode: VL01N – Create Outbound Delivery.
 Picking List: This is a list used by warehouse staff to pick items from stock.
o TCode: LT03 – Create Transfer Order for picking.
 Packing List: Details the products that need to be packed and shipped.
o TCode: VL02N – Modify Delivery (to pack items).

Steps in Delivery Processing:

1. Create Outbound Delivery using VL01N:

o Choose the sales order and generate the delivery document.
2. Picking and Packing:
o Generate the picking and packing documents as needed, ensuring that the
correct items are picked from the warehouse.
3. Goods Issue:
 o When items are physically shipped, perform a goods issue to reduce the
inventory levels.
o TCode: MIGO – Post Goods Issue (for outbound delivery).

Example of Delivery Document:

 Delivery Number: 500001234

 Sales Order Reference: 10001234
 Materials: Material 1 (10 pcs), Material 2 (5 pcs)
 Shipping Date: 2025-03-02

4. Shipping of Material

Shipping involves physically dispatching the goods to the customer after delivery processing
is complete. It includes packaging, transportation, and handover to logistics or carriers.

Steps in Shipping Process:

1. Confirm Goods Issue:

o TCode: MIGO – Goods Issue is posted to update inventory and indicate that the
goods have left the warehouse.
2. Create Shipment Document:
o Shipment planning involves assigning transportation tasks and generating
shipment documents.
o TCode: VT01N – Create Shipment.
3. Transportation Planning:
o If necessary, assign a carrier and delivery route for transportation.
4. Shipping Confirmation:
o Once the goods are shipped, a shipping confirmation is sent to the customer to
notify them of the shipment.

Shipping Document Example:

 Shipment Number: 700000012

 Carrier: XYZ Logistics
 Shipment Date: 2025-03-02
 Shipping Confirmation: Sent to Customer ABC.

5. Review Inventory at Inventory Location

After the goods are shipped, it is essential to review the inventory at the various inventory
locations (e.g., warehouses) to ensure proper stock management and to verify the remaining
inventory levels.

Key Functions:
  Inventory Management:
o Track stock movements after goods are shipped, ensuring that inventory data
remains accurate.
 Stock Overview:
o Use TCode: MMBE to get an overview of current stock levels at various
inventory locations.
 Inventory Check:
o Regularly check stock balances to ensure there are no discrepancies and that
goods are being tracked accurately.

Steps to Review Inventory:

1. View Current Inventory Levels using MMBE.

2. Check Inventory Locations to see stock levels across multiple warehouses or storage
locations.
3. Monitor Stock Adjustments made during the shipping and goods issue process.

6. Review Continuity Demand

Continuity Demand refers to the ongoing demand for materials or products that are not
linked to specific sales orders but are regularly required in production or for stock
replenishment.

Key Functions:

 Demand Forecasting: Continuity demand is typically forecasted based on historical

sales or planned future needs (e.g., for production or customer reorders).
 MRP and PIR Integration: This demand is often integrated into Planned
Independent Requirements (PIR) or handled as part of an MRP run to ensure
continuous stock availability.

Steps to Review Continuity Demand:

1. Review Forecasted Demand:

o Use the Demand Planning (DP) module to review forecasted continuity
demand for materials.
2. Monitor PIR and MRP Runs:
o Ensure that PIRs and MRP runs are aligned with continuity demand to
maintain stock levels for production or replenishment.
3. Adjust Procurement or Production Plans:
o Adjust procurement or production orders based on the forecasted continuity
demand.

Conclusion
The Order to Ship Process in SAP is a comprehensive workflow that spans across multiple
modules and functions, including sales order creation, demand management, delivery
processing, shipping, and inventory management. By integrating these functions, SAP SCM
ensures that products are delivered on time and that stock levels are effectively managed.

Key Steps:

 Create Sales Orders and manage customer demands.

 Demand Management ensures the right materials are available.
 Delivery Processing includes creating delivery documents and performing goods
issue.
 Shipping ensures physical dispatch and transport of goods.
 Inventory Review monitors stock levels across locations.
 Continuity Demand focuses on ensuring ongoing material availability for regular
requirements.

Each step is integral to fulfilling customer orders and maintaining smooth operations within
the supply chain. Let me know if you need further clarification on any specific process!

SAP SCM: Module 4 - SCM Master Data Overview

Master data plays a crucial role in Supply Chain Management (SCM) as it provides the
foundational information necessary for seamless operations across various modules. This
module focuses on key master data objects used in SCM, such as customer master records,
vendor master records, purchasing info records, sources of supply, bills of material, routing,
work centers, and production storage bins.

1. Customer Master Records

Customer Master Records are essential for managing customer information in SAP. These
records store details related to customers, including contact information, payment terms,
delivery methods, and sales conditions.

Key Features:

 Customer Identification: Unique customer ID that links to transactions and

communications.
 Customer Data: Contains essential details such as name, address, contact
information, and payment terms.
 Sales Area Data: Defines how the customer interacts with the organization (e.g.,
specific sales organization, distribution channel).
 Accounting Information: Handles the financial aspects such as payment terms and
credit limits.
Steps to Create a Customer Master Record:

1. TCode: VD01 – Create Customer (Sales Area).

2. Customer General Data:
o Enter name, address, language, and communication data.
3. Sales Area Data:
o Define the Sales Organization, Distribution Channel, and Division that
apply to the customer.
4. Billing and Payment Terms:
o Define payment terms, credit limit, and other financial information.
5. Shipping Information:
o Assign preferred shipping method and delivery terms.
6. Save:
o After entering the details, save the customer master record.

2. Vendor Master Records

Vendor Master Records store information related to external suppliers from whom
materials are purchased. These records ensure that procurement transactions are executed
efficiently, from purchasing to payment.

Key Features:

 Vendor Identification: Each vendor is assigned a unique vendor ID.

 Vendor Data: Includes contact information, banking details, and payment terms.
 Purchasing Data: Details like order currency, terms of delivery, and shipping
conditions.
 Accounting Information: Vendor payment terms, invoice verification, and payment
methods.

