SAP and ERP

SAP and ERP stands for:

• ERP - Enterprise Resource Planning
• SAP - Systems Applications and Products
• SAP system consists of a number of fully integrated modules, which covers
virtually every aspect of business management.

SAP as an ERP
• No duplication, discontinuity, and redundancy in data
• Provides information across departments in real time.
• Provides control over various business processes
• Increases productivity, better inventory management, promotes quality, effective
human resources management, reduced overheads, boosts profits
• Increased throughput and improved customer services

SAP R/3
R/3 - Real-time data processing, 3-tier/layer
1. Database
2. Application
3. Presentation/client (SAPgui)

SAP Modules
 Materials Management (MM)
 Sales & Distribution (SD)
 Warehouse Management (WM)
 Finance and Controlling (FICO)
 Production Planning(PP)
 Quality Management (QM)
 Transportation Management (TM)
 Logistics and Execution (LE)
 Human Capital Management (HCM)
 BASIS (Technical Module)
 ABAP (Technical Module)

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 Materials Management

MM is a process for planning, organizing and controlling all the activities involved in the
flow of materials and services into an organization.
A business function for planning, purchasing, moving and storing materials

Organisational Structure in SAP MM

Client

Company Code Company Code

Plant Plant Plant

Storage Storage Storage Storage

Location Location Location Location

Master Data in SAP MM

• Master data comprises data records that are stored in the database for a long period
of time in a centralized location
• Used and processed on a cross-application and cross functional/dept. basis
• Avoid multiple storage and redundancy of data
• Reduce human effort and errors
• Automatic copy of data to documents

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1. Material Master
2. Vendor Master
3. Purchase Info Record
4. Source List
5. Bill of Material (BOM)

Material Master
• Central source of material – specific data
• Integration of all material data in a single database
• All the below areas can jointly access the stored data:
• Materials Planning — for material requirements planning
• Inventory management — for posting goods movements and physical inventory
management
• Accounting — for material valuation
• Purchasing — for ordering purposes
Vendor Master
• information about the vendors of a company, names of important contacts, address
• Mode of communication
• Terms of payment
• Currency used for transactions with the vendor
Purchase info Master data
• The availability period during which the vendor can supply the material
• Quotation and ordering data; last PO#
• Planned delivery time (lead time to deliver the material)
• Vendor evaluation data
• Tolerance limits for over/under deliveries
• Prices and conditions for the relevant purchasing organization or plant

Source List
• The source list answers question: "Which vendors can supply a material at a given
point of time?”
• Supplementing source determination with a quota arrangement
• Defining a source as a fixed source
• Blocking a source
• Defining a source in a planning run

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Bill of Material (BOM)
• A bill of material (BOM) is a complete, formally structured list of components that
make up a product or an assembly.
• The list contains a description for each component, together with quantity and unit of
measure.
• BOM is used to determine the material requirements in the subcontracting process
and the planning run (Material Requirements Planning )

Transaction codes:
Material Master: Create – MM01 Edit – MM02 Display – MM03
Vendor Master: Create – XK01 Edit – XK02 Display – XK03
Purchase Info Record: Create – ME11 Edit – ME12 Display – ME13
Source List: Create – ME01 Edit – ME01 Display – ME03
Bill of Material (BOM): Create – CS01 Edit – CS02 Display – CS03

Profit center of an organization is to route all profitability and balance sheet related
information to a profit center. Company code is a profit center.
Storage location is the sub-division of plant where the stocks are physically stored and
maintained within a plant. It is a must to maintain least one storage location for one plant

Plant can be operational unit or manufacturing unit or a sales branch of an organization.

In MM, plant can be defined as a location that holds valuated Inventory.

Purchasing group is a unit of purchasing organization responsible for day to day buying
activities and control procurement activity.

Purchasing organization is an entity of MM responsible to procure materials or services

with negotiation terms and conditions from vendors or internal plant.

