MM Cookbook - Process Flow

Determination of Requirements

The user department responsible is manually passing a requirement for materials to the
purchasing department via Purchase Requisition. Purchase requests are generated when
business runs the MRP and Request are also generated based in Consumption based planning
(CBP) for Production and Engg.Stores.

Determination of Source of Supply

The purchasing component helps the buyer determine the sources of supply. User use the
determination of the source of supply to create Requests for quotation (RFQs) and then to enter
quotations. User is accessing the existing Purchase Orders and Conditions in the System.

Vendor Selection and Comparison of Quotations

The System is capable of simulating pricing scenarios and simplifies the selection of vendors by
making price comparisons between the various quotations.

Purchase Order Processing

The purchasing system adopts information from purchase requisition and the quotation to help to
create Purchase Orders. They are also creating manual purchase order directly for stock, non-
stock items, services etc.

Purchase Order Monitoring

The buyer monitor the processing status of the purchase order online at any time and determine
whether goods or an invoice have been received for the relevant purchase order item.

Goods Receipt and Inventory Management

The Goods receiving requester confirms the receipt of the materials by simply entering the
Purchase Order Number. The system compares the goods receipt quantity with the purchase
order quantity. By specifying permissible tolerances, buyers can limit over deliveries and under
deliveries of ordered materials.

PURCHASING

Purchasing Functionality is integrated with Inventory Management and Invoice Verification

within MM.

MM Cookbook - Enterprise Structure

By Subhajeet Behera

Define valuation level

BACKGROUND

This configuration setting enables to define at which level the stock are to be valuated in SAP.

Stocks can be valuated at following two levels in SAP.

 Plant level
 Company code level

It is recommended to keep at plant level. This is a client level setting.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics - General  Define
valuation level

1. Click
 2. Select the radio button

3. Click Save

Define Plant

BACKGROUND

This configuration setting enables to define the plant. Each manufacturing facility or branch of a
company is defined as a plant in SAP.

Plant is assigned to the company code.

Storage locations are created under each plant.

If the valuation level is the plant, the stocks are valuated at plant level.

Note: - It is common practice to copy plan from the existing defined plant. It will be defined by the
FI.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics - General  Define
copy, delete, check plant

1. Click
 2. Click

3. Click

4. Click

5. Enter from plant as 0001 to copy from SAP defined plant

6. Enter To Plant – E.g. IND6

7. Click

8. Click to return to main menu.

Note: - Definition of plant and assignment of plant to the company codes along with relevant GL
accounts is done by the FI team. However the creation of plant is demonstrated.

Maintain plant details and Factory calendar in Plant

BACKGROUND
 When copying the plant, the entire details will be copied from the source plant. Address of the
plant and other details attached to the plant can be changed.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics - General  Define
copy, delete, check plant

1. Double click

2. Select plant IND6 by clicking the grey box in the left side

3. Click

4. Click

5. Maintain the entire address, contact details of the plant.

6. Factory calendar must be attached to the plant

Below screen shows the details of plant settings.

Define Location

BACKGROUND

This configuration setting enables to define the location. Location indicates where the materials
are stored inside the plant.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics - General  Define
Location

1. Click

2. Click
 3. Update required and optional fields:

Field Name Description Value

Plant Name of the plant e.g. IND6
Location Location identification E.g. PROD
Name Description of the location Production location
4. Click

Note: - Maintain the address of the location in the subsequent screen.

5. Enter title as Company

6. Enter country
 7. Click

Click .

Maintain Storage Location

BACKGROUND

This configuration setting enables to define the physical storage location. This will indicate where
the stocks are stored physically inside the plant.

Each item must have storage location. One material can be stored in many storage locations.

Storage locations can be assigned to the warehouse through warehouse management.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Definition  Materials

Management Maintain storage location

Click

Enter the plant where the storage location is to be created. E.g. IND6

Click

Click

Enter Storage location

Enter description of the storage location

Click
Select the storage location

Double Click

Enter the sequential number 1

Click

Select the sequence number

Click
Maintain the address.

