SAP Materials Management overview for SAP Technical

A Facilitation Guide

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Table of contents
Procurement cycle ................................................................................................................................................................ 3
Stock Management ............................................................................................................................................................. 11
Special procurement........................................................................................................................................................... 12
Subcontracting ................................................................................................................................................................ 13
Consignment.................................................................................................................................................................... 15
Stock transport order...................................................................................................................................................... 19
Physical inventory .............................................................................................................................................................. 25

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Procurement cycle
Materials Management deals with the procurement cycle. The various stages of procurement is described below.

1. Requirement determination: A department shows up a requirement of a particular material. It can also be

determined automatically (via MRP or APO). Typically a purchasing requisition is created for this purpose. This
can be viewed in EBAN table.
2. Source determination: The system can identify the source of supply automatically or it can also be done manually.
A source can be another plant, quotation, contract, quota arrangement, source list etc.
3. Vendor selection: Using appropriate techniques, a vendor is identified (either manually or automatically).
4. Order processing: A purchase order is created against the purchase requisition. This is an external document and
is sent to the vendor. It is possible to have multiple levels of approval via release strategy (not covered in this
document).
5. Purchase order monitoring: The vendor might send a confirmation for the receipt of the purchase order, or that
they have sent the material (ASN Advance shipping notification). This information can also be stored in the
purchase order.
6. Goods Receipt: When the truck arrives at the gate, a goods receipt is posted. Upon goods receipt, the inventory
increases. In SAP accounting terms, the stock account is debited and the GR/IR clearing account is credited.

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7. Invoice verification: The vendor sends an invoice (a bill) of the materials they have sent. This is compared with
what has been ordered (in the PO) and what has been received (GR document). The invoice is posted; the GR/IR
account is debited and the vendor account is credited
8. Payment: This is an FI process. The vendor is paid according to the balance of the vendor account. The payment
can be via cheque, or direct credit to bank [depends on certain FI settings]

Lets assume the material AD_BBOOT_RS31504 is required in the plant MONT. This plant belongs to company code
AS01 (assignment in table T001K)
Requirement:
Txn ME51N is used to create a purchase requisition

Purchase Requisition 10000155 created. This can be viewed using txn ME53N. This purchase requisition can be seen in
table EBAN.
Going with the story, the company has identified two vendors STAPLES and SKATERS who can supply the above
material. RFQs (request for quotation) are created and sent to the two vendors.
These are created using txn ME41N with reference no. BOOT and the RFQ is sent to vendors STAPLES and SKATERS.

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RFQs 6000000015 and 6000000016 are created. These can be viewed in table EKKO (header) and EKPO (item)
A list of RFQs for a material can be viewed using txn ME4M.

The vendors have quoted their prices. These prices can be entered into the two RFQs. Lets assume STAPLES has
quoted $ 3.00 / pc and SKATERS has quoted $ 2.80 / pc. The prices can be maintained using txn ME47.

It is possible to perform price comparison of the two vendors using ME49 with collective no. BOOT. This collective number
has been entered while creating the RFQs.

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The system has ranked SKATERS as 1, since it has a lower price.

It is possible to create a contract with reference to the above quotation.
Creating a contract with reference to the quotation using ME31K

Quantity contract 4600000006 created. This can be viewed using ME33K. This is present in table EKKO / EKPO
We are manually assigning the purchase requisition to a quotation using ME57N

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The PReq is assigned to the contract as in the screenshot above.

Creating a purchase order from the purchase requisition 10000155 using ME58

The purchase order can also be created using ME21N. Go to document overview -> My Purchase Requisitions

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PO 4500000202 created. The PO can be viewed using ME23N or in tables EKKO (header) and EKPO (line items).
Check the status of Purchase Requisition using ME53N. At the item level, the status says that PO has been created.

