sap mm presentation

CONTENTSMM - Overview

MM - Purchasing

MM - Purchase Order

MM - Inventory Management

MM - Invoice Verification

Overview of

MATERIALS MANAGEMENT

Course Objectives

Visualize the MM functionalities

Understand MM related views of Material Master and Vendor master records

Create other master records or changing the existing master records

On conclusion of this course, you should be able to:

Introduction

Contents

MM overview

Organizational Structure

Material master

Vendor master

Other master recordsExercises

Solutions

MM - Overview

Major components of MM- Module materials planning and control (MRP)

procurement

inventory management

invoice verification.

Integration with other Modules

Finance / Asset ManagementFinance / Asset Management

ProcurementProcurement

Logistics PlanningLogistics Planning

Sales LogisticsSales Logistics

ProductionProduction

Integrated Business Process Overview

Requirement for Goods /

Services

Requirement for Goods /

Services

Purchase

Invoice

Verification

Invoice

Verification

Financial and Managerial Reporting and AnalysisFinancial and Managerial Reporting and Analysis

G/L Inventory /

G/L GRIR/ Expense

AP Invoice

G/L GRIR/ Expense

AP Invoice

Vendor

Payment

Vendor

Payment

MM Organization Structure

ClientClient

Storage location 1Storage

location 1Storage

location 2Storage

location 2WHWH WHWH Plant 3Plant 3 Plant 4Plant 4

Plant 1Plant 1 Plant 2Plant 2 Purchasing

Organization

Purchasing

Organization

Company code 1Company code 1 Company code 2Company code 2

Organizational Elements - Client

Highest Hierarchical Level in SAP(e.g. a corporation)

Can be Used to Differentiate between a Development, Quality Assurance, and Production System within R/3

All Areas of an Organization that are to be Integrated into the SAP R/3 Production System should be Included Under one Client

Client Characteristics Client Characteristics

Organizational Elements - MM

Responsible for Procurement for One or More Plants

Responsible for Negotiating Pricing and Delivery Terms with Vendors

Purchasing Organization is Assigned to A Company where Inventory is Legally Tracked or Costs are Legally Incurred.

Purchasing OrganizationPurchasing Organization

Usually a Manufacturing Facility, Warehouse, or a Location that Stocks , Manages, and Valuates Inventory

May be a Physical Site with Multiple Manufacturing/Production Lines

May be Multiple Manufacturing/Production Lines at One Physical Site

Can be a Physical Location(cost centers may or may not be associated to a plant i.e. administrative Vs. manufacturing cost centers)

SD Availability Checking is Normally Done at the Plant Level

PlantPlant

Links to Production (PP), Materials Management (MM), and Sales and Distribution (SD)

A Plant is Assigned to A Company code

Purchasing Organization are Assigned to Plants

Plant (Cont.)Plant (Cont.)

A Location within a Plant where Inventory is Stored

Storage LocationStorage Location

Master data in MM

Material Master

Vendor Master

Service Master

Purchasing info record

Source List

Material master in SAP.

The material master contains information on all the materials that a company procures, produces, stores, and sells.

The material master is used by all components in the SAP Logistics System

Different departments in a company work with the same material, so data in a material master record is subdivided in the form of user departments.

Material description and Base unit of measure appear in all user departments.

Use of material master in SAP logistics system functions.

In Purchasing for ordering materials.

In Inventory Management for goods movement postings and physical inventory

In Invoice Verification for posting invoices

In FI for maintaining value of material.

In Production Planning and Control for material requirements planning, scheduling, and work scheduling

User departments using same material master

Material Numbers

Definition

Number uniquely identifying a material master record, and thus a material.

For every material that your company uses, you must create a material master record in the material master. This record is uniquely identified by a material number.

Internal and External number assignment.

Industry sector

It determines type of industry .

Eg. mechanical industry,chemical industry,pharmaceutical etc.

The industry sector you specify determines

Which screens appear and in what sequence

Which industry-specific fields appear on the individual screens

Material Types

Materials with the same basic attributes are grouped together and assigned to a material type.

When creating a material master record, you must assign the material to a material type. The material type determines certain attributes of the material and has important control functions.

Some of the standard material types are

ROH: Raw materials which are bought from outside and goes into production.

HALB :Semi-finished material which are bought externally and manufactured inside. They can be sold individually as well.

FERT:Finished materials are final products of the company

Views relevant to MM

Basic data1/data2

Purchasing

Purchase order text

Storage 1

Storage 2

Accounting

CREATING MATERIAL MASTER IN SAP

From logistics screen click

Logistics Materials Management material master, to bring up material master screen.

Click material create(general) immediately

Organizational levels.

Storage location

Material master

In Purchasing screen you can enter

Purchasing group

purchasing value key

Set indicator for automatic PO

Material master

In purchase order text screen,

you can enter the text , which will be defaulted in PO every time when you create a PO for this material.