Steps to Create a Vendor Master Record:

1. TCode: XK01 – Create Vendor.

2. Vendor General Data:
o Enter the vendor’s name, address, contact information, and other details.
3. Purchasing Data:
o Define the vendor’s purchasing organization and terms (e.g., order currency,
delivery time).
4. Banking Data:
o Enter the vendor’s bank account and payment details.
5. Accounting Data:
o Set up payment terms, tax information, and payment methods.
6. Save:
o Once data is entered, save the vendor master record.
3. Purchasing Info Record

A Purchasing Info Record links a specific material with a particular vendor. It defines the
terms and conditions for purchasing materials from that vendor, including prices, delivery
times, and conditions.

Key Features:

 Material-Vendor Relationship: Contains detailed information about the specific

relationship between a vendor and material.
 Pricing Conditions: Defines prices for materials based on the vendor.
 Delivery Terms: Includes delivery times, minimum order quantities, and other
shipping terms.
 Validity Period: Defines the period during which the purchasing info record is valid.

Steps to Create a Purchasing Info Record:

1. TCode: ME11 – Create Purchasing Info Record.

2. Material and Vendor Selection:
o Enter the material number and the vendor ID.
3. Define Purchasing Conditions:
o Set terms such as price, delivery time, and unit of measure.
4. Save:
o After entering all relevant information, save the purchasing info record.

4. Source of Supply

The Source of Supply defines the different suppliers or sources that can provide materials. It
is used in the Material Requirements Planning (MRP) process to determine where
materials should be sourced from.

Key Features:

 Sourcing Information: Determines whether a material will be procured from a

vendor, produced in-house, or obtained from another source.
 MRP Integration: MRP uses the source of supply to decide whether to generate
purchase orders or production orders.
 Multiple Sources: A material can have multiple sources of supply, including
different vendors or internal production.

Steps to Define Sources of Supply:

1. TCode: ME01 – Maintain Source List.

2. Select Material and Vendor:
o Enter the material and the vendor.
3. Assign Validity Period:
o Specify the validity dates for sourcing the material from the vendor.
 4. Save:
o After inputting the source of supply details, save the record.

5. Bills of Material (BOM)

A Bill of Material (BOM) is a hierarchical structure that lists all the materials and
components needed to produce a finished product. It defines how products are assembled or
manufactured.

Key Features:

 Component Relationships: Defines which components are required for each product.
 Production Planning: Used in production planning to determine material needs.
 Types of BOM:
o Product BOM: Used for finished products.
o Component BOM: For individual components used in production.
o Alternative BOM: Used when there are multiple ways to assemble a product.

Steps to Create a BOM:

1. TCode: CS01 – Create BOM.

2. Material and Plant Selection:
o Enter the finished product material and the plant where production occurs.
3. Define Components:
o Enter the components (e.g., raw materials) and their quantities required for
production.
4. Assign Validity Period:
o Specify the validity dates for the BOM.
5. Save:
o Once all components are defined, save the BOM.

6. Routing

A Routing defines the sequence of operations required to manufacture a product, specifying

which work centers and machines are used during production.

Key Features:

 Operation Sequence: Lists all the operations required to produce the material.
 Work Centers: Each operation is assigned to a specific work center where the work
will be performed.
 Production Time: Defines the time required for each operation.
 Material Usage: Specifies which materials are consumed during production.

Steps to Create Routing:

 1. TCode: CA01 – Create Routing.
2. Material and Plant Selection:
o Enter the material to be produced and the relevant plant.
3. Define Operations:
o Enter the sequence of operations required for production.
4. Assign Work Centers:
o Assign each operation to a specific work center.
5. Save:
o After defining all operations and work centers, save the routing.

7. Work Center

A Work Center is a location or group of machines in which production operations take

place. It is where tasks are performed during the manufacturing process.

Key Features:

 Capacity Planning: Work centers are defined with capacity to determine the number
of operations that can be performed in a given time.
 Location and Costing: Each work center is assigned a location and can be associated
with production costs.
 Scheduling: Work centers are used in scheduling production orders and determining
operation timings.

Steps to Create a Work Center:

1. TCode: CR01 – Create Work Center.

2. Enter Work Center Details:
o Define the work center name, location, and related plant.
3. Assign Operations and Capacities:
o Specify the operations performed at the work center and its capacity (e.g.,
time, number of shifts).
4. Save:
o After entering all relevant details, save the work center.

8. Production Storage Bins

Production Storage Bins are locations within a warehouse or production facility where
materials are stored before they are used in production. These bins are part of warehouse
management and help track materials efficiently.

Key Features:

 Storage Location: Specifies where materials are stored within a warehouse.

  Material Tracking: Allows for better tracking of materials used in production,
ensuring inventory accuracy.
 Integration with Warehouse Management: Works closely with the Warehouse
Management (WM) module to manage material movements.

Steps to Define Production Storage Bins:

1. TCode: LS01N – Create Storage Bin.

2. Enter Warehouse and Bin Details:
o Specify the warehouse and the location of the production storage bin.
3. Material Assignment:
o Assign materials to the storage bin to track usage.
4. Save:
o Once the bin is created, save the entry.

Conclusion

Master data in SAP SCM ensures smooth and efficient operations across procurement,
production, and inventory management. The various master data records—such as customer
and vendor records, BOMs, routings, work centers, and storage bins—enable the organization
to manage its supply chain processes effectively, from material procurement to final product
shipment.

Key Master Data Elements:

 Customer and Vendor Master Records define relationships with business partners.
 Purchasing Info Records and Sources of Supply ensure accurate procurement
processes.
 Bills of Material (BOM) and Routings guide the production process.
 Work Centers and Production Storage Bins ensure effective manufacturing and
inventory management.

If you need further details or clarification on any specific master data objects or processes,
feel free to ask!

SAP SCM: Module 5 - Demand Overview

In this module, we cover several key concepts related to demand in supply chain
management, from forecasting and independent requirements to different methods of
managing stock and production. The goal of this module is to understand how demand is
planned, how materials are procured or produced, and how inventory is managed effectively
to meet that demand.
1. Forecasts and Independent Requirements

Forecasting is the process of predicting future customer demand for materials or products.
Independent Requirements (IR) are the quantities of products that are needed for
production or sales, regardless of actual customer orders.

Key Concepts:

 Forecasts:
o Forecasts are typically created based on historical data and trend analysis.
o Forecasts can be generated for both materials and finished goods.
o TCode for Forecasting: MP30 – Display Forecast.
 Independent Requirements (IR):
o These are planned quantities that need to be procured or produced, based on
sales predictions or production plans.
o TCode for IR: MD61 – Create Planned Independent Requirements.

