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1. Introduction SAP R/3 – MM
Dr. Djamal Ziani
King Saud University

2. ERP-Software: SAP R/3
Client / Server
ABAP/4
R/3
SD
MM
PP
QA
PM
HR IS
OC
PS
AM
CO
FI
Sales and
Distribution
Material
Management
Controlling
Financial
Accounting

3. 3
Components of Materials
Management

4. 4
Organizational Data
• A hierarchy in which the organizational units
in an enterprise are arranged according to
tasks and functions
• Are static data and are rarely changed
• The definition of organization units is a
fundamental step, it is a critical factor in how
the company will be structured

5. Organizational Structures

6. 6
Organizational Structures
• Client
• Company
• Plant
• Valuation Area
• Storage Locations
• Purchasing Organizations
• Purchasing Groups

7. Organizational Structures: Client
• The client is a unit within an SAP R/3 system
that is self-contained both in legal and
organizational terms and in terms of data,
with separate master records and an
independent set of tables.
• From a business viewpoint, the client
represents a corporate group, for example.
• Client: 3 numerical digits

8. Organizational Structures: Company &
Company code
• The company code is the smallest
organizational unit of external accounting for
which a complete, self-contained bookkeeping
system can be replicated.
• A company code represents an independent
unit producing its own balance sheet, for
example, a company within a corporate group
(client).
• Company code = 4 characters

9. 9
Organizational Structures: Plant
• Lowest valuation area
• Organizational level where Material
Requirements (MRP) runs
• Generally used to describe a production site, a
distribution center or centralized warehouse
• May be a physical or logical unit

10. 10
Organizational Structures: Valuation
Area
• The valuation area determines at which level a
material is valuated (inventory value is
established)
• SAP R/3 allows valuation at the company code
or plant level, but recommends valuation area
be set at the plant level.
• Means each plant can have its own material
prices and account determination

11. 11
Organizational Structures: Storage
Location
• Subdivision of a plant
• Where materials are managed (inventory
management)
– Raw Materials
– Maintenance, Repair, and Other (MRO)
– Finished Product
• May be a physical or logical unit

12. Organizational Structures: Purchasing
Organizations
• An organizational unit responsible for
procuring materials or services for one or
more plants and for negotiating general
conditions of purchase with vendors.
• The purchasing organization assumes legal
responsibility for all external purchase
transactions.

13. Purchasing organization
purchasing group MG 0, 3purchasing group MG 0, 3purchasing organization
purchasing group MG 1, 4purchasing group MG 1, 4
purchasing group MG 2, 5purchasing group MG 2, 5
purchasing group MG 7, 8, 9purchasing group MG 7, 8, 9
plantplant
purchasing group MG 6purchasing group MG 6
material
group

14. Organizational Structures: Purchasing
Organization Groups
•The purchasing organization is further
subdivided into purchasing groups (buyer
groups), which are responsible for day-to-day
buying activities.
A purchasing group can also act for several
purchasing organizations.

15. Inventory Management with a
Warehouse Management System
client
00010001plant
storage location
001001warehouse number
001001storage type
05-04-0305-04-03
002002
05-04-0405-04-04storage bin
MM
WM
company code
0001 – ABC inc.0001 – ABC inc.
0001 – Jones inc.0001 – Jones inc. 0002 – Model Ltd.0002 – Model Ltd.
purchasing organization
00010001
00010001 00020002 00030003
00020002 00030003 00040004 00010001
00020002 00030003 00040004
distrib.-
center factory
(physical stock)

16. The Module MM – Main Functions

17. MM – interdependencies to other modules
MM
material master
purchasing
requirements plan.
inventory mgmt.
invoice verification
MM
material master
purchasing
requirements plan.
inventory mgmt.
invoice verification
SD
sales and
distrib.
SD
sales and
distrib.
PM
plant
maintenance
PM
plant
maintenance
QM
quality
management
QM
quality
management
PP
production
planning
PP
production
planning
Logistik
FI
financial acc.
FI
financial acc.
CO
controlling
CO
controlling
AM
fixed assets mgmt.
AM
fixed assets mgmt.