In Storage 1 you can enter,

Storage bin

Unit of issue

Shelf life data

Batch management

Concept of vendor master in SAP.

vendor master record is maintained by both Accounting and Purchasing.

A vendor can be a one time vendor or regular vendor

A vendor master record contains the vendor’s name and address, as well as data such as:

the currency used for ordering from the vendor

terms of payment

names of important contact persons (sales staff)

Organization of vendor master records

A vendor master record is subdivided into three different data areas:

General Data

Company code data

Purchasing organization data

Creating vendor master record.

Menu Path

Logistics -> Material management -> purchasing ->master data vendor ->purchasing ->create

In the initial screen you can enter,

Vendor number (For External number assignment )

Vendor account group

Purchasing organization

Creating vendor master record.

In general data you can maintain,

Address

Control

Payment transactions

In Purchasing organization data you can maintain,

Purchasing Data

Partner functions

Changing vendor master record

You cannot change Vendor account group (One time vendor cannot be converted in to a regular vendor)

Blocking a vendor

Flag for deletion

Changing other options

Automatic PO

Vendor schema group

Payment terms

Discount

Service Master Records

Descriptions of all services that may need to be procured can be stored.

The organizational level at which services are procured is the purchasing organization.

In addition to a unique description of the service, a service master record contains further information that is necessary for procurement purposes (such as texts or units of measure).

Creating a service master record

In the initial screen you can enter

Service number (if external number assignment)

Service category

In the Basic data screen enter,

Base unit of measure

Description of services

Valuation class (3200 for services)

In the classification screen enter,

The class for classifying the services

Concept of Purchasing info rec in SAP.

An info record represents a material-vendor relationship.

The info record contains concise information about a vendor and a material that you already procure from that vendor.

Info records are created automatically when you order a material. You can also create, change, and delete info records.

Purchasing info rec (Contd…)

Use of Purchasing info rec in PO creation

Net price for the item will be defaulted in PO

All the pricing conditions will be defaulted

other uses include

Delivery tolerance

Shelf life

Purchase order text

Purchasing info rec (Contd…)

Use of info rec in Vendor evaluation

Order price history

Quotation price history

Delivery reliability

Quantity reliability

Concept of source list in SAP

A source list specifies the possible sources of supply for a material over a given period of time

It shows the time period in which a material may be ordered from a given vendor

Source list can be created automatically using generate source list option

Source list can also be maintained manually.

Source List (Contd…)

Uses of source list

Fixed vendor

Vendor blocking

Auto PO creation

Source list requirement at plant level

Can be made mandatory

MM - Purchasing

Course Objectives

Understand the concepts in SAP - Purchasing component

Create or change PRs

Create, change or compare RFQs

Create contracts

On conclusion of this course you should be able to

Introduction

Contents

Purchasing overview

Purchase requisitions

Request for quotations

Outline agreements

Exercises

Solutions

Purchasing - overview

The Purchasing component has the following tasks: external procurement of materials and services

determination of possible sources of supply for a requirement identified by the materials planning and control system

determination of possible sources of supply for a requirement arising directly within a user department

monitoring of deliveries and payments to vendors

Purchasing - integration with other modules

Integration

Controlling (CO)

Purchase orders for materials intended for direct consumption

They can be directly assigned to a cost center or a production order.

Financial Accounting (FI)

Vendor master is maintained by both accounting and purchasing departments.

Through PO account assignment, Purchasing can also specify which G/L accounts are to be charged in the financial accounting system.

Purchasing - integration with other modules

Sales and Distribution (SD)

Within the framework of materials planning and control, a requirement that has arisen in the Sales area can be passed on to Purchasing.

When a requisition is created, it can be directly assigned to a sales order.

Process flow in purchasing

Determination of Requirements

Materials requirements are identified either in the user departments or via materials planning and control.

It includes both MRP proper and the demand-based approach to inventory control.

The regular checking of stock levels of materials defined by master records, use of the order-point method, and forecasting on the basis of past usage are important aspects of the demand management.

You can enter purchase requisitions yourself, or they can be generated automatically by the materials planning and control system.

Source Determination

The Purchasing component helps in identifying potential sources of supply based on past orders and existing longer-term purchase agreements.

This speeds the process of creating requests for quotation (RFQs)

Vendor Selection and Comparison of Quotations

The system is capable of simulating pricing scenarios, allowing you to compare a number of different quotations.

Rejection letters can be sent automatically.

Purchase Order Processing

The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order.

You can generate Pos yourself or have the system generate them automatically.

Vendor scheduling agreements and contracts are also supported.

Purchase Order Follow-Up

The system checks the reminder periods you have specified

System automatically prints reminders or expediters at the predefined intervals.

