mm-mat.doc

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1 ENTERPRISE STRUCTURE

CLIENT

Is a commercial Organizational Unit within R/3 system with its own data, Master

records and set of tables.- It is the highest level element of all Organizational unit

- Represented by 3 digit alphanumeric key

COMPANY CODE

It is the smallest Organizational unit within R/3 system for which can have anindependent accounting department within external accounting. Legal entity

- It is having balance sheets, Profit & Loss accounting required by the law

- Represented by 4 digit alphanumeric key.

PLANT

Is an organizational logistic unit that structures the enterprise from the perspective

of production, procurement, Plant maintenance, Material Planning

- It can be a branch office/ Central delivery ware house/ HQ/ Maintenance Plant.- Represented by 4 digit alphanumeric key

STORAGE LOCATION

Is an Organizational unit that allows the differentiation of material stocks within the

Plant- Inventory management on quantity basis is carried out at storage location level.

- Physical Inventory is also carried out at storage location level.

VALUATION AREA

Is an organizational level at which material is valuated.

- R/3 system recommends Plant level

- Valuation at Plant level is mandatory if you are using Production planning/ CO/Retail system

- Valuation area selection is a fundamental setting in customization and very difficult

to REVERSE

PURCHASE ORGANIZATION

Is an organizational level that negotiates conditions of purchase with Vendors for 1

or more Plant.

- It is legally responsible for completing purchasing contracts


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CENTRALISED PURCHASE ORGANIZATION

Should be attached to Company Code or otherwise Plant specific (attached to Plants). We

can have cross-company code OR Cross-plant Purchase Organizations

PURCHASING GROUPS

Is the key for buyer or group of buyers responsible for certain specific purchasing

activities (eg. Mech/ Elect, etc.)

Organizational Unit Organizational grouping of an enterprise.

Transaction Application programs which executes business processes in R/3

systemDocument Data record generated through a transaction

Material Master Central data object in SAP R/3 system.

Configuring is the method of doing customizing

CONFIGURE to CUSTOMIZE


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2 BASIC PROCUREMENT PROCESS (GENERAL)

Flow

1. Determination of requirements2. Source determination

3. Vendor selection

4. Purchase Order processing5. Purchase Order monitoring

6. Goods Receipt

7. Invoice Verification8. Payment processing (FI)

Purchase Order : A formal request to Vendor to supply certain goods / services under the

stated conditions

When we enter an invoice against a PO/ GR, the system checks the price, rate, payment

terms with respect to Purchase Order and Quantity w.r.to GR

While entering the GR, system checks whether the material is as per PO or not w.r.to

Quantity, Shelf life, etc.

Several GRs can be entered for a PO item in one operation

The type of Invoice verification (PO Based / GR Based) is to be fixed in PO , Invoice Tab

If MRP Procedure is set, PR will be generated automatically during MRP run.

Purchasing value Key

for auto-reminders and supply tolerances. It is fixed in the purchasing view of the materialmaster. It is managed at CLIENT LEVEL.

Info update Indicator is set in material data of Purchase Order/ Quotations/ Outline

Agreement (Item Tab)

Item Category

Defines whether an item requires or can have- A material number- An account assignment

- Goods Receipt

- Invoice Receipt

Item categories displayed depends upon DOCUMENT TYPE (fixed in customizing)- StandardBlank materials that are procured externally


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- Subcontracting L Finished product ordered from a Vendor (maintained at

STORAGE LOCATION level)

- Consignment K Vendor makes the material available and manage aconsignment stock (maintained at PLANT Level)

- Stock TransferU

- Third Party S - Text

MANDATORY REQUIREMENTS (GENERAL)

Material Account Stock Goods Invoice

ITEM CATEGORY Number Assignment Receipt Receipt

Standard BLANK YES YES

Consignment K YES YES YES

Subcontracting L YES YES YES

Stock Transfer U YES YES YES

Third Party S YES YES

Limit/ Blanket B YES YES

ZERO VALUE POs

Generally used for samples. But generally used monitoring the delivery. FOC indicator isset in item level. Invoice receipt is cancelled because of this tick

Variable Order unit can be specified in material master record and purchasing info record.

In PO,

Inco-terms are specified at Header levelShipping Instructions can be at Item and header level (As a Text in header level and

Delivery tab at item level)

Delivery instructions can be at Item and header level. (In texts tab)

Changeability of PO

1. If PO is already sent to Vendor CAN change the PO and send a copy to the

Vendor

2. If Vendor is delivered material against PO Only LIMITED changes like texts arepossible (We can not change qty)

3. If Goods received and payment made NO changes possible.

Invoicing Plan

System creates invoice automatically as per Plan and release them for payment

For automatic settlement for periodic invoicing plan, ERS must be selected in

Vendor Master


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In partial invoicing plan, provision of down payment in the Billing or Invoicing

plan rule date

3 MASTER DATA

VENDOR MASTER

Vendor Master Data is maintained at

- General - CLIENT LEVEL INFORMATIONSAddresses

- Company code level COMPANY CODE LEVEL INFORMATIONS

Accounting related - Payment terms, payees,- Purchasing Organization level -

Related to purchasing Currency, Inco-terms, VSR, etc

We can BLOCK a Vendor Master Record (XK05) - Complete

If we want to block a Vendor for a SPECIFIC MATERIAL done through SOURCE LIST

ME01

Automatic PO generation is in purchasing data.

ACCOUNT GROUP of a Vendor

Control functions of Vendor account group are 1. Status of the Vendor ( One time Vendor or routine vendor)

2. Field selection in the Vendor Master Record

3. Partner schemas4. Vendor Sub range

5. Type of number assignment (external or internal)

Single Master Record is maintained for one time Vendor Account group is CPD

Other routine vendors are generally in LIEF

Vendor Reconciliation account

Its a G/L account which maps Companys liability towards several vendors.

Depending on account grouping selected, system assigns a number (can enter manually

also). This Vendor number is used in sub-ledger number in Financial Accounting.When posting an invoice, system uses the reconciliation account automatically from

Vendor master record.

A vendor account code is created against Company code and Purchase Organization, so itsaccount is unique in all Plants under the Company code.


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Pre-requisite for Vendor Partner roles

1. Vendor master record for each partner separately

2. Specified in customizing Partner roles selected

Controls of Document type

- Screen sequence and screen layout (Screen variant)

- Number ranges of document

MATERIAL MASTER

Material Master is structured for various organizational levels.

Data at CLIENT / COMPANY CODE LEVEL (table MARA)Data Valid for the total Company. Basic data

Material No., Material group, Unit of measure, Conversion factors, Purchasing

value key, etcData at COMPANY CODE LEVEL

Accounting Data, Costing data if valuation is at Company code

Data at PLANT LEVEL (Table MARC)Purchasing data, MRP Data, Scheduling data, Forecasting Data, etc.

Data at STORAGE LOCATION LEVELStorage bin, picking area, etc.

MATERIAL NUMBER

18 character alpha numeric key

- Basic data is CLIENT SPECIFIC

- Some Purchasing data are PLANT Specific Pur group, GR processing time, etc.- Purchasing Value key is maintained at CLIENT LEVEL

- If we are not specifying a Plant at Organizational level, only data at higher level

(Client) will be displayed

- Language selection is additional data of Material Master.

The standard system uses a BUFFER when assigning numbers to the material master

records

The amount of numbers for the buffer is 10. Using this buffer and having the material

number assigned before saving a new number, the master can be lead to a gaps in the

number assignment. However if you reset the number level of an interval back to the initialvalue, R/3 system fills these gaps when you create the new materials


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MATERIAL TYPE

Materials with same characteristics are grouped together in Material types- Raw Material,

Finished Goods, etc.Represented by 4 digit alphanumeric codes

Material type is having following CONTROL functions1. The type of number assignment (Internal or external)2. The permitted number ranges

3. Screen layout and screen sequence

4. User specific views5. Procurement type (Internal / external)

6. Up-dating of Quantity and Value in master records / FI

7. Account determination on goods movements8. Price control

Material type CANNOT be changed for materials whose Purchase Order is made.

Special Material types available in std SAP Additionals (VKHM) - requirements like effective presentation to Customs

Eg. Care labels

Advertising media (WERB) presentation for advertising. Eg. leaflets/ catalogues

Apparels (MODE)

Empties (LEER) Type of RTP generally subject to deposit of money. Can have

several components together in BOM. Eg. empty bottle/ empty crate, etc. (SD)

Full Products (VOLL) counter part of empties.

Operating supplies (HIBE) Procured externally and required for the manufacture

of other products.

Packing Materials (VERP) Transport with goods/ come with goods of FOC. It is

managed at quantity and value in Material master even though it is free of cost.

