SAP MM /WM - Overview
Dilip Sadh
Describe the basic business process of Procuring Materials
and Services in the SAP R/3 System.
Discuss the integration points in procurement to Financial
Accounting and Inventory management.
Discuss the reporting and analysis tools used in the
procurement cycle.
Discuss the Company’s procurement process.
Communicate scope expectations.
Procurement Cycle Workshop - Objectives
SAP
CO
AM
PS
WF
IS
MM
SD
PM
PP
QM
FI
HR
Finance
Human
Resources
Global tools
Logistics
QM : Quality Management
PM : Plant Maintenance
WF : Workflow
IS : Industry Solutions
SD : Sales & Distribution
MM: Material Management
WM : Warehouse Management
PP : Production Planning
FI : Financial Accounting
FI-AM : Assets Management
CO : Controlling
PS : Project System
SAP modules
Modules in PROJECT
MM module
MM is a component of Logistics in SAP that focuses on
inventory management, warehouse management, vendors and
purchases.
SAP
CO
AM
PSWF
IS
MM
SD
PM
PP
QM
FI
HR
MM Materials Management
Inventory management
MM overview
Material planning
ProductionInternal procurement
PurchasingExternal procurement
Invoice
verification
Goods receipts
Goods issue
Stock transfers
Invoice entry
Storage areas
management
Financial accounting Sales
MM
MASTER
DATA•Materials
•Batches
•Vendors
•Purchasing
info record
•Source list
Agenda
Attendees:
Business Managers, Process Owners
Topics:
Master Data
Procurement Process Overview
Reporting
Procurement Cycle Workshop
Organizational and Master Data
Business Process for
Procurement
Reporting and Analysis
Procurement
The primary SAP R/3
application modules that
support the Procurement
process include:
Materials Management
Purchasing
Goods Receipts
Invoice verification
Financial Accounting
Payment processing
Materials Valuation
R/3Client / Server
ABAP/4
FIFinancial
Accounting
COControlling
AMFixed Assets
Manage-ment
PSProjectSystem
WFWorkflow
ISIndustry
Solutions
MMMaterialsManage-
ment
HRHuman
Resources
SDSales &
Distribution
PPProductionPlanning
QMQuality
Manage-ment PM
Plant Main-tenance
Procurement
The SAP R/3 Procurement business process usesthe following R/3 organizational elements:
Storage Location
Purchasing Organization Purchasing Group
Company Code
COMPANY CODE
Plant
Organizational Elements
The following master data is used in the Procurement cycle:
Material Master
Vendor Master
Master Data
The material master record contains all data required to
define and manage material. It integrates data from
manufacturing, sales and distribution, purchasing,
accounting and other departments.
The material master is used as a source of data for purchase
order processing throughout the procurement cycle.
Master Data: Material Master
Material Master Primary Views
Purchasing
Sales
Work
scheduling
Stocks in plant/
storage location
Accounting
Engineering/
Design
MRP
A
B
St
t
Material
Master
Storage
Client
Plant
Storage Location
General data
Material number
Description
Units of measure
Plant-specific data
Planning data
Manufacturing data
Purchasing data
Valuation data
Storage location-specific data
Stock quantities
Material number
Description
Units of measure
General data
Storage Location
specific data
Stock quantities
Material Master Organizational Levels
The vendor master includes all data necessary for processing
business transactions and corresponding with vendors.
Information is shared between the accounting and purchasing
departments.
Data is grouped into three categories.
• General data
• Accounting data
• Purchasing data
Master Data: Vendor Master
Organizational and Master Data
Business Process for
Procurement
Reporting and Analysis
Procurement
Requirements
Determination
Order Follow-upInventory Management
1.
Vendor Selection
RUHR
TRUCKING
3.
Order Processing4.5.Goods Receipt and6.
Invoice Verification
Purchase Order
7.
8. Source
Determination2.Payment
Vendor
invoice?
Procurement Environment
Invoice
Processing
Goods
Receipt
Purchase
Order
Purchase
Requisition
for Goods/
ServicesPurchase Requisition
10
20
30
Purchase Order
10
20
30
Planning, Reporting, and Analysis
Vendor
invoice
The Procurement Process
Purchase Requisition
Request or instruction to the purchasing department to procure a
certain quantity of a material or service on or by a certain date.
Are created directly by a requesting department or automatically via
material requirements planning (MRP).
Are internal documents not used outside the company.