It provides you with an up-to-date status of all purchase requisitions, quotations, and purchase orders.

Goods Receiving and Inventory Management

Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number.

By specifying permissible tolerances, buyers can limit over- and underdeliveries of ordered goods.

Invoice Verification

The system supports the checking and matching of invoices.

Invoice verification can be based on purchase orders or GR documents or directly to a vendor without any document reference.

Std. Menu options in Purchasing

Create

Use this option to create a purchasing document .

Enter the required information and save the document .

The document is then stored under a unique number.

Change

Use this option to change a purchasing document .

You need the document number in order to access the document.

Display

Use this option to display a purchasing document .

You cannot change or add any information to the document that is displayed .

You need the document number in order to access the document.

List displays/reporting

You can use these options to generate reports analyzing purchasing documents

Example

List of all purchase orders for Vendor ABC

Follow-on functions

This option allows you to perform tasks related to (following on from) but not included in the purchasing functionality.

Example

Entering a goods receipt or an invoice in the system.

Messages

This option enables you to print or transmit documents in message form

Example

Transmission via fax, Printouts etc

Purchasing Documents

Definition

A purchasing document is an instrument used by Purchasing to procure materials or services.

Types of purchasing documents

Request for quotation (RFQ)

Transmits a requirement defined in a requisition for a material or service to potential vendors .

Quotation

Contains a vendor's prices and conditions

It is the basis for vendor selection.

Purchasing Documents

Purchase order (PO)

The buying entity’s request or instruction to a vendor (external supplier) to supply certain materials or render/perform certain services/works,

It formalises a purchase transaction .

Contract

In the SAP Purchasing component, a type of "outline agreement", or longer-term buying arrangement .

The contract is a binding commitment to procure a certain material or service from a vendor over a certain period of time.

Purchasing documents

Structure

Each purchasing document is subdivided into two main areas:

The header

The header contains information relevant to the whole document .

Example, information about the vendor and the document number is contained in the document header

The individual items .

The items specify the materials or services to be procured .

Example, The material description and the order quantity are specified in each item.

The additional data

It provides extra information about the item, and has no direct connection with the item procurement data.

Example,

account assignment data

PO history for an item, which contains information on already recorded goods and invoice receipts relating to the item.

Classification of Purchasing Documents

Purchasing documents are differentiated in the SAP system via the document type .

Example, relevant number range depends on document types

Document types are defined for RFQs, purchase orders, and contracts

Numbering of purchasing documents

Each document is assigned a unique number .

This number can be assigned internally or externally , depending on the policy .

Internal number assignment means that the system assigns the number.

External number assignment means that the person creating the document must supply it.

Alphanumeric assignment is only possible in the latter case.

Definition

A purchase requisition is a request or instruction to Purchasing to procure a certain quantity of a material so that it is available at a certain point in time.

It is an internal document.

Requisitions can be created in the following ways:

Directly: Someone from the requesting department enters a purchase requisition manually.

Indirectly: The purchase requisition is created via another SAP component.

Purchase requisitions can be subject to a release procedure.

Purchase requisitions - integration

Requisitions can be created indirectly in the following ways:

via materials planning and control

The component Consumption-Based Planning suggests materials that need to be ordered on the basis of past consumption or usage figures and existing stock levels.

The order quantity and the delivery date are determined automatically.

Materials planning and control can stipulate that a purchase requisition is to be resubmitted to the purchasing department if it has not been processed after a predefined period of time.

Purchase requisitions - integration

Requisitions are generated automatically from production orders if

They contain an external processing operation (e.g. subcontracting work)

A precondition is that the control key for the operation allows or prescribes external processing.

they contain non-stock components

Procurement types

Standard

Subcontracting

Components to be provided can be entered.

Consignment

Stock transfer

External service

Service specifications can be entered

Manual creation of PR

Things to remember

Item category

Account assignment category

Purchasing group

Requirement tracking number

Delivery date

Item with or with out material master record

Order quantity

Creating Request For Quotation

Automatically from PR

Manually

With reference to PR

With out reference to PR

Delivery address

Address of the company asking for quotation, by default it is the address of E+L. But it can be changed.

vendor address

Just enter the codes of the vendor, System will take other details from vendor master.

Quotation dead line

Delivery date

RFQ (contd…)

Printing RFQ

Send the Printed RFQ to the vendors

Receive the quotation from the vendor

Maintain the RFQ

Enter the net price quoted by the vendor

Enter the pricing conditions

Terms of payment

Update the info record if reqd

Quotations

Compare the quotations

Maintain the collective number in the RFQs

Quotations can be compared based on price

Discounts and delivery costs can be included

Comparison can be based on effective price also

System compares and gives the ranking list

Percentage basis for comparing quotations

Mean value equals 100%

Maximum value equals 100%

Minimum value equals 100%

Outline agreements with the vendor

To Setup longer-term purchasing arrangements with vendors regarding the supply of materials or the performance of services.