Goods Receipt
In SAP, all material movements are reflected in terms of material documents [table MKPF (header) / MSEG (line items)].
Upon GR, the stock levels rise, and hence a material document is created.
A GR of the material against PO 4500000202 is performed via txn MIGO [Goods Receipt Purchase Order]. A 101
movement type is picked up automatically.
The storage location would have to be specified if not done already in the PO.

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Upon posting, material document 5000000101 is created.

The FI documents show that
a) Inventory account is debited
b) GR/IR clearing account is credited
The value is 2800 USD (as negotiated with the vendor - $ 2.80 x 1000)
Since the price control for the material is V (moving average price), the price difference account is not hit.

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Invoice verification
Invoice verification is performed using txn MIRO.

PO amount

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Reference PO
Upon saving, an invoice document 1000102 / 2008 is created. It can be displayed using txn MIR4
This document can also be viewed in table RBKP (header) / RSEG (item)
Vendor payment
This is an FI process. The vendor is paid using an appropriate process (not covered in this document)

Stock Management
You can view current stocks in the plant / storage location using txn MMBE
The current stock of our material AD_BBOOT_RS31504 has increased by 1000 pc because of the GR from vendor.

Managing various stock types

There are 3 types of stocks:
Unrestricted stock
Quality inspection stock
Blocked stock
This takes place via transfer posting using certain movement types: Eg
344 Unrestricted to blocked stock
343 Blocked to unrestricted
Below is an example of using transfer posting to put some stock to blocked via 344 movement. Use txn MIGO and select
Transfer Posting Other. Change the movement type to 344

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Material document 4900000104 got created. This can be seen via MIGO (display material document) or via txn MB03.
The system shows that 100 PC have moved into blocked status

Special procurement

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Subcontracting
This is a special procurement scenario. In this case, the components (the raw materials) are provided by the company to
a vendor (known as the subcontracting vendor). This vendor manufactures the product and the company pays a service
charge to the vendor.
The steps are as follows
a) Creation of a subcontracting PO (with item category L)
b) Provision of components to the vendor
c) GR of the finished product
d) Invoice verification for the invoice sent by vendor
The ownership of the components remains with the company, and not with the vendor.
Lets assume that the finished product AD_BBOOT_FSJJJ1 is to be procured from the subcontracting vendor NATIONAL,
by issuing components BEARINGS and ECCROH13. This structure is known as a BOM (bill of materials) and can be
viewed using txn CS03.
The PO 4500000203 is created

Txn MBLB shows what stocks are available with the subcontractor

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Txn ME2O will show the requirements, and goods are issued to vendor.

.
As per the BOM, 2 PC of BEARINGS and 3 PC of
ECCROH13 are required for creation of 1 PC of material
AD_BBOOT_FSJJJ1. Since 100 PC of the finished product
has been ordered, it translates to requirements of 200 PC
and 300 PC respectively of the two materials.

This requirement is fulfilled by performing issue of the

components via txn ME2O. Movement 541 is done for
goods issue to subcontractor

When the vendor sends the finished product, a GR is performed using MIGO.
Material document 5000000102 created for GR. It contains 101 movement of the main material and 543 O for the two
components. The O signifies subcontracting stock (special stock).
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The vendor can later send an invoice which can be entered via MIRO (as a normal invoice)

Consignment
In a consignment scenario, the vendor sends goods to the premises of the company, but the ownership remains with the
vendor. A vendor liability is created only after the goods have been used (goods issued or transferred into own stock)
The steps for consignment are:
a) Creation of consignment PO (with item category K)
b) GR against the consignment PO company is not liable to pay to the vendor yet. No accounting documents
created
c) Goods issue to a cost center or transfer to own stock. Accounting documents are created, vendor account is
credited.
d) The liabilities are cleared via txn MRKO.
Creation of purchase order

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Step 2: GR from the consignment vendor using MIGO (Goods receipt Purchase Order)

Material document 5000000103 is created

The vendor consignment stock rises (as viewed using txn MMBE)

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Issue consignment goods to own stock with movement 411 K. use txn MIGO Transfer Posting other

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Material document 4900000108 posted.

