1

MM OVERVIEW

Contents

Invoice Verification/Valuation

Automatic Account Determination

Overview and Org. Structure

Material Master

Purchasing Master Data

Procurement

Inventory Management/ Valuation

Topics

Overview and Organizational Structure

NCPDMNCPDM (US National Committee on Physical (US National Committee on Physical Distribution Management) Distribution Management) ::

"..physical distribution management .. is .. "..physical distribution management .. is .. the integration of one or more activities the integration of one or more activities for the purpose of planning, implementing and for the purpose of planning, implementing and

controllingcontrolling the efficient flow of raw the efficient flow of raw materials, in-process inventory and materials, in-process inventory and finished goods from point of origin to finished goods from point of origin to point of consumption..."point of consumption..."

Definition: LogisticsDefinition: Logistics

Resource Management in Logistics

Capacity resourcesCapacity resources

Capital resourcesCapital resources

long-termlong-term short-termshort-term

Material resourcesMaterial resources

Logistics chainLogistics chain

VendorVendor

ProductionProduction Sales Sales

Purchase ordersPurchase orders

ProcurementProcurement

materialsmaterials

servicesservices

DistributionsDistributions productsproducts

servicesservices

Sales ordersSales ordersWare-Ware-househouse

Ware-Ware-househouse

CustomerCustomer

CapitalCapital InvestmentInvestment Expense/costsExpense/costs CashCash

Inventorymanagement

Invoiceverification

Invoicereceipt

Overview of MM

?

A

B

Warehousemanagement

Goods receipt

Sales anddistributionInternal and external accounting

Goods issue

Transferposting

Material requirementsplanning

External procurementPurchasing

Internal procurementProduction

Master dataMaterialBatchVendorG/L accountsCustomerStorage bins

.

.

.

Procurement Process

Order

Order processing

Order follow-up

Goods receipt andinventory management

MMMaterials

management6

5

4

Sourcedetermination

2

Vendor selection3

InvoiceOrder

?

Invoice verification7 Requirement determination1

MRP

Organizational structures in R/3Organizational units

Company

Controlling areas

Sales organizations Purchasing organizations

Company codes

Plants

Valuation areas

Storage locations/batches/special stocks

Invent. mgmt w/o warehouse mgmt

Storage locations

Company Code

Plants 0001 0002 0003

0001 0001 0002

Invent. mgmt with Warehouse mgmt

Plants

Storage locations

Warehouse numbers

Storage types

Storage bins

0001 0002

0088 000200880001

001

005001

05-04-0405-04-03

Company Code

Company codes

Valuation

Client

0001 0002

Plants 0001 0002 0003

Company codes

Example for Valuation

0001

Plants Plant 1 Depot

VAL. AT CO.CODE

VAL. AT PLANT

125/ BAG 125/ BAG

125/ BAG 150/ BAG

Accounting

Client

Company codes 0001 0002 0003

Business area0001

Business area0002

Business area0001

Example for Business area

Rajashree cement Grasim

Cement TextileCement

IRIL

B.A. Cement B.A.Textile

Purchasing Organization

Plants

Company (Group)

Company codes

Purchasingorganizations

0001

0001

0001

0001

0002

00040002 0003

00030002

Organizational Entities in Purchasing

Plant 1

Purchasing organization 1Purchasing organization 2

Purchasing group 1

Purchasing group 2

Purchasingorganization

Plant 2 Plant 2 Plant 10

Material Master

Material master recordGeneral data

Material numberDescriptionUnits of measureTechnical data

Plant-specific data

MRP/typePlanned delivery timePurchasing groupBatch indicator

Valuation

Valuation priceValuation procedureValuated quantity

Sales-specific data

Delivering plantSales texts

Unit of measurePalletting instruction

Storage location-specific data

Storage timeStockfields

Forecast data

Consumption data

Warehouse Manage-Warehouse Manage-ment system datament system data

Units of measure

Base unit: Piece

Box(unit of issue)

Crate(order unit)

Pallet(sales unit)

4 16 72

Material data maintenance: accounting

Valuation class

MART Allowed values

ROH 30003010

HALB 7920HIBE 3000

Maintenance of material data

Price control

Standard-price control:Valuation ofstandard pricefrom the material master record

Moving averageprice control:Final delivered price(such as purchaseorder price) influencesthe valuation price