Outline agreements can be subject to a release (approval or clearance) procedure.

Agreement types

Quantity contract

Value contract

Outline agreements

Structure

Document header: containing information relating to the entire agreement. For example, the vendor information and header conditions are in the document header

Items: containing the information specific to the relevant material or service.

statistics on ordering activities for the item

quantity or price of the item

conditions, such as quantity discounts and surcharges

Outline agreements

Texts in Outline Agreements

Header texts

Item texts

You can create your own text types

Creating a outline agreement

Outline agreement can be created with reference to a RFQ or without any reference

Important terms

Purchase group

Outline agreements

Target quantity

Target Value

Pricing conditions

Validity starting and ending date

Vendor address

Delivery address

Remainders

Introduction

Contents

Creating POs

Printing of POs

Printing Remainders

Changing or canceling POs

Purchasing information

Exercises

Solutions

Purchase order

Definition

Formal request or instruction from a purchasing organization to a vendor or a plant to supply or provide a certain quantity of goods or services at or by a certain point in time.

Structure

Header

Additional data

Creating a Purchase order

Automatically from PR

Set automatic PO indicator for material and vendor

Maintain Purchasing info record

Maintain source list

Fixed vendor

PR from MRP or Manually created PR

Assign manually or automatically

Process the assigned PR to create PO

Create PO - Manually

Manually creating a PO

With reference to PR

Select the PRs

Select the items from PR

Copy the items in to PO

Enter the vendor

Enter the prices and pricing conditions

Update the info record if reqd

Create PO

With reference to RFQ

Select RFQ

Select the items

Copy the selected items in to PO

Enter the Price and pricing conditions

Update the info record if reqd.

Acknowledgement and confirmations

Create PO

With out any reference

In this case you need to enter

Vendor code

Delivery date

Item category

Account assignment category (if reqd)

Order type ( NB For std purchase order)

Plant ( 4000 - default plant )

Storage location

Creating a PO (contd…)

Important terms in PO

Vendor

For creating a PO you need to enter vendor code

Vendor master should exist for this purpose

if you don’t want to maintain all the details for a vendor you can create a one time vendor

Item category

Standard

Subcontracting

service

Create PO (Contd…)

Account assignment category

Specification of the account assignment objects that are charged in the case of a purchase order for a material that is intended for direct usage or consumption.

Examples

Sales order

Production order

Cost center

Types of account assignment

Single account assignment

Multiple account assignment

Create PO (contd…)

Delivery date

Date format

Day format

Week format

Month format

Delivery date entered here is only expected delivery date

You can also specify a statistical delivery date

Create PO (contd…)

Units of measure in PO

The order unit

This is the unit you specify in connection with the order quantity.

The order price unit

This is the unit that applies in connection with the net price and which is taken as the basis for invoice verification.

If the order price unit does not correspond to the order unit, and if no conversion factor is specified in the system, you must enter a conversion factor on the item detail screen.

Example for units of measure in PO

Order quantity 24

Order unit Box

Gross price per unit $10

Order price unit (number) 1

Order price unit (of measure) kg

Conversion factor 24 boxes 1 kg

Conditions

This component enables you to store pricing stipulations agreed with the vendor

Examples are applicable discounts or surcharges, or stipulations regarding the payment of freight costs in the system.

There are three kinds of price in Purchasing:

Gross price

Price without taking any possible discounts and surcharges into account

Net price

Price taking any applicable discounts and surcharges into account

Effective price

Net price after deduction of cash discount, with allowance for any miscellaneous provisions, delivery costs, and non-deductible taxes.

Terms of Payment

Example

Within 14 days 2% discount

Within 30 days due net

Inco terms

Incoterms are internationally-recognized terms of delivery reflecting the standards set by the International Chamber of Commerce (ICC).

Example

FOB - Free On Board. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point.

You can specify Incoterms for an order item that differ from those in the PO header.

Creating PO from outline agreement

In the initial screen for Create PO,

Select the Outline agreement and items

Copy the items in PO

In the item overview screen

Enter the quantity

If the quantity exceeds the target quantity system gives a warning

Texts in PO

Header texts

Header note

Pricing types

Dead lines

Terms of delivery

Shipping instructions

Terms of payments

warranties

Penalties for breach of contract

Confirmations

Purpose

This component can be used, if you wish to have your vendor provide you with various kinds of confirmation regarding delivery dates and quantities

It enables you to base your materials planning and control activities on more up-to-date data than that contained in purchase orders.

Confirmation control key

Shipping notification

Order acknowledgement

Shipping notification

Shipping Notification

Definition

A vendor’s confirmation to a purchasing organization of the delivery date for a certain quantity of ordered materials

It can be for the date of performance of ordered services also.