Click

Click

Repeat the above to maintain the address for all storage locations.

Maintain Purchase organization

BACKGROUND

This configuration setting enables to define the purchase organization.

Purchase organization is the part of the enterprise structure from MM point of view. It represents
the responsibilities to

 Procure materials and services

 Negotiation with vendor

Purchase organization is assigned to the company codes and plants. Following are the
possibilities of assignments.

 One purchase organization to many company codes

 One purchase organization to one company code
 One purchase organization to one plant

Note: - It must be assigned to plant.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Definition  Materials

Management  Maintain purchase organization

1. Click

2. click

3. Update the following fields

Field Name Description

Purch.organization Key identifying the purchase organization. E.g.
IND6
Purch.org.descr. Description of the purchase organization. E.g.
For plant IND6
4. Click .

Assign Plant to company

BACKGROUND

This configuration setting enables to assign plant to the company code.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Assignment  Logistics –

General  Assign plant to company code

1. Click

2. Select the desired company code by clicking the cursor on it.

3. Click

4. Select the plant from the display

5. Click

6. Click .

Assign purchase organization to the company code

BACKGROUND

This configuration setting enables to assign the purchase organization to a company code.

INSTRUCTIONS

Follow the Menu Path: IMG  Enterprise structure  Assignment  Materials

Management  Assign purchase organization to company code

1. Click

2. Select the desired company code by clicking the cursor on it.

3. Click

4. Select the purchase organization

5. Click

6. Click

Assign purchase organization to plant

BACKGROUND

This configuration setting enables to assign the purchase organization to a plant.

INSTRUCTIONS
Follow the Menu Path: IMG  Enterprise structure  Assignment  Materials
Management  Assign purchase organization to plant

1. Click

2. Select the desired plant by clicking the cursor on it.

3. Click

4. Select the purchase organization

5. Click

6. Click

All right guys, not much about MM organization structure. Now we shall look into material master
related to configurations.

MM Cookbook - Vendor Creation

By Subhajeet Behera

Definition:-

Every vendor is identified with the code in SAP. It is called Vendor master record.

Vendor master record contains details of

 Address
 Payment terms
 Delivery terms
 Lead time to supply
 GL Account for reconciliation

Each vendor record will be created at company code and purchase organization level.

Normally vendor master contains the details of both accounts related and also purely purchasing
related, hence it is created in consultation with FI team.

Menu Path:-

Logistics  Materials Management  Purchasing  Master

Data  Vendor  Central  XK01 Create
Maintain Vendor code number, company code, Purchase organization and account group
Click

Maintain

Maintain

Note: - Click to enter more lines in the address

Maintain

Maintain

Click
Nothing specific to be maintained in this screen

Click
Maintain the payment related details.

Click
Maintain the reconciliation account. E.g. 160000

Note: - these entries maintained in consultation with accounts.

Click
Maintain more FI related information here.

Click
Dunning data are maintained here.

Click
Maintain order currency, terms of payment, Incoterms

Maintain schema group vendor – to determine the right pricing procedure.

Maintain the control data

Click
Click

Click

MM Cookbook - Create RFQ

By Subhajeet Behera

Definition:-

Purchase request is the requirement document created manually or through the MRP run.
Purchase request is further processed to create Purchase order document.

It is possible to create Request for Quotation purpose.

Let us create RFQ for a material.

Menu Path:-

Logistics  Materials Management  Purchasing  RFQ/Quotation  Request for

Quotation ME41 Create
Double Click ME41

Maintain the details as shown below

Click
Enter collective number. Collective number is like a tracking number in PR creation used to group
together and process the RFQ.

E.g. RM10 to indicate Raw Material requirement for 10th Month

Click

Click F7 key to maintain Vendor address

Maintain vendor as shown below

Click

Note: - Details will be copied from info record.

Click
Click to enter material number and quantity
Click

Click

Click

Message appear at the bottom

MM Cookbook - Maintain Quotation

By Subhajeet Behera

Definition:-

When the quote is received from the vendor, with reference to the request, quote can be
maintained.

