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Transcript of Mm Chapter
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Quarles: Flya Kite MM 1
Material Management
MM
How the company procures and tracks the
materials it uses and sells.
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Quarles: Flya Kite MM 2
The Module Concept
Material management describes all purchasing activities for materials
and services,
all goods receipt functions,
storingof materials and issuing materials and services for
further use.
The MM module is fully integratedinto any SAP business model anddemands integrated thinking andplanning.
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Quarles: Flya Kite MM 3
MM Functionality
Describes all materials and services
All vendors are described in MM and FI
Where all purchasing activities occur
Stores material-supplier relationshipsHolds information and rules of how to
issuematerial and services in SAP.
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Quarles: Flya Kite MM 4
Organizational Structures
Client
Company Code
Plant
Storage Location
PurchasingGroup
PurchasingOrganization
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Quarles: Flya Kite MM 5
Client
Highest hierarchical level in an SAPsystem
A complete database containing all
the tables necessary for creating afully integrated system
Master records are created per client
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Quarles: Flya Kite MM 6
Company Code
A required structural elementA legally independent entity
The smallest organizational unit for
which accounting can be carried outWhere business transactions are processed
Whereaccounts are managed
Where legalindividualfinancial statements,such as the balance sheet and the profit andloss statement, are created
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The Plant
Lowest valuation area
Organizational level
where MRP runsGenerally used to describe a
production site, a distribution center
or centralized warehouseMay be a physical or logical unit
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Storage Location
Subdivision of a plant
Where materials are managed.
May be a physical or logical unit.
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Purchasing Group
Is responsible for specified purchasingactivities
Represents buyer(s)
Used for reporting
Optional element
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Purchasing Organizations
Organizational unit responsible forthe procurement of materials andservices for one or many plants andfor negotiating prices and terms of
delivery with a vendorAssignment to plant(s) is mandatory
Assignment to company codes is
possibleRequired element not optional
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Purchasing Organization
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Organizational Data
Flya Kite Corporation
Client ......
Flya Kite Corporation
USA Company Code CC00
Flya Kite Corporation
Mexico CCMX
Plant 2000
Manufacturing site
Storage location
0010 warehouse
Storage location
0020 production
Storage location
0030 shipping
Dist.Center 0001
Mexico City
Dist.Center 0002
Cancun
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Master Data
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Vendor / Supplier Master
In SAP, all pertinent information
about a vendor is stored in thevendor master record.
Vendor data will be used by
MMpurchasingFI/COaccounting and controlling
PP - production
Vendors can be organized in vendoraccount groups.
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Vendor Account Group
Vendor masters are assigned to a
vendor account group.
Through field status maintenance,vendor account groups can be setup for
one-time vendors, regional vendors,internal vendors, etc. a managementdecision as to how to do this
The vendor account group controlsboth type and number rangeassignment for vendors.
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Vendor / Supplier Master
By editing the field statuses, amultitude of vendor account groupscan be created.
In MM the vendor account numberwill be created and used - additionalfunctionality will be addedinsubsequent modules
Vendor master data is maintained byboth the A/Pand the purchasingdepartments.
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Material Master
Each and every material in the system musthave a material master record
Material related transactions cannot take placewithout this record
Contains the material related pertinent data totrack and process transactions throughout thesystem
DANGER WARNING BEWARE
Material master record is tedious, contains a lot of
minute details, and is very, very critical to a greatnumber of downstream transactions
Mess this record up and you will pay at a futuretime and date in transactions in modules manylight years away
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Material MasterThe most integrated record in SAP
MM uses it to procure and trackmaterials
PP uses it in planning and carrying outproduction
SD uses it in selling and distributing theproduct to customers
FI/CO uses it invoice customers andtrack costs of sales/production
Users in these areas have differentviews of the master record
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Material Master - Views
Basic dataClassification
Sales: sales organizationdata
Sales: general/plant data
Sales text
Purchasing
Purchase order text
ForecastingMORE
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Material Master - Views
MRP 1, 2
Work scheduling
Storage
Warehouse management
Quality management
AccountingCosting
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Material Types
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Material Type
Used to categorize materials. Ex: raw materials, finished goods,
trading goods, etc.
