SAP MM

Overview of Materials Management Module: 

Materials Management deals with managing the materials (products and or services) resources of an organization with the aim of increasing productivity, reducing costs and increase optimization and at the same time be flexible to accommodate changes. 

A business process in SAP is termed as “Module”. SAP Materials Management (MM) is a part of Logistics area and helps to manage the procurement activity of an organization from procurement process, inventory management, invoice verification and material planning. 

Materials Management is the backbone of the Logistics area which includes modules like Sales and Distribution, Production Planning, Plant Maintenance, Project Systems, Warehouse Management which are highly dependent on Materials Management module. 

Materials management is highly integrated with other modules such as FI (Financial Accounting), SD (Sales & Distribution), PP (Production Planning), QM (Quality Management), PM (Plant Maintenance). 

Procurement Process: 

Is a process of acquiring goods and or services in the right amount, at the right price at the right time. Procurement can refer not only to buying of goods and or service, it also can include outsourcing. 

Procurement process generally starts when there is a Demand or Request for a Material or services.

The request or demand leads to requesting quotes from Vendor/Suppliers for the material or services. 

•       Vendor Selection is the next step after receiving the quotes from the vendors. 
•       Negotiating the terms and conditions. 
•       Creation of Purchase Orders 
•       Receipt of Goods against Purchase Orders 
•       Inventory Updating 
•       Invoice verification 
•       Payment to the vendor/supplier 

Enterprise Structure in Materials Management: 
 
The Organizational Structure in MM is made up of following Organizational Levels:
 

• Client 
• Company Code 
• Plant 
• Storage Location 
• Purchasing Organization 
• Purchasing Group

Client:

Represents a grouping or combination of legal, organizational, business and/or administrative units with a common purpose.

Company Code:

Company Code represents an independent accounting unit within a client. Each company code has its own balance sheet and its own profit and loss statement.

Plant:

Operational unit within a company code.

Storage Location:

This level contains the data specific to a storage location. Stock levels are an example of the data maintained for each storage location.

Purchasing Organization:

An organizational unit responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions.

Purchasing Group:

The purchasing organization is further subdivided into purchasing groups (buyer groups), which are responsible for day-to-day buying activities. A purchasing group can also act for several purchasing organizations.

What Is SAP MM Module?

• Material Management is a functional module that belongs to SAP AG that is used for Procurement Handling and Inventory Management. SAP MM is one the largest functional module in SAP. This module mainly deals with the Procurement Process, Master Data (Material & Vendor Master), Inventory Management, Valuation of Material & Account Determination, Material Requirement Planning, Invoice Verification etc.

• SAP Materials management is integrated with other modules such as SD, PP and QM. Materials management is used for procurement and inventory management.

• The SAP MM module has two important master data - material and vendor. Broadly, the various levels that can be defined for a SAP MM implementation are: Client, Company Code, Plant, Storage Location and Purchase Organization.

• The SAP MM module covers all tasks within the supply chain, including consumption-based planning, planning, vendor evaluation and invoice verification. It also includes inventory and warehouse management to manage stock until usage dictates the cycle should begin again. Electronic Kanban/Just-in-Time delivery is supported.

It can be divided into five major components. They are: 

materials management :

Material Management covers the functionality required to purchase goods and services, manage inventory, and inspect incoming materials. The Purchasing function includes creation of requisitions, requisition approval, purchase order generation, and receipt of goods and services. Inventory Management includes issuing and transferring inventory, inventory restocking, and the inventory count and adjustment processes.

plant maintenance:

The R/3 Plant Maintenance (PM) application component provides you with a comprehensive software solution for all maintenance activities that are performed within a company. The uniform, graphical user interface is particularly user-friendly and quickly meets with acceptance, thanks to the numerous possibilities that are available for tailoring it to meet individual requirements.

The data and functions of all maintenance procedures performed within a company can be fully interconnected.

The openness of the R/3 System enables you to use external systems that are integrated with the PM component, such as geographical information systems (GIS), computer-aided design (CAD) systems and supervisory control and data acquisition (SCADA) systems.

quality management : 

Helpful SAP QM related module contents to assist those supporting the SAP Quality Management Module.  If you have any SAP Quality Management question, please feel free to raise it in the SAP QM Forum.

The integration of the QM application component in the R/3 System allows quality management tasks to be combined with those in other applications (such as materials management, production, sales and distribution and cost accounting). 

production planning and control : 

Helpful SAP PP module contents to assist those supporting the SAP Production Planning Module. There are samples certification, interview questions and answers as well as common tcodes used in SAP PP.  If you have any SAP Production Planning and Control question, please feel free to raise it in the SAP PP Forum.

The SAP PP modules are use mainly in the Manufacturing industry.  This component allow you to create BOM, routing, work center, plan orders, production order and confirmation.  It is tightly integrated with modules such as SAP MM and SAP SD thru the used of MRP which is also part of PP.

project management system :

Projects are generally part of the internal processes of a company. To be able to control all tasks in project execution, you need an organizational form that is specific to the project and which is shared by all departments involved. Before you can carry out a project in its entirety, the project goals must be precisely described and the project activities to be carried out must be structured. A clear, unambiguous project structure is the basis for successful project planning, monitoring, and control.

The high degree of integration between the Project System (PS) and other R/3 application components means that you can plan, execute, and account for projects as part of your normal commercial procedures. This means the Project System has constant access to data in all the departments involved in the project.

The R/3 Project System guarantees close and constant monitoring of all aspects of your project. 

In Summary:

SAP MM module is a part of logistics and it helps in managing end to end procurements and logistics business process. The main features you can find in the MM module are requisitions, purchase orders, goods receipt, accounts payable, inventory management, BOM's and master raw material, finished goods etc. 

Requisitions in SAP MM module is a document created for purchase of goods or services, it is sent to procurement office for the issuance of purchase orders. Requisitions exceeding certain amount need vendor verification in SAP MM module. There are two ways of placing requisition either through SAPGUI or SAP web.

Purchase orders are the legal document issued as commitment to the vendor to supply mentioned material in the specified quantity along with shipping details and specification. The authorized vendors list is displayed while creating purchase order as per material and plant of the organization.