Quotation is the reply from vendor for our enquiry regarding the price and quantity and supply
schedule confirmation.
Let us maintain the quotation for the RFQ 6000000007.

Prerequisite:-

Manual confirmation from vendor must be available

RFQ must be available

Menu Path:-

Logistics  Materials Management  Purchasing  RFQ/Quotation  Request for

Quotation ME47 Maintain

Double Click ME47

Maintain the details as shown below

Enter RFQ number

Click to maintain rate at item level details

Click to maintain condition record

Maintain discount and freight as shown below.

Click

Click

Enter the quotation validity period

Enter payment terms

Enter vendor quotation reference.

Maintain the details as shown below.

Click to confirm the condition at header level
Click

Click

Click
Click

Note: - To compare the price from various vendor, use transaction code ME49 – price
comparison

MM Cookbook - Create Info record

By Subhajeet Behera

Definition:-

Purchase info record is the kind of template with all the information required to create purchase
order. For each vendor, material and plant combination purchase info record can be created.

Info records are created for following types of transactions

 Standard PO
 Sub contracting
 Consignment
 Pipeline
When creating PO, most of the information will be copied from info record into PO.

Info record controls

 Validity period for each vendor

 Indicates vendor as preferred vendor
 Blocking vendor from raising PO
 Source relevancy to MRP
 Supplying plant incase of STO

Menu Path:-

Logistics  Materials Management  Purchasing  Master Data  Info Record  ME11

Create

Double Click ME11

Maintain Vendor code number

Maintain Material code number

Maintain purchasing organization

Maintain Plant

Select the radio button Standard

Click
Maintain the following fields according to the business needs

Field name Field description

Number of days after which a reminder is to be
sent to the vendor for supply.
Material number used by vendor.
Material group to which the vendor belongs to.
Used for volume and point based rebates.

Click
Maintain planned delivery time

Maintain purchasing group

Maintain standard quantity

Maintain net price

Click
Click
Note: - Text maintained in purchase order text will be copied into the PO.

Click
Condition type specific to this vendor and material can be maintained here. It will be copied into
the purchase order

Click

Message appear at the bottom

MM Cookbook - Maintain Source list

By Subhajeet Behera

Definition:-

Source list is used to find the vendor automatically during auto vendor assignment process. It is a
plant specific master data.

Through configuration, it can be made as mandatory or an optional.

Source list controls

 Validity period for each vendor

  Indicates vendor as preferred vendor
 Blocking vendor from raising PO
 Source relevancy to MRP
 Supplying plant incase of STO

Menu Path:-

Logistics  Materials Management  Purchasing  Master Data  Source List  ME01

Maintain

Double Click ME01

Maintain Material code number

Maintain Plant

Click

Maintain valid from date

Maintain Valid to date

Maintain vendor code

Maintain Purchase organization

Note: - field is used incase of STO. Supplying plant can be mentioned here.

Tick the check box to indicate the vendor as preferred vendor.

Note: - Only one vendor can be indicated as preferred vendor in the same validity period.

Check box is used to block the vendor

If this source is to be used by MRP, fill the column.

Following are the allowed entries

Click

Click

MM Cookbook - Create Purchase Request

By Subhajeet Behera

Definition:-

Purchase request is the requirement document created manually or through the MRP run.
Purchase request is further processed to create Purchase order document.

It is possible to create Request for Quotation purpose.

Let us create Purchase Request for a material.

Menu Path:-

Logistics  Materials Management  Purchasing  Purchase Requisition  ME51N Create

Double Click ME51N

Click to close enjoySAP portion of the screen

Click to open the window

Maintain the details at item level as shown below

Click

To view more details, click the item details tab screen one by one.

Click

Change or maintain the details as required by the business.

Click
Click

Click

Click

click
Note: - Maintain the required text here

Click

Click

Message appear at the bottom

MM Cookbook - Goods Receipt against PO

By Subhajeet Behera

Definition:-

There are three types of main material movements in SAP. They are

 Goods Receipt
 Good Issue
 Transfer Posting

Through MIGO transaction entire above three types of transactions can be performed. There are
many options with MIGO transaction code.