Used in HU management

Material filed selection reference

A reference control key defines which control string applies to the relevant influencing

factorWe can maintain reference key for

1. Material type

2. Plant3. Industry sector in customizing

Filed selection group Grouping of master records according to the filed option (Hide/ Display/Optional/ reqrd. entry)

Field selection against TRANSACTION is also to be defined for filed

option

Link rules of each transaction against the material type

SAP defined link rules CAN NOT be changed

Screen/ views can be customized as per Company code


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INDUSTRY SECTOR

Represented by 1 digit alphanumeric key

The control functions of Industry sector are- Screen selection and its sequence

- Industry specific fieldsIf we assigned a material to an Industry sector, we CANNOT change it later.

Unit of measure

- Base unit of measure

- Purchasing Unit, Sales Unit, Issue unit

- Order Price Unit (OPU)

Main fields in Purchasing View are

- Purchasing Value key- Automatic PO Selection

- Source list requirement

- Quota Management

Accounting View

Valuation Class determines to which stock accounts are to be updated on goods

movementsPrice Control Standard or Moving Average Price

Valuation of material depends on the price control set in Material Master.Standard Price All stock postings will be at standard price and in case of any

deviation posting the difference to Price difference accountMoving Average Price (MAP or v)

GR valuation will be at PO price and Goods Issue at Moving average priceMAP updates on goods movements.In case of any difference with respect PO price, the difference amount will be

posted to the stock account (on total stock at that moment). If sufficient stock is not

available to distribute, system will post the difference to Price difference account.

Extending/ adding a View to an existing material master MM50

Then select the required view, Select

B AccountingD MRP

E Purchasing

K Basic DataC Classification

G Costing

A Work Scheduling


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4 PROCUREMENT OF STOCK MATERIAL

PURCHASING GENERAL

Centralized Purchasing

With one Purchasing Orgn1 Purchase Orgn responsible for a number of Company codes

Distributed Purchasing

Number of Purchase Orgn for different Plants1 Purchase Orgn responsible for 1 Plant

Company specific

1 Purchase Orgn responsible for 1 company code

Reference Purchase Organization

Pre-requisites for reference purchase organization:

1. Both the purchase organizations (reference and normal) are to be maintained inOrganization structure

2. The reference purchase Orgn can be maintained WITH or WITHOUT Company

code and Plant3. Assign reference purchase Orgn as Reference purchase orgn in customizing

Data in MM Purchasing

Material Master 1. Client related data 2. Plant related data 3. Storage location related data

Vendor Master 1. General data 2. Company code related data(accounting) 3. Purchasing

related data

Master records in Purchasing

1. Purchasing Info Record

2. Source List3. Quota Management

4. Conditions5. Vendor Evaluation

The linking of document type made in customizing (in purchasing) are:

Document type to allowed item categories

Allowed item categories to Link PR document type


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The conditions dependencies on time (TD & TID) are fixed at document type level at

customizing.

PURCHASE REQUISITION

PR can be created Manual, or Auto from PP/ PS/ PM/ PPC

Texts from externally created requisitions (PS/ PM/) are adopted in the item text of PR in

purchasingPurchase requisitions are processed by item-by-item

PR can be created for material with master record and without master record also. But if it

is without master record, it will be with Account assignment and Text & material group

PR changeability

Before changing PR, check

1. Already PO is issued or not If issued, NOT changeable

2. Already released or not (release procedure) If released limited changes possible.Depend on changeability indicator

3. Created by MRP NO Changes possible (Quantity can be changed whileprocessing. But the left out will shown as open against the same PR)

Flagging of PR items are CLOSED

The item of a PR is regarded as closed, if the requested quantity is ordered in a PO

If we are creating PR manually, the items will not be considered in MRP.

RFQ / QUOTATIONS

Single document for RFQ and QuotationCan be created with respect to:

Manual

Via reference document

Reference to PR

Reference to Outline Agreement

RFQ/ Quotations are Created and maintained at purchasing Organization level.

For RFQ NO COMPANY CODE / PLANT

Collective Number: For linking a number of RFQs. It is in the header of RFQ.

It is a 10 digit alphanumeric number.

Creation of RFQ

Initial screen Quotation deadline, Purchase Orgn & Purchase group are fixed

Header details Collective number is assigned, Vendor addresses are maintained.Item overview Material, Qty & deadline for each item

We cannot enter an account assignment in RFQ


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Quotation processing

Vendors price and price conditions

We can enter the prices and conditions of each vendor in RFQ.

Comparison list

We can save the quotation data in purchasing info record by giving the tick in check

box Info update We can set the rejection indicator for unsuccessful vendors.

The mean value of all quotations can be saved as Market Price in the quotation

comparison list. This market price will be used as the basis for valuating the pricelevel of a vendor and is called up during Vendor Evaluation.

Conditions in Purchasing

Conditions can be maintained for Contract/ Sch. Agreements/ PO level. Conditions canbe maintained in Info record. There are extended conditions also.

PURCHASING INFO RECORD

Info records are created for1. Standard

2. Subcontracting

3. Pipeline4. Consignment,

Where the system copies the data in purchasing

Certain concise information of a Vendor and material.

If we are not maintaining Material in Info record, system will store this information

against a material group. Info record contains :

1. Current and future price with pricing conditions for Plant/ Purchaseorganization

2. Delivery date and tolerance limits. Availability period During which,

vendor can supply the material3. Details of the Vendor & Vendor evaluation data and VSR. We can fix a

regular Vendor here.

4. Texts that can be maintained for Info record, which can be called up in PO5. Number of last Purchasing document/ PO (In Purchasing data 2)

We can fix the PO text in Info record1. If only info record text is to be fixed in PO, set NO M text option

2. If you are not selecting the above option, system will display both the texts

in PO

Info update indicator WILL NOT update the info record. It will update theinformation.

The updated details can be seen at Info list (ME1L/M/P)


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These data will be displayed as default data while creating the purchasing

documents. It can be edited at purchasing document level.

Info record can be created- manually

- automatically from Quotation / Outline agreements / Purchase orders, if info update

indicator is selected while creation If you want to maintain conditions in Info record, you have to maintain it

MANUALLY.

Auto-updated info records will NOT BE HAVING the pricing conditions

(ONLY final price will be retained)

Info update indicator

If we are fixing this info update indicator, system will copy the data and conditionsmaintained.

If we fix

A System will update the data WITH or WITHOUT PLANTB System will update WITH PLANT

C System will update WITHOUT PLANT

For Quotations/ Contracts/ Scheduling Agreements and Conventional POs

- If BLANK selected, Info record will not be updated

o A If an info record exists at Plant level, it is updated. Otherwise, info

record at Purchase Organization will be updated

o B If Plant conditions are allowed for the Plant, an info record at Plant got

updated

o C - IF Plant conditions are not necessary, for the Plant, info record at

Purchase Organization level will be updated.

The info update Indicator can be set at PO

If we fixBLANK No update

TICK System will update the info record as per the settings in

Customizing ( node Conditions > Define condition at Plant level)BLANK Conditions allowed WITH or WITHOUT PLANT

+ - Only PLANT BASED Conditions will be updated

- - NO-PLANT BASED CONDITIONS are allowed.

For Enjoy transactions (PO- ME21N)

If just one (With or without Plant) exists, record will updated.

If NO info record exists, PLANT Level info record will be CREATED

If 2 info record (1 with Plant and 1 without Plant) exists, WITH PLANT info record will be

updated

Structure of Info Record

1. General Data Vendor data, Order unit, etc.2. Purchasing Organization Data 1

Control data Delivery time, Minimum quantity, etc


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Price & Conditions Gross price, discount, etc.

Statistics PO History, PO statistics, etc.

Text Texts are maintained here, can be called up in PO3. Purchase Organization / Plant Data

Control, Price, statistics, texts

4. Purchase Organization data 2Here you will get the reference document number on which the info record

is created/ updated. This option is available only if the record is created with

reference to a purchasing document.In other words, if an info record is created manually, the last PO data will be

updated in Info record at purchasing data 2

Purchasing Info Record is valid forPLANT / PURCHASE ORGANIZATION

While creating a PO, system first search for info record with PLAN&PURCHASEORGANIZATION combination for price, if it is not available in the system, it will

search for data with PURCHASE ORGANIZATION only.

Purchasing Info record is suggesting prices in 2 ways :

a. Conditions conditions are included, if info record is prepared manually.b. If info record does not contain conditions, then the system will select the

price of last Purchase Order.