S V

Purchasing Master Data

Purchasing Master DataThe Vendor

The vendor

Goods receipt

Bank

order account

?=

Invoice verification

purchase order

InvoiceMaterial

Purchasing

Payment

DEUTSCHEMARKDEUTSCHE

MARK

DEUTSCHEMARK

Vendor

Organizational levels of vendor master record

General data

Purchasingorganization data

Company codedata

Company code

001

Vendor master recordGeneral data

AddressCommunication

Purchasing data

Order currencyIncotermsMinimum order value

Accounting data

Bank dataPayment transactionsAccount management

Validfor the whole group

Validfor one purchasingorganization

Validfor the whole group orfor one company code

One-timeaccount

Account group

Type of numberassignment

Interval for numberassignment

Field selection

Account group

Enter invoice

Control accountInvoice

"Parallel"

Invoice

Payables Vendor

G/L accounting

Vendor A

Accounts payable

Vendor

You

Purchasing Master DataInfo Record

Purchasing info records

Vendor A

Material

Piece % Conditions

USD

Piece % Conditions

USDInfo record

Vendor B

Stock material M1

Consumable material M2

Service S1

Info record

Info record

Info record

Info record

Data in the purchasing info record

General data

Vendor dataOrigin dataOrder unit

Texts

Control data

Delivery timeMinimum quantityTolerances

Prices andconditions

Gross priceDiscountsFreight

Price history Purchasing statisticsChanges

Pricing

Records for condition typeNo valid record existsValid record exists

Pricing procedure RM000

Item 10 120 pcs

PB00 Price $99

$100 for 1 pcs $99 for 100 pcs $98 for 200 pcs

1.Price PB002.Discount RA00

Access sequence: PB01 1. Outline agreement2. Vendor/material/

organizational level3. Vendor/material group/

organizational level

Condition type: PB00Access sequence: PB01

1111

2222

3333

4444

Purchase orderVendor 123Purchasing organization 2000

5555

Scale

Conditions

Gross priceDiscount %

Net price:Fixed freightcharge +

Effective price:

PB00

RA01

FRA1

Condition type

Calculation typeScale basisPrice/quantityscale

Pricing procedure

Purchasing Master DataSource List

Source list

1.1.95 - 30.6.95

Vendor 1 allowedVendor 2 allowedVendor 3 allowed

Source list

Material M1Plant 0001

1.7.95 - 31.12.95

Vendor 1 fixed

Procurement

ProcurementProcurement Environment

External procurement environmentSource list

Quota arrangement

Piece % ConditionsUSD

Piece % ConditionsUSD

Info record

RFQs

Quotations

Invoice receipt

Purchase

requisition

Source determination

Vendor selection

Requirementsdetermination

Outlineagreement

Goods receipt

Purchaseorder

Purchase order history

Purchasing documents

RFQ

Purchase order

Purch.order

Quotation

Quotation

A

Quotation

B?

Purchase requisition

Purchaserequisition

Release order

Contract

Schedulingagreement

31. 1.

RFQ

?

Structure of a purchasing document

Item 1

General dataConditionsTextsSchedule line

Additional data for item 1

Purchaseorder history

. .

.

Item 2

. .

.

Additionaldata for item 2

. .

.

Purchasing document

ocument

General datastatisticsMessagesConditions

ocument

General datastatisticsMessagesConditions

Document header

Item category

Purchasingdocument

Itemcategory

Account assign.category

A B C

Account assignment typePurchasingdocument

Itemtype

Acct.assign.type

A B C

Procurement for stock

Material

Purchasingdocument(s)

Item:no accountassignmentcategory

Vendor

Goods receipt

Goods issue

Warehouse

Production

Production

Procurement for consumption

Material

Purchasingdocument(s)

Item:with accountassignmentcategory

Vendor

Goods receipt

ProcurementConsumption-driven MRP

Consumption-driven MRP

Requirements planning

Net requirements calc.

Lot sizing

Scheduling

Inventory management

Material master

MaterialA

Purchasing

Forecasting

Reorder Point Procedure

Replenishmentlead time

Stock Lot size

Reorder level

Safety stock

Reorder point Delivery date Time

ProcurementProcessing Purchase Requisitions

Purchase requisition

Department

Requisition Requisition

Purchasing

MRP

Purchase requisition processing

RFQ

?Release

orderRelease

order

o.k.

MRP Direct entry

Purchase requisition

Determine source of supply

Vendor

Release

Allocate and process

Purchaseorder

ProcurementProcessing Vendor Inquiry / Quotations

Request for quotation/ quotationRFQ 1

Quotation 1 Quotation 2

Purchaseorder Rejection

RFQ 2

?

Price comparison list

Vendor 1 Vendor 2

Requirements known.Procure from whichsource?