Structure

A shipping notification consists of several items in which the notified (confirmed) quantity of the material or service is specified.

Confirmations from the Viewpoint of IM

When you post goods receipts, there are several ways of finding the associated purchase orders.

Enter the PO number

Enter the shipping notification number

Enter the transport identification code

If you establish a link via the PO number itself, the relationship is unique

i.e. one goods receipt (GR) against one purchase order

Confirmations from the Viewpoint of IM

If you enter the number of the shipping notification

The system selects all purchase orders containing this number

System suggests the notified quantities for the GR document.

Prerequisites

If you wish to match up GRs against POs via the shipping notification number ,

shipping notification must exist as a separate document.

Releasing the PO

Release Procedure for External Purchasing Documents

External purchasing documents (i.e. purchasing documents other than requisitions) are released at header level.

Item-by-item release is not possible.

These documents can only be released using the release procedure with classification.

Release Conditions

The release conditions determine the release strategy in accordance with which a PO is to be released.

If a PO does not meet the conditions for a release strategy, it is automatically released for further processing.

Release procedure

Release Strategy

The release strategy defines the approval process for purchasing documents.

The strategy specifies the release codes necessary and the sequence in which releases have to be effected.

A maximum of eight release codes can be defined.

The assignment of the release strategy to a purchasing document is based on the release conditions.

Release procedure

Release Code

Definition

The release code is a two-character ID allowing a person to release (clear, or approve) an external purchasing document.

Who may work with which release codes is basically controlled via a system of authorizations.

Release Prerequisites

The release prerequisites indicate the sequence in which PO must be approved via the release codes.

Printing a PO

Menu path

Purchase order -> Header -> Messages

Data required

Output type

Medium

Communication method

Select the printer

Further Data

Repeat output

Change output

Printing the remainders

Types of expediting letters

Remainders

A negative number of days means that a reminder is to be issued to the vendor n days prior to the delivery date

Urging letters

A positive number of days means that a letter or message urging delivery is to be issued n days after the due date.

Message type - MAHN (Dunning letter)

Changing and blocking POs

If you change a PO after it has been sent to the vendor, a change document is generated that can be sent to the vendor.

This tells the vendor what you have changed.

If the goods have already been delivered, then the changes you can make to the PO are limited.

For example, you cannot change the quantity to one that is less than the quantity delivered.

If the invoice has been received or the goods have been paid for, and your intended change affects the price, the change will be ineffective.

You can display the PO history for an item to determine whether deliveries have been received or the item has been invoiced.

MM - Inventory management

Course Objectives

Do planned and unplanned goods receipts

Do Issue of Goods

Do transfer posting of goods

Manage stocks of the company on both quantity and value basis

On conclusion of this course, you should be able to

Introduction

Contents

Overview

Integration with other modules

Type of stocks

Concept of material documents

Goods movements

Movement type concept

Inventory management - overview

What is inventory management ?

SAP's Inventory Management system allows you to

manage your stocks on a quantity and value basis

The stocks are managed not only on a quantity basis but also by value - a prerequisite for cost accounting. With every goods movement, the following values are updated:

the stock value for inventory management

the account assignment for cost accounting

the corresponding G/L accounts for financial accounting via automatic account assignment

What is inventory management ?

Planning, Entry, and Proof of Goods Movements

Goods movements include

external movements (goods receipts from external procurement, goods issues for sales orders)

internal movements (goods receipts from production, withdrawals of material for internal purposes, stock transfers, and transfer postings).

For each goods movement a document is created which is used by the system to update quantities and values and serves as proof of goods movements.

Integration in Materials Management (MM)

As a component of Materials Management, Inventory Management is directly linked with Material Requirements Planning , Purchasing, and Invoice Verification.

Inventory Management forms the basis for material requirements planning, which takes into account not only physical stocks but also planned movements (requirements, receipts).

Quantities and values from the purchase order and the goods receipt document are checked to ensure conformity with those in the invoice.

Integration in Production Planning (PP)

Inventory Management is closely linked to the Production Planning module:

Inventory Management is responsible for staging of the components required for production orders

Goods issue against production orders

The receipt of the finished products into the warehouse is posted in Inventory Management.

Integration in Sales & Distribution (SD)

As soon as you enter a sales order, you can initiate a dynamic availability check of stocks on hand.

When the delivery is created, the quantity to be delivered is marked as "Scheduled for delivery."It is deducted from the total stock when the goods issue is posted.

It is also possible to create sales order stocks.

These SD transactions are depicted in the Sales & Distribution system.

Integration in Quality Management (QM)

In the case of a goods movement, the system determines whether the material is subject to an inspection operation.

If so, a corresponding activity is initiated for the movement in the Quality Management system.

Financial Accounting (FI)

Automatic account assignment, a procedure during which the system determines the accounts relevant for the given goods movements.

