By Ashley Chimhanda
OVERVIEW
Materials management is the backbone of Logistics
area and helps to manage the procurement and
inventory management activities of an organization
FEATUR AIM
Ensures that there is never a shortage To GET
ES
of materials or any gaps in the supply The Right quality
chain process of the organization 5R Right quantity of supplies
It deals with managing the materials At the Right time
(products and or services) resources At the Right place
of an organization At the Right cost
It deals with the Procurement Process,
Master Data, Account Determination
& Valuation of Material, Inventory
Management, Invoice Verification,
Material Requirement Planning
Purchasing
External procurement of materials and services
And Determination of possible sources of supply
for a requirement identified by the materials
planning and control system or arising directly
within a user department
MRP
Is used to monitor stock and Inventory
make automatic requisitions management
when stocks fall below It deals with Management
specified quantities of material stocks on a
quantity and value basis
Material master
It contains data records which are
stored centrally and used on a cross
application basis.
Logistic invoice verification
It is situated at the end of the logistics supply
chain and this is when the system invoice is
matched with the goods delivered.
Contracts
a type of outline purchase
agreement against which release
orders can be issued for agreed
materials or services as and
when required during a certain
overall time-frame
ORGANIZATIONAL
STRUCTURE
The organizational structure forms a framework of
a company in which business is conducted.
Client:
Represents a grouping or combination of legal,
organizational, business and/or administrative
units with a common purpose.
Company Code:
Company Code represents an independent accounting unit within a client. Each
company code has its own balance sheet and its own profit and loss statement.
Plant:
Operational unit within a
Storage Location: company code.
A place where inventories are physically kept in
a plant and is the least level of an organization
in MM.
MASTER DATA
This is a collection of data about an object or
person which is referenced whenever it is used
in an entry field.
Types of Master Data:-
Material Master: Is the main source of
material specific data in an enterprise.
Vendor Master: Contains all required
information on a vendor and is maintained by
FI & Purchasing dept.
Service Master: Contains the description of a
service and serves as a source of data for you
to draw upon when creating service
specifications
PROCUREMENT
Determine
CYCLE
requirements
Invoice
verification
Source
determination
goods receipt
Materials
and inventory management
management
Vendor
selection
Order-
follow up
Order
processing
PURCHASING
Purchasing refers to a business or organization
attempting to acquire goods or services to
accomplish the goals of its enterprise.
Task of Purchasing as following :-
External procurement of material & services
Determination of possible source of supply
Monitoring deliveries from and payment to
vendors.
PURCHASING
Purchasing
requisition
DOCUMENTS
Purchase requisition
RFQ
Request for quotation
?
Quotation Quotation
Quotation
A ? B
Purchase
order
Purchase order
Contract
Contract
31. 1.
INVENTORY
MANAGEMENT
Inventory Management is used to manage stocks of
merchandise on a quantity and value basis.
Task of Inventory Management as include :-
Plan, enter and provide evidence of all goods
movements.
Creation of a document for every goods movement
Division of the stock into categories (such as
unrestricted-use stock, stock in quality inspection, or
blocked stock)
PROCESSES WITHIN
‘INVENTORY’
Goods Receipt
Return delivery
Stores Req.
Goods issue
Material disposal
Stock Transfers
Reporting
MRP
MRP: It’s main function is to guarantee
material availability, i.e. it is used to procure or
produce the requirement quantities on time
both for internal purposes and for sales and
distribution.
MRP involves:-
the monitoring of stocks
the automatic creation of procurement
proposals for purchasing
Monitoring deliveries from and payment to
vendors.
PROCESS FLOW
• Goods • Execute
Receipt MRP
Stores MRP
Controller
Buyer/
Section
Procurement
manager Head
• Generate • A Approve/Change
PO/Approve PR
CONTRACTS
In MM, a contract is a type of outline purchase
agreement against which release orders
(releases) can be issued for agreed materials or
services as and when required during a certain
overall time-frame.
Contracts can be :-
Centrally Agreed: For an entire company
code.
Distributed: For one particular plant
TY TYPES OF CONTRACT
INTEGRATION
How the SAP MM
module integrates
with some other
SAP modules
Integration with PP
Creation of PR for externally procured materials after doing an MRP run in
PP.
Creation of PR for subcontracting for externally processed operations in a
production order(PO).
Creation of Reservations for components of a PO during PO creation.
Goods Issue of components as soon as components are confirmed for a PO
& a Goods receipt of the finished product.
Integration with FI
When a PR for a non stock item is created, the system goes on to update
the correct cost center in FI.
After a stores req, the system assigns the cost to the relevant cost centre
and updates the relevant accounts(giver & given).
When a material document is created, postings are done to the relevant
accounts and for every mat doc there is a corresponding FI doc.
In general any transaction with a monetary value is catered for in FI.
Integration with SD
Third party sales order processing.
When you create a delivery for SD sales order then goods issue takes place
in the background using movement type 601.
Integration with PM
In the event of a maintenance(breakdown/preventative), a maintenance
order is created where there’ll be a GI(MM).
By Ashley Chimhanda