Entering an RFQ

Inquiry 2

?

Vendor 1

Vendor 2

Inquiry 1

?

Item list

1111 2222

Issuing output

Output

Reprint

Purchasingdocument

Reminder RejectionOrderacknowledge-ment check

Printer EDI Fax

Processing Quotations: ExampleEnter price and pricing conditions

1111

Vendor BQuotation forRFQ 2Item 10Gross price: 400/tSurcharge: 50%

Vendor C, B - Rejection-Thank you for your offer. Unfortunately,we cannot place anorder at this time .....

Vendor AQuotation forRFQ 1Item 10Gross price: 400/tDiscount: $50

Vendor CQuotation forRFQ 3Item 10Gross price: 400/tFixed costs: $40

Vendor A- Order -

Mat. Qty Price

Steel 2t 350/t

Create info record or reject quotation3333

Steel 2 t

Price

350/t 480/t 520/t 450/t

Quotation 1 Quotation 2 Quotation 3 Mean valuequotation

Compare quotations using price comparison list2222

ProcurementProcessing Purchase Orders

Processing Purchase Orders

Purchaserequisition

RFQ

??

Reference document

Contract

Pcs % Conditions

$

Pcs % Conditions

$Info record

Order history

Purchase order

Vendor

One-time vendor

ContractContractrequest

Reference RFQ

Reference contract

Contract

Purchase requisition

Vendor

Release order

1111 2222

Scheduling Agreements

EinstellungenEinstellungen

Purchaserequisition

RFQ Reference schedulingagreement

Purchase requisition

Vendor1111 2222

Schedule linesSchedulingagreement

PROCUREMENT OF EXTERNAL SERVICES

Inventory Management/Valuation

Inventory ManagementGoods Movements

Inventory management

Warehouse 1 Warehouse 2

Goods receipt

Goods issue

Old system Vendor In-house production

ConsumptionScrapping

Transfer posting

Documents for goods movements

Goods movement

MaterialA

Materialdocument Accounting

document

Warehouse

Plant

Valuation area

Material valuation levels

Material Valuation Levels

Company code

0001

Split Valuation: StructureValuation area 0001Material 1Valuation category HQuantity 100Mvg. av. price 5.20

Valuation

Plant 0001

Material 1Plant

Storagelocation

Batch

Stor. loc. 0001Quantity 30

Stor. loc. 0002Quantity 70

ItalyQuantity 10

FranceQuantity 20

ItalyQuantity 30

FranceQuantity 40

Quantity 40V - price 4.00

Quantity 60S - price 6.00

Valuation typeItaly

Valuation typeFrance

Updating the stock situationStock situation

On a quantity basis

Material masterSpecial stocks

Stock fields per plant, storage location

and special stock

On a value basis

G/L accounts

Debits and creditsper company code,

period and, possibly,business area

Entering material documents

Movement type

Material document item

Account determination

Consumption update

Quantity update

Indicator for printout

Field selection

Standard analyses

Analyses in inventory management

Analyses

Stocks overviews

Stock per material

Materialmovement list

Inventory control

Plant stock availability

Reqs./stock list

Warehouse stock list

ABC-Analyses

Stock value

Range of coverage

Slow-moving items/inventory turnover

Inventory ManagementProcessing Goods Receipts with Purchase Order Reference

Purchase Order Views in Inventory Management

Purchase order

General

Purchase orderhistory

Changes

Statistics

$ Conditions

01/01/9510/01/9530/03/95

Schedule lines

Account assignment

Texts

Header

Vendor Conditions Texts Output

Items

Determining the purchase order during GR

Manuell

Goods receipt for purchase order

Purchaseorder

List of open purchase orders by- vendor- material- delivery plant

Matchcode

Manual

Stock types for goods receipt

Account assignment object

Unrestricted-use stock

Stock in quality inspection

Blocked stock

Goods receipt blocked stock

Warehouse

Consumption

Cost center

Order

......

