SAP R 3 Materials Management Module Materials Management

SAP R/3 Materials Management Module

Materials Management • • • Procurement Inventory Management Warehousing Material Master Materials Planning Hazardous Materials Management

Organizational Elements • Organizational elements are structures that represent the organizational views of an enterprise. • Company structure is designed based on business processes. • The organizational elements provide a framework that supports all business activities.

Organizational Elements for the Procurement Process • • • Company Code Plant Storage Location Purchasing Organization Purchasing Group

Company Code • A company code represents an independent accounting unit. • Balance sheets and Profit and Loss statements, required by law, are created at the company code level

Plant • A plant is an organizational unit within a company. It produces goods, renders services, or distributes goods. • A plant can be one of the following types of locations: – Manufacturing facility – Warehouse distribution center – Regional sales office – Corporate headquarters

Storage Location • Storage locations are organizational units that allow the differentiation of material stocks within a plant.

Purchasing Organization and Groups • Decentralized with a separate organization for each plant. • Centralized, one organization for all plants. • Hybrid - multiple organizations buy for multiple plants. • Groups can be a further division of purchasing responsibility and/or structure.

Material Master • The material master contains all data required to define and manage material. It integrates data from engineering, manufacturing, sales and distribution, purchasing, accounting, and other departments. • The material master is used as a source of data for purchase order processing throughout the procurement cycle.

Material Master - View(s) • The R/3 system allows selection and maintenance of the data that is relevant to a particular department. • To create a view, the view must be selected on the “Select View(s)” screen before the material data is entered. • Users are responsible for creating and maintaining the view(s) of the materials that are relevant to their departments.

Material Master - Industry Sector • Industry sector determines the type of industry to which the material will be assigned. • Industry sector information determines: – which screens will appear and in what sequence – what industry-specific data will appear

Material Master - Maintenance • Defaults - speeds entry of data by using the most frequently used organizational levels and views as default values. These defaults are userspecific and may be overridden. • Reference Material - speeds entry by copying pertinent data from existing material master records. • Profiles - speeds entry by copying standard data created in a profile into a selected view. • Collective entry of storage locations - speeds creation of additional storage locations by adding multiple locations at one time.

Material Master - Material Type • Groups material with same basic attributes • Determines: – which department views are maintained – whether changes in material quantities are updated – whether internal or external procurement is allowed – which general ledger accounts are updated

Vendor Master • The vendor master includes all the data necessary for processing business transactions and corresponding with vendors. • Information is shared between the accounting and purchasing departments. • Data is grouped into three categories: – general data – accounting data – purchasing data

Basic Procurement Process • Requirements determination - purchase requisition • Source determination - RFQ and quotation • Vendor selection • Order processing - purchase order • Order follow-up • Goods receipt and inventory management • Invoice verification • Payment

Purchase Requisitions • Internal document • Requesting a certain quantity of material or service on a certain date • Can be created: – Manually – Automatically (MRP, sales orders, etc. ) • Release approval procedures can be established

Purchase Requisition Sources • Manually created by user department • Automatically created by: – Planning (MRP, MPS) – Plant maintenance – Production orders – Sales orders

Processing Purchase Requisitions • Create purchase requisition (manually or automatically) • Determine source of supply • Release procedure (optional) • Allocate vendor and process

Creating a Purchase Requisition • Default data for line items – delivery dates, plants, purchasing groups, etc. • Maintain line item data – materials, quantities, delivery dates, etc. • Maintain account assignment (if required) – cost center, G/L accounts, project number, etc. • Check data • Save

Purchase Requisitions - Menu Paths • Create: Logistics -> Materials management -> Purchasing -> -> Requisition -> Create • Change: Logistics -> Materials management -> Purchasing -> -> Requisition -> Change • Display: Logistics -> Materials management -> Purchasing -> -> Requisition -> Display

Purchase Requisitions – Transaction Codes • Create: Logistics -> Materials management -> Purchasing -> -> Requisition -> Create • Change: Logistics -> Materials management -> Purchasing -> -> Requisition -> Change • Display: Logistics -> Materials management -> Purchasing -> -> Requisition -> Display

Purchase Orders • Purchase orders are: – a formal request to provide materials or services – an internal planning and tracking tool • Purchase orders identify: – vendor – material and/or service – quantity and price – delivery dates – terms of payment

Purchase Order Structure • Header - information specific to the entire purchase order – vendor – currency – payment terms

Purchase Order Structure • Line item details – account assignment – delivery schedule – materials/services quantity – price – description – item category