Controlling (CO)

The interface to the cost accounting system is activated in the case of material consumption

For example, when materials are issued for various account assignment objects such as orders or cost centers.

Cost accounting is also involved when goods receipts are assigned directly to cost centers or orders.

IM - Material Master

Relevant views

Accounting

Price and accounting information.

Examples:

type of price control

valuation class.

Materials Planning

Information for materials planning.

Examples:

safety stock, reorder level, availability check.

Purchasing

Procurement information for a material.

Examples:

overdelivery and underdelivery tolerances

purchasing order unit of measure (order unit).

Storage

Information for warehousing and storing the material.

Example:

unit of issue

storage conditions, fixed bin location

Quality Management

Information for sampling and inspecting a material.

Examples:

indicator for goods receipt via quality inspection

Work Scheduling

Information for producing the material.

Examples:

production unit

overdelivery and underdelivery tolerances allowed.

IM - Data Required

For Inventory Management, you must maintain the following data:

Plant data

This data can be maintained via different views (for example, via Purchasing, Storage, Work scheduling).

You have to maintain at least one view that requires the entry of the organizational level plant.

Valuation data

Valuation data is required for managing the stock by value.

You maintain this data via the Accounting view.

IM - Data Required

Storage location data

You maintain the storage location data via the Storage view.

If a material is located in a storage location, the storage data for that storage location must exist in the material master record, so that the system can manage the stock quantities at storage-location level.

Storage data can be manually entered when the material master record is created

It can be automatically created during the first goods movement in that storage location.

Types of stocks

Total valuated stock

Sum of all valuated stocks of a material.

It consists of all the types of stock your company owns.

Unrestricted-use stock

Company's own stock that is physically located in the warehouse, valuated, and not subject to any kind of usage restrictions.

quality inspection stock

Company's own stock that is in quality inspection.

Types of stocks

Stock in quality inspection is valuated but does not count as unrestricted-use stock.

For MRP, it is either available or not available, depending on how the system is set.

Blocked stock

Company's own stock that should not be used.

It does not count as unrestricted-use stock for Inventory Management

It is usually not available for MRP.

Types of stocks

Restricted-use stock

Valuated stock of a material managed in batches held by a company (and belonging to that company)

Usage of this stock is subject to certain restrictions. This category of stock is only used when batch status management is active.

Blocked stock returns

Stock that was returned by the customer and conditionally accepted.

It is neither valuated nor does it count as unrestricted-use stock.

Types of stocks

stock in transfer

Quantity that was already withdrawn from stock at the issuing location but that has not yet arrived at the receiving location

Stock in transfer is managed in the valuated stock of the receiving location, but it does not yet count as unrestricted-use stock.

Stock in transit

Stock in transfer that is created in the case of a stock transfer via a stock transport order.

Types of stocks

Available stock

Dynamic stock that is calculated by MRP taking any receipts, issues, the current available stocks into account.

Which requirements, receipts, and issues are included in the availability check is defined in the Customizing system.

Reserved stock

Sum of all quantities of a material that are reserved for withdrawal.

Reserved stock is usually not available from the point of view of MRP

For Inventory Management it still counts as unrestricted-use stock.

Types of stocks

Planned receipts

Sum of all quantities whose receipt has been planned with reservations.

Planned receipts are usually already available from the point of view of MRP

For Inventory Management they do not yet count as unrestricted-use stock.

Open PO quantity (total)

Sum of all outstanding PO quantities for a material.

The open PO quantity usually increases available stock in MRP

It does not increase unrestricted-use stock in Inventory Management.

Types of stocks

Open order quantity (total)

Sum of all outstanding order quantities for a material.

The open order quantity usually increases available stock in MRP

It does not increase unrestricted-use stock in Inventory Management

Goods receipt blocked stock

Sum of all quantities of a material that were delivered by vendors for purchase orders and that have been conditionally accepted.

GR blocked stock is neither valuated nor does it count as unrestricted-use

Types of stocks

Stock scheduled for delivery

Sum of all current deliveries to customers for which goods issues have not yet been posted.

Like reserved stock, stock scheduled for delivery is usually not available from the point of view of MRP

It counts as unrestricted-use stock for Inventory Management.

Negative stocks

Negative stocks are required if, for example, goods issues are entered before the corresponding goods receipts for organizational reasons and the material is already physically located in the warehouse.

Goods movements

Definition of Goods Movement

A goods movement is an event that causes a change in stock.

Good receipt

A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted.

Goods issue

A goods issue (GI) is a goods movement with which a material consumption, or a shipment of goods to a customer is posted.

Goods movements

Stock Transfer

Transfer of material from one plant to other plant or from one storage location to other storage location

Transfer Posting

changes in stock type or stock category of a material.

