SAP MM Presentation:
The Backbone of the
Supply Chain
By
Prawin Kumar J S
THE PAIN POINTS: LIFE
WITHOUT A SYSTEM
•BEFORE SAP MM
• Inventory Silos: Warehouses
don't communicate, causing
stock-outs.
• Maverick Spending:
Uncontrolled buying from
expensive vendors.
• Manual Errors: Paper invoices
and lost purchase orders.
• No Visibility: Blind spots in the
supply chain.
SAP MM
• SAP MM (Materials Management) is a core
module of SAP ERP used for managing
procurement and inventory activities in an
organization.
• It ensures that the right materials are
available at the right time, in the right
quantity, and at the right cost.
• It supports the entire supply chain, from
purchasing raw materials to storing and
delivering finished goods.
• MM plays a major role in Logistics,
improving material flow and business
operations across departments
like procurement, production, and
warehouse.
SAP MM – Enterprise /
Organizational Structure
• The framework that defines how a
company is structured in the SAP
system:
• Client: The highest level (the
corporate group).
• Company Code: An independent
legal accounting unit.
• Plant: Location for production or
inventory.
• Storage Location: Where goods are
physically stored.
• Purchasing Org: Responsible for
procurement negotiations.
Sub-Component
of SAP MM
Master Data
• Stores long-term business information
• Includes Material Master, Vendor
Master, Purchasing Info Records, etc.
• Used across all logistics processes
Purchasing
• Manages end-to-end procurement activities
• Covers PR (Purchase Requisition) → RFQ
(Quotation) → PO (Purchase Order) → Vendor
Communication
• Ensures timely purchasing with best cost
Inventory Management
• Tracks material stock & movements in real time
• Handles Goods Receipt, Goods Issue, Stock
Transfer, Physical Inventory
• Ensures accurate stock availability
Master Data in
SAP MM
• Material Master
• Central database of all material-related information
• Data divided into multiple views like:
• Basic Data
• Purchasing
• MRP
• Accounting
• Used in purchasing, inventory, production,
sales & costing
• T-Codes:
• MM01 – Create Material
• MM02 – Change Material
• MM03 – Display Material
Vendor Master
• Stores supplier details →shared between MM
& FI
• Structured into:
• General Data (client level)
• Company Code Data
• Purchasing Data
• T-Codes:
• XK01 – Create Vendor
• XK02 – Change Vendor
• XK03 – Display Vendor
Purchase Info Source List Quota Arrangement
Record (PIR) • Assigns approved • Distributes procurement
vendors for a material quantity across multiple
• Links Material + vendors
Vendor • Prevents procurement • System calculates quota for
• Stores: from unapproved vendor selection
• Pricing details suppliers ✔ Example can be shown
during presentation
• Delivery terms and • T-Codes:
conditions • T-Codes:
• ME01 – Create
• MEQ1 – Create Quota
• T-Codes: Source List Arrangement
• ME11 – Create PIR • ME02 – Change • MEQ2 – Change Quota
Source List Arrangement
• ME12 – Change PIR • MEQ3 – Display Quota
• ME13 – Display PIR • ME03 – Display Arrangement
Source List
SAP MM – Inventory
Management
•What is Inventory Management?
• It is the process of tracking and managing
material stock in the organization.
• Ensures accurate availability of materials for
production and sales.
• Maintains stock levels to avoid overstocking and
stock-outs.
•Key Activities
• Goods Receipt (GR) – Stock increases when
materials are received
• Goods Issue (GI) – Stock decreases when materials
are issued for production / sales
• Stock Transfer – Movement of stock between
plants/locations
• Physical Inventory – Physical counting and stock
adjustment
Type Description
Goods Receipt for Types of Stock
101
PO • Unrestricted Stock –
102 Reversal of 101
Available for immediate use
• Quality Inspection Stock –
201
Goods Issue for Under quality check
cost center
• Blocked Stock – Not allowed
Stock transfer for usage
311
(SLoc → SLoc)
INTEGRATION WITH
OTHER MODULES
• SAP MM does not operate in isolation.
It is tightly coupled with:
• FI (Finance): Automatic posting of GL
accounts during Goods Receipt and
Invoice Verification.
• SD (Sales & Distribution):
Availability checks and stock transfer
requirements.
• PP (Production Planning): MRP
generates purchase requisitions based
on production needs.
• QM (Quality Management):
Inspections upon goods receipt.
THANK YOU