We can define the conditions of last PO by customizing

a. Are always copied

b. Not to be copied when prices are entered manuallyc. Never copied

Info Record CANNOT be deleted by normal archiving program run. It can be deleted by

the system administrator

Data can be displayed from Info record screen through ENVIRONMENT are

Material Vendor

RFQ/ Quotation

QM Info record

Last Document

Quotation price history

Order price historyWe can have 4 different info record for a material & vendor for standard/ Consignment/

Subcontracting/ Pipeline

TEXTS

Header Texts: Header Text/ Header memo (Internal)/ Supplementary texts

Item Texts - Item Text (CAN copy from Info Record/ Material Master)

- Delivery Text

Inserting texts from material master record


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\

CONDITIONS

Are stipulations agreed with vendors concerning prices, discounts, surcharges, etc..

We can create conditions in- Quotations

- Info Records

- Outline agreements- Purchase Orders

Conditions in PO are TIME INDEPENDENT and others are Time DEPENDENT

System will ask for VALIDITY for TIME DEPENDENT conditions.

Time dependent Time Independent

Conditions Conditions

1. Info Record YES NO

2. Quotation Depends on Doc Type Depends on Doc Type

3. Sch. Agreement Depends on Doc Type Depends on Doc Type4. Contract YES NO

5. Purchase Order NO YES

We can specify both time dependent and Time Independent conditions at Header

level and Item level EXCEPT Info Record. The setting is at Document level

In Info record, conditions are stored at Info record level. For Time Dependent conditions, we can create

1. Supplementary conditions

2. Validity Periods3. Scales

4. Upper and Lower Limits

If we are creating a new condition type, should be assigned to an access sequence to linkwith Pricing Procedure

If the conditions are on header level of the document, then it is applicable for items in that

document, but if it is at item level, it is applicable for that particular item only.

Conditions in Purchase Order DEPEND on DOCUMENT TYPE.

Conditions are prepared in a PO are at the level of document type

Conditions can be created for a Vendor/ for a Plant/ for Purchasing.

Header conditions Applicable for all items as per % or ValueItem conditions applicable for specific items - % or Value


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Group conditions Applicable to all items but distributed proportionately as per the

quantity/ value

CONDITION TECHNIQUE

Up to 3.1H version, Time independent conditions are referred as Document conditions andTime dependent conditions are referred as Master conditions.

Condition Type and condition category - Example

Condition category Assigned to condition type (Std system)

H- Base Value PB00 (this must exist in all pricing procedure

except stock transfer)

B- Delivery Cost FRA1N Non de-ductable input tax NAVS

E Cash Discount SKTOG Moving average Price P101

Condition types used in standard system (examples)

PB00 -Price - Gross Price (With access sequence-0002)RB00 - Discount/ Surcharge - Absolute discount

ZB00 - Discount/ Surcharge Absolute Surcharge

FRB1 - Discount/ Surcharge Absolute Freight

ZOA1 - Discount/ Surcharge - % Duty amount CustomsSKTO - Discount/ Surcharge Cash discount

NAVS -Taxes - Non de-ductable input taxes

Standard pricing procedure in SAP is RM000 used for Purchasing

Purchase Requisition Prices

If the material is WITH material master record, the price will be displayed for

Purchase requisition from the material master, even if we are maintaining a separateprice in Info record. But the vendor will be populated from the Info record.

If the material is WITHOUT material master record, we have to maintain the price

manually during the creation of PR, if required.

While preparing RFQ, DO NOT mention/ indicate Plant so that the same RFQ can

be referred for other plants also.

VENDOR CONFIRMATIONS

Vendor confirmations can be of

Order acknowledgements

Loading or Transport confirmations

Shipping Notifications


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ASN Advanced Shipping Note

5 PROCUREMENT OF CONSUMABLE MATERIALS

Account assignment category determines which category of accounts is to be debited in

G/L accounting.

Categories are:

A AssetK Cost centre

P Project

F Production OrderC Sales Order

U Unknown Consumable materials that are procured directly for consumption against an account

assignment object

It isNOT managed in value based in Inventory management

System updates the consumption in material master, if master data is available.

Examples are NLAG/ UNBW/ DIENNALG Non Stock Material

UNBW Non-valuated stock material

DIEN Services procured externally

If we select consumable material as material type in Material Master, it controls

- Procurement type (Internal / External)

- Account postings- Requirement in Inventory Management

Consumption is directly posted to consumption account

Inventory Management is NOT based on Value basis

Stock Vs Consumable

Stock Consumable

1. Entry of Material Number Required Possible but not required

2. Account assignment not required Mandatory3. Account postings to Stock account Consumption account

4. Mat. Master up-dation Qty, Value& Qty & ConsumptionConsumption are updated

5. MAP Adjusted Not applicable

Purchase Requisition for Consumable Material

Can be by manual or though automatic- through MRP run/ PM order/ Sales order

Can use account assignment U (Unknown) in PR. But to be confirmed in PO


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If material master is available, system will take the price from it otherwise we have

to enter manually.

Multiple account assignment is possible in PRBLANK No multiple account assignment

1 Distribution on Quantity basis

2 Distribution on Value basis. Goods Receipts are NON-VALUATED for consumable goods.


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6 EXTERNAL SERVICES PROCUREMENT

Procurement cycle Flow

1. Determination of requirements2. Creation of service specification

3. Source Determination

4. Vendor selection5. RFQ (Bid evaluation)

6. Comparison of Quotations

7. Creation of service Order8. Purchase Order monitoring

9. Service Entry

10. Service acceptance11. Invoice verification

12. Release of Payments

Service Master

Master record creation- description of service, UoM, etc.

Can attach price through conditions

Conditions can be maintained at- At Service level (Market price/ Estimate)

- At Service and Vendor level

- At service, Vendor and Plant level

Service is procured for direct consumption.

Account assignment U (Unknown) is accepted at PR level, not in PO

Materials are procured at Item Level, but Service is procured BELOW item level.

Item category D is used for Service POs

Provision of unplanned expenses and total limit at item level

Release procedure is possible for Service Entry Sheet

Service Entry Sheet is made with respect to PO

Invoice verification also done with respect to PO

PO History is updated after Invoice verification

Service Entry sheet updates FI/ CO. Complex service specification can format through outline levels

Can assign any number of service lines to each item level

AC03 Creation of Services, ML 81N Service Entry Sheet


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Account assignment in services

Specifying the account assignment for the services at the time of their initial procurement is

optional. Account assignment category is at document item level.

-U (Unknown is accepted- Multiple account assignment is accepted

- Distribution is also possibleInvoice verification of services (SES)

In Vendor master we have to specify, GR based IV/ ERS/ Service based IV

Global Percentage Bidding (GPB)

It is a procedure of bidding used inprocurement of external services ONLY.

Pre-requisites are

1. Document type AB in RFQ

2. Calculation schema MS0002 (with condition types KR01 header discount & KZ01 Header Surcharges

Process

1. Create RFQ with document type AB.Maintain price per service and send to Vendors

2. Vendors will not quote any price for each service, But they will indicate a %

addition or Deletion with respect to the price shown in RFQ.This % can be at Per Outline level or for the uppermost outline level (total)

- INVOICING PLAN and BLANKET POs are possible with Services

OUTLINE AGREEMENTS

Its a long term purchasing agreement with a Vendor concerning the supply of materialsor the performance of services according to the pre-determined conditions.

These are valid for a certain period of time and cover a pre-defined total purchase

QUANTITY and VALUE

Outline Agreements - 1. Contractsa. Value (WK)

b. Quantity (MK)

c. Centrally agreed Contracts

d. Distributed Contracts

2. Scheduling Agreements


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a. LA

b. LPA

c. LU

Contracts are with Release Orders and Scheduling agreements are with Delivery

schedule Release Order is a Purchase Order reference to a Contract

CONTRACTS

NO DATES

PR > RFQ > Contracts (manual)

VALIDITY PERIOD is to be indicated in the Header

In Quantity contract, the target quantity and purchasing conditions are to bemaintained for EACH item

Item category M & W are permitted in Contracts (M- Material Unknown & W-Material group)

Item category M Similar materials with SAME PRICE, but different material

numbers. Material numbers are to be specified in release order.

Item Category W Material belonging to the same material group, but withDIFFERENT PRICE.

W can be used in VALUE CONTRACTS ONLY

M & W are NOT ALLOWED in Release Orders

Account assignment U (unknown) is permitted in contracts but NOT in release

orders

Release order documentation contains the statistics for an item. It is updatedautomatically and used for monitoring the contract

Single and multiple account assignments are allowed in contracts

Centrally agreed contracts For many Plants in a purchase organization. In this case DONOT MAINTAIN PLANT. In this case individual release orders can be issued Plant-wise

against the contract. Partner functions are also possible.

Using Plant conditions, we can specify separates prices and conditions for each receiving

Plants.

Distributed Contracts (DK) Contracts at different Plants operating on different (ERP)

systems which are accessible through ALE

SCHEDULING AGREEMENTS

Long term agreement with a vendor to supply material as per pre-defined condition.