Steps for Creating Forecast:

1. Create Forecast for Material:

o Use TCode: MP30 to view and create forecast data.
o Define the Material, Forecast Period, and the required forecast quantities.
2. Create Independent Requirements:
o Use TCode: MD61 to create planned independent requirements based on the
forecast data.
o Specify the material and quantities needed for production.

2. Sales Order

A Sales Order represents a formal request from a customer to purchase products, capturing
the details of the customer’s needs. It is the basis for the demand in the system and directly
influences procurement or production requirements.

Key Features:

 Sales Order Details: Includes the customer’s order, material, quantities, pricing, and
requested delivery date.
 Impact on Demand: Once a sales order is created, it triggers the creation of planned
independent requirements and affects stock levels.

Steps for Sales Order Creation:

1. TCode: VA01 – Create Sales Order.

2. Customer & Material Information:
o Enter customer ID, sales area, and material requested by the customer.
3. Check Availability:
 oThe system checks if the material is available in stock, and if not, it creates a
demand for procurement or production.
4. Order Confirmation:
o Once confirmed, the sales order impacts the demand planning and material
procurement.

3. Reservation

A Reservation is a request to earmark materials in the inventory for a future production or

delivery need. It ensures that stock is set aside for a particular order or requirement.

Key Features:

 Stock Availability: A reservation ensures that materials will be available when

required for production or sales.
 Materials for Production: Used when materials are needed for production but are
not yet issued.
 Stock Planning: It helps in managing stock levels and avoiding stock shortages.

Steps to Create a Reservation:

1. TCode: MB21 – Create Reservation.

2. Enter Material and Quantity:
o Specify the material, plant, and quantity to be reserved.
3. Reservation Purpose:
o Choose the purpose (e.g., Production, Sales Order, or Service Order).
4. Save Reservation:
o Once the reservation details are entered, save the reservation.

4. Stock Transport Orders

Stock Transport Orders (STO) are used to manage the movement of stock between
different plants or storage locations. It’s typically used for inter-plant stock transfers.

Key Features:

 Stock Movement: Manages the transfer of materials from one plant to another.
 Purchase Order Integration: STOs can be integrated with purchase orders to
facilitate the transport process.
 Cross-Plant Inventory Management: Ensures efficient inventory management
across plants.

Steps for Creating Stock Transport Orders:

1. TCode: ME21N – Create Purchase Order.

 2. Material & Vendor Selection:
o Choose material, plant (from and to), and quantity to be transferred.
3. Stock Transport Order Type:
o Specify the order type (e.g., Stock Transport Order (STO)).
4. Save STO:
o Once all data is entered, save the STO.

5. Stock Transfer Using a Stock Transport Order

Once a Stock Transport Order (STO) is created, it can be used to initiate the stock transfer
between plants. The process includes managing goods receipt and goods issue related to the
stock transfer.

Key Features:

 Goods Issue: At the supplying plant, the material is issued from stock using TCode:
MIGO.
 Goods Receipt: At the receiving plant, the stock is received and updated into the
system using TCode: MIGO.

Steps for Stock Transfer Using STO:

1. Goods Issue:
o Use TCode: MIGO to post the goods issue at the supplying plant.
2. Goods Receipt:
o Use TCode: MIGO to post the goods receipt at the receiving plant.

6. Production Orders

A Production Order is an instruction to produce a material, typically used for discrete

manufacturing. It contains details about the materials, operations, and work centers involved
in production.

Key Features:

 Material Production: Specifies the quantity and materials to be produced.

 Routing and Work Centers: Links to routing and work centers to define the
production process.
 Production Planning: Drives the production planning process and inventory
requirements.

Steps for Creating a Production Order:

1. TCode: CO01 – Create Production Order.

2. Enter Material and Quantity:
 o Specify the material and quantity to be produced.
3. Define Operations and Work Centers:
o Assign relevant routing and work centers to the production order.
4. Release Production Order:
o After planning, release the production order for execution.

7. Safety Stock

Safety Stock is the buffer inventory that is maintained to avoid stockouts due to demand
variability or supply chain delays.

Key Features:

 Inventory Buffer: Safety stock helps cover unexpected fluctuations in demand or

delays in supply.
 MRP Integration: MRP automatically considers safety stock levels when planning
material procurement or production.
 Stock Management: Ensures that enough inventory is available to meet customer
demand during uncertain times.

Steps for Defining Safety Stock:

1. TCode: MM02 – Change Material Master.

2. Enter Material Details:
o In the MRP 2 view, enter the safety stock level for each material.
3. Save:
o Save the material master with the defined safety stock level.

8. Data on Lot Size

Lot Size refers to the quantity of a material that is planned for procurement or production at
one time. It helps optimize procurement or production processes by determining the optimal
batch size.

Key Features:

 Lot Size Calculation: Determines the order size for production or procurement based
on demand.
 MRP Integration: MRP uses the lot size to calculate material procurement or
production requirements.
 Lot Size Types: Includes fixed lot size, lot-for-lot, and other variants.

Steps to Define Lot Size:

1. TCode: MM02 – Change Material Master.

 2. Lot Size Setting:
o Under the MRP 1 view, define the lot size type (e.g., Lot-for-Lot, Fixed Lot
Size).
3. Save:
o Save the material master with the defined lot size.

9. Lot Size Planning

Lot Size Planning ensures that the optimal lot size is chosen for procurement or production
based on factors such as demand, capacity, and costs.

Key Features:

 Optimization: Lot size planning aims to balance material availability and cost-
efficiency.
 MRP Integration: MRP calculates the optimal procurement or production lot size
based on the settings.

Steps to Perform Lot Size Planning:

1. TCode: MD01 – MRP Run.

2. Lot Size Determination:
o MRP will automatically calculate the lot size based on the material master
settings.
3. Adjustments:
o If necessary, adjust the lot size manually or change MRP parameters to
optimize production and procurement.

10. Materials Requirements Planning (MRP)

MRP is a process that helps ensure that the right materials are available for production and
that inventory levels are optimized. It calculates material requirements based on demand from
production orders, sales orders, or independent requirements.