18. Basic Data
• Master records - include information about
1. vendors
2. material and services to be procured
3. the relation between 1. and 2. (purchasing info
record)
e.g. prices / terms and conditions
• bills of material for
– production planning
– purchasing
– sales and distribution
– withdrawal of Material

19. • invoice entry
• invoice verification
• payment handling
• invoice entry
• invoice verification
• payment handling
• request for quotation
• quotation processing
• purch. order handling
• request for quotation
• quotation processing
• purch. order handling
Structure of the Vendor Master
Record
 General data
• name
• address
• control data
 General data
• name
• address
• control data
 accounting data
• bank account
• acc. maintenance
• payment
 accounting data
• bank account
• acc. maintenance
• payment
 purchasing
• terms and cond.
• partner functions
• currency
 purchasing
• terms and cond.
• partner functions
• currency
utilization
for each
purchasing
organization
for each
purchasing
organization
client wide or
for each
company code
client wide or
for each
company code
client wideclient wide
area of validitysections

20. Create a Vendor
Creating Your Own Vendor Master Record
Usage
We recommend that you create your own vendor master
record for this scenario. If, however, you prefer to use the
reference vendor instead, it could be that the order currency
has already been changed and this IDES scenario may no
longer work.
You create a German vendor in company code 1000, IDES AG
Germany, to create purchase orders and invoices
denominated in euros.

21. Create a Vendor
Menu Path Logistics → Materials Management
→ Purchasing → Master Data →
Vendor → Central → Create
Transaction Code XK01
Procedure
1.Call up the transaction as follows:

22. Create a vendor
Field Data
Vendor Your own vendor (choose a
number between 1000 and
1999)
Company code 1000
Purch. organization 1000
Account group LIEF
Reference vendor 1080
Reference company code 1000
Reference purchasing
organization
1000
.
On the Create Vendor: Initial Screen, enter the following
data:

23. Create a Vendor
On the Create Vendor: Address screen, enter the following data:
Field Data
Description Any
Search term Any, for example "euro"
Street/House number Any
Postal code/City 5-figure, numerical (any)
Country DE
Language DE

24. 1. Choose until you reach the Create Vendor: Accounting and
make sure that 160000 appears in the Reconciliation Account
160000 field.
2. Choose until the Create Vendor: Purchasing Data screen
appears.
3. On the Create Vendor: Purchasing Data screen, check that the
order currency is EUR.
4. Choose until the Create Vendor: Partner Functions screen
appears.
5. Choose until the Create Vendor: Partner Functions screen
appears.
6. Choose until the Create Vendor: Partner Functions screen
appears.
Create a Vendor

25. Create a Vendor

26. Create a Vendor

27. Create a Vendor

28. Views on the Material Master Record
each view is maintained by a certain user department of the firm
 accounting: valuation- und calculation-specific information
 requirements planning: information about material requirements
planning (e. g. reorder point)
 purchasing: e. g. responsible purchasing group, order unit
 engineering: technical information
 storage: information about warehousing, material movements, ...
 forecast: information about the forecasting of the material requirements
 S & D: informationen about sales orders and price determination

29. Demo: Create Material Master

30. Demo: Create Material Master
•Select the views: Basic data 1, Purchasing, Purchase Order
text, Gl. Plant Data/Storage 1, Accounting 1

31. Demo: Create Material Master

32. Demo: Create Material Master

33. Demo: Create Material Master

34. Demo: Create Material Master

35. Demo: Create Material Master

36. Demo: Create Material Master
SAVE

37. purchasing info record
info recordinfo record
prices
terms & cond.
PO statistics
tolerance levels
date
prices
terms & cond.
PO statistics
tolerance levels
date
quotation
order
outline
agreement

38. outline agreem.
PO
Purchasing Process
MM
X X X
X X
determination: requirements
X X X
X X
determination: source of supply
vendor 1
vendor 1
vendor 2
vendor 2
vendor selection
vendor
PO
PO
purchase order processing
PO monitoring
goods received &
inventory mgmt.
PO invoice
?
=
invoice verificationinvoice verification
?