Pre-defined PERIOD and QUANTIRY (NO VALUE)

PR > RFQ > Scheduling Agreement.

Centrally agreed S.As can be prepared.


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M, W and U are not allowed in Scheduling Agreements

Details of delivery date and quantity are maintained through Delivery schedules

Schedule line can be created automatically through MRP run, but for this

1. Define Scheduling agreement as a Source of supply for the material.

2. Auto schedule line selection source list Select option 2 in MRP Column (in

Me01)3. Auto schedule line must be allowed in MRP system

Types of Scheduling Agreements:1. Type LA Document type - LP

Agreement + Delivery Schedule

2. Type LPA Document type LPAa) Agreement + Delivery Schedule + Forecast Schedule + Release

documentation

b) Agreement + Delivery schedule + Forecast schedule + Releasedocumentation + JIT Schedule + Release documentation

3. Type LU Stock transfer scheduling agreement

FRC (forecasting) Schedule gives a medium term overview of requirementsJIT Schedule gives the requirements in near future. JIT schedule can be prepared daily/

Hourly basis.

Release documentation requirement is SET by fixing release documentationindicator in Customizing

For JIT scheduling, JIT is Indicator to be set in Material Master record

We can post a Goods receipt against a scheduling agreement directly in MIGO

Creation Profile

1. Optional data from Vendor master record2. Release creation profile is for each scheduling item3. It is customized on a Plant specific basis

4. It determines the periodicity of SA release and aggregation of schedule line

quantities5. Tolerance limits are in release creation profile (RCP) and set it during

customizing

Aggregation schedule Total scenario in a specific time period

Firm, Trade off & Planning Zones

1. FIRM ZONE Immediate Vendor can go ahead with manufacturing. The

Purchaser is liable for total quantity2. TRADE OFF ZONE Near future requirements. Vendor can go ahead with

mobilization of requirements. But the liability is limited to the purchased raw

materials/ semi finished goods3. PLANNING ZONE No liability by the Purchaser

Firm and trade off zones details are forwarded to the Vendor along with FRC and JITSchedules for getting more clarity of Scheduling Agreement.


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The procedure is

A. At IMG level Maintain release creation profile against your Plant. Here you are going

to maintain1. General Parameters like Creation strategy for JIT & FRC Schedules

2. Aggregation Horizon Daily or monthly aggregation in Days for both JIT & FRC

3. Creation periodicity Daily/ Weekly/ Monthly for JIT & FRC4. Tolerance profile, etc

B. Transaction level

1) Create Scheduling Agreement ME31L. Attach the creation profile in the SchedulingAgreement at Item > More functions > Additional data

Please see that the Material Master is having tick for JIT Schedule &

2) Maintain Delivery schedule ME 38

3) Create the release documentation ME84. Select FRC & JIT Schedule and process andsee that FRC and JIT Schedules are created

4) If you want to see the schedules, go to ME9E

SOURCE DETERMINATION

Source can be a Vendor or an Outline agreement.

By Source list, we are defining preferred or allowed sources for a material.By Quota, we are specifying the share of total requirement over a specified PERIOD from

each SOURCE.

Source determination at PR level

If the material is with master record, during creation of PR, Prices will be taken

from the material Master, EVEN IF, we maintain a different price in Info record.But the vendor will be selected from Info record

Case. Source list is maintained for Vendor A & Info record is for Vendor B

While creation of PR, system will select A as the source, if the source list selectionis opted in the material Master, otherwise, B will be selected.

For fixing a Vendor in a source list, the info record for that Vendor is TO BE

maintained.

If we have maintained a source list for a material we have to select that Vendor for

placement of PO. So check the requirement display before maintaining a Source list

for a material.

INFO RECORD is a MUST for automatic source determination at PR level. Source determination function is available ONLY for PR

SOURCE LIST

Allowed/ Preferred/ Blocked sources of Supply for a MATERIAL in a PLANT for

a PERIOD (Validity)


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MRP Indicator in Source list considered while material Planning

If source list requirement is defined at Plant level, then system will not allow

creating a purchasing document without Source list.

Source list can be for a Material (at Material Master) or Plant (at customizing)

Source List analysis List out materials which are NOT having source list in the

Plant ONLY ONE FIXED Source is allowed fro a material within a Validity period

Source list can be maintained Manually/ From Outline Agreement / From

Purchasing Info Record/ Automatic generation.

Source list can be made referral (of another material)

If the selection of source list is auto, we can have single or collective procedure.

Can be from Out line agreement/ Info record

We can create a Source list for a MATERIAL GROUP (for contract W)

EXCLUSION INDICATOR Set for excluding a source in the source list

7 INVENTORY MANAGEMENT

MOVEMENT TYPE

- A 3 digit key used to differentiate between goods movements in R/3 system.

- It is having several control functions in Inventory Management1. Plays a central role in automatic account determination

2. Determine which stock or consumption accounts are to be updated in FI.

3. Determines the format of the screen where we enter documents and how the

quantity fields are updated.

Valuated Good Receipts

Auto creation of storage location- If it is set in customizing for Plant & Movement type, the

storage data is created automatically during the first goods movement.Auto creation of storage location happens if the given quantity is to be posted in to normal

storage location.

Auto storage location will NOT be created for goods movements in SPECIAL

STOCKS

Stock types

1. Unrestricted Available for MRP & Available for withdrawal

2. Quality Inspection Available for MRP but NOT available for withdrawals

3. Blocked NOT available for MRP & Withdrawal4. Restricted stock. -As per the batch requirement in Batch Master

Stock Indicators are the indicators for differentiate between stock types on goods receipt

1 Unrestricted stock

2 Quality Inspection stock


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4 Blocked stock

STOCKS

During goods receipt, a material and accounting documents are generated and it updates

the Purchase order history

After GR is posted against a particular movement type, the Quantity, Material,Movement type and Organizational level CAN NOT BE CHNAGED. If any errors,

reverse or cancel the document

We can post withdrawals & Consumption ONLY from UNRESTRICTED Stock.

If we want to withdraw material from QI/ blocked, we have to first transfer post it to

Unrestricted and then withdraw it.

Plant stock & Storage location stocks views will appear automatically in material

master after booking material movements.

Stock Transfer Vs Transfer Posting

Stock Transfer involves physical movement of goods but transfer posting need not be

In transfer posting ONLY Material document is generated (NO Accounting

document)

Movement type is the key control factor in both the cases.

Quality

Inspection 322

350

349 321

Blocked 343 UN Restricted

344

Document principle applies to Inventory management.

A document is the proof of that transaction involving stock changes has taken place.Documents are stored in the system

Material Document Vs Accounting Document

A material document consists of Header (Posting date, created by, etc..) and item

level details like quantity, material, storage location, etc Accounting document consists of Header (General data like posting date, posting

period, currency, etc.) and item level details like G/L account number, amount, etc.

Material document and accounting documents are INDEPENDENT documents

We can identify the material document by the material document number and

document year. The Accounting documents are identified by the accounting

document number, company code and a Fiscal year.


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3. Others

The stock display will be as follows

GR from Stock detail as per systemPurchase Order Open PO quantity

Order Open order quantity

Reservation Planned receipts

ENJOY Transaction MIGO

MIGO transaction is combining following 7 transactions in single code

1. MB01 - GR for known PO

2. MB0A GR for Unknown PO3. MBRL Return Delivery

4. MBSF Release of blocked stock

5. MBNL Subsequent delivery6. MBST Cancel Material document for GR

7. MB02/ 03 Change & Display Material document

GR of Blocked Stock (Movement type 103)

It is the conditional acceptance of goods. While we post the material into GR blockedstock-

1. Quantity is posted to Stock

2. Material is NOT VALUATED3. The transaction will be available in PO History

4. The material is NOT available for MRP

GR STOCK Unrestricted use (101)

Quality Inspection (101+X)Valuated Blocked (101+S)

GR Blocked stock (103)

When GR blocked stock is released (MBSF), then it is valuated automatically. It will havethe same effects of an ordinary GR.

While accepting the GR blocked stock to Plant unrestricted stock(105), you

can refer the material document of earlier GR or Purchase Order

Goods Receipt in to QI stock (101 +X)

Pre-requisites

1. Quality inspection indicator in material master

2. QI indicator in Additional data in PO (Header). It will automatically copied frommaterial master


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3. Set QI indicator in GR at item level

Possible movements for QI stocks

1. Transfer to Unrestricted stock and its reversal

2. Transfer to GR blocked stock & its reversal3. Transfer to Blocked stock and its reversal

4. Transfer to Sampling and its reversal

5. Return delivery to Vendor and its re-receipt

OTHER GOODS RECEIPTS

1. Initial entry of stock balances Movement type 561/ 563/ 565

2. External Good receipts without PO (Movement type 501)

3. Internal Goods receipts without production order (Movementtype 521)

4. Good receipts for By-products (Movement type 544/542)

5. Good receipt for Free of Charge (FOC)- Movement type -5116. Returns from customers (Movement type 451)

DELIVERY COMPLETED INDICATOR

The delivery completed indicators are fixed in PO & GR.