Examples of transfer postings are:

Transfer Postings From Material to Material

Release from quality inspection stock

Transfer of consignment material into company's own stock

The document concept

When posting a goods movement in the SAP System, the following documents are created:

Material document

a material document is generated that serves as proof of the movement

Accounting document

If the movement is relevant for Financial Accounting an accounting document is created

Cost accounting Document

Movement types

Movement Type

When you enter a goods movement in the system, you must enter a movement type to differentiate between the various goods movements.

A movement type is a three-digit identification key for a goods movement.

Examples

Goods receipt for a purchase order 101

Goods issue for a cost center 201

Release from quality inspection stock 321

Movement types

Control Functions of the Movement Type

The movement type has important control functions in Inventory Management.

For example, the movement type plays an important role in

updating of quantity fields

updating of stock and consumption accounts

determining which fields are displayed during entry of a document in the system

Material documents

Changing a Material Document

you can not change a document once it has been posted.

If you made a typing error when entering a goods movement you must reverse the movement with a reversal document

Although you cannot change a posted document, you can use the function "Change Material Document" to

enter additional information for the document.

print a goods receipt/issue slip for the document

Planning goods receipts

Referencing Document During Entry of Goods Movement

The documents used to plan goods receipts serve as reference documents for entering the goods movement

GR for purchase order

Return Deliveries

When you enter the return delivery, you should reference the purchase order or the material document, so that the system can

suggest data (for example, the storage location), to simplify data input

perform certain checks (the returned quantity must not exceed the delivered quantity)

reduce the quantity delivered to-date

reverse other updates that occurred (for example, for goods receipt into consumption) when the goods receipt was entered

Shelf Life Expiration Date Check

When you enter a goods receipt, it is possible to check the shelf life of a material.

Prerequisites

The shelf life is only checked if the following prerequisites are met:

The minimum remaining shelf life is maintained in the material master record or in the purchase order.

The minimum remaining shelf life is the minimum number of days for which the material must keep for the goods receipt to be accepted by the system.

Other goods receipts

initial entry of stock balances

external goods receipts without a purchase order

internal goods receipts without a production order

goods receipts of by-products

deliveries free of charge

returns from the customer

Reservations

Goods issue for an order

Results of a Goods Issue Posting

A goods issue has the following results in the system: material document is created

accounting document is created

Creation of a Goods Receipt/Issue Slip

Stock Update

Update of G/L Accounts

Consumption Update

Reservation Update

Order Update

Printing documents

MM - INVOICE VERIFICATION

Course Objectives

Enter and verify vendors invoice

Enter and verify vendor’s excise invoice

Devalue materials

Carry out physical inventory

On conclusion of this course, you should be able to

Introduction

Contents

Invoice entry and verification

Credit memo

Excise invoice

Material devaluation

Physical inventory

Inventory management information

Exercises

Solutions

MM - invoice verification

Invoice Verification in Materials Management serves the following purposes:

It completes the materials procurement process

It allows invoices that do not originate in materials procurement (for example, services, expenses, course costs, etc.) to be processed

It allows credit memos to be processed, either as invoice cancellations or discounts

Invoice Verification does not handle the payment or the analysis of invoices.

The information required for these processes is passed on to A/C department.

Invoice verification

Invoice Verification tasks include:

Entering invoices and credit memos that have been received

Checking the accuracy of invoices with respect to contents, prices, and arithmetic

Executing the account postings resulting from an invoice

Updating certain data in the SAP system, for example, open items and material prices

Checking invoices that were blocked because they varied too greatly from the purchase order

Types of Invoice Verification

As a rule, an invoice refers to a transaction for which the issuing party requests payment.

Invoice Verification differs depending on the type of invoice involved:

Invoices based on purchase orders

With purchase-order-based Invoice Verification, all the items of a purchase order can be settled together,

Invoices based on goods receipt

With goods-receipt-based Invoice Verification, each individual goods receipt is invoiced separately.

Types of Invoice Verification

Invoices without an order reference

When there is no reference to a purchase order, it is possible to post the transaction directly to

a material account

a G/L account

or an asset account.

Data required for invoice verification

The key data required for Invoice Verification is

Master data

Transaction data

Material data

Material data is information on the materials bought or produced in the company

Vendor data

Vendor data provides information on the suppliers a company deals with.

Data required for invoice verification

Accounting data

Accounting data is used to define G/L accounts

Transaction data

Transaction data records transactions or events in the SAP system.

Purchasing document

Material document

Accounting document

Invoice data

An invoice contains various information, such as: Who issued the invoice?

Which transaction does the invoice refer to?

How much tax do you have to pay?

If the invoice refers to a particular transaction, the system will automatically retrieve information pertaining to the transaction

Terms of payment

Quantities to be invoiced

The amounts the system expects per item

Screens for Invoice Verification

The initial screen

This contains general data such as

company code

currency

invoice reference.