Goods receipt is the process of receiving materials in to the storage location.

Example receiving goods with reference to PO, customer returns, from production. When goods
are received, inventory will be increased and relevant other documents will be adjusted.
During the material movement, material document is generated for all movements. Relevant
accounting and controlling documents are also created for relevant movement types.

Menu Path:-

Logistics  Materials Management  Inventory management  Goods Movement  MIGO –

Goods Movement (MIGO)

Double Click MIGO

Maintain the entries as explained below

Ensure Goods receipt is selected in the left top box above the header

details .

To look at the other possible entries click . Other possible entries are

Ensure is selected to make GR with reference to purchase order.

Other possible entries are

Above two fields indicate the Process and reference document. I.e. Goods Receipt with reference
to Purchase Order.

Enter the purchase order number and serial number as shown below.

Note: - PO can be selected from the left side display. Left side display will show the past
purchase orders used. To select from left side display, double click on the required PO.

Click

Note: - as soon as pressing the key display of purchase order in the above box where we
mentioned the PO will disappear.

Maintain the delivery note details

Click the tab screens one by one in the detail data area

Click

Click

Maintain the received quantity

Click to maintain the storage location where it is to be received

Note:- If the material is batch managed, batch number has to be entered.

Click

Click

Click at the bottom

Click at the top to verify the data correctness

Message will appear at the bottom.

Note: -If any warning or information message appeared, click to proceed.

Click

Message appear at the bottom.

Note:-

If the item is batch managed and the items under one delivery note with different batches are
received, quantity can be split into according to the batch size by pressing

Screen will appear as below

If the item is batch managed, batch column will also appear.

Click after completing the entry.

MM Cookbook - Create Contract

By Subhajeet Behera

Contract is an agreement between the vendor and the company to supply goods and services as
per the agreed terms and condition.

At the time of negotiating, it may not be clear as of how much is required and when it is required.
In such a situation, an open contract can be released on the vendor.

Every contract must be followed by a release order which is nothing but a normal PO with
reference to the contract.

Contracts can be release centrally or with specific to plant. In case of multiple plants, central
contract can be released and release order specific to each plants can be released.
Menu Path:-

Logistics  Materials Management  Purchasing  Outline Agreement  Contract  ME31K

– Create

Double Click ME31K

Enter vendor number. E.g. IND6-1

Enter document type. Possible entries are

e.g select MK.

Click

Enter Purchase organization, purchasing group and storage location.

Click

Maintain the entries as shown below.

Click

Enter material code and target quantity. E.g. STJRM001 and 10000 respectively
Select the item

Click to maintain the pricing conditions

Note:- Condition which are already maintained in the info record only appear here. If required add
discount condition type manually.

Double click on item serial number to enter item detail tax

Click

Message will appear at the bottom

MM Cookbook - Create Scheduling Agreement

By Subhajeet Behera

Definition:-

Purchase order is an agreement between the vendor and a company to supply the goods at an
agreed rate and at an agreed duration of interval.

Purchase order is a legal document between a vendor and a company. It covers the payment
terms and terms of delivery also.

Scheduling agreement is one of the purchase order types. It defines the agreement between
vendor and the company similar to the PO. For every scheduling agreement, delivery schedule is
a must to indicate the supply schedule.

If scheduling agreement exist, MRP can automatically create the delivery schedule.

Let us create the scheduling agreement with vendor IND6-1 for material STJRM001.

Menu Path:-
Logistics  Materials Management  Purchasing  Outline Agreement  Scheduling
Agreement  Create  ME31L – Vendor Known

Double Click ME31L

Maintain the entries as shown below

Click

Maintain the entries as shown below.

Click to maintain the item details

Maintain the entries as shown below

Click

Select the row by clicking the grey box in the left

Click to check the conditions

Note: - Scheduling agreement is used where the rate is fixed over the period of time without any
changes.

Click

Message would appear at the

bottom