After setting the delivery completed indicator at GR, the open order quantity

becomes ZERO. But still we can post new GRs against it. But the open orderquantity WILL NOT CHANGE.

If we change the quantity of a delivery after posting the GR, the system DOES

NOT CANCEL the delivery completed indicator automatically. But it issues awarning message.

If an order quantity/ return delivery quantity reduces the delivered quantity below

the tolerance limit, the system cancels the delivery completed indicator. But issues a

message Delivery completed indicator has been reset. Thereafter we have tomanage it manually.

Standard R/3 system does not accept Over deliveries

For accept over deliveries, you have to select unlimited delivery in PO or properlyset the over delivery tolerance

GRs valuated on the basis of the incoming quantities in the Order price unitInvoice verification is also based on the GR qty in the order price unit.

If you want to restrict a GR upto a certain date, enter that date in Latest GR date in

Delivery tab of item


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RETURN DELIVERY

Return delivery can be created with reference to a material document or Purchase Order

Receipt by Return SubstituteDelivery by Delivery

101 122 123103 124 125105 122 123

If you receive a substitute delivery, after you have returned the goods to a Vendor, it is

ADVISABLE to reference the associated return delivery by using a reverse posting whenyou post a new receipt

122- Return delivery from WarehouseIt results into 1. Material document created

2. Stock accounts updated

3. Purchase Order update

124 Return delivery from GR Blocked stockIt results ONLY in creation of a material document as a proof of return

Return delivery in GR based Invoice verification

Uses the material document to reverseIf invoices are settled and then you are returning, please ensure that

Invoices should be cancelled

In customizing, for each MOVEMENT TYPE, you can specify Reversal and return

delivery movement type and transactions in case of GR based IV

Difference between Reversal & Return delivery

Reason for movement is optional in the case of reversal, but mandatory in returndelivery.

Return delivery slip is not required for reversal but mandatory for return delivery.

Both operate on different movement types.

Movement type 161

It is used to assign in a PO so that while posting the GR, the qty in the GR will be

automatically removed from the stock. It is generally used forexchange of materials.

Quantity Distribution facility at GR

We can distribute the incoming quantity in GR to1. To several storage locations

2. To several Movement types

3. To several stock types4. To several Batches

Note Batch selection list DOES NOT work with SPECIAL STOCKS


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Goods Receipt of Non-valuated goods

The receipt of goods to unrestricted stock. We can directly issue it for consumption

Automatic PO generation at GR

We can configure the system in such a way that system creates PO in background

during the receipt of Goods which is not having any PO. We can do the invoiceverification afterwards.

In Customizing for organizational structure, the plant must be assigned a purchasing

organization in the step Standard purchasing organization - assign plant so that the

system can determine the purchasing info records.

Automatic POs are allowed only for movement type 101 & 161 in standard system.

The customization for these movement types are to be there for automatic POcreation

System valuates the GR with the price defined in purchasing info record.

MIGO transaction is supporting automatic PO. It is available in MB01

In Vendor Master the purchase group default data for material to be maintained

Automatic PO is only possible for valuated goods

Pre-requisites for automatic PO are;1. Selection in Material Master

2. Selection in Vendor master

3. Info record should be available

4. Valuated good receipt5. Automatic PO selection for Plant & Movement types (101& 161)

If a PO is generated in the background for the return item

(movement type 161). This PO is required if you want to carry out invoiceverification for the credit memos, issued by the Vendor for this return

GOODS ISSUE

TO

FROM

Ware House To Cost Center Consignment GOODS ISSUE To Asset

Pipe Line To Sales

To OrderTo SamplingTo scrapping

Sampling Materials are treated as scrapped. But the value of sampling material

posted from the material stock account to the Quality Inspection stock account.

GOODS ISSUE


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But while scrapping material, the material will be posted to Scrap account and it

debits to the cost center.

Issue to sampling and scrapping are different.

We can change the movement type while goods issue.

Goods can be issued to reservation and BOM

While goods issue, we can have collective entry with different account assignmentalso.

System WILL NOT update the consumption statistics in Material Master, if you

post goods movements using special stock types Sales Order Stock and ProjectStock

We can set final issue indicator while issuing against a reservation

Stock determination is a function that can be used on a cross-application basis.

We CAN issue goods from Quality inspection and Blocked stock ONLY for

SCRAPPING or SAMPLING

Reversing a planned goods issueCan be reversed with reference to a Material Document OR to a reservation

A Material document (Reversal) will be created

An accounting document will be createdStock will be updated (increased)

Consumption will be reduced

While issuing a material for scrapping,

- Relevant stock reduced

- Value posted from stock account to scrap account

- Price is taken from material master

o Movement type Consumption for

201 Cost center

221 Project231 Sales Order

241 Assets

251 Sales261 Production order

281 Network

291 All account assignments

GR/ GI SLIP numbering

We can have GR/GI slip number in addition to the Material and accounting

document numbers

It is a statutory requirement for some countries like Italy

It can be assigned Internally/ externally by each Plant or Storage Location or

Movement type

Options 1) Include the filed for the GR/GI slip number in the SAP script form


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2) Call up form MB-XAB using transaction MBXA

Then customize it Print report SAPLMBXA in print control

Serial numbers should be active for the Plant

In stock transfer (Plant to Plant) of material with serial number is only possible if

the same profile is assigned to the material in both the Plants

Returns to Vendor

Movement type Functionality

102 Reversal of GR due to any clerical mistake122 Returns to Vendor due to any reason like damage

124 Returns to Vendor from GR blocked stock

161 Returns to vendor For the exchange of another material

NOTE : To carryout stock transfer from Plant to Plant for a material that is subject

to SPLIT VALUATION, you HAVE TO USE 1STEP or STO

SPECIAL STOCKS

Special stocks that are managed separately becoz they are not belonging to your company.

The special stocks and special procurement types are of 2 types1. Company owned special stocks

2. Externally owned special stocks.

1. Company owned special stocks

The special stocks that are owned by the Company stored with Vendor or customer.Stock material provided to Vendor/ subcontractor

Consignment stock at Customer

Returnable packaging at Customer These Materials are managed at PLANT LEVEL. NOT at Storage location level. Only 2

types of stocks are possible. Unrestricted / Quality Inspection

2. Externally owned special stocks

Stocks owned by Vendor/ Customer and stocked at your place.

1. Vendor Consignment2. RTP (returnable Transport Packaging

3. Sales Order Stock

4. Project Stock

These materials are managed at STORAGE LOCATION LEVELAll the 3 stock types, UR/ Blocked/ QI are allowed


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8 SPECIAL PROCUREMENT TYPES

1. Consignment (K)

2. Sub Contracting (L)

3. Stock Transfer using Stock Transport Order (U)4. Third Party Processing (S)

5. RTP (R)

6. Pipeline Handling (P)

CONSIGNMENT PROCESS

When buying goods as a Consignment, the ordered goods still belong to Vendor, even afterdelivery. The goods become your property ONLY after they are consumed. The quantities

consumed are periodically settled.

The Ownership of the material is with Vendor but storing at clients premises

The stocks are NOT VALUATED,but available for MRP

The ownership of the material transfers to the client ONLY after issuing/transferring it from the consignment stock

Consignment liabilities are settled periodically (thru MRKO) based on the

consumption statement by the vendor

The prices of consignment stocks are defined in Info record and maintainedperiodically

We can use the conditions in Purchasing

CAN maintain ANY unit of measure with proper definition of conversion factor

in material master

Physical Inventory of Consignment stock is possible

Consignment stocks are managed at STORAGE LOCATION level

There will NOT be ANY VALUE in consignment purchase orders

In PO, No Price, No conditions, No Invoice receipt requirement but GR

requirement

Stock movements are possible.

Consignment stocks can be displayed by Tcode MB54

We can issue the consignment material from Consignment stock using movementtype 201+K

Item category K is used for consignments

We can post GRs for consignment WITH or WITHOUT reference of a PO. Butthe consignment prices are to be maintained before GR

Consignment stocks can be managed at Unrestricted/ QI/ blocked and we can do

the transfer posting between them.