The vendor screen

This contains data on the vendor

The terms of payment

taxes.

The selection screen

This lists the items of the transaction specified on the initial screen.

The layout of the selection screen depends on whether the invoice is based on a purchase order or a goods receipt.

Invoice Based on a Purchase Order

All the purchase order items are listed.

The quantity that is still to be billed (i.e. the difference between the quantity delivered and the quantity invoiced so far) appears as a default in the Quantity column.

Invoice Based on a Goods Receipt Goods-receipt-based invoice verification must have been defined in

the purchase order.

If the GR-IV field on the item screen in the purchase order is not selected, the goods receipt cannot be settled in this way.

There are two ways of finding the correct transaction in goods-receipt-based Invoice Verification:

You can enter a delivery note number or a GR document number and the system will list the items for the goods receipts on the selection screen;

you can enter a purchase order number and the system will list all the GR documents

Parking the invoice

Preliminary Posting

You can enter an invoice (or a credit memo) without posting it and simply "park" it.

If you park an invoice or a credit memo the system does not make any postings.

A parked document can be changed as often as you like.

When data is added or changed, the changes are noted by the system.

When no further changes are required, you can then post the parked document.

Parking the invoice

The preliminary posting function can be of great advantage if:

You are interrupted when entering an invoice. You can park the document and continue processing it later on. This saves you time having to enter the data twice.

You wish to clear up some questions before you post an invoice. You can park the document and continue processing it later on.

You wish to split the Invoice Verification process. One employee can, for example, park an invoice without checking it, while another carries out the actual checks and posts the document after making any necessary corrections.

Data Update When Posting an Invoice

When you post an invoice, the system carries out the account movements and updates the following

The system generates a Financial Accounting document that displays the accounts involved in the posting and the amounts posted to these accounts.

The system creates a purchase order statistic for each item in the purchase order.

The moving average price is updated in the material master record If the invoiced price differs from the price in the purchase order for a material with moving average price control

Blocking the invoice

When an invoice is blocked, Financial Accounting cannot pay the invoice.

The invoice must first be released in a separate step before it can be processed.

Variances in an Invoice Item

Quantity variance (M)

Price variance (P)

Variance in order price quantity (G)

Schedule variance (T)

Quality inspection (I)

Credit memos

The term credit memo always refers to a credit memo from the vendor.

Posting a credit memo always leads to a debit posting to the vendor account.

Two types of credit memos are possible:

Credit memos that refer to a purchase order or goods receipt

Credit memos that do not refer to a transaction.

Processing of credit memos is same as invoice verification

Types of Delivery Costs

In the SAP System, there are two types of delivery costs:

Planned delivery costs

They are entered in the purchase order. Provisions are set up for the relevant costs at goods receipt. The delivery costs posted at goods receipt can be referenced at invoice entry.

Unplanned delivery costs

They are only entered when the invoice is entered. No provision is made at goods receipt.

Physical inventory

Every company must carry out a physical inventory of its warehouse stocks at least once per fiscal year to balance its inventory

Stocks that can be inventoried

unrestricted-use stock in the warehouse

quality inspection stock

Blocked stock

Physical Inventory Process

The process of physical inventory can be divided into three phases:

Physical inventory preparation

Create a physical inventory document.

Block materials for posting.

Print and distribute the physical inventory document.

Physical inventory count

counting stocks

entering the result of the count on the physical inventory document printout

Physical inventory

Physical inventory analysis

entering the result of the count into the system

initiating a recount, if necessary

posting inventory differences

Processing Steps

Creating a physical inventory document

Entering the Physical Inventory Count

Post inventory differences

Physical inventory

posting the physical inventory count and inventory differences

If a physical inventory document exists, the following are combined in this step:

The count is posted.

Any inventory differences are posted.

Posting inventory differences without reference to the physical inventory document

A physical inventory document is created.

The count is posted.

Any inventory differences are posted.

You can perform the following functions by selecting Environment from the Inventory Management menu.

List display

The List display function offers reports for documents posted in Inventory Management.

Example: material documents for a material.

Stock display

Example: Stock overview

Information

The Information function allows you to display data (master data, transaction/movement data) from other applications.

Example: displaying a purchase order.

Balances display

The Balances display function offers analysis of the stock accounts and of the GR/IR clearing account.

Consignment

The Consignment option permits analysis of the consignment stocks from vendors as well as the consignment stocks and the returnable packaging stocks at the customer’s site.

Batch where-used list

Batch search strategy

Material analysis

Stock values

Receipts and issues

Inventory turnover

Inventory turnover of the value of valuated stock is calculated as follows:

Value of total consumption / Value of average valuated stock

Range of coverage

The range of coverage of the value of valuated stock is calculated as follows:

Value of valuated stock / value of average total usage / day

sap mm presentation

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