Materials Management MM

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Materials Management MM

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1. Materials Management (MM) - Master Data and Rules -

2. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 2 Business Process Integration We will be covering rules and master data for Material Management. We will be covering rules and master data for Material Management.

3. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 3 Master Data Master data is relatively fixed Material master data Vendor master data Purchasing information record General Ledger master data Before making the master data configurations, you must have completely defined the organizational structures Master data does not change very often Org data – should not change Transaction data (application data) – changes every transactionMaster data does not change very often Org data – should not change Transaction data (application data) – changes every transaction

4. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 4 Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – e-mails, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – e-mails, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices.

5. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 5 Unit 7, Part 1 – Overview (Master Data) Unit Concept Procure-to-Pay Process Vendor Master Data Purchasing Information Record

6. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 6 Unit Concept The purchasing process involves the acquisition of goods and services to support the creation of goods and services in the organization Master data and rules required for the purchasing process is presented This is fundamental for the acquisition of goods for a distribution company. This is fundamental for the acquisition of goods for a distribution company.

7. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 7 This is a standard view of the procure to pay process and the most common. It may vary significantly based upon the company procedures, the products/services purchases and other factors. SAP allow businesses to tailor it to their needs. Starts with a requisition or need that needs to be filled. This can come from Planning (MRP), manually or other The purchase order is the document to fill the need: usually includes the vendor, cost/price, quantity, terms and other pertinent information. [ part one of the 3-way match] Notifying the vendor The goods are shipped and brought to the organization The goods are received (typically at the dock) and then put away [ part two of the three way match] An invoice is received from the vendor [third part of the 3-way match] After the tolerances/verification of the 3-way match are met a payment is made according to the terms agreed to on the purchase order.This is a standard view of the procure to pay process and the most common. It may vary significantly based upon the company procedures, the products/services purchases and other factors. SAP allow businesses to tailor it to their needs. Starts with a requisition or need that needs to be filled. This can come from Planning (MRP), manually or other The purchase order is the document to fill the need: usually includes the vendor, cost/price, quantity, terms and other pertinent information. [ part one of the 3-way match] Notifying the vendor The goods are shipped and brought to the organization The goods are received (typically at the dock) and then put away [ part two of the three way match] An invoice is received from the vendor [third part of the 3-way match] After the tolerances/verification of the 3-way match are met a payment is made according to the terms agreed to on the purchase order.

8. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 8 Master Data – General Business rules and supportive information are stored in master data records Each master data record is unique in name or number Internal or external number ranges are possible Usually created or converted (legacy system) in the beginning Maintained by numerous organizations Master data created at the client level Can go across multiple organizations or plants. Internal number ranges are system generated. External are user/company determined Business transactions are posted to accounts and managed using those accounts. You must create a master record for each account that you require. The master record controls how business transactions are recorded and processed by the system. Specifications you make in master records are used: As default values when you post items to the account. For example, the terms of payment you specify in the master record are defaulted for document entry. For processing business transactions For instance, bank details and the payment methods (check or bank transfer, for example) are required for automatic payments. For working with master records. You can prevent certain users from accessing an account by setting up authorization groups. Master data created at the client level Can go across multiple organizations or plants. Internal number ranges are system generated. External are user/company determined Business transactions are posted to accounts and managed using those accounts. You must create a master record for each account that you require. The master record controls how business transactions are recorded and processed by the system. Specifications you make in master records are used: As default values when you post items to the account. For example, the terms of payment you specify in the master record are defaulted for document entry. For processing business transactions For instance, bank details and the payment methods (check or bank transfer, for example) are required for automatic payments. For working with master records. You can prevent certain users from accessing an account by setting up authorization groups.

9. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 9 Master Data – General (continued) Vendor master records are maintained by both accounts payable (A/P) and purchasing Material master records are maintained by purchasing, sales, production, accounting, etc. Purchasing information records are maintained primarily by purchasing All kinds of view – Different part of data. Vendors information is pertinent to both A/P and purchasing. Both departments have information that they need to maintain, though maintain primarily by purchasing and used by A/P Infor Records are records pertinent to the Vendor and the Material. We will be discussing them shortly All kinds of view – Different part of data. Vendors information is pertinent to both A/P and purchasing. Both departments have information that they need to maintain, though maintain primarily by purchasing and used by A/P Infor Records are records pertinent to the Vendor and the Material. We will be discussing them shortly

10. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 10 Vendor Master Organization of the Data The customer master record is broken into three areas: General Data: demographic data Company Code Data: Financial Accounting – Accounting information Sales Data – Sales information General Data General data does not depend on the company code, the sales and distribution organization or the purchasing organization. General data applies to one business partner for all company codes, and in all sales areas and purchasing organizations. It includes: Company name Address Telephone number General data is not limited to information used by both Financial Accounting and Logistics. The unloading point, for example, is unique for a customer and is only relevant for Sales and Distribution. However, because it is not part of the sales and distribution organization of your company, it is not sales and distribution data. It is general data. If you edit a master record using the customer or vendor number without specifying a sales area, a purchasing organization, or a company code, the system displays only general data screens. The department that creates the master record for a business partner also enters general data. If Financial Accounting creates the master record, it must also enter general data, such as the address. When Logistics then enters data, the general data for the business partner exists. Logistics can display the general data. Company Code Data Company code data only applies to one company code. This data is only relevant to Financial Accounting, and includes: Account management data Insurance data If you edit a master record, you must specify the customer or vendor number and company code to access the screens containing company code data. You can only invoice a business transaction if the data on the payer partner function is entered in the Financial Accounting view. Sales and Distribution Data The data for one customer can differ for each sales area. The sales area is a combination of sales organization, distribution channel and division. This data is only relevant to Sales and Distribution, and includes: Pricing data Delivery priority Shipping conditions If you edit a customer master record, you must enter the customer number and the sales area in order to access screens containing sales and distribution data. You can only process sales and distribution transactions, for example, a sales order, after entering the sales and distribution data for a customer. The customer master record is broken into three areas: General Data: demographic data Company Code Data: Financial Accounting – Accounting information Sales Data – Sales information General Data General data does not depend on the company code, the sales and distribution organization or the purchasing organization. General data applies to one business partner for all company codes, and in all sales areas and purchasing organizations. It includes: Company name Address Telephone number General data is not limited to information used by both Financial Accounting and Logistics. The unloading point, for example, is unique for a customer and is only relevant for Sales and Distribution. However, because it is not part of the sales and distribution organization of your company, it is not sales and distribution data. It is general data. If you edit a master record using the customer or vendor number without specifying a sales area, a purchasing organization, or a company code, the system displays only general data screens. The department that creates the master record for a business partner also enters general data. If Financial Accounting creates the master record, it must also enter general data, such as the address. When Logistics then enters data, the general data for the business partner exists. Logistics can display the general data. Company Code Data Company code data only applies to one company code. This data is only relevant to Financial Accounting, and includes: Account management data Insurance data If you edit a master record, you must specify the customer or vendor number and company code to access the screens containing company code data. You can only invoice a business transaction if the data on the payer partner function is entered in the Financial Accounting view. Sales and Distribution Data The data for one customer can differ for each sales area. The sales area is a combination of sales organization, distribution channel and division. This data is only relevant to Sales and Distribution, and includes: Pricing data Delivery priority Shipping conditions If you edit a customer master record, you must enter the customer number and the sales area in order to access screens containing sales and distribution data. You can only process sales and distribution transactions, for example, a sales order, after entering the sales and distribution data for a customer.

11. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 11 Vendor Master Data A master record must be created for every vendor General data, Company Code data (Financial Accounting - FI), and Purchasing Org data (Material Management - MM) Vendor master has to be created for every vendor in the system Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data Vendor master has to be created for every vendor in the system Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data

12. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 12 Vendor Master Includes all data necessary for processing business transactions and corresponding with vendors Information is shared between the accounting and purchasing departments We need to have the address because we are going to send them a check. General data This is data that applies to every company code and every purchasing organization in your company. The general area includes, for example, the vendor’s name, address, language, and telephone number. Company code data This is data that is specific to an individual company code. Company code data includes, for example, the reconciliation account number and payment terms. Purchasing organization data This is data relevant to the purchasing organization of your company. For example, requests for quotations, purchase orders, and invoice verifications are stored in this section. language on vendor or customer – The language they communicate in. All communications will be in their language Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data We need to have the address because we are going to send them a check. General data This is data that applies to every company code and every purchasing organization in your company. The general area includes, for example, the vendor’s name, address, language, and telephone number. Company code data This is data that is specific to an individual company code. Company code data includes, for example, the reconciliation account number and payment terms. Purchasing organization data This is data relevant to the purchasing organization of your company. For example, requests for quotations, purchase orders, and invoice verifications are stored in this section. language on vendor or customer – The language they communicate in. All communications will be in their language Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data

13. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 13 Vendor Master – Typical Screens Address Control Payment Transactions Accounting Information Correspondence Purchasing Data Partner Functions Address has typical demographic information Control has tax and accounting information – Payment Payment Transactions – Who makes the payments (bank or alternative payor) Correspondence – Who and how to contact the people in the purchasing Org Purchasing Data – Who is the sales person, What conditions, terms, Inocterms (International Chamber of Commerce shipping) Dunning works on this side Partner functions – Defines who is responsible for what action. We order material They did not ship it Note letting them know that we did not receive it Escalation Address has typical demographic information Control has tax and accounting information – Payment Payment Transactions – Who makes the payments (bank or alternative payor) Correspondence – Who and how to contact the people in the purchasing Org Purchasing Data – Who is the sales person, What conditions, terms, Inocterms (International Chamber of Commerce shipping) Dunning works on this side Partner functions – Defines who is responsible for what action. We order material They did not ship it Note letting them know that we did not receive it Escalation

14. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 14 Vendor Master General Data – Address Address Name: Name of the vendor. Search Term: A method to find your vendor by match-codes. Street: Optional entry. City: Mandatory entry. Postal Code: Mandatory entry. Country: Mandatory entry. Communication Language key Mandatory entry: This is the language the vendor uses. All communications to them will be in this language Address Name: Name of the vendor. Search Term: A method to find your vendor by match-codes. Street: Optional entry. City: Mandatory entry. Postal Code: Mandatory entry. Country: Mandatory entry. Communication Language key Mandatory entry: This is the language the vendor uses. All communications to them will be in this language

15. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 15 Vendor Master General Data – Control Data Account Control Customer Authorization Trading partner Group key Tax Information Tax codes Fiscal address Country code City code Reference Data / Area International locator number Industry Transport zone Account control Customer If the Customer is a Vendor as well, enter the Customer number here. Account Number of Vendor or Creditor Group key If the customer or the vendor belongs to a group, you can enter a group key here. The group key is freely assignable. If you create a matchcode using this group key, group evaluations are possible. Authorization Group The authorization group allows extended authorization protection for particular objects. The authorization groups are freely definable. The authorization groups usually occur in authorization objects together with an activity. Tax information Tax code 1 Number, with which the customer reports to the tax authorities. Tax code 2 Number, with which the customer reports to the tax authorities. Fiscal address Account number of the master record containing the fiscal address. Tax information County code Key for county taxes. City code Key is used for city taxes. Tax jurisdiction code This code is used in the US to determine tax rates. Reference data / area Industry Freely definable name for a group of companies (e.g.trade, manufacturing). Transport Zone Region, where the ship-to party is located. International location number  (part 1) Here you enter the first 7 digits of the international location number. The International Location Number (ILN) is assigned (in Germany by the Centrale for Coorganisation GmbH)) when a company is founded. It consists of 13 digits, the last digit being the check digit. There are two categories of location numbers: Participants who only need an ILN to cleary and unmistakably identify themselves for communication with the business partner are given a category 1 ILN. This cannot be used to identify articles by means of EAN. Participants who wish to assign the location numbers for their own enterprise areas are given a category 2 ILN. For a category 2 ILN, digits 1 to 7 are described as basis number. This is used as basis for the creation of article numbers (EAN). Account control Customer If the Customer is a Vendor as well, enter the Customer number here. Account Number of Vendor or Creditor Group key If the customer or the vendor belongs to a group, you can enter a group key here. The group key is freely assignable. If you create a matchcode using this group key, group evaluations are possible. Authorization Group The authorization group allows extended authorization protection for particular objects. The authorization groups are freely definable. The authorization groups usually occur in authorization objects together with an activity. Tax information Tax code 1 Number, with which the customer reports to the tax authorities. Tax code 2 Number, with which the customer reports to the tax authorities. Fiscal address Account number of the master record containing the fiscal address. Tax information County code Key for county taxes. City code Key is used for city taxes. Tax jurisdiction code This code is used in the US to determine tax rates. Reference data / area Industry Freely definable name for a group of companies (e.g.trade, manufacturing). Transport Zone Region, where the ship-to party is located. International location number  (part 1) Here you enter the first 7 digits of the international location number. The International Location Number (ILN) is assigned (in Germany by the Centrale for Coorganisation GmbH)) when a company is founded. It consists of 13 digits, the last digit being the check digit. There are two categories of location numbers: Participants who only need an ILN to cleary and unmistakably identify themselves for communication with the business partner are given a category 1 ILN. This cannot be used to identify articles by means of EAN. Participants who wish to assign the location numbers for their own enterprise areas are given a category 2 ILN. For a category 2 ILN, digits 1 to 7 are described as basis number. This is used as basis for the creation of article numbers (EAN).

16. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 16 Vendor Master General Data – Payment Transactions Bank Details Bank Key Bank Account Account Holder Partner Bank Type Payment Transactions Alternative Payee Instruction Key Bank Key When you define the country key, you also specify the country-specific definition of the bank key. Normally, you manage banks using their bank number. The bank number in the control data for the bank is then displayed twice, that is, as the bank key too. In certain countries, the bank account number takes on this function; then there are no bank numbers and the bank data is managed using the account number. For data medium exchange, you may find it useful to be able to enter foreign business partners without a bank number, even if there are bank numbers in the country in question. In this case, the bank key can be assigned internally. Bank Account Number This field contains the number under which the account is managed at the bank. Account Holder Name Here you can enter another name that the payment program can use if the name of the account holder is not the same as the name of the customer or vendor. Partner bank type Key you enter in the line item to specify which business partner's bank the system should use. Procedure In the business partner's master record: If several bank accounts exist in a customer or vendor master record, you can assign different keys for these accounts. Account Number of the Alternative Payee The account number of the vendor with whom automatic payment transactions are carried out. Instruction key for data medium exchange For automatic payment transactions, this field (along with the house bank country and the payment method determined by the payment program) controls which statements are given to the participating banks when carrying out the payment order. This field is used in countries such as Germany, Austria, the Netherlands, Spain, Norway, Finland, and Japan as well as for the internnational SWIFT format, MT100. Bank Key When you define the country key, you also specify the country-specific definition of the bank key. Normally, you manage banks using their bank number. The bank number in the control data for the bank is then displayed twice, that is, as the bank key too. In certain countries, the bank account number takes on this function; then there are no bank numbers and the bank data is managed using the account number. For data medium exchange, you may find it useful to be able to enter foreign business partners without a bank number, even if there are bank numbers in the country in question. In this case, the bank key can be assigned internally. Bank Account Number This field contains the number under which the account is managed at the bank. Account Holder Name Here you can enter another name that the payment program can use if the name of the account holder is not the same as the name of the customer or vendor. Partner bank type Key you enter in the line item to specify which business partner's bank the system should use. Procedure In the business partner's master record: If several bank accounts exist in a customer or vendor master record, you can assign different keys for these accounts. Account Number of the Alternative Payee The account number of the vendor with whom automatic payment transactions are carried out. Instruction key for data medium exchange For automatic payment transactions, this field (along with the house bank country and the payment method determined by the payment program) controls which statements are given to the participating banks when carrying out the payment order. This field is used in countries such as Germany, Austria, the Netherlands, Spain, Norway, Finland, and Japan as well as for the internnational SWIFT format, MT100.

17. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 17 Vendor Master – Company Code – Accounting Information Accounting Information Reconciliation Account Sort Key Release Group Interest Calculation Interest Calculation Indication Interest Calculation Frequency Withholding Tax Withholding Tax Code Exemption Number Reconciliation Account in General Ledger The reconciliation account in G/L accounting is the account which is updated parallel to the subledger account for normal postings (for example, invoice or payment). For special postings (for example, down payment or bill of exchange), this account is replaced by another account (for example, 'down payments received' instead of 'receivables'). The replacement takes place due to the special G/L indicator which you must specify for these types of postings. Key for sorting according to assignment numbers Indicates the layout rule for the Allocation field in the document line item. Use The system uses a standard sort sequence for displaying line items. Among other things, it sorts the items according to the content of the Allocation field. This field can be filled either manually or automatically (by the system) when a document line item is entered. For this purpose, the system requires rules that determine which information is to be taken from the document header or from the document line item and placed in the field. The rules can be stored in the master record of an account which enables you to determine the standard sort sequence on an account-specific basis. Release Approval Group The release approval group can be freely assigned. You use it to classify vendors and customers, which means that the release approval group can be defined for vendors and customers. By using the release approval group, you can determine release approval paths and those people with release approval. Interest calculation indicator Enter an interest calculation indicator here if the account is to be included in automatic interest calculation. Interest calculation frequency in months An entry in this field determines the intervals (in months) at which interest is to be calculated automatically for this account (account balance interest calculation). The interest calculation frequency is added to the date of the last interest calculation. Withholding Tax Code The withholding tax code can be compared to a tax sub-category which must be taken into consideration when reporting tax to the tax authorities. The tax codes are unique per country. For each tax code, the tax rate, the portion of the invoices to be taxed and further properties are stored in a table. Certificate Number of the Withholding Tax Exemption Number of the certificate which is issued for temporary exemption from withholding tax. Reconciliation Account in General Ledger The reconciliation account in G/L accounting is the account which is updated parallel to the subledger account for normal postings (for example, invoice or payment). For special postings (for example, down payment or bill of exchange), this account is replaced by another account (for example, 'down payments received' instead of 'receivables'). The replacement takes place due to the special G/L indicator which you must specify for these types of postings. Key for sorting according to assignment numbers Indicates the layout rule for the Allocation field in the document line item. Use The system uses a standard sort sequence for displaying line items. Among other things, it sorts the items according to the content of the Allocation field. This field can be filled either manually or automatically (by the system) when a document line item is entered. For this purpose, the system requires rules that determine which information is to be taken from the document header or from the document line item and placed in the field. The rules can be stored in the master record of an account which enables you to determine the standard sort sequence on an account-specific basis. Release Approval Group The release approval group can be freely assigned. You use it to classify vendors and customers, which means that the release approval group can be defined for vendors and customers. By using the release approval group, you can determine release approval paths and those people with release approval. Interest calculation indicator Enter an interest calculation indicator here if the account is to be included in automatic interest calculation. Interest calculation frequency in months An entry in this field determines the intervals (in months) at which interest is to be calculated automatically for this account (account balance interest calculation). The interest calculation frequency is added to the date of the last interest calculation. Withholding Tax Code The withholding tax code can be compared to a tax sub-category which must be taken into consideration when reporting tax to the tax authorities. The tax codes are unique per country. For each tax code, the tax rate, the portion of the invoices to be taxed and further properties are stored in a table. Certificate Number of the Withholding Tax Exemption Number of the certificate which is issued for temporary exemption from withholding tax.

18. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 18 Vendor Master – Company Code – Payment Transactions Payment Data Payment Terms Tolerance Group Check Double Invoice Check Cashing Time Automatic Payment Transactions Payment Methods Alternate Payee Payment Block Invoice Verification Tolerance Group Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. It is used in sales orders, purchase orders, and invoices. Terms of payment provide information for: Cash management Dunning procedures Payment transactions Tolerance Group Each tolerance group contains settings that affect cash discount and payment difference processing. These settings become effective during payment entry. Check Flag for Double Invoices or Credit Memos Indicator which means that incoming invoices and credit memos are checked for double entries at the time of entry. Probable time until check is paid Number of days which usually pass until the vendor has cashed your check. Use During automatic payment transactions, the system calculates the value date for check payments using this information and stores the date in the line item. The date is calculated as follows: Value date = posting date + check cashing time In Cash Management, the value date is used as information about the expected cash outflow. List of the Payment Methods to be Considered List of payment methods which may be used in automatic payment transactions with this customer/vendor if you do not specify a payment method in the item to be paid. If you do specify a particular payment method in the item to be paid, this specification has priority over the specifications in the master record. You may also specify payment methods in the item which are not listed in the master record. Account number of the alternative payee The account number of the vendor with whom automatic payment transactions are to be carried out. Block key for payment Block key used to block an open item or an account for payment transactions. The block key can be used as follows: 1. During automatic payment transactions, the block key affects open items if it is: Stored in the master record or Entered in the document. If you enter the block in the master record, the exception list will include all the open items for this account. The block keys '*' and '+' are of special importance and function as follows: If the * block key is entered in the master record, none of the items in this account are included in the automatic payment process. If the + block key is entered in the master record, only those items for which a payment method is explicitly defined are included in the automatic payment process. The "A" block key also has a special function: It is generally set automatically when a down payment is entered. For this reason, you should neither delete the "A", nor use it for other purposes. A block key can be set or deleted during payment proposal processing if you select the option Change in payment proposal permitted. 2. The block key in the document will affect manual payments only if you have selected the Blocked for manual payments option for the block key. The block key you set in the master record has no effect on manual payments. However, it is possible to make system settings so that a warning is shown, explaining that this is the case. You do so by customizing message 671 in work area F5 in the message control . 3. You must select the Not changeable option for the block key that is relevant to payment release in financial accounting. Tolerance group; Invoice Verification Settings for vendor-specific parameters in Invoice Verification. Only one tolerance group can be assigned to a vendor in the one company code. Use For each tolerance group you can define: by how much the actual value of an invoice can differ from the expected value and still be accepted by the system; whether invoices can be automatically reduced. These settings are valid in Logistics Invoice Verification.Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. It is used in sales orders, purchase orders, and invoices. Terms of payment provide information for: Cash management Dunning procedures Payment transactions Tolerance Group Each tolerance group contains settings that affect cash discount and payment difference processing. These settings become effective during payment entry. Check Flag for Double Invoices or Credit Memos Indicator which means that incoming invoices and credit memos are checked for double entries at the time of entry. Probable time until check is paid Number of days which usually pass until the vendor has cashed your check. Use During automatic payment transactions, the system calculates the value date for check payments using this information and stores the date in the line item. The date is calculated as follows:

19. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 19 Vendor Master – Company Code – Correspondence Accounting Dunning Data Dunning Procedure Dunning Block Dunning Recipient Date of Legal Dunning Procedure Correspondence Local Processing Accounting Clerk Account With Vendor Dunning procedure This field contains the key for the dunning procedure to be used. Dunning block Key which reflects the reason for a dunning block indicator. Account number of the dunning recipient Account number of the vendor who is to receive the dunning notice. Date of the legal dunning proceedings Date on which a legal dunning procedure was initiated. Use The printing of dunning notices in the legal dunning procedure generates an internal notice about any further account movements. A dunning notice is not created for the customer. If the Legal dunning procedure field in the master record contains a date, this means that the account is involved in a legal dunning procedure. The relationship between this date and the dunning date does not affect how the account is processed. The printing of account movements in the legal dunning procedure differs from the normal printing of dunning notices as follows: You must specify a separate form for your dunning procedure in Customizing. For more information, see Customizing (IMG) under Dunning Forms. The dunning program also displays text element 520 "Legal dunning procedure". This makes it possible to display the date of the legal dunning procedure from the master record. The program also displays the documents blocked for dunning and those with a payment method (automatic debit, bank direct debit). Although dunning notices are printed, the dunning level does not change in the master record or in the items. New dunning level = old dunning level. The program only updates the date of the last dunning run. Indicator: Local processing? Indicates that payment transactions and dunning notices are created for the branch. Use Normally automatic payment transactions and dunning notices are created for the head office. Accounting clerk Identification code for the accounting clerk. The name of the accounting clerk defined by this identification code can be used in the payment program for correspondence and reporting (for example, open item lists). Our account number with the vendor This field contains the account number the company is listed under at the vendor . Dunning procedure This field contains the key for the dunning procedure to be used. Dunning block Key which reflects the reason for a dunning block indicator. Account number of the dunning recipient Account number of the vendor who is to receive the dunning notice. Date of the legal dunning proceedings Date on which a legal dunning procedure was initiated. Use The printing of dunning notices in the legal dunning procedure generates an internal notice about any further account movements. A dunning notice is not created for the customer. If the Legal dunning procedure field in the master record contains a date, this means that the account is involved in a legal dunning procedure. The relationship between this date and the dunning date does not affect how the account is processed. The printing of account movements in the legal dunning procedure differs from the normal printing of dunning notices as follows: You must specify a separate form for your dunning procedure in Customizing. For more information, see Customizing (IMG) under Dunning Forms. The dunning program also displays text element 520 "Legal dunning procedure". This makes it possible to display the date of the legal dunning procedure from the master record. The program also displays the documents blocked for dunning and those with a payment method (automatic debit, bank direct debit). Although dunning notices are printed, the dunning level does not change in the master record or in the items. New dunning level = old dunning level.The program only updates the date of the last dunning run. Indicator: Local processing? Indicates that payment transactions and dunning notices are created for the branch. Use Normally automatic payment transactions and dunning notices are created for the head office. Accounting clerk Identification code for the accounting clerk. The name of the accounting clerk defined by this identification code can be used in the payment program for correspondence and reporting (for example, open item lists). Our account number with the vendor This field contains the account number the company is listed under at the vendor .

20. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 20 Vendor Master – Purch. Org. Data – Purchasing Data Conditions Order Currency Terms of Payment Incoterms Minimum Order Value Sales Data Salesperson Purchase order currency Key for the currency on which an order placed with a vendor is based. Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. Incoterms (part 1) Commonly-used trading terms that comply with the standards established by the International Chamber of Commerce (ICC). Use Incoterms specify certain internationally recognised procedures that the shipper and the receiving party must follow for the shipping transaction to be successfully completed. Example If goods are shipped through a port of departure, the appropriate Incoterm might be: FOB ("Free On Board"). You can provide further details (for example, the name of the port) in the secondary Incoterm field: FOB Boston, for example. Minimum order value Minimum value specified for purchase orders issued to the relevant vendor. Sales Person Responsible salesperson at vendor's office Order acknowledgment requirement Determines whether the purchasing document ( purchase order, outline purchase agreement , etc.) is to be acknowledged by the vendor. Indicates whether vendor is returns vendor Indicates that a vendor return is carried out using shipping processing. Automatic generation of purchase order allowed Allows you to automatically generate purchase orders from purchase requisitions if the requisition has been assigned to a vendor (source of supply). Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Use Internally, the purchasing group is responsible for the procurement of a material or a class of materials. Externally, it is the medium through which contacts with the vendor are maintained. Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. Purchase order currency Key for the currency on which an order placed with a vendor is based. Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. Incoterms (part 1) Commonly-used trading terms that comply with the standards established by the International Chamber of Commerce (ICC). Use Incoterms specify certain internationally recognised procedures that the shipper and the receiving party must follow for the shipping transaction to be successfully completed. Example If goods are shipped through a port of departure, the appropriate Incoterm might be: FOB ("Free On Board"). You can provide further details (for example, the name of the port) in the secondary Incoterm field: FOB Boston, for example. Minimum order value Minimum value specified for purchase orders issued to the relevant vendor. Sales Person Responsible salesperson at vendor's office Order acknowledgment requirement Determines whether the purchasing document ( purchase order, outline purchase agreement , etc.) is to be acknowledged by the vendor. Indicates whether vendor is returns vendor Indicates that a vendor return is carried out using shipping processing. Automatic generation of purchase order allowed Allows you to automatically generate purchase orders from purchase requisitions if the requisition has been assigned to a vendor (source of supply). Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Use Internally, the purchasing group is responsible for the procurement of a material or a class of materials. Externally, it is the medium through which contacts with the vendor are maintained. Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally.

21. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 21 Vendor Master – Purch. Org. Data – Partner Functions Partner Functions Partner Function Partner Name Partner function The abbreviated form of the name that identifies the partner function. Example The ship-to party in your system could be abbreviated, for example, to "SH".Partner function The abbreviated form of the name that identifies the partner function. Example The ship-to party in your system could be abbreviated, for example, to "SH".

22. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 22 Vendor Master – Purch. Org. Data – Account Group Vendor masters are assigned to a vendor account group Through field status maintenance, vendor account groups can be setup for one-time vendors, regional vendors, and internal vendors The vendor account group controls both type and number range assignment for vendors Can be set up for type of vendors – Account groups determine: The type of number assignment, A number range for assigning account numbers, Which fields are displayed and whether their entry is optional or required (field status) when you enter or change vendor master data. Whether the account is for one-time vendors For vendors whom you only supply once or rarely, you can create a special vendor master record, the master record for "one-time accounts". In contrast to other master records, no data specific to a single customer is stored in the one-time master record, since this account is used for more than one customer. The customer-specific entries such as address and bank details are not entered until the document for the transaction is entered into the system. Can be set up for type of vendors – Account groups determine: The type of number assignment, A number range for assigning account numbers, Which fields are displayed and whether their entry is optional or required (field status) when you enter or change vendor master data. Whether the account is for one-time vendors For vendors whom you only supply once or rarely, you can create a special vendor master record, the master record for "one-time accounts". In contrast to other master records, no data specific to a single customer is stored in the one-time master record, since this account is used for more than one customer. The customer-specific entries such as address and bank details are not entered until the document for the transaction is entered into the system.

23. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 23 Purchasing Info Record The purchasing info record provides continuously updated information about the relationship of a specific material with a specific vendor Order unit, price, price changes, tolerances, reminder infos, historic data, statistics, texts Choice of automatic or manual updating Information about the relationship we have with that vendor. The purchasing info record is a source of information for Purchasing on a certain material and the supplier of this material. It contains data such as the vendor’s current prices and conditions for this material, the number of the last PO, or the time interval in which the vendor can supply the material. Information about the relationship we have with that vendor. The purchasing info record is a source of information for Purchasing on a certain material and the supplier of this material. It contains data such as the vendor’s current prices and conditions for this material, the number of the last PO, or the time interval in which the vendor can supply the material.

24. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 24 Source List The source list stores information about where to acquire a given material for a given period of time It specifies whether this source should be used by Materials Requirement Planning (MRP) Who we buy material from. Who’s dependable You use the source list to determine the valid source of supply at a certain point in time. The source list contains all the sources of supply defined for a material and the periods during which procurement from these sources is possible. Who we buy material from. Who’s dependable You use the source list to determine the valid source of supply at a certain point in time. The source list contains all the sources of supply defined for a material and the periods during which procurement from these sources is possible.

25. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 25 Unit 7, Group 1 – Exercises Vendor Account Groups Create Vendor Master Accounting Record Create Vendor Master Purchasing Record Create Vendor Master Record Centrally Create Vendor Master Record Centrally Create Vendor Master Record Centrally

26. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 26 Unit 7, Part 2 – Overview (Rules) Fiscal Period Plant Parameters MRP

27. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 27 Rules Defines the parameters for Master Data and Transactions Determines functionality for Master Data and Transactions Relatively fixed Changes as policy changes Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction Rules are relatively fixed. Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction Rules are relatively fixed.

28. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 28 Fiscal Period In order to execute any material postings, the current fiscal period has to be activated By initializing the company code for material management, the first major integration between Financial Accounting (FI) and Logistics is completed This exercise is critical If you create a material fiscal period in the future YOU CANNOT post for any reason. Before data can be posted in FI-SL, you must define accounting periods and allowed accounting periods. Accounting period definitions determine the fiscal year(s) and posting periods that are available on the system; allowed accounting periods determine which posting periods are open for posting data. You can define your fiscal calendars so that the system identifies data by a unique posting period. You only define the end date for the period. The system uses the business transaction date (posting date) to calculate to which fiscal period of a special purpose ledger the transaction data should be posted. This exercise is critical If you create a material fiscal period in the future YOU CANNOT post for any reason. Before data can be posted in FI-SL, you must define accounting periods and allowed accounting periods. Accounting period definitions determine the fiscal year(s) and posting periods that are available on the system; allowed accounting periods determine which posting periods are open for posting data. You can define your fiscal calendars so that the system identifies data by a unique posting period. You only define the end date for the period. The system uses the business transaction date (posting date) to calculate to which fiscal period of a special purpose ledger the transaction data should be posted.

29. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 29 Plant Parameters Material Requirements Planning (MRP) controllers Individuals responsible for running and maintaining Material Requirements Planning data and reports Negative stock allowance If a material is allowed to go negative for inventory stock Plant Parameters define the rules for material management. There are a wide variety of rules that we will see in exercises Indicate if we allow negative stock Some organizations allow negative stock because their receiving is physically done before it is updated in the system. The time-phase difference is for execution of the system.Plant Parameters define the rules for material management. There are a wide variety of rules that we will see in exercises Indicate if we allow negative stock Some organizations allow negative stock because their receiving is physically done before it is updated in the system. The time-phase difference is for execution of the system.

30. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 30 Plant Parameters – (continued) Purchasing Special purchasing rules External purchasing only settings Planned orders Rescheduling Conversion to purchase requisitions Days and Floats – For instance, do we have to place the PO today for it to be conveyed to the vendor for tomorrow (e.g. 1 day float)Days and Floats – For instance, do we have to place the PO today for it to be conveyed to the vendor for tomorrow (e.g. 1 day float)

31. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 31 Plant Parameters – (continued) Document number ranges Planned orders Purchase requisitions Material Requirements Planning (MRP) lists Reservations Each of these different order types can/will have their own number ranges. Each of these different order types can/will have their own number ranges.

32. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 32 Material Requirements Planning Detailed planning level Primary Functions Monitor inventory stocks Determine material needs Quantity Timing Generate purchase or production orders The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing and production (planned orders, purchase requisitions or delivery schedules). This target is achieved by using various materials planning methods which each cover different procedures. Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. The procedures in consumption-based planning do not refer to the master production schedule. That is, the net requirements calculation is not triggered either by planned independent requirements or dependent requirement. Instead, it is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values.The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing and production (planned orders, purchase requisitions or delivery schedules). This target is achieved by using various materials planning methods which each cover different procedures. Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. The procedures in consumption-based planning do not refer to the master production schedule. That is, the net requirements calculation is not triggered either by planned independent requirements or dependent requirement. Instead, it is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values.

33. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 33 Materials Requirements Planning (continued) Integrates Production Planning (PP) module with the Materials Management (MM) module Prerequisites for Materials Requirement Planning (MRP) Activate Material Requirements Planning (MRP) for a plant Material Master created Material Requirements Planning view Material Requirements Planning type

34. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 34 Material Requirements Planning Basic Process Exploding the Bill of Material (if using production) Netting Out Inventory Lot Sizing Time-phasing requirements Exploding the BOM allows the system to plan at all levels of the BOM The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Lot-sizing procedures The standard lot-sizing procedures are available in the R/3 System. However, you can quite easily integrate your own formulas without much effort. Time phase requirements are what is needed, how much, and when to meet the supply/demandExploding the BOM allows the system to plan at all levels of the BOM The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Lot-sizing procedures The standard lot-sizing procedures are available in the R/3 System. However, you can quite easily integrate your own formulas without much effort. Time phase requirements are what is needed, how much, and when to meet the supply/demand

35. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 35 Material Requirements Planning Net Requirements Material Requirements Planning (MRP) calculates the quantity of material needed, if any, based on Sales Orders Material Reservations Repair Parts Inventory Purchase Orders Etc… The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Process Flow The system calculates plant stock. For all storage locations which belong to this plant and which are not excluded from materials planning or are planned separately, the following stocks are grouped together to form plant stock: Unrestricted-use stock Stock in quality inspection Unrestricted-use consignment stock Consignment warehouse stock in quality inspection In Customizing for MRP in the IMG activity Availability of Stock in Transfer/Blocked Stock/ Restricted Stock, you can also determine whether stock in transfer, blocked stock and restricted-use stock are included in the plant. The system also takes into account all the goods issues and receipts for a material. Receipts are, for example, planned orders or purchase requisitions and issues are, for example, customer requirements, planned independent requirements, or reservations. Therefore, the system checks to make sure that for each issue date, the requirement is covered by one or several receipts or by warehouse stock. If this is not the case, the system then calculates the shortage quantity and creates a procurement proposal. The lot-sizing procedure, scrap and rounding determine the quantity in the procurement proposal (see Calculating Procurement Quantity). The net requirements calculation supports the following types of planning: Reorder point planning, forecast-based planning, material requirements planning (MRP). In each procedure, the system calculates the available stock differently The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Process Flow The system calculates plant stock. For all storage locations which belong to this plant and which are not excluded from materials planning or are planned separately, the following stocks are grouped together to form plant stock: Unrestricted-use stock Stock in quality inspection Unrestricted-use consignment stock Consignment warehouse stock in quality inspection In Customizing for MRP in the IMG activity Availability of Stock in Transfer/Blocked Stock/ Restricted Stock, you can also determine whether stock in transfer, blocked stock and restricted-use stock are included in the plant. The system also takes into account all the goods issues and receipts for a material. Receipts are, for example, planned orders or purchase requisitions and issues are, for example, customer requirements, planned independent requirements, or reservations. Therefore, the system checks to make sure that for each issue date, the requirement is covered by one or several receipts or by warehouse stock. If this is not the case, the system then calculates the shortage quantity and creates a procurement proposal. The lot-sizing procedure, scrap and rounding determine the quantity in the procurement proposal (see Calculating Procurement Quantity). The net requirements calculation supports the following types of planning: Reorder point planning, forecast-based planning, material requirements planning (MRP). In each procedure, the system calculates the available stock differently

36. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 36 If adequate inventory is not available to meet Material Requirements Planning (MRP) needs then the system generates Planned Production Orders Planned Purchase Orders Material Requirements Planning Net Requirements – (continued) The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Process Flow The system calculates plant stock. For all storage locations which belong to this plant and which are not excluded from materials planning or are planned separately, the following stocks are grouped together to form plant stock: Unrestricted-use stock Stock in quality inspection Unrestricted-use consignment stock Consignment warehouse stock in quality inspection In Customizing for MRP in the IMG activity Availability of Stock in Transfer/Blocked Stock/ Restricted Stock, you can also determine whether stock in transfer, blocked stock and restricted-use stock are included in the plant. The system also takes into account all the goods issues and receipts for a material. Receipts are, for example, planned orders or purchase requisitions and issues are, for example, customer requirements, planned independent requirements, or reservations. Therefore, the system checks to make sure that for each issue date, the requirement is covered by one or several receipts or by warehouse stock. If this is not the case, the system then calculates the shortage quantity and creates a procurement proposal. The lot-sizing procedure, scrap and rounding determine the quantity in the procurement proposal (see Calculating Procurement Quantity). The net requirements calculation supports the following types of planning: Reorder point planning, forecast-based planning, material requirements planning (MRP). In each procedure, the system calculates the available stock differently The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Process Flow The system calculates plant stock. For all storage locations which belong to this plant and which are not excluded from materials planning or are planned separately, the following stocks are grouped together to form plant stock: Unrestricted-use stock Stock in quality inspection Unrestricted-use consignment stock Consignment warehouse stock in quality inspection In Customizing for MRP in the IMG activity Availability of Stock in Transfer/Blocked Stock/ Restricted Stock, you can also determine whether stock in transfer, blocked stock and restricted-use stock are included in the plant. The system also takes into account all the goods issues and receipts for a material. Receipts are, for example, planned orders or purchase requisitions and issues are, for example, customer requirements, planned independent requirements, or reservations. Therefore, the system checks to make sure that for each issue date, the requirement is covered by one or several receipts or by warehouse stock. If this is not the case, the system then calculates the shortage quantity and creates a procurement proposal. The lot-sizing procedure, scrap and rounding determine the quantity in the procurement proposal (see Calculating Procurement Quantity). The net requirements calculation supports the following types of planning: Reorder point planning, forecast-based planning, material requirements planning (MRP). In each procedure, the system calculates the available stock differently

37. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 37 Material Requirements Planning Lot Sizing Static Based on fixed values in the Material Master Periodic Groups net requirements together from multiple periods Optimum Calculates the optimum lot size for a several periods of net requirements The lot-size calculation is carried out in MRP. In the net requirements calculation, the system determines material shortages for each requirement date. These shortage quantities must be covered by receipt elements. The system then calculates the quantities required for the receipts in the planning run in the procurement quantity calculation. In static lot-sizing procedures, the procurement quantity is calculated exclusively by means of the quantity specifications entered in the material master. Features The following static lot-sizing procedures are available: Lot-for-lot order quantity Fixed lot size Fixed lot size with splitting and overlapping Replenishment up to maximum stock level In period lot-sizing procedures, the system groups several requirements within a time interval together to form a lot. Features You can define the following periods: days weeks months periods of flexible length equal to posting periods freely definable periods according to a planning calendar The system can interpret the period start of the planning calendar as the availability date or as the delivery date. In static and period lot-sizing procedures, the costs resulting from stock keeping, from the setup procedures or from purchasing are not taken into consideration. The aim of optimum lot-sizing procedures, on the other hand, is to group shortages together in such a way that costs are minimized. These costs include lot size independent costs (setup or order costs) and storage costs.The lot-size calculation is carried out in MRP. In the net requirements calculation, the system determines material shortages for each requirement date. These shortage quantities must be covered by receipt elements. The system then calculates the quantities required for the receipts in the planning run in the procurement quantity calculation. In static lot-sizing procedures, the procurement quantity is calculated exclusively by means of the quantity specifications entered in the material master. Features The following static lot-sizing procedures are available: Lot-for-lot order quantity Fixed lot size Fixed lot size with splitting and overlapping Replenishment up to maximum stock level In period lot-sizing procedures, the system groups several requirements within a time interval together to form a lot. Features You can define the following periods: days weeks months periods of flexible length equal to posting periods freely definable periods according to a planning calendar The system can interpret the period start of the planning calendar as the availability date or as the delivery date. In static and period lot-sizing procedures, the costs resulting from stock keeping, from the setup procedures or from purchasing are not taken into consideration. The aim of optimum lot-sizing procedures, on the other hand, is to group shortages together in such a way that costs are minimized. These costs include lot size independent costs (setup or order costs) and storage costs.

38. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 38 Unit 7, Group 2 – Exercises Initialize Fiscal Period for Company Code Maintain Plant Parameters for Material Management Activate Materials Requirements Planning

39. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 39 Unit 7, Part 3 Overview (Material Master) Industry Sector Material Type Maintenance Features Organizational Levels Primary Views Materials with the same basic attributes are grouped together and assigned to a material type. This allows you to manage different materials in a uniform manner in accordance with your company's requirements. Industry Sector Key that specifies the branch of industry to which the material is assigned. If you frequently assign materials to the same industry sector, it is useful to define it as a default to save you having to keep entering it whenever you create or access a material master record. Likewise, if you always require the same views when creating or accessing material master records, you can define that they are selected by default in the Select View(s) dialog box. Like the industry sector, you can also predefine the organizational levels for which you maintain data, and the profiles you use. Materials with the same basic attributes are grouped together and assigned to a material type. This allows you to manage different materials in a uniform manner in accordance with your company's requirements. Industry Sector Key that specifies the branch of industry to which the material is assigned. If you frequently assign materials to the same industry sector, it is useful to define it as a default to save you having to keep entering it whenever you create or access a material master record. Likewise, if you always require the same views when creating or accessing material master records, you can define that they are selected by default in the Select View(s) dialog box. Like the industry sector, you can also predefine the organizational levels for which you maintain data, and the profiles you use.

40. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 40 Material Master – Industry Sector Records are grouped according to industry sector and material type Determines the industry specific data that will appear on the master record When you create a material master record, you are required to classify the material according to industry sector and material type. Like material types, industry sectors have control functions in the R/3 System. For example, it is a factor determining the screen sequence and field selection in a material master record. Once you have assigned an industry sector to a material, you cannot change the industry sector.When you create a material master record, you are required to classify the material according to industry sector and material type. Like material types, industry sectors have control functions in the R/3 System. For example, it is a factor determining the screen sequence and field selection in a material master record. Once you have assigned an industry sector to a material, you cannot change the industry sector.

41. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 41 Material Master – Material Type Material types group materials with the same attributes Material type information determines: What views are maintained Whether internal or external procurement is allowed If changes in material quantity are updated Which general ledger accounts are updated Every material has a material type Material Type controls the views and fields to create the material Material types are controlled at the client level Materials with the same basic attributes are grouped together and assigned to a material type. This allows you to manage different materials in a uniform manner in accordance with your company's requirements. When you create a material master record, the material type you choose determines: Whether the material is intended for a specific purpose, for example, as a configurable material or process material Whether the material number can be assigned internally or externally The number range from which the material number is taken Which screens appear and in what sequence Which departmental data you may enter What procurement type the material has; that is, whether it is manufactured in-house or procured externally, or both Together with the plant, the material type determines the material's inventory management requirement; that is: Whether changes in quantity are updated in the material master record Whether changes in value are also updated in the stock accounts in financial accounting In addition, the accounts affected by a material entering or leaving the warehouse depend on the material type. Every material has a material type Material Type controls the views and fields to create the material Material types are controlled at the client level Materials with the same basic attributes are grouped together and assigned to a material type. This allows you to manage different materials in a uniform manner in accordance with your company's requirements. When you create a material master record, the material type you choose determines: Whether the material is intended for a specific purpose, for example, as a configurable material or process material Whether the material number can be assigned internally or externally The number range from which the material number is taken Which screens appear and in what sequence Which departmental data you may enter What procurement type the material has; that is, whether it is manufactured in-house or procured externally, or both Together with the plant, the material type determines the material's inventory management requirement; that is: Whether changes in quantity are updated in the material master record Whether changes in value are also updated in the stock accounts in financial accounting In addition, the accounts affected by a material entering or leaving the warehouse depend on the material type.

42. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 42 Material Master – Material Types Standard material types are used in all industries. ROH: Raw Materials Purchased externally only No sales view HAWA: Trading Goods Always purchased externally Sold without any change to the material No manufacturing views exist ROH German acronym for Raw materials Raw materials (ROH) Raw materials are always procured externally and then processed. A material master record of this type contains purchasing data, but not sales data since they cannot be sold. Trading goods (HAWA) Trading goods are always procured externally and then sold. A material master record of this material type can contain purchasing data and sales data. ROH German acronym for Raw materials Raw materials (ROH) Raw materials are always procured externally and then processed. A material master record of this type contains purchasing data, but not sales data since they cannot be sold. Trading goods (HAWA) Trading goods are always procured externally and then sold. A material master record of this material type can contain purchasing data and sales data.

43. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 43 Material Master – Material Types (continued) FERT: Finished Products Are produced internally Normally no purchasing views exist Finished products (FERT) Finished products are produced in-house. Since they cannot be ordered by Purchasing, a material master record of this material type does not contain purchasing data. Finished products (FERT) Finished products are produced in-house. Since they cannot be ordered by Purchasing, a material master record of this material type does not contain purchasing data.

44. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 44 Material Master Additional Material Types HIBE: Operating Supplies VERP: Customer returnable packaging LEER: Empty containers KMAT: Configurable material ERSA: Spare parts DIEN: Services Operating supplies (HIBE) Operating supplies are procured externally and required for the manufacture of other products. A material master record of this material type can contain purchasing data, but not sales data. Packaging materials (VERP) Packaging materials are used to transport goods and come with the goods free of charge. A material master record of this material type is managed on both a quantity basis and value basis. Empties (industry LEER, retail LGUT) Empties are a type of returnable transport packaging generally subject to a deposit. They can consist of several components grouped together in a bill of material (BOM) that are assigned to a full product. For example, an empty crate and the empty bottles are assigned to the full product beer. Each of the components in the BOM has a separate material master record. Configurable materials (KMAT) Configurable materials are materials that can have different variants. For example, an automobile can have different types of paintwork, trim, and engine. The Material is configurable indicator is already set for this material type in Customizing for the Material Master in Define Attributes of Material Types. Spare parts (ERSA) Spare parts are used to replace defective parts. They may be kept in stock. A material master record of this material type can contain purchasing data, but not sales data. Services (DIEN) Services can be performed internally or procured externally (outsourced). They cannot be stored or transported. Construction work Janitorial/cleaning services Legal services Savings on Customer Returnable containers Configurable – Dell or Gateway Operating supplies (HIBE) Operating supplies are procured externally and required for the manufacture of other products. A material master record of this material type can contain purchasing data, but not sales data. Packaging materials (VERP) Packaging materials are used to transport goods and come with the goods free of charge. A material master record of this material type is managed on both a quantity basis and value basis. Empties (industry LEER, retail LGUT) Empties are a type of returnable transport packaging generally subject to a deposit. They can consist of several components grouped together in a bill of material (BOM) that are assigned to a full product. For example, an empty crate and the empty bottles are assigned to the full product beer. Each of the components in the BOM has a separate material master record. Configurable materials (KMAT) Configurable materials are materials that can have different variants. For example, an automobile can have different types of paintwork, trim, and engine. The Material is configurable indicator is already set for this material type in Customizing for the Material Master in Define Attributes of Material Types. Spare parts (ERSA) Spare parts are used to replace defective parts. They may be kept in stock. A material master record of this material type can contain purchasing data, but not sales data. Services (DIEN) Services can be performed internally or procured externally (outsourced). They cannot be stored or transported. Construction work Janitorial/cleaning services Legal services Savings on Customer Returnable containers Configurable – Dell or Gateway

45. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 45 Material Master Additional Material Types (continued) NLAG: Non-stock, non-valuated material UNBW: Non-valuated, stocked material FHMI: Production resources/tools WETT: Competitive products PROD: Product group IBAU: Maintenance assembly (Plant Maintenance) Nonstock materials (NLAG) Nonstock materials are not held in stock because they are consumed immediately. Nonvaluated materials (UNBW) Nonvaluated materials are managed on a quantity basis, but not by value. Production resources/tools (FHMI) Production resources/tools are procured externally and used in production or plant maintenance. A material master record of this material type can contain purchasing data, but not sales data. It is managed on a quantity basis. Jigs and fixtures Measuring and test equipment Competitive products (WETT) Observing and evaluating the activities of your competitors is essential for optimum market analysis. You can enter basic data on the products of your competitors in material master records of this material type. By specifying a competitor number, you can assign the product to a particular competitor. Maintenance assemblies (IBAU) Maintenance assemblies are not individual objects, but logical elements to separate technical objects into more clearly defined units in plant maintenance. For example, an automobile can be a technical object, and the engine, gearbox, chassis, and so on the maintenance assemblies. A material master record of this material type can contain basic data and classification data. Product groups (PROD) Product groups aggregate materials according to certain freely definable criteria. For example, the products may be similar to each other in some way, or they may be finished products that were produced on the same machine. Nonstock materials (NLAG) Nonstock materials are not held in stock because they are consumed immediately. Nonvaluated materials (UNBW) Nonvaluated materials are managed on a quantity basis, but not by value. Production resources/tools (FHMI) Production resources/tools are procured externally and used in production or plant maintenance. A material master record of this material type can contain purchasing data, but not sales data. It is managed on a quantity basis. Jigs and fixtures Measuring and test equipment Competitive products (WETT) Observing and evaluating the activities of your competitors is essential for optimum market analysis. You can enter basic data on the products of your competitors in material master records of this material type. By specifying a competitor number, you can assign the product to a particular competitor. Maintenance assemblies (IBAU) Maintenance assemblies are not individual objects, but logical elements to separate technical objects into more clearly defined units in plant maintenance. For example, an automobile can be a technical object, and the engine, gearbox, chassis, and so on the maintenance assemblies. A material master record of this material type can contain basic data and classification data. Product groups (PROD) Product groups aggregate materials according to certain freely definable criteria. For example, the products may be similar to each other in some way, or they may be finished products that were produced on the same machine.

46. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 46 Material Master Maintenance Defaults - speeds entry of data by using the most frequently used field values (plant, purchasing organization, etc.) Reference Material - speeds entry of data by copying data from existing material master Profiles - speeds entry of data by copying standard data created in a profile into a selected view Materials Requirements Planning (MRP) Collective entry of storage location data - speeds creation of multiple storage locations If you frequently assign materials to the same industry sector, it is useful to define it as a default to save you having to keep entering it whenever you create or access a material master record. Likewise, if you always require the same views when creating or accessing material master records, you can define that they are selected by default in the Select View(s) dialog box. Like the industry sector, you can also predefine the organizational levels for which you maintain data, and the profiles you use. Reference material Number of the material whose data you want the system to copy as default values.If you frequently assign materials to the same industry sector, it is useful to define it as a default to save you having to keep entering it whenever you create or access a material master record. Likewise, if you always require the same views when creating or accessing material master records, you can define that they are selected by default in the Select View(s) dialog box. Like the industry sector, you can also predefine the organizational levels for which you maintain data, and the profiles you use. Reference material Number of the material whose data you want the system to copy as default values.

47. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 47 Material Master Data Material master data can be related to all organizational levels General information of a material (description, number, base unit of measure) Has to be related to the highest level of organization - the client The material master has a hierarchical structure resembling the organizational structure of a company. Some material data is valid at all organizational levels, while other data is valid only at certain levels. Client Company Code Plant Storage Location Purchasing Organization Sales Organization Warehouse Number Storage Type The material master has a hierarchical structure resembling the organizational structure of a company. Some material data is valid at all organizational levels, while other data is valid only at certain levels. Client Company Code Plant Storage Location Purchasing Organization Sales Organization Warehouse Number Storage Type

48. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 48 Material Master – Levels Client Description Units of measure Material number Engineering data Plant Planning data Manufacturing data Purchasing data Client data is used enterprise wide. It will default for all lower levels Plant data can be plant specific. Demand at one plant may result in a production order Another plant’s demand may result in a transfer order from the production plant. These causes different ‘behaviors’ in operations per plant. Thus, material master is partially independent Different plant views – we do not have to create the same material over again at each plant Different functionsClient data is used enterprise wide. It will default for all lower levels Plant data can be plant specific. Demand at one plant may result in a production order Another plant’s demand may result in a transfer order from the production plant. These causes different ‘behaviors’ in operations per plant. Thus, material master is partially independent Different plant views – we do not have to create the same material over again at each plant Different functions

49. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 49 Material Master – Levels (continued) Storage Location Stock quantities Storage Location An organizational unit allowing the differentiation of material stocks within a plant. All data referring to a particular storage location is stored at storage location level. This applies mainly to storage location stocks. A plant may contain one or more storage locations. Storage Location An organizational unit allowing the differentiation of material stocks within a plant. All data referring to a particular storage location is stored at storage location level. This applies mainly to storage location stocks. A plant may contain one or more storage locations.

50. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 50 Material Master – Views Basic data 1, 2 Classification Sales: sales organization data 1, 2 Sales: general/plant data Sales text Purchasing Purchase order text Forecasting 256 fields available in the material master. You do not need them all By selecting the views, by default, it will result of that information being created regardless is you access the screen or not. 256 fields available in the material master. You do not need them all By selecting the views, by default, it will result of that information being created regardless is you access the screen or not.

51. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 51 Material Master – Views (continued) MRP 1, 2, 3, 4 Work scheduling Storage Warehouse management Quality management Accounting 1, 2 Costing 1, 2 256 fields available in the material master. You do not need them all By selecting the views, by default, it will result of that information being created regardless is you access the screen or not. 256 fields available in the material master. You do not need them all By selecting the views, by default, it will result of that information being created regardless is you access the screen or not.

52. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 52 Material Master – Material Management Basic Data Purchasing MRP 1,2,3 General Plant Data/Storage Accounting 1 Once you create a view, you can only change a view. You cannot delete it. Once you create a view, you can only change a view. You cannot delete it.

53. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 53 Material Master – Basic Data General data Basic Unit of Measure Unit of measure in which stocks of the material are managed Material Group Key that you use to group together several materials or services with the same attributes Division Used to determine the sales area and the business area for a material, product, or service Once you create a view, you can only change a view. You cannot delete it. Base Unit of Measure Unit of measure in which stocks of the material are managed. The system converts all the quantities you enter in other units of measure (alternative units of measure) to the base unit of measure. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. Use You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Division A way of grouping materials, products, or services. The system uses divisions to determine the sales areas and the business areas for a material, product, or service. Use A product or service is always assigned to just one division. From the point of view of sales and distribution, the use of divisions lets you organize your sales structure around groups of similar products or product lines. This allows the people in a division who process orders and service customers to specialize within a manageable area of expertise.Once you create a view, you can only change a view. You cannot delete it. Base Unit of Measure Unit of measure in which stocks of the material are managed. The system converts all the quantities you enter in other units of measure (alternative units of measure) to the base unit of measure. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. Use You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Division A way of grouping materials, products, or services. The system uses divisions to determine the sales areas and the business areas for a material, product, or service. Use A product or service is always assigned to just one division. From the point of view of sales and distribution, the use of divisions lets you organize your sales structure around groups of similar products or product lines. This allows the people in a division who process orders and service customers to specialize within a manageable area of expertise.

54. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 54 Material Master – Basic Data (continued) Dimensions/EANs Gross weight Used to check storage capacity in warehouse Net weight Weight excluding packaging and extras – this is needed for sales and distribution Weight Unit Unit of Measure for weight Volume The space that the material occupies per unit of volume Once you create a view, you can only change a view. You cannot delete it. Gross weight Gross weight expressed in the unit of weight specified by you in the Unit of weight field. Use The system can use the gross weight at a later stage, depending on what kind of capacity check you run, to check storage bin capacity for warehouse management purposes. Net weight Net weight expressed in the unit of weight specified by you in the Unit of weight field. This is the weight shipped or without packaging Weight Unit Unit referring to the gross weight or net weight of the material. Volume Space that the material occupies per unit of volume. The volume refers to the unit specified in the "Volume unit" field. The volume and its unit always refer to the base unit of measure. International Article Number (EAN/UPC) Glossary definition Use The EAN on the Basic Data screen always relates to the base unit of measure.Once you create a view, you can only change a view. You cannot delete it. Gross weight Gross weight expressed in the unit of weight specified by you in the Unit of weight field. Use The system can use the gross weight at a later stage, depending on what kind of capacity check you run, to check storage bin capacity for warehouse management purposes. Net weight Net weight expressed in the unit of weight specified by you in the Unit of weight field. This is the weight shipped or without packaging Weight Unit Unit referring to the gross weight or net weight of the material. Volume Space that the material occupies per unit of volume. The volume refers to the unit specified in the "Volume unit" field. The volume and its unit always refer to the base unit of measure. International Article Number (EAN/UPC) Glossary definition Use The EAN on the Basic Data screen always relates to the base unit of measure.

55. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 55 Material Master – Purchasing View General Data Order Unit The unit of measure in which a company purchases the product Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Purchasing Values Purchasing Value Key Define the reminder days and tolerance limits for purchasing Order unit Specifies the unit of measure in which the material is ordered. Procedure Enter a value in this field only if you want to use a unit of measure differing from the base unit of measure. If the field does not contain an entry, the system will assume that the unit of measure is the base unit of measure. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. Use You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Purchasing Value Key Key defining the reminder days and tolerance limits valid, as well as the shipping instructions and order acknowledgment requirement of the material for Purchasing. Order unit Specifies the unit of measure in which the material is ordered. Procedure Enter a value in this field only if you want to use a unit of measure differing from the base unit of measure. If the field does not contain an entry, the system will assume that the unit of measure is the base unit of measure. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. Use You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Purchasing Value Key Key defining the reminder days and tolerance limits valid, as well as the shipping instructions and order acknowledgment requirement of the material for Purchasing.

56. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 56 Material Master – Plant Data/Storage 1 General Data Container Requirements Define the regulations that govern which type of container the material must be stored and shipped in Storage Conditions Defines the conditions on how a material must be stored or warehoused Shelf Life Data Minimum remaining shelf life Minimum time the material must keep upon goods receipt for the goods receipt to be accepted by the system Total Shelf Life Period of time the material will keep in total, from the date of production or receipt to the shelf life expiration date Container requirements Key for the regulation that governs which type of container the material must be stored and shipped in. Storage conditions Indicates what storage conditions are required for the material. Minimum remaining shelf life Minimum amount of time for which the material must keep upon goods receipt for the goods receipt to be accepted by the system. Total shelf life Period for which the material will keep in total, that is, from the date of production to the shelf life expiration date.Container requirements Key for the regulation that governs which type of container the material must be stored and shipped in. Storage conditions Indicates what storage conditions are required for the material. Minimum remaining shelf life Minimum amount of time for which the material must keep upon goods receipt for the goods receipt to be accepted by the system. Total shelf life Period for which the material will keep in total, that is, from the date of production to the shelf life expiration date.

57. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 57 Material Master – MRP 1 General Data Purchasing Group The buyer(s) who are responsible for certain purchasing activities MRP Procedures MRP Type Determines whether and how the material is planned Reorder Point If stock falls below this point, the system is flagged to create a planned order MRP Controller The person(s) responsible for the material planning Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. MRP Type Key that determines whether and how the material is planned. You have the following options: manual reorder point planning automatic reorder point planning forecast-based planning material requirements planning with forecasts for unplanned consumption master production scheduling (MPS) Reorder point If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry. MRP Controller Specifies the number of the MRP controller or group of MRP controllers responsible for material planning for the material. Lot size (materials planning) Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced. Minimum lot size Minimum procurement quantity Fixed lot size Quantity that will be ordered or produced in the event of a shortage.Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. MRP Type Key that determines whether and how the material is planned. You have the following options: manual reorder point planning automatic reorder point planning forecast-based planning material requirements planning with forecasts for unplanned consumption master production scheduling (MPS) Reorder point If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry. MRP Controller Specifies the number of the MRP controller or group of MRP controllers responsible for material planning for the material. Lot size (materials planning) Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced. Minimum lot size Minimum procurement quantity Fixed lot size Quantity that will be ordered or produced in the event of a shortage.

58. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 58 Material Master – MRP 1 (continued) Lot Size Data Lot Size The lot sizing procedure to calculate the quantity to be produced or procured Minimum Lot Size The smallest order quantity Fixed Lot Size The quantity to be ordered Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. MRP Type Key that determines whether and how the material is planned. You have the following options: manual reorder point planning automatic reorder point planning forecast-based planning material requirements planning with forecasts for unplanned consumption master production scheduling (MPS) Reorder point If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry. MRP Controller Specifies the number of the MRP controller or group of MRP controllers responsible for material planning for the material. Lot size (materials planning) Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced. Minimum lot size Minimum procurement quantity Fixed lot size Quantity that will be ordered or produced in the event of a shortage.Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. MRP Type Key that determines whether and how the material is planned. You have the following options: manual reorder point planning automatic reorder point planning forecast-based planning material requirements planning with forecasts for unplanned consumption master production scheduling (MPS) Reorder point If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry. MRP Controller Specifies the number of the MRP controller or group of MRP controllers responsible for material planning for the material. Lot size (materials planning) Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced. Minimum lot size Minimum procurement quantity Fixed lot size Quantity that will be ordered or produced in the event of a shortage.

59. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 59 Material Master – MRP 2 Scheduling Planned Delivery Time Number of calendar days needed to obtain the material Scheduling Margin Key Used to determine the floats required for scheduling Net Requirement Calculation Safety Stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. Procedure If you have different vendors for a material, you must specify an average value. The same applies if you order the material from a fixed vendor that has varying delivery times. Scheduling Margin Key for Floats Key that the system uses to determine the floats required for scheduling an order. You define the following floats with the scheduling margin key: The specified order dates or production dates (scheduled dates) form the starting point for scheduling an order and the scheduling type determines whether the start or finish date is required to do this. Since disturbances and delays in the production process can never be completely avoided, you can plan in additional time floats at the beginning and end of an order (float before production, float after production). You define the duration of these floats in the master record of the material to be produced. Scheduling determines the required dates using these floats. The float before production is a start float. It has two functions: It can compensate for delays in the staging of the material components. If there is a capacity bottleneck at the work centers involved, the production dates can be moved forward in the future. In this way it serves as a float for capacity leveling. The float after production is a finish float. It is used to compensate for unexpected disturbances in the production process, so that they do not delay the scheduled finish date. The floats before and after production are defined for each material using a scheduling margin key. This scheduling margin key is automatically transferred from the material master when an order is created. However, you can change the times in the order. opening period float after production (only in the case of in-house production) float before production (only in the case of in-house production) release period (only in the case of production order management) Floats are maintained in workdays. Safety stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. The risk of shortfalls is reduced by having a safety stock. The safety stock exists to cover both excess material consumption within the replenishment lead time and any additional requirements that may occur due to delivery delays. Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. Procedure If you have different vendors for a material, you must specify an average value. The same applies if you order the material from a fixed vendor that has varying delivery times. Scheduling Margin Key for Floats Key that the system uses to determine the floats required for scheduling an order. You define the following floats with the scheduling margin key: The specified order dates or production dates (scheduled dates) form the starting point for scheduling an order and the scheduling type determines whether the start or finish date is required to do this. Since disturbances and delays in the production process can never be completely avoided, you can plan in additional time floats at the beginning and end of an order (float before production, float after production). You define the duration of these floats in the master record of the material to be produced. Scheduling determines the required dates using these floats. The float before production is a start float. It has two functions: It can compensate for delays in the staging of the material components. If there is a capacity bottleneck at the work centers involved, the production dates can be moved forward in the future. In this way it serves as a float for capacity leveling. The float after production is a finish float. It is used to compensate for unexpected disturbances in the production process, so that they do not delay the scheduled finish date. The floats before and after production are defined for each material using a scheduling margin key. This scheduling margin key is automatically transferred from the material master when an order is created. However, you can change the times in the order. opening period float after production (only in the case of in-house production) float before production (only in the case of in-house production) release period (only in the case of production order management) Floats are maintained in workdays. Safety stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. The risk of shortfalls is reduced by having a safety stock. The safety stock exists to cover both excess material consumption within the replenishment lead time and any additional requirements that may occur due to delivery delays.

60. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 60 Material Master – MRP 3 Availability Check Specifies whether and how the system checks availability and generates requirements for materials planning Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. Procedure If you have different vendors for a material, you must specify an average value. The same applies if you order the material from a fixed vendor that has varying delivery times. Scheduling Margin Key for Floats Key that the system uses to determine the floats required for scheduling an order. You define the following floats with the scheduling margin key: opening period float after production (only in the case of in-house production) float before production (only in the case of in-house production) release period (only in the case of production order management) Floats are maintained in workdays. Safety stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. The risk of shortfalls is reduced by having a safety stock. Checking Group for Availability Check This field has two uses: 1. Specifies whether and how the system checks availability and generates requirements for materials planning. 2. In Flexible Planning, defines - together with the checking rule - the different MRP elements that make up this key figure. The sum of these elements gives the key figure. Use 1: Availability Checking and Materials Planning Use The value you enter for use 1 (see above) is a default value which defines: Which MRP elements (for example, purchase orders, reservations) the system includes in the availability check Whether the system checks availability only until the end of the replenishment lead time or whether it checks availability over the entire period for which MRP elements exist Whether the system generates individual requirements or summarized requirements if you enter sales orders or deliveries for the material Use 2: Flexible Planning Dependencies If you use this field to define the MRP elements of a key figure for Flexible Planning, you must also select Document KF in the Customizing parameters of the information structure.Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. Procedure If you have different vendors for a material, you must specify an average value. The same applies if you order the material from a fixed vendor that has varying delivery times. Scheduling Margin Key for Floats Key that the system uses to determine the floats required for scheduling an order. You define the following floats with the scheduling margin key: opening period float after production (only in the case of in-house production) float before production (only in the case of in-house production) release period (only in the case of production order management) Floats are maintained in workdays. Safety stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. The risk of shortfalls is reduced by having a safety stock. Checking Group for Availability Check This field has two uses: 1. Specifies whether and how the system checks availability and generates requirements for materials planning. 2. In Flexible Planning, defines - together with the checking rule - the different MRP elements that make up this key figure. The sum of these elements gives the key figure. Use 1: Availability Checking and Materials Planning Use The value you enter for use 1 (see above) is a default value which defines: Which MRP elements (for example, purchase orders, reservations) the system includes in the availability check Whether the system checks availability only until the end of the replenishment lead time or whether it checks availability over the entire period for which MRP elements exist Whether the system generates individual requirements or summarized requirements if you enter sales orders or deliveries for the material Use 2: Flexible Planning Dependencies If you use this field to define the MRP elements of a key figure for Flexible Planning, you must also select Document KF in the Customizing parameters of the information structure.

61. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 61 Material Master – Accounting 1 Current Valuation Valuation Class Allows the stock values of materials of the same material type to be posted to different G/L accounts. Allows the stock values of materials of different material types to be posted to the same G/L account. Determines together with other factors the G/L accounts updated for a valuation-relevant transaction (Material Movements) Price Unit Number of units to which the price refers Price Control Indicator Indicates the price control used to valuate the stock of a material. You have the following options: Standard price Moving average price Price Unit Number of units to which the price refers. Example If 10 gallons of gasoline cost $12.00, the price unit is 10. Standard Price Standard price of the material Use The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period. Moving Average Price/Periodic Unit Price Price of the material. This can be one of the following: Moving average price Periodic unit price (only if the material ledger is activated for the material) Use The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned. It changes the price with each valuation-relevant movement. The system changes the periodic unit price if you settle the material ledger and then save the data. The valuation of stocks at moving average price or periodic unit price means that the price of the material is adapted to the continual fluctuations in the procurement price.Price Control Indicator Indicates the price control used to valuate the stock of a material. You have the following options: Standard price Moving average price Price Unit Number of units to which the price refers. Example If 10 gallons of gasoline cost $12.00, the price unit is 10. Standard Price Standard price of the material Use The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period. Moving Average Price/Periodic Unit Price Price of the material. This can be one of the following: Moving average price Periodic unit price (only if the material ledger is activated for the material) Use The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned. It changes the price with each valuation-relevant movement. The system changes the periodic unit price if you settle the material ledger and then save the data. The valuation of stocks at moving average price or periodic unit price means that the price of the material is adapted to the continual fluctuations in the procurement price.

62. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 62 Material Master – Accounting 1 (continued) Current Valuation Price Control Indicator The price control used to valuate the stock of a material (e.g, Standard or Moving Average Price) Standard Price The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period Moving Average Price The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned Price Control Indicator Indicates the price control used to valuate the stock of a material. You have the following options: Standard price Moving average price Price Unit Number of units to which the price refers. Example If 10 gallons of gasoline cost $12.00, the price unit is 10. Standard Price Standard price of the material Use The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period. Moving Average Price/Periodic Unit Price Price of the material. This can be one of the following: Moving average price Periodic unit price (only if the material ledger is activated for the material) Use The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned. It changes the price with each valuation-relevant movement. The system changes the periodic unit price if you settle the material ledger and then save the data. The valuation of stocks at moving average price or periodic unit price means that the price of the material is adapted to the continual fluctuations in the procurement price.Price Control Indicator Indicates the price control used to valuate the stock of a material. You have the following options: Standard price Moving average price Price Unit Number of units to which the price refers. Example If 10 gallons of gasoline cost $12.00, the price unit is 10. Standard Price Standard price of the material Use The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period. Moving Average Price/Periodic Unit Price Price of the material. This can be one of the following: Moving average price Periodic unit price (only if the material ledger is activated for the material) Use The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned. It changes the price with each valuation-relevant movement. The system changes the periodic unit price if you settle the material ledger and then save the data. The valuation of stocks at moving average price or periodic unit price means that the price of the material is adapted to the continual fluctuations in the procurement price.

63. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 63 Unit 7, Group 3 – Exercises Define Attribute for Material Types (Set Updating/Deselect Classification) Create Material Master for Trading Goods (Optional Exercise) Create Material Master for Operating Supplies

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