Purchase Requisitions:
Invoice
Processing
Goods
Receipt
Purchase
Order
Purchase
Requisition
for Goods/
ServicesPurchase Requisition
10
20
30
Purchase Order
10
20
30
Planning, Reporting, and Analysis
Vendor
invoice
MRP
Purchase requisition Release strategy
Purchase
Order
Determine source of supply
Direct Entry
Purchase Requisition Processing
Purchase Order
Represent the formal approval of a purchasing transaction with a vendor.
Identify the following items such as:
Vendor
Material and quantity ordered
Price and terms
Delivery date and location
Purchase orders:
The Procurement Process
Invoice
Processing
Goods
Receipt
Purchase
Order
Purchase
Requisition
for Goods/
ServicesPurchase Requisition
10
20
30
Purchase Order
10
20
30
Planning, Reporting, and Analysis
Vendor
invoice
Service
Consumable Material
Stock Material
Account Assignment(cost center, asset,
internal order)
Statistics Order History
Purchase
Order
• Standard
Purchase Requisition
Direct Entry
or Purchase
Requisition
Purchase Order Processing
Processing Purchase Orders
Purchaserequisition
Reference document
Contract
Vendor
One-time vendor
Purchaseorder
10
20
30
Goods Receipt
Verifying the receipt against the order.
Valuating material at purchase order price.
Creating material and accounting documents to record the event.
Updating the purchase order history.
Providing basis for invoice verification (2nd part of 3-way match).
Goods receipts record the inward movement of goods or materials by:
The Procurement Process
Invoice
Processing
Goods
Receipt
Purchase
Order
Purchase
Requisition
for Goods/
ServicesPurchase Requisition
10
20
30
Purchase Order
10
20
30
Planning, Reporting, and Analysis
Vendor
invoice
Goods
Receipt
Vendor
RUHR
TRUCKING
Purchasing
Documents
Items
1.
2.
3.RUHR
TRUCKING
Warehouse/Stores
Entering the goods receipt increases the inventory
level of a material that is procured for stock.
Goods Receipt for Stock Material
Consumption Statistics
Purchasing Data:Order item
Order history
Goods
Receipt
Posting
G/L Accounts:
Stock AccountConsumption AccountGR/IR Account
Accounting DocumentStock Quantity
Point of ConsumptionCost centerOrder
Material
Document
Goods Receipt
Slip
Results of a Goods Receipt Posting
Material Movements Through IM and WM
Material Movements Flow:
Transfer Requirement (TR)
Transfer Order (TO)
Confirm Transfer Order
Invoice Processing (1)
Matches the vendor’s invoice to the purchase order and the
goods received (3rd part of 3-way match).
Matches price, and quantity.
Updates the purchase order and its history.
Updates accounting information.
Invoice verification:
The Procurement Process
Invoice
Processing
Goods
Receipt
Purchase
Order
Purchase
Requisition
for Goods/
ServicesPurchase Requisition
10
20
30
Purchase Order
10
20
30
Planning, Reporting, and Analysis
Vendor
invoice
Invoice Verification Environment
G/L accounts:
PurchaseOrder
Goods Receipt
VendorInvoice
Invoice
Verification
Invoice verification accesses data from purchasing, inventory
management, material master, and vendor master files.
Material Master
Vendor Master
Conditions
G/L Accounts
Assets
Cost Centers
Projects
Orders
Posting an invoice in the SAP System
updates purchasing and accounting data
Vendor
Invoice?
Invoice Processing (2)
Selects invoices for payment based on the payment terms in
the vendor master or purchase order.
Generates payment for released invoices.
Updates accounting information.
Invoice Payment:
The Procurement Process
Invoice
Processing
Goods
Receipt
Purchase
Order
Purchase
Requisition
for Goods/
ServicesPurchase Requisition
10
20
30
Purchase Order
10
20
30
Planning, Reporting, and Analysis
Vendor
invoice
Financial
Accounting
Vendor
1000Paymentprogram
Bank
1000
Motor Sports International
Released
invoice
Vendor Payment
PP FI FI
Purchase Requisitions
Goods Receipt
Invoice Verification
Purchase requisition
Released
invoice
?
Procurement Integration
Organizational and Master Data
Business Process for
Procurement
Reporting and Analysis
Procurement
Standard Reporting provides List Displays by:
Vendor
Material
Account assignment
Material Group
Purchase order number
General Analysis
Order Value Analysis
Inventory Transaction Analyses
Reporting and Analysis
Logistics Information Library
Logistics
Processing
Systems
Logistics
Information
Systems
R/3Sales and
Distribution
(SD)
Materials
Management
(MM)
Production
Planning
(PP)
Shop Floor
Information
System
Inventory
Controlling
Purchasing
Information
System
Sales
Information
System
Logistics Information System
Thank you for your kind attention!
Dilip Sadh