Key Features:

 Demand Forecasting: MRP calculates material needs based on sales orders,

forecasts, or independent requirements.
 Procurement Planning: MRP suggests procurement actions (e.g., purchase orders,
production orders) based on material availability.
 Lot Size and Safety Stock Integration: MRP considers factors like lot size and
safety stock when planning.

Steps for Running MRP:

 1. TCode: MD01 – Run MRP.
2. Enter Planning Parameters:
o Specify the plant, material, and MRP type.
3. Review MRP Results:
o After the run, review the planned orders or procurement proposals generated
by MRP.

Conclusion

This module highlights the processes involved in managing demand and inventory, including
forecasting, sales orders, reservations, and production orders. Key concepts like safety
stock, lot size, and materials requirements planning (MRP) ensure that materials are
available at the right time, in the right quantity, and at the right cost. By effectively using
these tools, SAP SCM helps optimize production, procurement, and inventory management in
the supply chain.

If you need more detailed information on any of the topics, feel free to ask!

SAP SCM: Module 6 - Procure to Receipt Process Overview

The Procure to Receipt Process involves the steps from identifying the need for materials to
receiving and managing those materials within your company. The module covers the entire
process of purchasing, from the manual creation of purchase requisitions to receiving the
materials and managing inventory in storage bins.

This module explains the key transactions and concepts, such as creating and managing
purchase requisitions and orders, working with material types, and understanding storage
bins.

1. Manual Creation of Purchase Requisitions (ME51)

A Purchase Requisition (PR) is an internal document that indicates a need for materials or
services. It is the starting point for the procurement process. ME51 is used to create a manual
purchase requisition when there is no automated trigger (e.g., no sales orders or production
orders generating the requisition).

Key Features:

 Material or Service Request: The PR can request either materials or services.

 Internal Document: It's an internal document that does not directly involve external
vendors until converted into a purchase order.
  Approval Process: PRs typically go through an approval workflow before they are
processed further.

Steps to Create a Purchase Requisition:

1. TCode: ME51 – Create Purchase Requisition.

2. Enter Purchase Requisition Information:
o Material: Enter the material you need.
o Quantity: Specify the quantity required.
o Delivery Date: Define the required delivery date.
o Plant and Storage Location: Specify the plant and storage location where the
material will be received.
3. Vendor Selection (Optional):
o If required, specify the preferred vendor.
4. Save the Purchase Requisition:
o After filling out the details, save the purchase requisition.

2. Changing a Purchase Requisition (ME52)

Once a purchase requisition has been created, it may need to be updated or modified. ME52
is used to change an existing purchase requisition. For example, you may need to change
quantities, delivery dates, or material details.

Key Features:

 Modify Existing Requisition: Allows the user to make changes to any field in the
purchase requisition, such as quantity or delivery date.
 Manage Approvals: Changes may need to be re-approved if they affect the overall
order details.

Steps to Change a Purchase Requisition:

1. TCode: ME52 – Change Purchase Requisition.

2. Enter Purchase Requisition Number:
o Enter the number of the purchase requisition you want to modify.
3. Modify the Requisition:
o You can change fields such as material, quantity, delivery date, etc.
4. Save Changes:
o Once modifications are made, save the changes.

3. Create a Purchase Order

A Purchase Order (PO) is a formal document that is sent to a vendor to procure materials or
services. It is the result of a purchase requisition and a key element of the procurement
process. ME21N is the TCode used to create purchase orders.
Key Features:

 Binding Agreement: A PO is a binding contract with the vendor, specifying the

materials, quantities, and terms of delivery.
 External Document: Unlike the internal purchase requisition, a PO is typically sent
to an external vendor to confirm the purchase.
 MRP Integration: PO creation is often triggered by MRP or by purchase
requisitions.

Steps to Create a Purchase Order:

1. TCode: ME21N – Create Purchase Order.

2. Enter Vendor Information:
o Select or enter the vendor from whom you want to purchase the material.
3. Material and Quantity Details:
o Enter the material, quantity, delivery date, and plant where the goods will
be received.
4. Verify Terms and Conditions:
o Ensure that the payment terms, delivery terms, and other relevant conditions
are correct.
5. Save the Purchase Order:
o Once everything is entered and confirmed, save the purchase order.

4. Creation of Purchase Orders and Purchase Requisitions from SAP APO

SAP Advanced Planning and Optimization (APO) is an integrated planning tool that helps
in forecasting demand and supply, procurement planning, and production planning. Purchase
requisitions and purchase orders can also be created directly from SAP APO.

Key Features:

 Integration with Demand Planning: SAP APO generates procurement proposals

based on demand forecasts, which are then converted into purchase requisitions and
orders.
 Collaboration with SAP ERP: Once the requisition is created in SAP APO, it can be
transferred to SAP ERP to generate actual purchase orders.

Steps to Create Purchase Orders from SAP APO:

1. APO Planning Runs:

o After running MRP in SAP APO, procurement proposals will be created.
2. Transfer to SAP ERP:
o Transfer the procurement proposal to SAP ERP for further processing.
3. Convert to Purchase Order:
o The proposal can be converted to a purchase requisition, which then can be
used to create a purchase order.
5. Material Types

Material Types define the attributes of materials within SAP. Each material type
corresponds to specific characteristics and processes related to that material (e.g., whether it
is stocked, non-stocked, or a service).

Key Features:

 Control Material Behavior: Determines how the material is managed within SAP
(e.g., how it is procured, stored, and consumed).
 Examples of Material Types: Raw Materials (ROH), Finished Goods (FERT),
Consumables (HIBE), Services (DIEN).

Steps to Define Material Type:

1. TCode: OMS2 – Material Types.

2. Define Material Type:
o Configure or modify the material type settings as needed for your business
scenario.

6. Storage Bin

A Storage Bin represents a specific location within a warehouse where materials are stored.
It is part of the Warehouse Management (WM) module and helps in organizing the storage
of materials in a way that facilitates inventory management and picking processes.

Key Features:

 Warehouse Location: A bin is associated with a specific warehouse and storage

type.
 Inventory Management: Bins help ensure that materials are stored in an optimal and
accessible location.
 Stock Visibility: Provides better control and visibility over stock levels in a
warehouse.

