SAP is the ERP software where all the modules like finance, costing, purchase, sales, production, CRM, plant maintenance, and project system tightly integrated with each other.
SAP MM – Material management is the short form of SAP MM.
SAP Material management is the heart of the logistics of any company that uses SAP as its ERP in their material handling.
MM is the main module of ERP in trading, manufacturing, procurement, finance, and sales where the movement of the material involves entire logistics.
SAP MM Features
- MM modules support and assists the entire procurement cycle by providing all the information relevant to purchase.
- This module facilitates the purchase managers and purchase users in procuring material and services.
- SAP MM stores all the information related to all the purchases from year to year so that users can track and refer to that information whenever is required.
- MM is directly integrated with FICO so that all the information related to the purchase ad finance-related details can be accessed so that the management can be taken the decision based on the historical data.
- The costing department can track the cost related to purchase the material and service procurement.
- This module helps to control the inventory of any organizations
- Material management helps in the availability of all types of material at any time and find the gap in case of any gap in supply.
- Material management records all the data regarding the purchase, inventory, goods issues, and goods receipts.
- Material management reduces the waiting time of production activities of any companies thus reducing the production cost and improving the efficiency in production.
- If any changes happen in a business process that can be mapped in SAP through material management and can be ensured the same is followed by the purchasing team
The company wants to use the SAP feature need to create their entire organizational data to map the real-time data in SAP.
This should mandatorily match with the company’s entire logistics nothing should not be left out. Then only the reporting can be accurate with all the parameters.
The followings are each organizational logistical unit that needs to be created in SAP
- Controlling code
- Company codes
- Purchase Organisation
- Storage Locations
- Purchase Group
Master data in SAP MM
There are master data that needs to be created in achieving the SAP MM feature. Without these, you cannot create any documents like purchase requisition and purchase documents.
Whenever these documents need to be created, if there are master data like a material master, vendor master, source list, purchase info record, and pricing master.
If you have created all these master data in a client, you can go ahead to create a purchase requisition and purchase order.
SAP MM master data
The following master data can be created and the same can be used in all the document creation, using the master data the reports can be obtained.
- Material master
- Vendor Master
- Source List
- Purchase Info record
- Schedule line
- Condition Master
What is the difference between purchase requisition and purchase order?
The purchase requisition is created internally which is used to communicate management from the purchasing department which will not have a vendor in this document.
The purchase order document can be used to communicate the vendor who is assigned in the purchase order to procure the particular quantity.
MM Process flow
Every process has certain steps to be followed for achieving the required goals and the same is applicable to SAP MM. The list of steps needs to be carried out for the purchasing process.
The steps to be followed listed below
- The user decides what is required quantity for each material and same thing is also communicated to the purchasing department
- Determination of requirement – Material and quantity requirement
- Purchase requisition creation
- Approval from management
- Purchase Order creation
- Receiving the material based on the purchase order
- Goods receipt of purchased material
- Invoice verification
- Invoice receipt of purchased material
- GR/IR Clearing
SAP MM Other Features
There are other features in SAP MM that cover in upcoming blog post one by one and what are the topics we discuss in other blogs.
The topics are listed below,
- Release strategy
- Outline agreement
- Pricing procedure
- Third-party purchase
- Service Orders
- Output determination
- Partner function
- Automatic Account determination
- Split Valuation
- Version management
- Quota Arrangement
- Physical Inventory
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