Material Management Concept:
Material Management is one of the important module in SAP. These module supports the Procurement and Inventory Function occurring in day to day business operations.This module contains many aspects such as Purchasing, Good Receiving, Material Storage, Consumption based Planning and Inventory MM Module is tightly integrated with other modules of SAP R/3 like Financial Accounting, Controlling, Sales and Distribution, Quality Management, Plant Maintenance, Production Planning and Warehouse Management It supports all phases of Material Mgmt like Material Planning and Control, Purchasing, Good Receiving, Inventory Mgmt and Invoice verification.
MM-FI Integration :
Purchasing Organization:
It is an MM Org unit, used to categories inventory transactions according to its nature.
Multiple Plants can be assigned to one Purchasing Org.
Plant:
It is a physical location where the Production Activity and Procurement transactions are performed. In SAP Plant can be Production Unit, Sales Office or a Corporate Office.
Note: All Inventory transactions must be Posted at Plant Level
Automatic Posting of Inventory Valuation Transactions in Fin. Accounting depends on Assignment of Company Code to Plant This Assignment can be 1 : 1 or 1 : N ratio (Company Code Vs Plant)
Note: One Plant Cannot be Assigned to Multiple Company Codes
Storage Location:
The Place where the Stock are kept. These Locations are maintained under Plant
Importance Parameters of MM – FI Integration are
Company Code and Plant Assignment
Valuation Level
Moment Type
Material Master
Transaction Keys or Event Keys
Valuation Sting
Valuation Grouping Code or Valuation Modifier
Account Modifier or General Modifier
Valuation Class
Posting Keys
Sub Module of MM
Material Planning
Purchasing
Inventory Mgmt
Vendor Valuation
Invoice Verification
Statutory Requirement
Procurement To Payment ( P To P Cycle )
All Inventory Managed transaction are posted from MM Module and due to Integration settings, the valuation will hit Financial Accounting in the form of Journal Entries
Purchase Requisition
Purchase Order
Goods Received → Inventory A/c Dr To GR/IR Clearing A/c
Invoice Receipt → GR/IR Clearing A/c Dr To Vendor A/c
Outgoing Payment → Vendor A/c Dr To Cash / Bank A/c
List of Movement Type
101 - Good Received with Reference to Purchase Order
102 - Reversal of Movement Type 101 (Cancellation of Good Received)
122 - Return Delivery of the Supplier
201 - Goods Issued to Cost Center for Consumption
241 - Goods Issued to the Assets
261 - Goods Issued Against Production Order
309 - Transfer of Posting from Material to Material
311 - Transfer Posting from Storage Location to another Location
545 - Receipt of Product from Sub-Contractor
554 - Scrapping of Goods
561 - Initial Entry of Stock Balances (Opening Stock)
601 - Goods Issued for Delivery
651 - Good Return from Customer
701 - Inventory Differences Unrestricted Stock
Note: Based on Movement Type system will control the transaction keys. Inventory GL Accounts are maintained
against transaction keys
Material Types:
It is used to classify the materials based on material nature and attributes
The Material Master must be created with ref. to material type
Each Material Type Control
No. Range of Material Master (Internal/External)
Field Status of Material Master, Views, and Screens Settings
It Controls Controlling and Accounting information
List of Material Types:
ROH - Raw Material
FERT - Finished Goods
VERP - Packing Material
ERSA - Spare Parts
DIEN - Services
HALB - Semi Finished Goods
PIPE - Pipe Line Products
HAWA - Traded Goods
Note: Against Material Type, we must maintain quantity update and value update (Material Type Attribute) for each Plant and Valuation Area. On setting of this indicator system will updates all quantity movements and value of material in a Material Master
Material Master:
It is Important Logistic Master Data and consists of all the imp or Key Properties relevant to other modules. It is maintained with multiple views relevant to MM, SD, PP, PM, WH, FI and CO .It indicates Material Master is central component used for Integration between all others module
Plant Or Valuation Area:
Plant is Logistic Org unit which is used to track or maintain all inventory transactions.
All the stocks or Material Master must be maintained at Plant Level Each Plant must be assigned to a Company Code
Valuation Area:
Material can be valuated at Plant Level or at Company Code Level.The Level at which the Materials are valuated into Financial Accounting is called as Valuation Area or Valuation Level
Valuation Level at Company Code:
The Material Price must be equal across all the Plants of a Company Code
Valuation At Plant Level
Material Prices are maintained at Plant Level and Price can be differentiated
It is advisable to maintain material valuation at Plant Level
Price Indicators:
The Price indicators of Material Master Place a vital/imp Role in Material Valuation
Below are Price Indicator available for Valuate inventory
S- Standard Price
V- Moving Average Price
Standard Price:
The nature of material prices which are Fixed or not Fluctuated frequently are managed with Price indicator ‘S’ and also the in-house manufacturing materials for which the Price is under control also managed with Standard Price
The standard price is maintained in material master. All the material/goods movements must be evaluated with the standard price maintained in material master. Any price difference will be posted to Price Difference Account
The Production Department produced 10 more quantity at 12/- Actual Cost. The material is valuated at Rs.10/- and difference of Rs.2/- will be posted to Price difference account or Production
Variance Account
List of Transaction Keys:-
Moving Average Price:
This indicator is maintained for materials for the Prices which are much fluctuated and not under the control of Organization.
Ex: - External Procured Materials, Services, Traded goods.
System will always calculate a New Price at each Goods Movement
Transaction Keys:
The inventory GL A/c are mapped to Transactions Keys with the Combination of Chart of Acc (COA), Valuation Grouping Code, Valuation Modifier or Account Modifier and Valuation Class
Based on the Valuation Sting of the movement type system will automatically hit the respective transaction keys.This code is used to maintain same GL Accounts across all the Plants or to differentiate inventory GL Accounts at Plant Level .
The Valuation grouping code maintained with above combination COA, Plant, CoCd Valuation Grouping Code.
The Valuation Grouping Code maintained with above combination COA, Plant, CoCd, Val Grouping code
Valuation Modifier or Account Modifier:
This Valuation modifier or Account Modifier are used to differentiate Offsetting inventory GL Account.
These modifiers are used along with Transaction Keys like GBB – (Offsetting Inventory Account) and PRD – (Price Differences)
List of Account Modifier or General Modifier:
Valuation Class:
It is used to differentiate Inventory GL Accounts based on Material nature
Valuation class is assigned to the material master under Accounting view.
Note: The Valuation Class is maintained with reference to Material Type Material Master also created with Reference Material Type. While assignment of Valuation Class to the material master, system validates material types of Material Master and valuation class. If any mismatch will cause error
Note:
All Inventory and goods movements will be posted by logistic users with Movement Type
The respective transactions keys area associated with movement type Against transaction keys inventory GL Accounts are maintained with the Combination of COA, Val Grouping Code, Account Modifier or General Modifier and Valuation Class.
Configuration Steps for MM – FI Integration
Step 01 - Define Plants T-Code 0X10
Path: SPRO → Enterprise structure → Definition → Logistic general → Define copy, delete check plant → Double click on Define Plant → New Entries button
Step 02 - Define Location T-Code 0X10
Path: SPRO → Enterprise structure → Definition → Logistic general → Define Location → New Entries button
Step 03 - Define Division: T Code OVXB TSPA
Path :SPRO → Enterprise structure → Definition → Logistic general →Define copy, Delete, check division → Define Division → New Entries button
Note : Division is organizational unit of SD, which is used to track sales or profits from Salable Materials or services. Division are used to identity or track business area against logistic transactions
Step 04 - Maintain Storage Location T Code : OX09 – T001L