Steps to Define Storage Bin:

1. TCode: LS01N – Create Storage Bin.

2. Enter Warehouse and Storage Type:
o Define the warehouse, storage type, and storage bin where materials will be
placed.
3. Assign Material:
o Specify the materials that can be stored in the defined bin.
4. Save Storage Bin:
o Once the details are entered, save the storage bin configuration.
Conclusion

The Procure to Receipt Process is a critical part of the supply chain, ensuring that materials
are procured, tracked, and efficiently received within the organization. By understanding and
using transactions like ME51 (purchase requisitions), ME52 (changing requisitions),
ME21N (purchase orders), and integrating with SAP APO, companies can streamline their
procurement processes.

Key Elements Covered in This Module:

 Purchase Requisitions: Manual creation and modification.

 Purchase Orders: Creating and managing POs for external vendors.
 Material Types: Defining and categorizing materials based on their characteristics.
 Storage Bins: Defining the physical locations for storing materials.

This process ensures that materials are readily available for production, inventory, or
consumption. If you need more details or have questions about specific processes or
configurations, feel free to ask!

SAP SCM: Module 7 - Demand Planning in ECC and SCM

This module delves into Demand Planning (DP) within both SAP ECC (Enterprise Central
Component) and SAP SCM (Supply Chain Management). It focuses on essential processes
related to rush orders, cash sales, and free-of-charge deliveries, each of which plays a
significant role in the demand and supply chain.

1. Rush Order

A Rush Order is a sales order type used to process urgent customer requests that need
immediate fulfillment. This order type is used when a customer requires a product in a very
short time frame, and it bypasses the usual processing and delivery schedules.

Key Features:

 Urgency: Rush orders are treated with higher priority and typically do not follow
normal lead times.
 Faster Processing: Due to urgency, these orders can override available stock,
production schedules, or normal delivery timeframes.
 Customer Satisfaction: Provides flexibility and responsiveness to meet customer
expectations in critical situations.

Steps for Creating a Rush Order:

1. TCode: VA01 – Create Sales Order.

 2. Order Type:
o Select the Rush Order order type (usually denoted as OR with specific
configurations for rush handling).
3. Customer and Material Details:
o Enter the customer, material, quantity, and delivery date.
4. Expedited Processing:
o Indicate that the order is urgent, and ensure priority processing for faster
fulfillment.
5. Save the Order:
o After all details are entered, save the rush order for processing.

Rush Order Considerations:

 Availability Check: Rush orders often override standard availability checks and
allocate stock immediately from the system.
 Shipping: The logistics team should prioritize shipping and delivery in line with the
urgent request.
 Lead Times: Adjust lead times accordingly to meet customer expectations.

2. Cash Sales

Cash Sales are sales orders where the customer makes immediate payment (usually on
delivery or in advance). This order type is frequently used for customers who pay in cash at
the point of sale, and it does not require credit or terms.

Key Features:

 Immediate Payment: Cash sales are paid for at the time of order or delivery,
reducing the credit risk.
 Simplified Process: Typically, cash sales orders bypass the credit check, and
payment is processed in real-time.
 Integration with Financials: Payments received are directly posted to financial
accounts, making cash sales easy to track and manage.

Steps for Creating a Cash Sale:

1. TCode: VA01 – Create Sales Order.

2. Order Type:
o Select the Cash Sale order type (usually denoted as CS).
3. Customer and Material Details:
o Enter customer information, material to be sold, quantity, and delivery
date.
4. Payment Terms:
o Since it’s a cash sale, ensure the payment is set to immediate payment or at
delivery.
5. Create Delivery:
o Cash sales often proceed directly to delivery, without credit checking.
6. Save the Order:
 o Once the details are entered, save the cash sale order.

Cash Sale Considerations:

 No Credit Check: As payment is immediate, credit checks are bypassed.

 Integration with Payment Systems: Cash payments are integrated into the financial
accounting system for instant processing.
 Delivery Processing: Cash sales are processed like normal orders, but often are
shipped without delay, as the payment is already received.

3. Free-of-Charge Delivery

Free-of-Charge Deliveries refer to goods delivered to a customer at no charge. This can

occur for various reasons, such as promotions, samples, or warranty replacements. It is
essential to handle these deliveries carefully to ensure that no payment is processed, and
appropriate accounting practices are followed.

Key Features:

 No Payment Involved: The customer receives goods for free, with no charge or
payment expected.
 Promotions or Samples: Commonly used in marketing campaigns, as free samples
or promotional gifts to attract customers.
 Warranty Replacement: Items sent as free-of-charge deliveries are sometimes
replacements for defective products.
 Impact on Inventory: Even though no money is collected, inventory levels are
reduced as goods are delivered.

Steps for Creating a Free-of-Charge Delivery:

1. TCode: VA01 – Create Sales Order.

2. Order Type:
o Select a Free-of-Charge Delivery order type (this could be a custom order
type or defined under a specific category in your system).
3. Customer and Material Information:
o Enter the customer, material, quantity, and delivery date.
4. Price Determination:
o Set the price condition to zero (this indicates the delivery is free of charge).
5. Create Delivery:
o Once the order is saved, create the delivery document. Even though it’s free of
charge, the delivery process remains the same.
6. Billing Document (Optional):
o In some scenarios, a billing document may be created for documentation
purposes, but it will reflect no charge.

Free-of-Charge Delivery Considerations:

 Stock Deduction: Free-of-charge deliveries still reduce the stock in the system.
  Pricing Conditions: Set price conditions to reflect zero pricing, ensuring no invoice
is generated.
 Accounting Impact: Free deliveries do not generate revenue but may impact the
overall cost and financial accounting for the company.
 Marketing or Warranty Use: These deliveries are typically linked to marketing or
warranty programs, and their impact on demand planning should be carefully
considered.

Conclusion

This module highlights important processes involved in Demand Planning within both SAP
ECC and SAP SCM, particularly related to customer orders. Understanding these processes
will help businesses manage urgent orders, streamline cash sales, and handle free-of-charge
deliveries in their operations. These processes contribute to order fulfillment efficiency,
customer satisfaction, and inventory management, which are critical components of
effective demand and supply chain management.

Key Elements Covered in This Module:

 Rush Orders: Orders with high priority that require expedited handling.
 Cash Sales: Orders paid for immediately, usually at delivery or in advance.
 Free-of-Charge Deliveries: Deliveries made without charging the customer,
commonly used for promotions, samples, or warranty replacements.

