This is overview of SAP MM/WM module by Dilip Sadh Think Tree Technologies,Inc

1. MM - Introductory Class
Dilip Sadh
Think Tree Technologies, Inc
Consulting ,Training, Outsourcing
The Power of Thought

2. Procurement Cycle Workshop - Objectives
 Describe the basic business process of Procuring Materials
and Services in the SAP R/3 System.
 Discuss the integration points in procurement to Financial
Accounting and Inventory management.
 Discuss the reporting and analysis tools used in the
procurement cycle.
 Discuss the Company’s procurement process.
 Communicate scope expectations.

3. Procurement
The primary SAP R/3
SD FI
application modules that Sales & Financial
Distribution Accounting
support the Procurement MM
Materials
CO
process include: Manage- Controlling
PP ment AM
 Materials Management Production Fixed Assets
Planning
R/3 Manage-
ment
 Purchasing
QM Client / Server PS
 Goods Receipts Quality Project
Manage-
ment PM
ABAP/4 System
 Invoice verification WF
Plant Main- Workflow
tenance
HR IS
 Financial Accounting Human Industry
Resources Solutions
 Payment processing
 Materials Valuation

4. SD FI
MM CO
PP AM
QM
SAP PS
PM WF
IS
HR
MM Materials Management
MM is a component of Logistics in SAP that focuses on
inventory management, warehouse management, vendors and
purchases.

5. MM overview
Material planning
Purchasing Production
External procurement Internal procurement
MM
Goods receipts Storage areas
Invoice MASTER
management
verification DATA
Inventory management •Materials
•Batches
Invoice entry Goods issue •Vendors
Stock transfers •Purchasing
info record
•Source list
Financial accounting Sales

6. Procurement Cycle Workshop
Agenda
Attendees:
 Business Managers, Process Owners
Topics:
 Master Data
 Procurement Process Overview
 Reporting

7. Procurement
Organizational and Master Data
Business Process for
Procurement
Reporting and Analysis

8. Organizational Elements
The SAP R/3 Procurement business process uses
the following R/3 organizational elements:
COMPANY CODE
Plant Storage Location
Company Code
Purchasing Organization Purchasing Group

9. Master Data
The following master data is used in the Procurement cycle:
 Material Master
 Vendor Master

10. Master Data: Material Master
 The material master record contains all data required to
define and manage material. It integrates data from
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.

11. Material Master Primary Views
Engineering/ Purchasing
Design
St
t MRP Sales
A Stocks in plant/ Work
B
storage location scheduling
Accounting Material
Master
Storage

12. Material Master Organizational Levels
General data
General data
Material number
Description
Client Units of measure
Plant-specific data
Planning data
Manufacturing data
Purchasing data
Plant Valuation data
Storage Location
location-
specific data
specific data
Storage Location Stock quantities
Stock quantities

13. Master Data: Vendor Master
 The vendor master includes all 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

14. Procurement
Organizational and Master Data
Business Process for
Procurement
Reporting and Analysis

15. Procurement Environment
1. Requirements
Purchase Order 8. Payment Determination
2. Source
Vendor Determination
invoice
?
RUHR
TRUCKING
7. Invoice Verification
3. Vendor Selection
6. Goods Receipt and
Inventory Management 5. Order Follow-up 4. Order Processing

16. The Procurement Process
Purchase Purchase Goods Invoice
Requisition Order Receipt Processing
for Goods/
Vendor
Services invoice
Purchase Purchase
Requisition Order
10 10
20 20
30 30
Planning, Reporting, and Analysis

17. Purchase Requisition
Purchase Purchase Goods Invoice
Requisition Order Receipt Processing
for Goods/
Vendor
Services invoice
Purchase Purchase
Requisition Order
10 10
20 20
30 30
Planning, Reporting, and Analysis
Purchase Requisitions:
 Request or instruction to the purchasing department to procure a
certain quantity of a material or service on or by a certain date.
 Are created directly by a requesting department or automatically via
material requirements planning (MRP).
 Are internal documents not used outside the company.

