This article gives readers a glimpse of the complete capabilities of SAP Material Management (SAP MM), starting with the fundamentals like Goods Receiving, Stock Replenishment, and Inventory Management and progressing to more complex subjects like Vendor Evaluation, Quality Management, and Warehouse Management.
Whether you are a complete beginner to SAP MM or a seasoned pro, you will find helpful information in this post that can enhance your performance, engagement, and productivity in every area.
You can also take a Sap MM Course to learn more about SAP Material Management and how their team of senior-level SAP consultants can help your business. Please keep reading.
What SAP MM is?
Organisations can benefit from SAP MM (Material Management), a module that helps with material management, procurement processing, and inventory management. To make sure the correct products are on hand when needed, it simplifies the procurement process and covers everything from inventory to payment, including receiving and verifying final invoices.
Features Accessed using SAP MM:
When it comes to inventory management, SAP MM is crucial for tasks like
- Making sure the appropriate items are on hand when and where needed
- Keeping stock levels high by reducing discrepancies between predicted and actual product quantities and outcomes
- Effective and cost-effective resource and supply chain management
- Monitor material, warehouse, storage, and consumption-based planning procedures.
- Use extensive applications to verify invoices, track physical inventory, manage services, and value commodities.
Exclusive Sourcing:
Products that are considered special are treated differently because they do not belong to the company. There is a designated spot for storing specific inventory. The following categories are used to classify special procurement and special stock types:
Inventory on Consignment:
The fabric that is available for purchase at any store is considered consignment stock because it is still technically the property of the seller. The vendor must be paid if the fabric is used from consignment inventories.
Processing by third parties:
A business uses third-party processing when it sends a purchase order to an outside vendor, who then ships the goods to the buyer. The vendor, and not the corporate office, is responsible for fulfilling the purchase order. Purchasing requisitions, purchase orders, and sales orders sometimes include items from third parties.
Handling Pipelines:
The company doesn’t have to buy or keep the fabric on hand for pipeline handling. it can be accessed whenever needed through a pipeline (like water or oil) or another type of cable (like power). Every day, the buyer and seller settle over the fabric that has been consumed.
Stock for Returnable Transportation:
The business places an order with a seller. Items are sent in reusable shipping containers or pallets that are owned by the vendor; once the buyer takes possession of them, they are kept at their location until they send them back to the company.
SAP Guidelines for Implementation:
Clients often receive SAP on a CD in the form of software. The initial configuration of SAP should be by the needs of the client, or organisation, as it is its usual setup.
With the help of an implementation guide, or IMG, SAP configuration is finished. It is common practice to modify the structure of a corporation’s forms by adding fields, changing their titles, rearranging dropdown lists, etc. If an organisation wants SAP to work according to their needs, they need to define the enterprise structure and other parameters in IMG.
SAP MM Configuration:
According to the Sap MM Course here discuss SAP MM configuration:
Level of Valuation Defined (OX14)
The Menu Path:
Navigate to the following sections: Enterprise Structure, Definition, Logistics General, and Define Valuation Level in the Implementation Guide for R/3 Customising (IMG).
Detailed Configuration Description:
The valuation level of material stocks is defined here. Because Production Planning (PP) and Costing are application components, they have utilised the Plant level.
For every plant or firm code in the material master record, accounting data (namely the valuation price) is kept according to the selected valuation level.
When material stocks are valued at the company code level, a joint stock account is maintained for each company code to manage all plant stockpiles of that material.
If the material stocks are valued at the plant level, then separate accounts can be used for each plant’s material stocks. Every plant can have its own unique account decision.
Plant Defined by SPRO
The Menu Path
Navigate to Enterprise Structure, then Definition, then Logistics General, and finally Define, copy, remove, and check plant in the Implementation Guide for R/3 Customising (IMG).
Detailed Configuration Description:
The Logistics Organisational Structure includes the SAP definition of Plants. “Plant” can refer to a specific location, department, or division within an organisation. A unique ‘company code’ is given to every ‘plant’. Multiple “Plants” can be part of a single “company code.” As an example, each “company code” at ITZ Pvt. Ltd. corresponds to one of the several Plants.
This is the setup of a single plant; the MM KDS document has a complete inventory.
OX09 – Keep the Current Storage Site
The Menu Path
Proceed to the following sections of the R/3 Customising Implementation Guide (IMG): Enterprise Structure, Definition, Materials Management, and Maintain Storage Location.
Detailed Configuration Description:
Wherever inventory is physically housed within a facility is known as a storage site. Within a plant, you might find a storage area or maybe more than one.
The following characteristics characterise a storage location:
- Every place of storage has an address and a description.
- Material data that is location-specific can be stored.
- At the level of individual storage locations, stock management is based solely on quantity, not value.
- Storage locations are the level at which physical inventories are conducted.
This diagram shows the configuration of storage locations within a single plant; the MM KDS document has a complete list of all of these locations.
SPRO – Keep track of purchases
The Menu Path
Using the R/3 Customising Implementation Guide (IMG), navigate to the Enterprise Structure section, then define materials management, and finally, maintain the purchasing organisation.
Detailed Configuration Description:
They set up the Purchasing Organisation at this node. Next to the organisational unit “client,” the purchasing organisation is the most aggregative level for purchasing statistics.
SPRO – Make Plant Code a Company Prefix
The Menu Path
Using the R/3 Customising Implementation Guide (IMG), navigate to the Enterprise Structure, then to Assignment, then to Logistics General, and finally, to Assign Plant to Company Code.