These processes are all essential parts of the sales order management system and ensure that
companies can respond effectively to various customer demands and needs. If you have any
questions or need further clarification on any of the topics, feel free to ask!

SAP SCM: Module 8 - Demand Management

Demand Management is a crucial part of Supply Chain Management (SCM) in SAP, as it

helps forecast and plan for materials required for production. This module focuses on
Planned Independent Requirements (PIR) for materials, a key feature in managing
demand and ensuring supply chain continuity.

In this module, we'll cover the steps for creating PIRs with segmentation, reference PIR,
and PIR consumption.

1. Creating Planned Independent Requirements (PIR) for Materials with

Segmentation
Planned Independent Requirements (PIR) are used in SAP to specify the forecasted
demand for materials that will be used in production. These requirements are generally
independent of any specific customer orders, meaning they are used for planning purposes.

Segmentation is the process of dividing the demand into different categories or time periods,
which helps in better managing and aligning production with demand over different time
horizons.

Key Features:

 PIRs are typically created based on forecasts, historical data, or other factors that
predict demand.
 Segmentation allows you to break down demand into different periods, such as daily,
weekly, or monthly requirements.
 Segmentation helps in balancing supply and demand, and it can be based on different
criteria, such as product groups, customer segments, or seasonal demand.

Steps for Creating PIR with Segmentation:

1. TCode: MD61 – Create Planned Independent Requirements.

2. Enter Material and Plant Information:
o Select the material for which you need to create PIR.
o Enter the plant (production location).
3. Specify the Planning Horizon:
o Choose the planning horizon (time frame) for the demand. This can be
weekly, monthly, or custom intervals.
4. Enter Demand Segments:
o In the segmentation section, specify different demand quantities for each time
period. This allows you to plan for varying demand over time.
5. Save the PIR:
o Once the data is entered, save the Planned Independent Requirements. This
PIR will be used as input for Material Requirements Planning (MRP).

Segmentation Considerations:

 Time-based Segmentation: For example, dividing demand into daily or weekly

segments helps with more precise MRP calculations.
 Demand Classifications: PIRs can be segmented based on product types, customer
preferences, or seasonal factors, ensuring the plan aligns with actual needs.

2. Reference PIR

A Reference PIR allows you to create a new PIR based on a previously existing one. This is
particularly useful when a historical pattern or another PIR can serve as a model for creating
future demand.

Key Features:
  Copy Demand: You can create a new PIR by referencing an existing PIR, saving
time and effort.
 Customization: Reference PIRs can be adjusted to match the specific forecast
requirements or production needs.
 Historical Data Usage: Often used when past demand patterns (such as seasonal
variations or product lifecycles) are the basis for future planning.

Steps for Creating PIR Using Reference:

1. TCode: MD61 – Create Planned Independent Requirements.

2. Reference PIR:
o Select the reference PIR from which to copy the demand data. This could be
from a previous forecast or a PIR with similar characteristics.
3. Adjust Segments:
o Review and adjust the demand segments, as the reference PIR may not exactly
match the new requirement.
4. Enter Plant and Material Information:
o Choose the material and plant for which the PIR is being created.
5. Save the PIR:
o Save the new PIR created from the reference data.

Reference PIR Considerations:

 Flexible Adjustments: You can adjust the copied PIR as needed to fit the current
forecast scenario.
 Forecasting Accuracy: It’s a good practice to evaluate historical PIRs for accuracy
before using them as references to ensure future demand planning is realistic.
 Time Period Adjustments: The demand periods can be adjusted based on changes in
production cycles, market conditions, or product seasonality.

3. PIR Consumption

PIR Consumption refers to the process where independent requirements (PIRs) are
"consumed" or reduced by dependent requirements, such as actual sales orders or
production orders. This consumption mechanism ensures that planned demand is adjusted
based on real-time data, such as actual customer orders or production requests.

Key Features:

 Demand Adjustment: As sales orders or production orders are confirmed, the PIRs
are consumed (i.e., reduced) by the actual demand.
 Consumption Types: SAP allows different types of PIR consumption, such as
order-based consumption or period-based consumption.
 Efficiency: Helps ensure that planned independent requirements don’t exceed the
actual demand, leading to better inventory management.

Consumption Types:
 1. Order-based Consumption (Consumption Mode 1):
o Consumption is based on actual sales orders or production orders. When these
orders are confirmed, the PIR is reduced by the amount that was consumed by
the order.
2. Period-based Consumption (Consumption Mode 2):
o PIRs are consumed based on the time periods (such as monthly, weekly) when
actual demand occurs. For example, if the demand is not consumed in one
period, it may carry over into the next period.

Steps for Configuring PIR Consumption:

1. TCode: MD03 – MRP (Material Requirements Planning) or related MRP transactions.

2. Define Consumption Mode:
o You can set up consumption types in MD61 or MD04 by choosing the
consumption mode and defining how the PIR will be consumed.
3. Define Consumption Parameters:
o Configure the parameters for consumption, such as time periods or specific
rules for how demand will reduce the PIR.
4. Monitor PIR Consumption:
o Use MD04 or similar transaction codes to monitor the consumption of PIRs in
the system. This will allow you to see if any PIRs are still unconsumed or if
new demand has reduced them.

Consumption Considerations:

 Timing: The timing of when consumption happens (e.g., monthly, weekly) should
align with actual production or sales schedules.
 Overlapping Demand: Be careful of scenarios where demand exceeds forecasted
PIRs and ensure sufficient inventory or procurement.
 Flexible Consumption Adjustments: If consumption does not occur as expected
(e.g., sales orders are delayed), you may need to adjust PIRs manually to ensure that
your material planning remains accurate.

Conclusion

This module provides key insights into the various aspects of Demand Management in SAP,
focusing on Planned Independent Requirements (PIR) and their management. By
understanding how to create PIRs, implement segmentation, use reference PIRs, and
handle PIR consumption, organizations can better align their demand planning processes
with actual production and sales needs.

Key Topics Covered:

 Creating PIR with Segmentation: Forecasting material demand with segmentation

based on time periods.
 Reference PIR: Creating new PIRs based on existing or historical data.
 PIR Consumption: Adjusting PIRs based on actual demand from sales orders or
production orders.
These tools are essential for managing supply chain demand and ensuring that materials are
available when needed, while minimizing excess stock or production costs. If you have
further questions or need clarification on any of these topics, feel free to ask!