But we can withdraw the consignment from UNRESTRICTED ONLY

Goods Issue from consignment unrestricted stock results in a liability to the

consignment vendor


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We can enter the invoice for consignment WITHOUT reference to a PO. Debits

are posted to the Liabilities from consignment stores G/L account to which thecredits were posted upon Goods issue from consignment G/L account

Consignment info record- The info record of consignment with differentPlants (different prices at each plant) is having a SINGLE INFO RECORD

number Info record should be created BEFORE creating a PO/ GR.

Process of Consignment Procurement & Settlement

1. Creation of Info record ME112. Create Purchase Order ME21N

Standard procedure.

Item category KGR to consignment store

Invoice Receipt is NOT required

No Price in PO

3. Goods Receipt MIGO Receipt of Material to consignment storeThe movement type 101+K

Please note that the GR can be with or without GR. Item will be in special stockwhile posting the GR

3. Transfer Posting MB1B. Transferring the material to own stock

The movement type 411K (the step is Not Mandatory)

4. Goods Issue MIGOGoods Issue from consignment store to movement types 201/231/ 241/ 251/ 261

Note We can directly issue the material from consignment stock using movement type

201+K, without transferring to companys stock.

Process of Physical Inventory of Consignment

1. Creation of Physical Inventory document In the create screen enter K in special

stock field2. Enter Physical Inventory document

3. Post the differences If you want to include QI/ blocked stock, enter a new material

number and enter the relevant stock type in the filed of STY and post thedifference as per your settings

SUBCONTRACTING PROCESS

The vendor receives the components from which he produces the finished product

mentioned in the PO. The components are listed in the PO and can also be determined bythe system via BOM

You order an end product from a vendor and specify in the PO with components,

you will send to vendor to manufacture the end product

Issue of components to the vendor and good receipt of finished product with

consumption detail of components


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Vendor invoice is posted against the purchase order

A subsequent adjustment for excess/ under consumed components can be made.

Item category L is used in the PO, and several components can be attached to the

Po

We can enter the components by manual or thru BOM explosion

System automatically creates reservation for the MRP relevant components The purchase order price will be the price of subcontracting services

Conditions of subcontracting can be stored in Purchasing info record forsubcontracting

We can link services specification with subcontracting items

The components with subcontractor (after issuing it) are managed as a special stock

to the vendor. This stock is VALUATED and AVAILABLE for MRP as thecomponents are your property. It is not allocated to a specific storage location becoz

its still your property

We can monitor subcontracting stock by evaluations

Goods issues are made, 1. With respect to a Subcontracting PO 2. From the list of

all the material of a subcontracting vendor

We can do the process of subcontracting thru SD. Through delivery and shipping

Good receipts are posted with respect to Subcontracting order item

Consumption of components posted at GR and subsequent settlement is possible

with respect to PO

Invoice verification is same that of standard process.

The account postings at subcontracting at GR & invoice verification are;

SUBCONTRACTING SCENARIOOrder - SF Material

Component - Raw MaterialA. At Goods Receipt

1. Stock account of SF Product - Debited @ (Order price + Valuation price of SF product)

2. Cost of Goods Manufactured - Credited @ (Order price + Valuation price of SF product)

3. Stock account of Raw Material - Credited @ Valuation price of Raw material

4. Consumption Account - Debited @ Valuation Price of Raw Material

5. GR/ IR Clearing Account - Credited @ Order Price

6. External Labor Account - Debited @ Order price

B. At Invoice Receipt

1) If there is NO deviation Price in Vendor invoice

Invoice Value = Order price

1. GR/ IR Clearing Account - Debited @ Order Price

2. Vendor account - Credited @ Invoice Price (Order price)2) Invoice Value = Order price + deviation price from PO

1. Stock account of SF Product - Debited @ deviation amount in invoice

2. Cost of Goods Manufactured - Credited @ deviation amount in invoice

3. GR/ IR Clearing Account - Debited @ Order Price

4. External Labor Account - Debited @ deviation amount in invoice

5. Vendor account - Credited @ Invoice Price (Order price + deviation amount from PO)


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i. Stock account fro Finished goods -ii. Stock account of raw material

iii. GR/ IR clearing account

iv. Vendor accountv. Cost of goods manufactured

vi. Consumption account (for components)

vii. External labor account

We can enter the material that is to be produced as a subcontract

item in the scheduling agreement

By the issue of components (thru transfer posting), the stock of

components WILL NOT reduce from your stock. The stock will be produced at thetime of receipt of Goods receipt of finished product

CS01 is used for creating BOM/ components1. The order of the end product in PO. The components are attached to the item n PO

2. In Inventory management, components are posted to the stock of material provided tothe vendor

3. Vendor supplies the end product with consumption details of components and it willposted to the system while GR

4. Any balance (+ or -) of components are done at subsequent adjustment transaction

5. Vendor submit his invoice for the services rendered and invoice will be posted in MIRO

Process of Subcontracting Process

1. Creation of Info Record ME11. Service with price of service

2. Creation of Purchase Order ME21N Creation of PO with Item category L.Attach components to the item in PO

3. Transfer Posting MB1B Transfer the components from your store to thesubcontractor using the movement type 541

4. Goods Receipt MIGO receive the end product (and components) to Stock by

using the movement type 101 for main material and 543 for components

5. Subsequent Settlement MB04 Subsequent adjustment of components, if any

(other than the entry happened during GR). Movement type 544 for componentsand 545 for by product

6. Invoice verification MIRO Normal process for invoice verification of vendor

services

The Master record of end product and components are to be made available

before the creation of PO

The components with subcontractor / Subcontractor stock is your stock. It isavailable for MRP and it is valuated, it is managed at PLANT LEVEL.

BLOCKED STOCKS are not allowed for subcontracting (Components). But

we can transfer the stocks between these 2 (UR&QI) stocks

Subcontracting in Inventory Management (Facilities)

1. Provision of components


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2. Goods receipt of final product with consumption details of components. We can

adjust the components at Goods receipt

3. Subsequent adjustment of components4. Allowed transfer postings

a) Plant to Plant 1step (301)

b) Material to Material (309)c) Between Unrestricted and QI ( 321 & 322)

Provision of components

Posting from Unrestricted stock Can be with respect to a PO or Without PO

The components can be delivered by another vendor

Issue PO to a Vendor for supplying the components, the delivery address

should be the address of subcontracting vendor. Enter the check box provision

at PO. When you are getting the information that the Vendor is supplied thecomponents to your Subcontracting vendor. Make a Goods receipt

(STATISTICAL GOODS RECEIPT) in the system so that the stock

position will be updated

The Goods receipt for a Subcontracting Order is VALUATE the material atSubcontracting Price PLUS the value of the components consumed

Subsequent adjustment

In this transaction the consumption account is already posted is available / displayed

as a second line for each itemUse + or - sign to adjust the components. The movement type is 544.

Subsequent adjustment is possible ONLY for subcontracting orders (L)

Receipt of a BY PRODUCT generated during subcontracting

The by products are entered in the subcontracting Purchase Order as components

with NEGATIVE quantity

While receiving the good at GR, system automatically posts the receipt ofbyproducts

1. In the material document you can identify the by product by the

movement type 545

2. By products are posted to the Stock of material provided to the Vendor

Due to the receipt of byproduct, the value of end product will be REDUCED.

To transfer the byproduct quantities from the Stock of material provided to

Vendor to Unrestricted stock, make a transfer posting using the movement type

542

Subcontracting for Sales Order stock and Project stock

An account will be assigned to a sales order or a WBS elementSTOCK TRANSFER USING STOCK TRANSFER ORDER

Advantages of stock transfer with STO w.r.to transfer posting

1. Good receipt can be planned in receiving plant

2. Can include an additional vendors (freight, etc) in Stock Transport Order

3. Delivery costs can be entered in STO


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4. Its a part of MRP PR created via MRP can be converted to STO

5. Goods Issue can be done through Shipping delivery

6. GR can be posted directly to consumption7. Total process can be monitored through PO history

PLANT to PLANT STOCK TRANSPORT ORDER

1 Step 2 Step Without SD With SD With Billing

ORDER TYPEArea - MM-PUR UB UB UB

MOVEMENT TYPEArea -MM-IM

301 (TransferPosting) 303 & 305 351 & 101 641 & 101

643 & 101645 for 1 step

DELIVERY TYPEArea - SD NL NLCC

BILLING TYPEArea - SD IV

DOCUMENT TYPEArea - MM-IV RE

PRICE Valuation Price Valuation Price Valuation Price Valuation Price Pricing in SD & MM

PLANNING Via Reservation Purchase Order Purchase Order Purchase Order

STOCK after GIStock inTransfer Stock-in-Transit Stock-in-Transit

Stock-in-TransitCompany code

DELIVERY COSTS Possible Possible Possible

CROSS-CompanyCode Via

Company codeclearing account



Company codeclearingaccount

Revenue account &GR/IR Clearingaccount

STOCK TRANSFER PLANT to PLANT 1 Step

Carried out ONLY in Inventory Management

Entered as a transfer posting MB1B

Can be planned by reservation

The quantity of unrestricted stock entering in sending plant posts IMMEDIATELY

to unrestricted stock of receiving Plant

Postings are valuated at the price of sending plant

If it is between 2 company codes, it will create 2 accounting documents at the time

of goods issue

STOCK TRANSFER PLANT to PLANT 2 Step

Carried out ONLY in inventory management

Transfer posting CAN NOT be planned through a reservation

Goods issue sending plant > Stock-in-transit of receiving Plant > Goods Receipt of

receiving Plant.