Detailed Configuration Description:
The relationship between a Plant and a Company Code is always one-to-one; that is, a Plant can only have one Company Code given to it. Not all plants can be displayed here; please refer to the MM KDS document for a comprehensive list.
SPRO – Assign purchasing organization to company code
The Menu Path
Navigate to Enterprise Structure, then Assignment, Logistics General, and finally, Assign purchasing organisation to company code in the Implementation Guide for R/3 Customising (IMG).
Detailed Configuration Description:
Here they associate the purchasing organisation with the business code it uses. Because ITZ is a central purchasing organisation, it is not social impact with a specific company code.
“SPRO – Assign purchasing organisation to Plant”
The Menu Path
Enterprise Structure Assignment Logistics general Assign purchasing organisation to plant
Detailed Configuration Description:
This stage involves assigning purchasing organisations to the factories that are under their purview.
For ITZ, they have already assigned the Purchasing Organisation to all of the defined plants since they operate with the Centralised Purchasing Org.
SPRO – Delegate plant purchase to a standard organisation
The Menu Path
In the R/3 Customising Implementation Guide (IMG), go to Enterprise Structure, then Assignment, Logistics General, and finally, assign the standard purchasing organisation to the plant.
Detailed Configuration Description:
For “pipeline procurement,” “consignment,” and “stock transfers,” one of many purchasing groups may be considered the standard for a certain plant.
This standard purchasing organisation is automatically used by the system for source determination in stock transfers and consignments. When problems arise with pipeline materials commodities, the records of the standard purchasing organization’s purchasing department are reviewed.
Since they are just working with one purchasing organisation in ITZ, they have not yet established this setting.
OMS9 – Keep Data Screen Field Selection Up to Date
The Menu Path:
Field Selection Maintain Field Selection for Data Screens is located in the Implementation Guide for R/3 Customising (IMG) under Logistics – General, Material Master, and Field Selection.
Detailed Configuration Description:
Here, they specify how a Field from a specific Field Selection Group is related to a Material Type’s Screen Reference. The procedures comprise:
Choosing the field selection category.
For every field reference, choose the appropriate field selection option (hidden, display, or optional entry).
OMSY-Keep the Company’s Materials Management Codes Up-to-Date
The Menu Path:
Navigate to Logistics – General, then Material Master, then Basic Settings, and finally, Maintain Company Codes for Materials Management in the Implementation Guide for R/3 Customising (IMG).
Detailed Configuration Description:
The purpose of this action is to establish the beginning posting period and make the Company Code applicable to Materials Management. To make a Material Master, this must be done.
OMS2 – Material Type Attributes Definition
The Menu Path:
Using the R/3 Customising Implementation Guide (IMG), navigate to Logistics – General, then Material Master, then Basic Settings, then Material Types, and finally, Define Attributes of Material Types.
Detailed Configuration Description
Like a material master’s family, a material type governs all the material’s important attributes through its settings. It specifically regulates:
- Pattern and type of the number range (external/internal.
- Fields in the material master can be hidden or made optional.
- G/L Derivation via Valuation Control at the Level of Valuation Areas
- Production and Purchase Control
MMNR – Establish Quantity Ranges for All Materials
The Menu Path:
Within the R/3 Customising Implementation Guide (IMG), navigate to Logistics – General, then Material Master. From there, go to Basic Settings, then Material Types. Finally, specify the number ranges for each material type.
Detailed Configuration Description
They have established the range intervals and kind of number assignment for material master records in this stage. A unique number must be assigned to each material master record when it is created by the system. You can accomplish this in two ways:
Number assignment inside the organisation Here, the SAP system will assign a number that falls inside the permitted range.
Allocating numbers externally Here, the user is asked to assign a number that falls inside the specified period. The intervals for assigning numbers from the outside can be defined both numerically and alphabetically.
The intervals for numbers belonging to so-called groups have been determined. Each category gets one or more materials.
They can specify the internal and external number range intervals for a single material type when they assign it to a group.
It is also possible to establish an internal and an exterior number range interval when multiple material types are grouped. This makes it possible for different kinds of materials to share the same number of range intervals.
OMSF-Classify Materials
The Menu Path:
Navigate to Logistics – General in the Implementation Guide for R/3 Customising (IMG). Then, go to Material Master. Scroll down to Settings for Key Fields. Finally, define material groups.
Detailed Configuration Description
Here they outline the Materials and Services Groups. These Groupings will be defined with the company’s reporting needs in mind so that they can analyse things like purchases, consumption, stocks, and more.
The screenshot only shows a small subset of the entries; for the full set, see the MM KDS page or the real system node. The setting is merely a table entry.
SPRO-Delineate Groups of External Materials
The Menu Path:
Logistics – General → Material Master → Settings for Key Fields → Define External Material Group in the Implementation Guide for R/3 Customising (IMG).
Detailed Configuration Description
The Groups are defined here to provide an additional key for filtering and ordering the materials list based on criteria other than material grouping. Regarding ITZ, they have refrained from utilising External Material Groups.
Conclusion:
Optimising procurement and inventories require SAP MM configuration. Organisational structures, master data, procurement cycles, and SAP module integration are involved. Material master data, vendor master data, purchase info records, and document kinds are crucial. Pricing, release, and inventory management must be understood. SAP MM course gives in-depth information and practical skills for successful configuration, assuring efficient SAP materials management.