SAP SCM: Module 9 - Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a key process in SAP that ensures the
availability of materials required for production while minimizing inventory levels. This
module covers the steps for creating Planned Orders, converting them into Production
Orders, and generating Purchase Requisitions for materials that need to be procured.

1. Create Planned Order

A Planned Order is an internal document created in SAP to plan the production of materials.
It is generated through the Material Requirements Planning (MRP) process and serves as a
request for the production of specific quantities of material at a specified time.

Key Features of Planned Orders:

 Planning Tool: Planned Orders are created to fulfill future demand for materials in
production.
 Internal Document: They are used internally within the company for planning purposes
before converting to production orders or purchase requisitions.
 MRP-Driven: Planned Orders are created automatically by the MRP run based on demand
such as sales orders, forecasted demand, and independent requirements.

Steps to Create a Planned Order:

1. TCode: MD01 or MD02 – MRP Run (for collective or single material).

o MD01 is used for a full MRP run, and MD02 is used for planning specific materials.
2. Enter Material and Plant Information:
o Specify the material and the plant where the material will be produced.
3. Set Planning Parameters:
o Choose the planning strategy (e.g., Make-to-Stock, Make-to-Order) and ensure that
demand is correctly forecasted.
4. Execute MRP Run:
o Run the MRP to generate planned orders based on demand and available capacity.
5. Review Planned Orders:
o After the MRP run, go to MD04 (Stock/Requirements List) to review the planned
orders generated for the material.
6. Save the Planned Order:
o The planned orders are now available for conversion into production or
procurement orders.

Planned Order Considerations:

  Time Frame: Make sure that the time frame aligns with the production schedules.
 Capacity Planning: Ensure that planned orders do not exceed production capacity.
 Order Conversion: Planned orders can be converted into either Production Orders (for in-
house production) or Purchase Requisitions (for externally procured materials).

2. Convert Planned Order into Production Orders

Once the Planned Order is generated and reviewed, it can be converted into a Production
Order to initiate actual production activities. The Production Order is the official request to
begin manufacturing the material.

Key Features of Production Orders:

 Execution Document: Production orders are the final document used for actual
manufacturing.
 Execution Control: Once a production order is created, it controls material issues, work
scheduling, and production tracking.
 Integration: The production order integrates with various components of SAP, including
Materials Management (MM), Production Planning (PP), and Sales and Distribution (SD).

Steps to Convert Planned Order into Production Order:

1. TCode: CO40 – Convert Planned Order to Production Order.

2. Enter Planned Order Information:
o Provide the planned order number that you want to convert.
3. Review Production Order Details:
o SAP will display all details regarding the material, quantity, and planned dates.
4. Convert to Production Order:
o Click the Convert button to change the planned order into a production order.
5. Save Production Order:
o After conversion, the production order is saved, and you can now proceed with
material issuance, work scheduling, and actual production.

Production Order Considerations:

 Order Confirmation: After production is completed, the production order must be

confirmed.
 Work Center: The work center and routing details are critical for scheduling production
work.
 Capacity Planning: Make sure that the work center has enough capacity to handle the
production orders within the desired time frames.
 Material Issuance: Materials required for the production order need to be issued from
inventory.

3. Create Purchase Requisitions

Purchase Requisitions (PRs) are internal requests to procure materials from external
vendors. If the MRP run determines that certain materials are required but not available in
stock, a purchase requisition is created to ensure procurement of these materials.

Key Features of Purchase Requisitions:

 Internal Request: A PR is an internal document requesting procurement of materials.

 No Vendor Information: Initially, a PR does not include vendor details but can be later
converted to a Purchase Order (PO).
 Procurement Process: Once a PR is created, it triggers the procurement process, including
vendor selection, quotation, and purchase order creation.

Steps to Create Purchase Requisitions from MRP:

1. TCode: ME51N – Create Purchase Requisition.

2. Enter Material and Plant Information:
o Specify the material and plant for which procurement is needed.
3. MRP-Generated PR:
o After running MRP (using MD01 or MD02), purchase requisitions can be generated
automatically for materials that require external procurement.
o Use transaction MD04 (Stock/Requirements List) to view the PRs created by MRP.
4. Review PR Details:
o Review the quantity and delivery dates for the material to be procured.
5. Save the Purchase Requisition:
o Once the PR is reviewed, save it. The requisition can be further processed to create a
purchase order.

Purchase Requisition Considerations:

 Vendor Selection: The purchase requisition does not specify a vendor but provides
information to the procurement team for vendor selection.
 Lead Time: Pay attention to the lead times for procurement to ensure that materials are
received in time for production.
 Material Availability: Ensure that sufficient stock is available or on order to meet the
production plan, and make adjustments to the PR accordingly.
 Automated PR Generation: In an MRP-driven process, PRs can be created automatically
based on the material requirements forecasted by the system.

Conclusion

In this module, we have covered essential steps for Material Requirements Planning
(MRP) in SAP, specifically focused on creating Planned Orders, converting them into
Production Orders, and generating Purchase Requisitions. These steps form the backbone
of a company's manufacturing and procurement processes, ensuring that the right materials
are available at the right time to meet production and sales demand.

Key Topics Covered:

  Planned Orders: Created via MRP to plan material availability for production.
 Production Orders: Planned orders are converted into production orders to begin actual
manufacturing.
 Purchase Requisitions: Automatically generated if material is needed but unavailable in
inventory; triggers the procurement process.

By understanding these processes, businesses can better manage their production schedules,
minimize material shortages, and optimize inventory levels. If you need any further details or
have specific questions regarding any of these processes, feel free to ask!

SAP SCM: Module 10 - Production Execution

Production Execution in SAP refers to the process of carrying out the production activities
once the production order has been created and released. This module covers the steps
involved in executing the production process, from creating an order to closing it after all
operations are completed. The process includes order creation, release, goods issue, order
confirmation, goods receipt, and order closing.

1. Create an Order

The creation of a Production Order is the first step in executing the production process. A
production order serves as the instruction to the shop floor for the manufacturing of a
product, detailing the materials, operations, and timelines required.

Key Features:

 Production Order: Contains all relevant details like material to be produced, quantity,
production location, and required resources.
 Execution Control: The order is used to manage the actual production process, from
material issuance to order completion.