Defines the materialattributes, e.g.,valuation, procurement, pricecontrol
Also controls screen sequence,number assignment field selection,account determination
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Material Type - Examples
ROH - raw materials, purchased externallyonly, no sales view
HAWA- trading goods, always purchasedexternally, are sold without any change to
the material, no manufacturing views exist
FERT-finished products are producedinternally no purchasing view exists
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Quarles: Flya Kite MM 24
Purchasing Info Record
The purchasing info record providescontinuously updated information aboutthe relationshipof a specific materialwith aspecific vendor. Order unit, price, price changes,
tolerances, reminder infos, historic data,statistics, texts
Once this record is created, the particularvendor is automatically selected when thespecific material is to be purchased
Choice of automatic or manual updating
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Quarles: Flya Kite MM 25
Transactions
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Quarles: Flya Kite MM 26
Transactions
Transactions describe business
activities in SAP.Number ranges are assigned to
transactions to allow unique documents
to be created for every singletransaction.
Every transaction follows pre-configured rules.
Unlike master data transactional data isdynamic - it constantly changes, usuallymany times per day.
A t ti A t A i t
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Quarles: Flya Kite MM 27
Automatic Account Assignment
A a set of rules and master data which enablethe financial tracking of logistics movements.
Created to avoid manual postings of financialtransactionswhich follow goods movementsto reflect the values of transferred materials. Movements create journal entries
Ex: when physical movement of a quantity of a material isrecorded by scanning a bar code, a journal entry with theappropriate debit and credit is entered by the system inthe appropriate ledger(s)
Used across all modules to keep track of thevalues of materialsthat are beingconsumed(e.g., production), or transferredinto othervaluation areas of the company.
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Quarles: Flya Kite MM 28
Automatic Account Assignment
Example
-Debit posting $100 -Credit posting $100
-VBR goods issue -GBB offsetting
to consumption raw material
material expenses inventory account
account 701000 102000
-Movement type 261
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Quarles: Flya Kite MM 29
Goods Receipt
Materials can be received as stockitems or non-stock items.
Stock: capitalize and track as used
Non-stock: expensed but quantitymay be tracked
Receipt is possible from external or
internal sources.
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Quarles: Flya Kite MM 31
Goods Receipt
Tolerance limits can be set for goodsreceipt.
How much variation from the data in the
purchase order will be allowed
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Quarles: Flya Kite MM 32
Set rules for invoice receipt Quantity, price, receiving date
Updates material master cost if movingaverage price is used
Automatic account assignment for pricedifferences if allowed
Verify actual versus target
Invoice Verification
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Quarles: Flya Kite MM 33
Invoice Verification
Three Way Check
Purchase ordertarget quantity
target price
Goods receipt -actual quantity
Invoice receiptactual price
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Quarles: Flya Kite MM 34
FI - MM Integration Points
Invoice
receiptPayment
ProgramGoods
Receipt
AP(Vendor)
D+ C-
GR / IR
$100
Bank
D+ C-
Inventory
$100
$100$100
D+ C-D+ C-
$100
$100
$100
$100
Recon.
AccountD+ C-
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Quarles: Flya Kite MM 35
Procurement Activities
From requisition to purchase order
Purchase Order
Order Type
Vendor
Material/Service
Quantity
Delivery Date Price
Text
Add. Terms
Goods
Receipt
Requisition
Material/Service
Quantity
Delivery Date
Acct.Assn. Category
Item Category Text
Plant
Inventory
Consumption
Fl Kit MM T ti
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Quarles: Flya Kite MM 36
Flya Kite MM Transactions
EXERCISE MM01: CREATE GENERAL
LEDGER RECONCILIATION ACCOUNT
We will create the control account in thegeneral ledger that links to the accountspayable subledger where the individualamounts owed to vendors are trackedReconciliation account must exist before a
purchase can be recorded
EXERCISE MM02: CREATE VENDOR
MASTER ACCOUNTING RECORDS
Must create a record of the basic datarelated to the vendor (name, address, etc.)before anything can be purchased fromthat vendor
Fl Kit MM T ti
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Quarles: Flya Kite MM 37
Flya Kite MM Transactions
EXERCISE MM03: CREATE VENDOR
MASTER PURCHASING RECORD
Creation of the purchasing views for thevendor created in the previous exercise
The previously created vendor master record
will be extended to include the data necessaryto make a purchae
Assignment to a purchasing organization within FlyaKite that will make all purchases from this vendor
Specification of currency to be used
Setting up payment termsd
Fl Kit MM T ti
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Quarles: Flya Kite MM 38
Flya Kite MM Transactions
EXERCISE MM04: CREATE VENDOR
MASTER RECORDS CENTRALLY
Creation of another vendor but rather thancreating the various views individually (asin the previous two exercises) all views
necessary to make the purchase arecreated at one time when done centrally
Fl a Kite MM Transactions
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Quarles: Flya Kite MM 39
Flya Kite MM Transactions
EXERCISE MM05: CREATE MATERIAL
MASTER RECORD FOR RAW MATERIALS
Must have a material master record for a materialbefore it can be purchased, managed, tracked,costed, etc.