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Procurement to Pay process (P2P)

1. ME51N - Create Purchase Requisition

2. ME21N - Create Purchase Order
3. MIGO - Goods Receipt (GR)
4. MIRO - Invoice Verification
5. MRBR - Invoice Release
6. F-53 - Payment to Vendor

T-codes of reports in MM
1. ME5A – List of Purchase Requisitions
2. ME2N - List of Purchase Orders
3. MB51 – List of Material documents
4. MIR5 – List of Invoice documents
5. MMBE – Stock Overview
6. MB52 – Stock Overview multiple materials

Procurement – Return Process

1. MIGO - Goods Return
2. MIRO - Credit Memo
3. MRBR - Invoice Release
4. F-52 - Incoming Payment

Reports in MM
 ME5A – List of Purchase Requisitions
 ME2N - List of Purchase Orders
 MB51 – List of Material documents
 MIR5 – List of Invoice documents
 MMBE – Stock Overview
 MB52 – Stock Overview multiple materials

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 Warehouse Management

A storage type is a storage space, storage facility, or storage zone, defined for a
warehouse number in Extended Warehouse Management (EWM). The storage type is a
physical or logical subdivision of a warehouse complex. A storage type consists of one or
more storage bins.
Commonly-used physical storage types in EWM are:
• Bulk storage area
• General storage area
• High rack storage area
• Fixed bin storage area
• Rack storage area

A storage section is an organizational subdivision of a storage type that groups

together storage bins with similar features for the purpose of putting away stock. The
criteria for grouping bins for example: heavy parts, bulky materials, fast-moving items,
slow-moving items.

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Storage bins are storage spaces or slots in Warehouse Management (WM). The storage
bin is the smallest available unit of space in a warehouse where the goods are or can be
stored.
Quant is the details of the goods stored (content) in a bin. It provides unit of measure,
volume, size and additional information like – number of pieces, weight, pallets etc. of the
stored goods.
Quant number is a temporary unique identification number (a digital code) system assigns
to a bin when goods are placed in a bin.
System will delete the quant number when the goods are moved/cleared from the bin.

Putaway Process
 LT04 - Create Transfer Order from Transfer Request (Putaway)
 LT12 - Confirmation of Transfer Order

Bin to Bin Transfer

 LT01 - Create Transfer Order
 LT12 - Confirmation of Transfer Order
Pre-requisite for Bin to Bin transfer
 LX01 – List of empty bins
 LS24 – stock by storage type by bin

Return Process
 LT06 - Create Transfer Order from Transfer Request (Return)
 LT12 - Confirmation of Transfer Order

T-Codes for Reports in WM

 LB10 – List of Transfer Requests
 LT22 – List of Transfer Orders

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 Sales & Distribution
Master data:
1. Material Master
2. Customer Master
3. Customer Material Info Record

Sales organization designs the company as per the sales requirements and responsible for
sales and distribution of goods and services. The selling unit is represented as a legal unit.

Sales Organisational structure

Distribution Channel is the process of distributing the goods or services to the

customers. It is selection criteria for grouping customers. One or more distribution
channel can serve the same customer.

A division is a way to group similar products or product lines in SAP. When you create a
material master record in SAP, you create it for a particular division. A division is also one
of the rules used to determine the sales area.

Sales Area is simply a combination of Sales Organization, Distribution Channel and

Division. It defines strategy of market reach, i.e. a Distribution Channel to sale a good or
service belonging to a particular division

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Sales Process steps
1. VA11 - Create Inquiry
2. VA21 - Create Quotation
3. VA41 - Create Contract
4. VA01 - Create Sales Order
5. VL01N - Create Delivery
6. LT03 - Create Transfer Order/Picking
7. LT12 - Confirmation of Transfer Order
8. VL02N - Post Goods Issue
9. VF01 - Create Billing Document
10. F-28 - Receipt of Payment

Sales return steps:

1. VA01 - Return Sales Order
2. VL01N - Return Delivery
3. VL02N - Post Goods Receipt
4. VF01 - Create Credit Memo
5. F-31 - Out going payment

Reports
 VA15 – List of Inquiries
 VA25 – List of Quotations
 VA45 – List of Contracts
 VA05 – List of sales orders
 VL06F – List of Outbound deliveries
 VF05 – List of Billing documents

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