Steps to Create a Production Order:

1. TCode: CO01 – Create Production Order.

2. Enter Material and Plant Information:
o Specify the material (product) to be produced.
o Enter the plant where the production will take place.
3. Order Type:
o Select the appropriate order type based on the production scenario (e.g., standard
order, repetitive manufacturing).
4. Enter Required Data:
o Input the required quantity and production start/end dates.
5. Define Routing/Work Center:
 o Specify the routing (production process steps) and work center (location where the
work will take place).
6. Save the Production Order:
o After entering all necessary data, save the production order. The order is now
created and ready for further processing.

Considerations:

 Bill of Materials (BOM): Ensure that the BOM for the product is correctly maintained to
ensure the right components are available for production.
 Capacity Planning: The work center should be evaluated for capacity to ensure that the
production process can be completed within the scheduled time frame.

2. Order Release

Once a production order is created, it needs to be released before actual production can
begin. The order release step makes the production order official and authorizes the
production process to start.

Key Features:

 Authorization: Releasing the order indicates that the production team can start working on
it.
 Resource Allocation: This step ensures that resources such as materials, labor, and machines
are allocated to the production order.

Steps to Release the Order:

1. TCode: CO02 – Change Production Order.

2. Enter Production Order Number:
o Enter the production order number that you want to release.
3. Release the Order:
o Select the Release button to authorize the production order for execution.
4. Verify Order Release:
o After releasing, verify the order’s status has changed to “released” in the system.

Considerations:

 Order Status: A production order must be in the released status for it to proceed with
material issue and production.
 Capacity Check: Before releasing the order, ensure that there are sufficient resources and
capacity available to fulfill the order.

3. Goods Issue (GI)

Once the production order is released, the required materials need to be issued from inventory
for production. The Goods Issue (GI) process transfers the materials from the warehouse to
the production area, thus reducing inventory levels.

Key Features:

 Inventory Movement: Materials are moved from storage to the production area, reducing
the available stock.
 Costing Impact: The GI process updates material consumption and impacts the production
order's costs.

Steps for Goods Issue:

1. TCode: MB1A – Goods Issue for Production Order.

2. Enter Production Order:
o Enter the production order number for which goods will be issued.
3. Select Materials:
o Choose the materials from the BOM that need to be issued to the production order.
4. Post Goods Issue:
o Confirm the material quantities and post the goods issue to update inventory and
transfer materials to production.

Considerations:

 Material Availability: Ensure that all materials required for production are available in stock
before issuing them.
 Consumption Confirmation: The GI process updates the production order's material
consumption, which is important for cost tracking.

4. Order Confirmation

After the production process is completed, the order confirmation step is required to
confirm the work done and record the actual production quantities, times, and resources used.
This step ensures that the system reflects the real progress of the order.

Key Features:

 Tracking Production Progress: Confirms the actual time spent and quantity produced.
 Cost Control: Updates the actual consumption of resources and time, ensuring that costs are
accurately recorded.

Steps to Confirm the Production Order:

1. TCode: CO15 – Confirmation of Production Order.

2. Enter Production Order Number:
o Input the production order number you want to confirm.
3. Confirm Quantities:
 o Enter the actual production quantity and confirmation data (e.g., labor hours,
machine hours).
4. Confirm the Production Process:
o Post the confirmation data once the production is completed, including confirmation
of actual output and resources used.

Considerations:

 Partial Confirmations: In some cases, production may happen in phases, and partial
confirmations are possible.
 Recording Downtime: You can also record downtime or delays during the production
process, which will impact overall performance metrics.
 Cost Tracking: Confirmations are crucial for tracking costs, as they reflect the actual use of
materials, labor, and overhead.

5. Goods Receipt (GR)

After the production order is confirmed, the finished goods need to be received into
inventory. Goods Receipt (GR) updates the stock of finished goods, increases inventory, and
marks the production order as completed.

Key Features:

 Inventory Update: GR increases the finished goods stock in the system.

 Valuation and Costing: The GR also impacts material valuation and cost tracking for the
production order.

Steps for Goods Receipt:

1. TCode: MIGO – Goods Receipt for Production Order.

2. Enter Production Order Number:
o Enter the production order number to perform the goods receipt.
3. Select the Goods Receipt Type:
o Choose Goods Receipt and select Production Order.
4. Post the Goods Receipt:
o Confirm and post the GR to update the inventory and mark the production order as
complete.

Considerations:

 Inventory Valuation: The GR process updates the value of finished goods in inventory, based
on the valuation price.
 Stock Transfer: The GR step transfers the produced goods from the production area to the
warehouse, making them available for sale or distribution.

6. Order Closing
Once all production activities are completed, the final step is to close the production order.
Order closing ensures that the system records all production activities and materials, and the
production order is no longer active.

Key Features:

 Finalization: Closes the production order and ensures that all relevant data has been
recorded.
 Cost Completion: All costs (material, labor, overhead) are finalized for the order.
 Clearing: Ensures that all system entries related to the production order are cleared, and the
order is closed.

Steps to Close the Production Order:

1. TCode: CO02 – Change Production Order.

2. Enter Production Order Number:
o Enter the production order number that you want to close.
3. Close the Order:
o Select the Close button in the order screen to complete the process.
4. Check Order Status:
o After closing, the production order status will change to “closed.”

Considerations:

 Final Costing: Ensure that all material movements, confirmations, and goods receipts are
posted before closing the order.
 Analysis: It’s a good practice to review the final production costs and compare them with
the planned costs to assess production efficiency.

Conclusion

In this module, we have covered the steps involved in Production Execution within SAP
SCM, from creating a production order to closing it after completion. These steps are critical
for ensuring smooth production operations and efficient use of resources.

Key Topics Covered:

 Create Production Order: Initiates the production process with necessary details.
 Order Release: Authorizes the production order for execution.
 Goods Issue (GI): Issuing materials from inventory to production.
 Order Confirmation: Confirming the actual progress and resource usage.
 Goods Receipt (GR): Updating inventory with the produced goods.
 Order Closing: Finalizing and closing the production order after completion.

By understanding these processes, businesses can streamline their manufacturing operations,

track progress accurately, and ensure inventory is well-managed throughout the production
cycle. If you have any questions or need clarification on any steps, feel free to ask!