18. Purchase Requisition Processing
MRP Direct Entry
Purchase
Order
Purchase requisition Release strategy
Determine source of supply

19. Purchase Order
The Procurement Process
Purchase Purchase Goods Invoice
Requisition Order Receipt Processing
for Goods/
Vendor
Services invoice
Purchase Purchase
Requisition Order
10 10
20 20
30 30
Planning, Reporting, and Analysis
Purchase orders:
 Represent the formal approval of a purchasing transaction with a vendor.
 Identify the following items such as:
 Vendor
 Material and quantity ordered
 Price and terms
 Delivery date and location

20. Purchase Order Processing
Purchase
Order Statistics Order
• Standard
History
Direct Entry
or Purchase
Requisition
Purchase
Requisition
Stock Material
Consumable Material Account Assignment
Service (cost center, asset,
internal order)

21. Processing Purchase Orders
Purchase Reference Contract
requisition document
Purchase
Vendor order
10
20
30
One-time vendor

22. Goods Receipt
The Procurement Process
Purchase Purchase Goods Invoice
Requisition Order Receipt Processing
for Goods/
Vendor
Services invoice
Purchase Purchase
Requisition Order
10 10
20 20
30 30
Planning, Reporting, and Analysis
Goods receipts record the inward movement of goods or materials by:
 Verifying the receipt against the order.
 Valuating material at purchase order price.
 Creating material and accounting documents to record the event.
 Updating the purchase order history.
 Providing basis for invoice verification (2nd part of 3-way match).

23. Goods Receipt for Stock Material
Purchasing
Documents
Items Goods
1.
2.
Receipt
3.
RUHR
RUHR
TRUCKING
TRUCKING
Vendor Warehouse/Stores
Entering the goods receipt increases the inventory
level of a material that is procured for stock.

24. Results of a Goods Receipt Posting
G/L Accounts:
Accounting Document
Stock Account Stock Quantity
Consumption Account Consumption Statistics
GR/IR Account Goods
Receipt
Posting
Material
Document Point of Consumption
Cost center
Order
Purchasing Data:
Goods Receipt Order item
Slip Order history

25. Material Movements Through IM and WM
 Material Movements Flow:
 Transfer Requirement (TR)
 Transfer Order (TO)
 Confirm Transfer Order

26. Invoice Processing (1)
The Procurement Process
Purchase Purchase Goods Invoice
Requisition Order Receipt Processing
for Goods/
Vendor
Services invoice
Purchase Purchase
Requisition Order
10 10
20 20
30 30
Planning, Reporting, and Analysis
Invoice verification:
 Matches the vendor’s invoice to the purchase order and the
goods received (3rd part of 3-way match).
 Matches price, and quantity.
 Updates the purchase order and its history.
 Updates accounting information.

27. Invoice Verification Environment
G/L accounts:
G/L Accounts
Vendor
Purchase Invoice
?
Order Assets
Invoice
Verification
Cost Centers
Vendor
Invoice Projects
Goods Receipt
Orders
Material Master
Vendor Master Posting an invoice in the SAP System
Conditions updates purchasing and accounting data
Invoice verification accesses data from purchasing, inventory
management, material master, and vendor master files.

28. Invoice Processing (2)
The Procurement Process
Purchase Purchase Goods Invoice
Requisition Order Receipt Processing
for Goods/
Vendor
Services invoice
Purchase Purchase
Requisition Order
10 10
20 20
30 30
Planning, Reporting, and Analysis
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.

29. Vendor Payment
Vendor Bank
Financial
Payment
Accounting 1000
program
1000
Motor Sports International
Released
invoice

30. Procurement Integration
PP FI FI
Purchase
requisition
Purchase Requisitions
Goods Receipt
? Invoice Verification
Released
invoice

31. Procurement
Organizational and Master Data
Business Process for
Procurement
Reporting and Analysis

32. Reporting and Analysis
 Standard Reporting provides List Displays by:
 Vendor
 Material
 Account assignment
 Material Group
 Purchase order number
 General Analysis
 Order Value Analysis
 Inventory Transaction Analyses

33. Logistics Information System
Logistics
Logistics Information Library Information
Systems
Sales Purchasing Shop Floor
Inventory
Information Information Information
Controlling
System System System
Sales and Materials Production
R/3 Logistics
Distribution Management Planning
Processing
(SD) (MM) (PP)
Systems

34. Thank you for your kind attention!
Dilip Sadh