Item Category • Item category defines the form of procurement • Whether a purchase order requires: – material number – account assignment – goods receipt and/or invoice receipt • Examples: – subcontracting – consignment – stock transfer

Purchase Order Output • Request for quotations • Purchase order • Order acknowledgment

Purchase Order Output Format • Printed and mailed • EDI • Faxed (hardcopy or electronic)

Purchase Order - Menu Paths • Create: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Create – vendor known – vendor unknown – via requisition • Change: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Change • Display: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Display

Purchase Order – Transaction Codes • Create: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Create – vendor known – vendor unknown – via requisition • Change: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Change • Display: Logistics -> Materials management -> Purchasing -> -> Purchase order -> Display

Goods Receipt • Goods receipt with reference to a purchase order: – copy data from purchase order – delivery notification – invoice verification – updates PO history – inventory update – automatic update of G/L accounts • You can search for the PO number with: – material number, vendor number, etc.

Goods Receipt Destinations • Stock - given a storage location, can be posted to three different stock types: – unrestricted-use – quality inspection – blocked stock (valuated) • Consumption - can be assigned a recipient or unloading point • Goods Receipt Blocked Stock - updates inventory, but material is not valuated (conditional acceptance)

Goods Receipt - Movement Types • Movement types - stock transactions: – goods receipt – goods issue – stock transfer • Movement type determines which: – quantity fields are updated – stock types are updated – G/L stock or consumption accounts are updated – fields are displayed during document entry

Movement Type - Examples • 101 - goods receipt for purchase order into warehouse/stores • 102 - reversal of goods receipt for purchase order into warehouse/stores • 122 - return delivery to vendor • 501 - receipt w/o purchase order into unrestricted-use stock

Goods Receipt - Account Postings • Inventory account is debited at standard price • GR/IR clearing account is credited at purchase order price • Price difference account is debited (credited) with difference between standard price and purchase order price

Effects of a Goods Receipt • • PO history and PO updated Material master - stock and value updated Notification of goods receipt issued (optional) Transfer request to Warehouse Management system (if active) • Material and financial documents created and/or updated • Stock and consumption accounts updated • Inspection notification in QM (if active)

Goods Receipt - Menu Paths • Create: Logistics -> Materials management -> Inventory management -> -> Goods movement -> Goods receipt -> For purchase order -> – PO number known – PO number unknown • Change: Logistics -> Materials management -> Inventory management -> -> Material document > Change • Display: Logistics -> Materials management -> Inventory management -> -> Material document > Display

Goods Receipt – Transaction Codes • Create: Logistics -> Materials management -> Inventory management -> -> Goods movement -> Goods receipt -> For purchase order -> – PO number known – PO number unknown • Change: Logistics -> Materials management -> Inventory management -> -> Material document > Change • Display: Logistics -> Materials management -> Inventory management -> -> Material document > Display

Invoice Verification • Matches the vendor’s invoice to the purchase order and the goods receipt (3 rd part of 3 -way match) • Matches price and quantity • Updates the purchase order and its history • Updates accounting information

Invoice Payment • Selects invoices for payment based on the payment terms in the vendor master or purchase order • Generates payment for released invoices • Updates accounting information

Accounts Payable Payment Process • Determines: – open items to be paid – when they will be paid – bank from which payment will be made – payment medium – who will get paid • Payment process creates a financial accounting document to record the transaction

Invoice Processing - Menu Paths • Enter an Invoice: Logistics -> Materials management -> Invoice verification ->-> Document entry -> Enter invoice • Change: Logistics -> Materials management -> Invoice verification ->-> Further processing -> Change • Display: Logistics -> Materials management -> Invoice verification ->-> Further processing -> Display

Invoice Processing - Menu Paths • Payment Processing: Accounting -> Financial accounting -> Accounts payable >-> Document entry -> Outgoing payment -> Post • View PO History Documents: Logistics -> Materials management -> Purchasing ->-> Purchase order -> List display -> By PO number

Invoice Processing – Transaction Codes • Enter an Invoice: Logistics -> Materials management -> Invoice verification ->-> Document entry -> Enter invoice • Change: Logistics -> Materials management -> Invoice verification ->-> Further processing -> Change • Display: Logistics -> Materials management -> Invoice verification ->-> Further processing -> Display

Invoice Processing - Menu Paths • Payment Processing: Accounting -> Financial accounting -> Accounts payable >-> Document entry -> Outgoing payment -> Post • View PO History Documents: Logistics -> Materials management -> Purchasing ->-> Purchase order -> List display -> By PO number