39. Create Purchase Order (PO)
1
vendor known
purch. order
vendor 2
vendor 2
2
vendor not known
terms & cond.
outline
agrement
source list
vendor
info record
3
assigned purchase
requisition exists
(from user department)
purch. req.
vendor 2
vendor 2
purch. order
purch. order

40. Purchasing Process
• Create a requisition
• First release of requisition
• Create RFQ (Request for Quotation) with
reference to requisition
• Create PO (Purchase Order) with reference to
RFQ
• Department receives material ordered (GR)
• Department pays invoice (MIRO).

41. Purchase Requisition
Document generated by a user department
or storeroom-personnel to notify the
purchasing department of items it needs to
order, their quantity, and the timeframe. It
may also contain the authorization to
proceed with the purchase. Also called
purchase request or requisition.

42. Request for Quotation
Is a standard business process whose purpose is
to invite suppliers into a bidding process to bid on
specific products or services. RFQ generally
means the same thing as IFB (Invitation For Bid)

43. Purchase Order
Buyer-generated document that authorizes a
purchase transaction. It sets forth the
descriptions, quantities, prices, discounts,
payment terms, date of performance or
shipment, other associated terms and conditions,
and identifies a specific seller.

44. Create Purchase Requisition

45. Create Purchase Requisition

46. Create Purchase Requisition
• In the item, enter your material, Plant= 1000, QT = 100

47. Create Purchase Requisition
• Save your Purchase requisition
• Take note of Purchase requisition number

48. Demo: Create Purchase Order

49. Demo: Create Purchase Order
• Open document overview: Click on document
overview button
• Choose “Selection variant list” icon
•Then select “My purchase requisition”, you will get
your purchase requisition listed
•Click on “adopt” icon, your purchase requisition
will be copied to the purchase order (or you can
drag and drop it into the shopping cart)

50. Demo: Create Purchase Order

51. Demo: Create Purchase Order
• Enter your vendor, and price 30 euro and save

52. Posting an Order Entry (Goods Receipt)
MMMM
Logistics
purchasing req. planning
inventory
controlling
invoice
verification
goods receipt
inventory mgmt.
goods issue. transfer
posting
SD
sales and
distrib.
SD
sales and
distrib.
PM
plant
maintenance
PM
plant
maintenance
QM
quality
management
QM
quality
management
PP
production
planning
PP
production
planning
FI
financial acc.
FI
financial acc.
CO
controlling
CO
controlling
AM
fixed assets mgmt.
AM
fixed assets mgmt.

53. Demo: Posting Order Entry (Goods Received)
1. Use T_code : MIGO
2. Select Goods Receipt
3. Select Purchase Order
4. Enter PO number for goods to be received.
5. Hit "Enter"

54. Demo: Posting Order Entry (Goods Received)
6. Enter Document date & posting date
7. Enter Header text (comment) if necessary.
8. Close detail data.

55. Demo: Posting Order Entry (Goods Received)
9. Notice that movement data is "101"
10. If you only received first item, then Check the "OK" box for
first line item.therefore, the second item need not be processed

56. Demo: Posting Order Entry (Goods Received)
11. If you only received 3 pcs out of 10 pcs of item one & 2 pcs out of
10 pcs of item two, then Check the "OK" box for both line item
12. Input actual quantity (3 & 2 pcs ).
13. Hit "Enter"

57. Demo: Posting Order Entry (Goods Received)
14. Click "Check" button to find out if there is any error.
15. Check the "status" column .
. Green means OK . Yellow means Warning . Red means error

58. Invoice Verification
input
information
input
information invoice verificationinvoice verification
output
information
output
information
orders
actions:
• enter invoice
• verify invoice
• post invoice
• update
relevant data
• (re-edit
invoice)
goods receipt
master data:
material
vendors
accounts
terms & cond.
financial
accounting
asset
management
cost accounting

59. Create Invoice
Create Invoice using Tcode MIRO
Enter the Purchase order no. and click on
Enter, to display the material details.
Enter the Required details in all
Tabs

60. Create Invoice (contd..)
Click the check box, to calculate the Tax

61. Create Invoice (contd..)
Enter the Amount and click on save

62. Create Invoice (contd..)
Invoice is created

63. Demo: Invoice Verification
Using the tcode: MIRO"

64. Demo: Invoice Verification

65. Demo: Invoice Verification
net amount for
positions