Vendor

Posting procedure for goods receipt (example)

Stock accountStock value GR/IR clearing

Price differences

( ) ( )

Update for goods receipt

Inventory ManagementProcessing Goods Receipt w/o Reference

GR w/o Reference to a Purch. Order or Production Order

Goods receiptPreplanning

without purchase order

without production order

Initial entry of stock balanceWithout purchase orderWithout production orderGoods receipt of by-productsDelivery free of chargeReturns from customer

Inventory ManagementProcessing Stock Transfer / Transfer Postings

Transfer posting

Transfer posting

Stock transferMiscellaneous

transfer postings

From plantto plant

From storagelocation tostorage location

From material

to material

From QM to unrestricted use

From consignm. stores towarehouse

Valuation in the Case of Stock Transfer

Receiving plantIssuing plant 100 pcs

Stock plant 01

( a ) 200.00

( b ) 200.00

Stock plant 01

( a ) 200.00

( b ) 200.00

Stock plant 02

300.00200.00

Stock plant 02

300.00200.00

Expense / revenuefrom stock transfer

100.00

Expense / revenuefrom stock transfer

100.00

Standard-price 2.00

(a)

(a)

(b)

(b)Moving averageprice 2.00

Standard-price 3.00

Any movingaverage price

Inventory ManagementProcessing Goods Issues

Goods issues

From warehouse

From consignmentstores

Goods issue

Sampling

Scrap

Consumption

Cost center

Asset

Sales

Order

Issue

Effects of goods issueMaterial document

Accounting document

G/L account.Stock accountConsumption account...

Reservation

Order

Stock quantityConsumption statistics...

Point of consumption:Cost centerOrder...

Warehouse mgmt:Transfer order

Quality management:Inspection lot

Goods issue

Posting method for goods issue

Stock accountStock value Consumption account

Update on goods issue

Special Stocks and Special Procurement Types

Consignment Subcontracting Stock Transfer with Stock Transport Order Third party processing Returnable Transport Packaging Pipeline handling Sales order stock Project Stock

Company’s Own Special Stock

Stock of material provided to Vendor Consignment stock at Customer Returnable packaging stock at Customer

Company’s Own Special Stock

Managed at plant level Stock types Unrestricted use stock Quality inspection

stock

Externally-Owned Special Stocks

Vendor Consignment Returnable Transport Packaging Sales order stock Project Stock

Externally-Owned Special Stocks

Managed at Storage location level

Stock Types Unrestricted Use

stock Quality inspection

Stock Blocked stock

Inventory ManagementPhysical Inventory

Physical Inventory Procedures

Periodic inventory Continuous inventory Cycle counting Inventory sampling

Physical Inventory

Can be carried out for Company’s own stock and Special Stock

Inventory for Company’s own stock and Special stock must be taken separately in different physical documents

Physical inventory can be taken for

Unrestricted-use stock in the warehouse

Quality inspection stock

Blocked stock

Physical inventory procedureCreate physical

inventory document1

Set blockingindicator

2

Physicalinventory document

4

Post differences

Batch-Input

Batch-Input

Arrangerecount

Change count

6

List of differences

5

Print physicalinventory document

3

5a

5b

Invoice Verification / Valuation

Types of invoice verificationPurchase order

Purchaseorder

?Invoice verification

Vendor invoice

Goods receipt

or or

----

Invoice verification environmentPurchase order

Goods receipt

Material master

Vendor master

Conditions

Invoice verification

Invoicedocument

G/L accounts

Assets

Cost centers

Purchase order

Material master

Posting an invoice

Purch. order history

Goods receipts Down payments Invoices

Material master

Moving average price Value

Invoicerelating to purchaseorder

Post

AXX

BXX

GR/R account

Vendor account

Doc. No. 51000123

Vendor 100-GR/R 100+

Variances

Goods receipt

QuantityInvoice

50 piecesWE 40

Price

Goods receipt

Invoice

10 pcs = 200g10 pcs = 200g

DateInvoice

Purchaseorder

$5

Invoice

$6at

= 2 kg

Purchaseorder10 pieces at

$20/kg

Orderprice quantity

04/12/95

Invoice

10 pieces = 2.5 kg

26/11/95

10 pieces = 250 g

Purchaseorder

Planneddelivery date

Tax

Company Material value+Tax on sales/

PurchasesMaterial value

+ input tax

Tax office

Tax payable

Vendor

A A

A

KMTKMT

Customer

Invoice receipt postings

Stock accountStock value

( ) ( )

GR/R clearing Input VATVendor

(control acct.)

