Unit 4-Material Management-Organizational Structure

7/30/2019 Unit 4-Material Management-Organizational Structure

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Material Management(MM)

- Organizational

Structures -

Unit 4

MELJUNCORTES


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January 2008 SAP AG - University 2

Business Process Integration

MM

OrgD

ata


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Organizational Data

A hierarchy in which theorganizational units in an enterpriseare arranged according to tasks andfunctions

Are static data and are rarelychanged

The definition of organization units isa fundamental step, it is a criticalfactor in how the company will bestructured


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R/3

FIFinancial

Accounting

COControlling

PSProject

SystemWFWorkflow

ISIndustry

Solutions

MMMaterials

Mgmt.

HRHuman

Resources

SDSales and

Distribution

PPProduction

Planning

QMQuality

Mgmt.PMPlant Maintenance

SMServiceMgmt.

Client / Server

Integrated Business

Solution

ECEnterpriseControlling

AMFixed Assets

Mgmt.

Materials Management (MM)


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Unit 4 Overview

Unit Concept

Purchasing and SAP R/3

Procurement Process Organizational Structures

Organizational Relationships

Warehouse Management


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Unit Concept

The purchasing process involves theacquisition of goods and services tosupport the creation of goods andservices in the organization

In this unit the structure required forthe purchasing process is presented


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Purchasing and SAP R/3

The purchasing process exists in theMaterials Management (MM) moduleof SAP R/3 and Finance (FI) module

The structure includes elements ofthe Materials Management (MM) andFinance (FI) modules

Master data for the purchasingprocess exists in the (MM) and (FI)modules

The purchasing process can and


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Components of MaterialsManagement

Materials

Management

(MM)

Logistics

InvoiceVerification

Material

Master

Physical

Inventory

Valuation

MRP

Service

Entry

Sheet

Service

Master

Product

CatalogPurchasing

Inventory

Mgmt.

Foreign

Trade/

Customs


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Procurement Process(Procure-to-Pay)

PurchaseRequisition

Paymentto Vendor

NotifyVendor

VendorShipment

InvoiceReceipt

GoodsReceipt

PurchaseOrder

3-WayMatch


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Organizational Structures

Plant

Valuation Area

Storage Locations Purchasing Organizations

Purchasing Groups


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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

Can be a factory, a warehouse, a

regional distribution center, a service


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Plant

a part of a building, an entirebuilding, or a collection of buildings

A single building can house multipleplants

A company code can have multiple

plants A plant can belong to only one

company code


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Ex. Coca-Cola Enterprises

Coca-cola enterprises provides us witha good example of a company that hasseveral types of plants. It operates

factories that produce both rawmaterials and finished goods. Somefactories produce the syrup that forms

the basis of the Coca-Cola productsyou are familiar with. Other factoriescombine the syrup with carbonated

water during the bottling process to-


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Ex. Coca-Cola Enterprises

The finished goods which consists ofcases of bottles and cans of Coca-Cola products, are then shipped to

regional distribution centers forstorage until they are transported toend customers, such as retailers. The

syrup factory, the bottling factory,and the distribution center are allconsidered plants in Coca-Colas SAP

ERP system.


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Valuation Area

The valuation area determines atwhich level a material is valuated(inventory value is established)

SAP R/3 allows valuation at thecompany code or plant level, butrecommends valuation area be set atthe plant level


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Storage Location

Subdivision of a plant

Where materials are managed

(inventory management)/where stockis physically kept

Raw Materials

Maintenance, Repair, and Other (MRO) Finished Product

May be a physical or logical unit

A lant can have multi le stora e


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Storage Location

Specific storage locations mayinclude:

Shelves, bins, cabinets, trays, hanger

A plant must have at least 1 storagelocation if it needs to track the

quantity and value of materials in itsinventory.


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OrganizationalRelationships

Plant/Storage Location

Storage Location

20 - Quality

Storage Location

10 - Inventory

Plant P001


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Purchasing Organization

Organizational unit responsible forthe procurement of materials andservices.

SAP requires that purchasingorganizations be assigned at theplant level

A purchasing organization can beassigned to more than one plant

A purchasing organization can be


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Plant/Purchasing Organization (1)

One plant multiple purchasing organizations

Purchasing

Organization P002

Purchasing

Organization P001

Plant P001

Organizational Relationships


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Each plant has its own purchasing organization

Purchasing

Organization P002

Plant P002

Purchasing

Organization P001

Plant P001


(Continued)


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One purchasing organization for multiple plants

Plant P002Plant P001

Purchasing

Organization P001


(Continued)


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(continued) Plant/Purchasing

Organization (4)

One purchasing organization for multiple company codes

Company Code

C002

Company Code

C001

Purchasing

Organization P001



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Purchasing Group

Responsible for specified purchasingactivities

Often used to identify individualbuyers

Used for reporting

O i i l


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Purchasing Organization/PurchasingGroup

Purchasing Group002

Purchasing Group001

Purchasing

Organization P001

O i i l S


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Organizational Structure

Purchasing

Organization P001

Company Code

C001

Storage Location

20 - Quality

Storage Location

10 - Inventory

Plant P001

PurchasingGroup

001


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Ex. Dell and Intel

Dell Computers and Intel Corporationillustrate how purchasingorganization manage both local and

global procurement strategies. Dellhas manufacturing facilities in theUnited States, Brazil, Ireland, Poland,

China, Malaysia, and India. Thecompany purchases vast quantitiesof Intel microprocessors for its

various computer product lines


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In turn, Intel maintains a dedicatedsales force at Dells headquarters tonegotiate purchasing contracts and

manage the relationship. Dell has acentral purchasing organization thatconsolidates procurement

requirements globally and negotiatespricing centrally with Intel. However,the actual purchase orders are

created t the local Dell


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In other words, Dell US purchaseschips from Intel US, Dell Chinapurchases chips from Intel China, and

so on. All purchases are based onglobal contract and pricing termsnegotiated between Dell and Intel

headquarters, but they are executedlocally by the purchasing groups forthe various plants. This arrangement

ensures that Dell receives the best


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At the same time, however, the localmanufacturing facilities maintaincontrol over the tactical purchasing

activities because the purchasingorganization is located on the samepremises. Intel also benefits from this

arrangement by gaining globalvisibility into Dells purchasing sothat the company can better adjust

their manufacturing capacity to


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Not required for the purchasingfunctionality of SAP R/3

A separate module in the SAP R/3environment

Many functions and elements can be

performed outside of the module


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Elements Receiving, identifying and sortinggoods

Placing goods into storage bins Taking inventory

Monitoring and inspecting goods in

storage Preplanning distribution of materials

Picking and accumulating orders

W h M t


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Warehouse ManagementRelationships

InventoryManagement(MM)

WarehouseManagement (WM)

Company Code

Plant

Storage Loc.

Warehouse

AisleStorage Rack

Quantity

U it 4 E i


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Unit 4 Exercises

28. Verify Valuation Area

29. Define Plant (P_ _ _)

30. Define Storage Locations for Inventoryand Quality

31. Define Purchasing Organization

32. Create Purchasing Groups

33. Assign Plant to Company Code

34. Assign Purchasing Organization toCompany Code

35. Assign Purchasing Organization to Plant

36. Setup Parameter ID


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Company CodeC002Company CodeC001

Purchasing

Organization P001


Purchasing

Organization P002

Plant P002

Purchasing

Organization P001

Plant P001

Unit 4-Material Management-Organizational Structure

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