Creates all the views necessary
Basic data basic data for the material (name, description,unit of measure, etc)
Purchasing data needed to make purchases of thismaterial
General Plant / Data Storage 1 must be able to track thematerial in the plant
Accounting data to get the vendor paid
Controlling data to transfer the cost of the raw material tothe finished good it will be used to produce (in PP) forproduct costing
Flya Kite MM Transactions
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Quarles: Flya Kite MM 40
Flya Kite MM Transactions EXERCISE MM06: CREATE MATERIAL MASTER
RECORD FOR TRADING GOODS*
Must have a material master record for a material before it canbe purchased, managed, tracked, costed, etc.
Creates all the views necessary
Basic data basic data for the material (name, description, unit ofmeasure, etc)
Purchasing data needed to make purchases of this material General Plant / Data Storage 1 must be able to track the material
in the plant
Accounting data to get the vendor paid
Controlling data to transfer the cost of the material for product
profitability determination* Trading goods are goods that a bought in order to be resold unlike raw materials that
are bought to become components of finished goods (i.e., manufactured goods)
Flya Kite MM Transactions
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Quarles: Flya Kite MM 41
Flya Kite MM Transactions EXERCISE MM07: CREATE MATERIAL MASTER
RECORD FOR FINISHED GOODS*
Must have a material master record for a material before it canbe purchased, managed, tracked, costed, etc.
Creates all the views necessary
Basic data basic data for the material (name, description, unit ofmeasure, etc)
Accounting data to get the vendor paid Controlling data to transfer the cost of the material for product
profitability determination
Notice no Purchasing or General Plant Data Storage views -these goods are manufactured, not purchased and are not
tracked data storage wise in the same manner as raw materialsor trading goods
* Finished goods are goods that are manufactured by the company from raw materials(and in some cases, trading goods)
Flya Kite MM Transactions
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Quarles: Flya Kite MM 42
Flya Kite MM Transactions
EXERCISE MM08: CREATE PURCHASING INFO
RECORDS
Creates a linkage between materials to be purchasedand a specific vendor from whom they will beacquired
Vendor can be pre-certified and various factors (e.g.,
price, delivery time, standard quantity, etc.) can bepredetermined so that purchasing activity time andcost can be reduced
Only data needed to complete a purchase would be
the material(s) needed and their quantities
Flya Kite MM Transactions
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Quarles: Flya Kite MM 43
Flya Kite MM Transactions
EXERCISE MM09: CREATE PURCHASING
REQUISITION FOR STOCK ITEMS
Purchase requisition is an internal document thatnotifies the purchasing organization of the need formaterials, the quantity involved, delivery daterequired, and where the materials will be stored when
they are delivered Although not completed in this case, the appropriate
approval authority would approve the purchase ofthese materials and assume responsibility for their
costs by approving the requisition
Flya Kite MM Transactions
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Quarles: Flya Kite MM 44
Flya Kite MM Transactions
EXERCISE MM10: CREATE PURCHASE ORDER
Using the data from the purchase requisition,
purchasing creates the purchase order to be sent tothe vendor
The purchase order is a legal offer to buy thatcommits the company to receive and pay for thematerials ordered
Copying the Requisition data eliminates needto again input the specifics of the materials tobe purchased
Automatically assigning the source of supplyutilizes the Purchasing Info Record toeliminate the need to input vendor data it isautomatically loaded from to the purchaseorder
Flya Kite MM Transactions
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Quarles: Flya Kite MM 45
Flya Kite MM Transactions
EXERCISE MM11: CREATE A GOODS RECEIPT
When the ordered goods are delivered, they must be
received not only physically but the data related tothat receipt must be entered into the system
Referencing the purchase order number brings in thepertinent data related to the materials that were
ordered and are being delivered The system can be set to automatically propose the
receipt quantities as the quantities that were ordered
This can be changed if receipt quantities differ from ordered
quantities
Flya Kite MM Transactions
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Flya Kite MM Transactions
EXERCISE MM12: CREATE AN INVOICE
RECEIPT
Vendors want to be paid for materials they have sentto the company so they send and invoice asking forthat payment
The invoice must be received by inputting thevarious data elements from the invoice into thesystem
The invoice receipt must link to the appropriatepurchase order so that the three way match can beaccomplished
Purchase Order = Goods Received = Invoice The actual payment of the invoice occurs in the FI
module at some time after the invoice verificationoccurs in MM