Material Management

Present by :-
Content
• Introduction
• Why Material Management ???
• Process Flow
• Material Management Integration
• Material Management Component
• Benefits of Material Management
• Implementation Challenges
• Q&A
• Thank you !!!
• Appendix A - MM Definition
• Appendix B – Material Type
• Appendix C – MM Terms & Definition
• Appendix D – Important MM Tables
Introduction
SAP MM Module is one of the most important SAP Modules where MM
stands for Materials Management - underpins the supply chain,
including

 Requisitions
 Purchase orders
 Goods receipts
 Accounts payable
 Inventory management
 BOM’s
 Master raw materials, finished goods etc
Why Need MM ???
 amount spend on material is higher
than other inputs

 material offer considerable scope for

reducing cost and improving profit

 material add value to the product

 quality of end product depend on

material

 efficiency of any organization depend

upon the availability of right material, in
right quantity at right time and at right
place.
Process Flow

orders
Purchasing Finish
C
Goods
S U
Storage
U Raw D S
R T
P Material I
E O
P Storage S
C M
I T
I E
E R
V Transformation R
R I
I Processes
S B
N
G T
N
In Process
Storage
MM Integration
SD Sales & Distribution

PP Production Planning

QM Quality Management

MM PM Production Managemen

FI Financial Accounting

AM Asset Management
Material Management
CO Controls

PS Project System
Material Management Component
 Consumption based planning (MM-CBP)

 Purchasing (MM-PUR)

 External Service Management (MM- SRV)

 Inventory Management (MM-IM)

 Logistic Invoice Verification (MM - IV)

 Vendor Evaluation Management

Consumption based planning
CBP is based on the past consumption values and uses the forecast or
other statistical procedure to determine future requirements. It gets
trigger when stock level falls below pre-defined reorder points.

Procedure available for MRP :-

 Reorder point procedure

 Forecast based planning

 Time-phased materials planning

Purchasing
Purchasing is a component of Material
Management.

Task of Purchasing as following :-

 External procurement of material &
services
 Determination of possible source of
supply
 Monitoring deliveries from and payment
to vendors.

Integration with :- SD, FI & CO

External Service Management
SRV is a MM component. It supports the
complete cycle of bid invitation, award /
order placement & acceptance of
services.

Task of Purchasing as following :-

 External procurement of material &
services
 Determination of possible source of
supply
 Monitoring deliveries from and
payment to vendors.

Integration with :- PM & PS

Inventory Management

Task of SAP-IM as following :-

 Management of material stocks on a
quantity and value basis

 Planning, entry and documentation of all

goods movement

 Carrying out the physical inventory

Integration with :- SD, PP, QM & PM

Logistic Invoice Verification :-
It is a component of MM. It is in the logistic
invoice verification that incoming invoice are
verified in terms of content, price and
arithmetic.

Task of SAP-IV-LIV as following :-

 It completes material procurement process,
which start with purchase requisition & result in
goods receipts.
 It allows invoices, that do not generate in
material procurement like expenses to be
processed.
It allows credit memo to be processed.

Integration with :- FI & CO

Vendor Evaluation :-
The Vendor Evaluation component supports
you in optimizing your procurement processes
in the case of both materials and services .
Task of SAP-IV-LIV as following :-
 Helps you to select source of supply &
monitoring of existing supply relationships
 Vendor reliability

Criteria :- Price / Quantity / Delivery /

General Service Support

Integration with :- QM & MM

Benefits of MM
 Material cost can be lowered
down
 Controlling of indirect cost
 Risk of Inventory loss
minimized
 Reduction in loss of time of
direct labor
 Control of manufacturing cycle
 Material congestion in storage
places avoided
 Improvement in delivery of the
product
Implementation Challenges
Difficulty in
Optimizing forecast
time and accurate
quality for demand
product

Selection Management
of of
appropriate information
vendors
Q&A

I hate
it.
Thank you !!!
Appendix I – MM Definition
• “Material management is the grouping of management functions
supporting the complete cycle of material flow, from the purchase and
the internal control of production material to the planning and control of
work in process to the warehouse shipping and distribution of the
finished product”. – Thomas f Wallance.

• “Material management is the management of the flow of materials

into an organization to the point, where those material are converted
into firm's end products”.
Appendix II Material Type
 DIEN ---- Services
 FERT ---- Finished Product
 FHMI ---- Production Resources / tools
 HALB ---- Semi finished Products
 HAWA ---- Trading Tools
 HIBE ---- Operating Supplies
 NLAG ---- Non-stock material
 ROH ---- Row Material
 UNBH ---- Non Valuated Material
 VERP ---- Packaging material
 WETT ---- Competitive product

http://www.sap-img.com/materials/sap-mm-configuration-tips.htm
Appendix III – MM Terms Definition
• Material Master Record
Data record contain all the basic information required to manage a
material.
• Material Requirement Planning
Term for requirement planning that take into account and plan every
future requirement during the creation of order proposal.
• Plant
An organization unit for dividing enterprise according to production,
procurement, maintenance & material planning.
• Storage Location
Warehouse Stock Location
• Vendor Master
Contains details about all the vendors within a company.
• Goods Receipts
Term for inventory management denoting a physical inward movement
of goods or material.
Appendix III – MM Terms Definition
• Material Group
Grouping of material and services according to their characteristics.
• Material Master Record
Data contains all the basic information required to manage a material.
• Release Strategy
Plan define the release code with which a purchase requisition item, a
complete purchase requisition or a complete external purchasing
document must be release.
Appendix IV – MM Tables
EINA Purchasing info record – general data

EINE Purchasing info/organization record

MAKT Material description
MARA General material data
MARC Plant data for material
MARD Storage location data for material
MAST Material to BOM link
MBEW Material consumption
RKPF Document header
T156 Movement type
T024 Purchasing group