Price differences

( ) ( )

Postings at Standard Price

Purchase order price 2.40 / pc

Invoice price 2.20 / pc

Stock account

( 2 ) 200.00

Exp. / revenue Price difference

( 2 ) 40.00 20.00 ( 3 )

Vendor / general ledger

220.00 ( 3)

GR / IR clearing account

( 3 ) 240.00 240.00 (2)

Event Stock Total value Standard Moving av.price price

( 1 ) Initial situation 100 200.00 2.00 2.00

( 2 ) GR for purch. order: 100 @ 2.40 200 400.00 2.00 2.20

( 3 ) IR for purch. order: 100 @ 2.20 200 400.00 2.00 2.10

Postings at Moving Average PriceStock account

( 2 ) 240.00 20.00 ( 3 )( 4 ) 240.00 550.00 ( 5 )

10.00 ( 6 )

Event Stock Total value Moving av. price

Exp.. / revenue Price difference

10.00 ( 6 )

( 1 ) Initial situation 100 200.00 2.00

( 2 ) GR for purch. order: 100 @ 2.40 200 440.00 2.20

( 3 ) IR for purch. order: 100 @ 2.20 200 420.00 2.10

( 4 ) GR for purch. order: 100 @ 2.40 300 660.00 2.20

( 5 ) Goods issue: 250 @ 2.20 50 110.00 2.20

( 6 ) IR for purch. order: 100 @ 2.20 50 100.00 2.00

Raw material consumption

( 5 ) 550.00

GR / IR clearing account

( 3 ) 240.00 240.00 ( 2 )240.00 ( 4 )

( 6) 240.00

Vendor / general ledger

220.00 ( 3 )220.00 ( 6 )

INVOICING PLANS

Facility to schedule Invoicing dates for planned procurement independent of goods and service receipts

Periodic Invoicing Plan

Partial Invoicing Plan

Account Determination Procedures for Automatic Postings in MM

Types of Account Determinations

Movement Type basedTransactions

SDSDMMMM

PPPP

QAQAPMPM

HRHR

FIFICOCO

AMAM

PSPSWFWF

ISIS

R/3- Client/Server

ABAP/4

R/3- Client/Server

ABAP/4

SDSDMMMM

Non-Movement Type based Transactions

Cond. Technique

Grouping Organizational Levels for Account Determination

Valuationgrouping

codePlant Company code

Case: valuation area = plant

Chart of accounts

00010001

00030003

00020002

00010001

00040004

00050005

00030003

00020002

00030003

00040004

00020002

IKRIKR

00010001

GKRGKR

Grouping of Material Type - Valuation ClassValuation

classAccount category

referenceMaterial type

FERT

HALB

HAWA

.

.

.

ROH1

ROH2

ROH3

. . .

0001

0002

0003

0004

7900

3000

3010

3020

3030

3040

3100

3200

Grouping of Materials for Account DeterminationOption 1:

Acct. 1Acct. 1

Acct. 2Acct. 2

Acct. 3Acct. 3

Option 2

Acct. 1Acct. 1

Acct. 3Acct. 3

Option 3

ROH

Acct. 1Acct. 1

Acct. 2Acct. 2

Mat 1Mat 1

Mat 2Mat 2

ROH

Mat 2Mat 2

HIBE

Mat 3Mat 3

Mat 4Mat 4

Mat 1Mat 1

ROH

Mat 1Mat 1

Mat 2Mat 2

HIBE

Mat 3Mat 3

Mat 4Mat 4

FERT

Mat 5Mat 5

Mat 6Mat 6

FERT

Mat 5Mat 5

Mat 6Mat 6

Procedure Part 1: Value String - Processing Keys

Transaction

Inventory Management Invoice verification

Value String (Generalized

posting record)

BSXBSXProcessing keysProcessing keys

G/L account numberG/L account number

Material

Invoiceverification

?=

WRXWRX

191100191100300100300100 425000425000

KBSKBS

Procedure Part 2: Processing Key - Rules

Transaction Processing keysfor debit/credit posting

Parameters on which account allocationdepends

1

Processing Key(Transaction)

Chart of accounts

Rules2

Procedure Part 3: Rules - Account Allocation

Rules specifyaccount determination

key

(Valuation grouping code)

(Account groupingcode)

(Valuation class)

Accountnumber

Processing Key(Selection oftransaction)

Selection ofchart of accounts

Account Determination Procedure: Overview

Legend

Information derived from Transaction typeInformation derived from Material MasterInformation derived from the organiz. Structure

Main Customizing area

Movement type basedTransaction

"Type ofMaterial"

Step 1 or 2 MaterialType

Plant

ValuePosting String

Qty.Posting String

Step 3

ProcessingKey (GBB)

Company Code

Chart ofAccount

ValuationClass

Val. GroupingCode

Rules

Step 4

G/L Account

AccountCateg. Reference

MaterialMaster

Type ofTransaction

Non-move-ment type based

Transaction

Accountmodification

ProcessingKey (AUF)

Automatic Posting: Maintenance of the Settings

Selection of thevaluation grouping code

1

Selection of the posting transaction

2

Allocation of the G/L account number(s)per valuation class(and account grouping code)

3