Transfer posting (Goods issue-1step) is valuated at the price of sending plant


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of goods issue. If any offset, will post to Company code clearing account

We can request and monitor stock transfer in purchasing through a PR, STO& Scheduling Agreement

For stock transfer scheduling agreement use document type LU and item

category -U

STOCK TRANPORT ORDER WITHOUT SD DELIVERY

Goods Issue Sending Plant > Stock-in-transit of receiving plant > Goods receipt of

receiving Plant

Delivery costs CAN BE entered in ST Order

Transfer posting (Goods issue-1step) is valuated at the price of sending plant


of goods issue. If any offset, will post to Company code clearing account

Process Flow

1. Creation of ST order in receiving Plant for sending plant with adocument type UB in ME21N

2. Posting a goods issue through transfer posting MB1B at sending plantwith a movement type 351

3. Posting a goods receipt MIGO at receiving plant with movement type

1014. Invoice verification at receiving plant Normal MIRO

STOCK TRANSPORT ORDER WITH DELIVERY

Carried out in Purchasing (entering the STO), Shipping (delivery

at sending Plant) and Inventory management (GR at receiving Plant)

Other characteristics are same as that of STO without delivery

Process Flow

Creation of STO at sending Plant

ii. Post goods issue through delivery (VL 10B or 10F) at sending plant withmovement type 641

iii. Goods receipt (MIGO) at receiving plant with movement type -101

STOCK TRANSPORT ORDER WITH DELIVERY & BILLING

The transfer posting in NOT VALUATED at thevaluation price of the material of sending Plant. But defined in both the sending and

receiving plant using conditions

Possible ONLY between plants at DIFFERENTCOMPANY CODES

The areas are Purchasing (STO), Shipping

(sending Plant delivery and goods issue), Billing Plant (Creation of Invoice atsending Plant), Inventory management (Receiving Plant goods receipt) and Invoice

verification (MIRO at receiving plant)

Goods Issue through Delivery > Stock-in-transitCompany code at receiving Plant > Goods receipt at receiving plant


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Prices in purchasing as per the conditions

maintained in Info record and inter company pricing procedure

Goods movements are valuated as per theaccounting documents generated.

4 Accounting documents are generated

a. Goods Issue at sending Plantb. Goods receipt at receiving Plant

c. Billing at sending Plant

d. Invoice verification at receiving plant

Process Flow

a. Creation of STO in receiving Plant for sending Plant. Document type UB

and item category -Ub. Post delivery in sending Plant (Movement type 643)

c. Creation of billing document in sending plant

d. Post GR at receiving Plant

e. Post invoice at receiving Plant

GENERAL INFORMATIONS ON STO

Pre-requisites for Goods Issue in Shipping

b. In customizing in Purchasing, a delivery type (NL for STO with delivery and

NLCC for delivery & billing) must be assigned to the PURCHASINGDOCUMENT TYPE (UB)

c. Customer number for receiving plant to be created and that MUST be maintained in

customizing in STOd. In SD customizing, shipping point determination MUST be maintained

e. In material master, shipping data MUST be maintained

To display the

stock-in-transit, we can use MMBE and MB53

Posting of GR forSTO to a blocked stock is NOT POSSIBLE because the stock-in-transit is already

valuated

No accountingdocument will be generated for a GR of STO

CROSS COMPANY STOCK TRANFER

We can do a cross company stock transfer in 3 ways

a. Stock transfer between 2 plants by 1 step or 2 step

b. An STO without delivery via shipping

c. STO with delivery via shipping (possible for plants in different company codes)

In all cases the value of transportation is posted to a company code clearing account in both

the plants. The stock transfer is valuated at the valuation price of the material in sendingplant


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Valuation of stock transport with billing- INTERCOMAPNY EXAMPLE

Plant P1 orders 10Kg of material from Plant P2Value of the material at P1 10

Price for inter company billing at P1 12

STO order price 11

Plant Transaction Value Account Remarks

P1 Goods Issue 100(-) - Stock Account (at price of P1)100(+) Change inventory stocks (at price of P1)

P1 Billing 120(-) Sales revenue (Price Inter Co billing)

120(+) Customer clearing (Price Inter Co billing)

P2 Goods Receipt 110(-) GR/IR clearing ( P2 -STO Price)110(+) Stock account ( P2 -STO Price)

P2 Invoice verify. 120(-) - Vendor account (Billing Price)

110(+) GR/IR clearing (STO Price)

10(+) PDA or Stock A/c (Difference)

THIRD PARTY PROCESSING

Company

Order Pur. Order

Billing Invoice

Customer Vendor

Material

Customer places an order on your company

You are placing/ passing the same order to a Vendor

Vendor supplies the material to customer directly

Vendor submits his invoice to you

You are submitting your invoice to the customer

Process Flow (with SD component)

1. Entering a Sales Order

While entering a sales order with Item category S and account assignment X,system will automatically creates a PR for each item in the third party sales order.

2. Entering a Purchase Order

Process the PR generated above, assign a Vendor and convert it to a Purchase Order

The delivery address in the Purchase Order will be as that of the customer


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3. Delivering goods to Customer

Vendor supplies the material directly to the Customer

Can create a STATISTICAL GOODS RECEIPT in the system, but NOTmandatory.

4. Enter the Invoice of Vendor

Invoice verification of the Vendor invoice. This CAN be a mandatory requirementas per the customized settings (If customized for creation of billing document after

the posting of Vendor invoice)

5. Creating Billing document for the CustomerBilling document is created in SD.

Depending on the BILLING RELEVANT INDICATORset for this item category

in SD

The path in customizing for this is SPRO > SD > Sales > Sales Documents

> Sales Document Item > Define Item Category > Check the details of TAS.

Billing Document cab be Quantity based on Order OR Quantity specified in

Vendor Invoice

If the customer is billed on the basis of quantity, we CAN create billingdocument, IMMEDIATELY after the sales order is entered

If it is based on Vendor invoice, we CAN NOT create the billing documentTILL the vendor invoice is entered/ posted in the system

Implications of Third Party Processing in SALES

By creating a Sales order for Third party, the resulting activities in Purchasing are1. A Purchase Requisition will be created with one or more delivery schedule

2. Purchase Requisition numbers are updated in the sales order (Item details)

3. Item is scheduled automatically after considering the delivery time and

purchasing processing time from material master

Implications of Third Party processing in PURCHASING

A PR is created automatically. We can do LIMITED changes in this

automatically created PR, like purchasing group

Order quantity / Scheduled Delivery date CAN NOT be changed

manually. It can be changed through sales order ONLY.

We can create a PR for third party processing manually using Item

category S & account assignment X

We can create the PO with respect to PR or manually

GR Indicator- For account assignment category X, GR can beposted as per the customizing.

If the Purchase Order is with respect to a Purchase Requisition, the

VENDOR ADDRESS CAN NOT be changed.

If the delivery address is same for all items, the delivery address willbe printed on Header, other-wise it will be item-wise


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Implications of Third Party processing in Inventory Management

We can enter the Goods receipt, if the GR indicator is set in PO

Goods receipt for third party processing will be similar that of a GR for a PO withaccount assignment

RETURNABLE PACKING (RTP) VENDOR PROCESSING

Its a multi-trip packaging medium

Property of your Vendor came along with material, stored at your place

It is NOT VALUATED

It is managed as a SPECIAL STOCK. So special stock data is required in addition

to material master data.

Special stock Indicator is M

The special stock data is defined for EVERY vendor at storage location level. It iscreated automatically 1st receipt is posted to RTP stock.

This RTP stock can not be maintained manually, but updated automatically upongoods movements.