The stock levels show that 100 PC has been added to our inventory / vendor consignment stock has reduced

The vendor liabilities can be settled using txn MRKO

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Since 100 PC have been issued, the company is liable to pay 100 x 1.2 MXP to the vendor. The price comes from
consignment info record ME13.

Stock transport order

This happens when goods are moved from one plant to another. There are two ways of doing this
With shipping Here a delivery is created, and goods are managed with a delivery
Without shipping A transfer posting takes place. Delivery comes into picture.
This document will show STO both with and without shipping
STO with shipping:
Lets assume 10 pc of material E_PAD_99 is to be moved from plant MEXT to MONT. The steps are as follows
a) Creation of an STO purchase order with type UB by the receiving plant
b) Creation of delivery against the STO using txn VL10B
c) Picking and goods issue of the delivery
d) Goods receipt in case of two step movements, and no GR in case of one step movement (since it happens in the
previous step)
Step a: Creation of STO (using txn ME21N)

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Document type is UB
Supplying plant MEXT and receiving plant MONT
STO # 4500000205 is created
Step b: Creation of delivery against STO (txn VL10B)

Create by clicking on Background

Delivery 80000092 is created against the STO. This can be viewed in the PO history tab at the item level

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Delivery picking
This is done by entering the picked quantity txn VL02N

Click on post goods issue to perform goods issue

Material document 4900000109 created for goods issue and receipt. It can be viewed using ME23N / PO history.

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STO without SD
In this case, the steps are
a) Creation of STO by the receiving plant
b) Transfer posting to stock in transit by the supplying plant
c) GR by receiving plant
Lets assume the material E_PAD_99 is to be transferred from plant MONT to plant MEXT via STO
Step a: STO 4500000206 created using ME21N.
Step b: Transfer posting using txn MIGO (Goods Issue Purchase order)

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Upon posting, material document 4900000110 is created.

Step c: GR against PO (using txn MIGO Goods Receipt Purchase Order) using movement type 101

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Upon posting, material document 5000000104 created.

Both these movements can be viewed in the PO history (table EKBE)

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Physical inventory
Physical inventory involves physical counting of materials.
These are the steps of physical inventory
a) Creation of a physical inventory document
b) Actual counting of materials in the plant / warehouse
c) Entering count
d) Clearing differences
Lets assume two materials AD_BBOOTS_RS345VB and AD_BBOOTS_RS345VM are being counted in plant MONT /
storage location MAIN.
Current stocks are (as per MMBE)

AD_BBOOTS_RS345VB: 300 pc
AD_BBOOTS_RS345VM: 0 pc

Step a: Creation of PI document using txn MI01

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Upon saving PI document 1000102 / 2008 created. This can be viewed using txn MI03 and in table IKPF (header) and
ISEG (items)
Step c: Once physical counting is complete, the counts are entered using txn MI04. Lets assume 295 pc of
AD_BBOOTS_RS345VB was found (5 less than the book quantity) and 10 pc of AD_BBOOTS_RS345VM was found (10
more than the book quantity).

Upon saving the count is entered. These counted values can be displayed using txn MI06 / changed using txn MI05
Step d: Posting differences against the PI document
Since there is a loss / gain of materials due to physical inventory, there will be an accounting impact. This difference
needs to be reflected both in the inventory levels (via material documents) and the accounting levels (via FI documents)
Posting differences creates material as well as FI documents.
Use txn MI07 to post differences.

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Upon saving, material document 4900000111 created.

Reduction in inventory of 5 pc via 702 movement

Increase in inventory of 10 pc via 701 movement

Appendix:
MM on SAP help:
http://help.sap.com/saphelp_erp60_sp/helpdata/en/9c/df293581dc1f79e10000009b38f889/frameset.htm
List of MM tables: http://www.sap123.com/showthread.php?t=1

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