RTP is an UNRESTRICTED STOCK ALWAYS

Allows a Negative stock

We CAN NOT transfer RTP stock to your own stock

At Goods receipt, the movement type for RTP 501+M is selected automatically by

the system. For returns, 502+M. Can use Goods Issue Others for returning toVendor with 502+M

If we want to transfer these RTP material between storage locations, system selects

the movement type311+M RTP stocks are available in stock displays MMBE / MB53

PIPLINE MATERIAL PROCESSING

Material is ALWAYS available. It can be withdrawn any quantity at any time

These PIPE materials are NEITHER PRODUCED/ PROCURED Nor STORED

Pipeline movements are mandatory in all Valuation areas

For each material type, you can specify in the valuation area whether pipeline

movements are Mandatory/ Allowed. Info record is mandatory for movements

Pipeline withdrawals are to be for a Order/ Cost center

Considered as a special stock

The special stock indicator is P

Withdrawals are valuated at Info record price. Withdrawals leads to a paymentliability to the Vendor and its Consumption history is updated.


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In standard system, the same account is assigned for consignment and pipeline. But

it can be separated by settings in customizing

Process Flow1. Creation of PIPE material . Maintain purchasing and accounting views. Price

control can be S or V

2. Creation of Info record3. Maintain the source list (Not mandatory)

4. Posting of Goods Issue Movement type can be 201+P, 261+P, 281+P/

291+P5. Settlement of Pipeline Liabilities (MRKO)

SALES ORDER STOCK

Stocks maintained for sales order

Special stock Indicator E

It can be Valuated / non valuated If it is NOT valuated, it is managed via a Cost Center

Can be transferred to own stock using movement type 411+E

PROJECT STOCK

The stocks stored for a Project till the completion of the project

It can be valuated / non valuated

It is allocated to a WBS element (Work Breakdown Structure)

Components from this stock can be issued for a WBS element The stock is available for MRP

Managed with a special stock Indicator Q

It can be transferred to own stock using the movement type 411 +Q

9 VALUATION AND ACCOUNT DETERMINATION

General Postings in MM

At Goods Receipt

Stock Account - Debited (+)

GR/IR clearing - Credited (-)

At Invoice Verification

GR/IR clearing - Debited (+)

Vendor - Credited (-)

At Payment


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Vendor - Debited (+)

Bank cash - Credited (-)

At Goods Issue

Consumption - Debited(+)

Stock Account - Credited (-)

Valuation Area Can be at Company code level or Plant level. SAP recommendsthe valuation at Plant Level.

Valuation at Plant level is MANDATORY if we want to use Production Planning

(PP) or Product costing accounting components or retail system.

Once the valuation area is defined In the customizing, it is very DIFFICULT to

reverse it.

If you want to have a storage location for storing materials non-valuated, you can

have it through another Plant(Valuation area) where only quantity updation will

take place The transactions in inventory management that affects accounting are Goods

Receipt, Goods Issue and Transfer Posting

These transactions can change the valuation price of the material depending on the

price control of the material

The posting of invoice verification (MIRO) also can affect the material valuation

Material Valuation during :

1. RECEIPTS are valuated at current material price in the material master

2. a) GR for PO GR before IR Materials are valuated at PO Priceb) GR for PO GR after IR Materials are valuated at Invoice price

3. GOODS ISSUE Goods Issues are valuated at the current price of the

material in material Master.4. Free Delivery Zero Value

Materials that are to be valuated should have accounting data with

valuation Class

Material Price Control1. In standard pricing (S),

Material is valuated at material master price and incase any difference, will be posted to Price Difference Account (PDA)

Exact value available for cost accounting/ Controlling

purposes

In accounting view, the difference can be displayed. The changing of this standard price in material master

is possible

2. In moving average pricing (V),

GR at PO price and GI at material master price. Receipts are

valuated at actual price (PO or IV)


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In case of any difference, the difference is posted to Stock account, if

sufficient stock available (in such case, the MAP will be changed)or itwill be posted to a PDA.

System modifies the price in material master according to the

delivered price

If the data is used for cost accounting, will have fluctuations

If the material is managed at Standard price, the moving average

price will be recorded in the material master by the system

Changing of Material master price (MR21) from Standard to Moving

average price is ALWAYS possible

Changing of Material master price from Moving average price toStandard is NOT POSSIBLE in 2 cases

1. If the material is valuated in SPLIT VALUATION

2. If the standard price is coming from COSTING and is NOT

equal to the moving average price

3. Changing fro S to V & V to S are Possible, if POs are Notcreated or Stocks are not existing

Periodic Unit Price (PUP) Price that changes

periodically as a result of goods movements and invoice postings

PUP = Value of material / Quantity of material

PUP is used in single level or multi level price

determination to valuate the material for closing period.

PUP can carryout in 3 currencies and 3 valuation

areas

The valuation in current period, system uses standard

pricing.

VALUATION AND ACCOUNT ASSIGNMENT

For automatic account determination

The system will automatically determine the relevant G/L accounts for eachtransaction in MM.

There are several accounting transactions are linking to a single MM Transaction

We can configure the automatic account determination facility to occur within theareas of Inventory management, Invoice verification and material valuation

Valuation area to be set before creating a material

Company code chart is assigned in FI module

Levels of valuation in automatic account determination1. Chart of Accounts/ Company Code

2. Valuation area

3. Material Type/ Valuation class4. Transactions (Movement type)

1. Chart of Accounts Influencing Factors

Chart of account is assigned to company code


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Used as a key factor for account determination to enable a

differentiation for the purpose of G/L account assignment

Configure separately for automatic account determination

Financial accounting, Cost & Revenue accounting uses the optional

chart of accounting

2. Valuation Area- Valuation Grouping code Influencing factors Key for account determination that enables a differentiation for G/L account

assignment WITHIN Chart of accounts

By Valuation grouping code, dependency of accounts on Valuation area

If a valuation grouping code is there assign a code for each valuation area

Valuation Area is the level at which the materials are valuated

If the valuation is at company code, G/L account CAN NOT be assignedaccording to Plant

We can assign a totally different G/L accounts to Plant if it is having a

separate Valuation grouping code

CHART OF ACCOUNTS

COMPANY CODE

PLANT

VALUATION

GROUPING CODE

3. Material Type Material Influencing Factors

Its a key in account determination that enables a differentiation for G/L

Account assignment depends on Material

Material is assigned to a Valuation class, which depends on a Material type

More than 1 material type is allowed for a valuation class

MATERIAL TYPE A/C ASSIGNMENT VALUATION CLASSCATEGORY

Raw Material ROH 3000

Finished Goods FERT 0001 3001

Oper.Supplies HIBE 30024. Transaction Influencing Factors

Its a key for account determination that symbolizes the transaction

Posting transactions will define the relevant accounting

Posting records are assigned to each Movement type to each invoice

verification


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a. Account grouping

Depending on Movement type and special stock indicators, we can assign an

account grouping for individual transactions.We can use the rules to define its configuration of automatic postings for a posting

transaction depends on

1. Valuation Grouping code2. Account grouping

3. Valuation class

COMPANY CODE Chart of Accounts

Valuation Area Valuation Grouping Code

Material Material Type

Account Category

Reference

Valuation Class

Business Transaction

(Movement Type)

Value

StringTransaction

Event Key

Account Modifier

1

2

3

4 5

General

LedgerACCOUN

T


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ACCOUNT DETERMINATION Specific Information

Account determination is required if the system is to fulfill its integration promise and post

financial transactions at the same time as the relevant operational transaction.Accounts are determined differently, depending on which functional area you are using:

MM: The process of account determination varies depending on whether

the transaction involved has a movement type such as inventory managementor whether there is no movement type such as invoice verification and valuation.

Account determination in SD uses the condition technique.

This chapter looks at the account determination of MM transactions w. and w/o movementtype only.

You can do most of the settings relevant for the account assignments for MM transactions

either in the configuration menu for "valuation/account assignment" (settings for MM

transactions w. movement type) or in the configuration menu for "invoice verification"(settings for MM transactions w/o movement type). You will get to the same tables but

there are different simulation functions.

It is also possible to access these tables via the configuration menu for accounting.

The valuation area is the level at which material valuations are carried out. In the MM

application transactions, the valuation area is hidden. In customizing, you can choosewhether the valuation area equals the company code or the plant. This setting must be

carried out before creating materials and before entering transactions in MM inventory

management. If PP is active the valuation area must be on plant level !

Grouping of organizational entities

The allocation of a company code to a chart of accounts is carried out in the FI

customizing. The chart of accounts to be used is determined for each company code.The valuation grouping code facilitates the allocation of G/L accounts with as little effort

as possible. Valuation areas to be treated equally in terms of account assignment must be

defined with the same valuation grouping code. Valuation grouping codes either serve as ameans of fine differentiation within a chart of accounts or they correspond to a chart of

accounts.

When making the basic settings for valuation, you can specify whether the valuationgrouping code is active.

Grouping of material master entities

Account category reference is the grouping term for account determination depending onthe material type.

Several valuation classes can be allocated to one account category reference.

Each material type is allocated to one account category reference. When maintaining theaccounting data of a material of this material type, you can select one