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Advanced SAP S/4HANA MM Processes Guide

Advanced SAP S/4HANA MM Processes Guide

Master complex Materials Management scenarios for experienced MM consultants

Overview
Returns
Subcontracting
Third-Party
Batch Mgmt
Services
Cross-Company

Organization Structure for Advanced Scenarios

The following organizational structure will be used throughout the advanced scenarios in this guide.

Enterprise Structure for Advanced Processes

Client: 100 (Global Enterprise Inc.)

Company Codes:
1000 - Global HQ (Los Angeles, USA)
2000 - Western Subsidiary (Denver, USA)
3000 - Eastern Subsidiary (Boston, USA)
4000 - European Operations (Berlin, Germany)
5000 - Asia-Pacific Division (Singapore)

Plants:
LA01 - Los Angeles Main Plant (Company Code 1000)
LA02 - Los Angeles Distribution Center (Company Code 1000)
DV01 - Denver Manufacturing (Company Code 2000)
BS01 - Boston Distribution Center (Company Code 3000)
BE01 - Berlin Manufacturing Plant (Company Code 4000)
SG01 - Singapore Distribution Center (Company Code 5000)

Business Areas:
1000 - Consumer Products
2000 - Industrial Products
3000 - Specialty Products

Purchasing Organization Structure

Purchasing Organizations:
C100 - Central Purchasing (Headquarters)
W100 - Western Region Purchasing
E100 - Eastern Region Purchasing
EU10 - European Purchasing
AP10 - Asia Pacific Purchasing

Purchasing Groups:
P01 - Raw Materials & Chemicals
P02 - Packaging Materials
P03 - Equipment & MRO
P04 - Professional Services
P05 - Global Trading
S01 - IT Services

Valuation & Accounting Structure

Valuation Areas:
- Each plant is a separate valuation area

Profit Centers:
PC100 - Consumer Division
PC200 - Industrial Division
PC300 - Global Operations
PC400 - Specialty Products

Intercompany Configuration:
- Transfer pricing model based on cost plus 5-10%
- Automated intercompany billing
- Central payment processing with clearing

Advanced Materials Management Processes in S/4HANA

This guide covers complex MM scenarios and advanced processes that experienced MM consultants should master. These processes extend beyond standard procurement and require specific configurations and expertise.

1 Returns and Claims Management

Master the complete returns process including:

  • Returns to Vendors
  • Debit/Credit Memo Processing
  • Complaints Management
  • Quality Notifications
  • Returns Cost Settlement

Key Challenge

Returns workflows often involve multiple departments. Focus on process integration with QM and FI modules.

2 Advanced Subcontracting

Explore complex subcontracting scenarios including:

  • Component Tracking
  • Byproduct & Co-product Handling
  • Multi-level Subcontracting
  • Subcontractor Capacity Planning
  • Subcontracting with Batch Management

Key Challenge

Proper material valuation and component tracking require precise configuration and accounting integration.

3 Third-Party Order Processing

Master direct shipment scenarios including:

  • Customer-Vendor-Customer Drop Shipments
  • Third-party with Special Stock
  • Direct Shipment with Service Components
  • Direct Procurement for Projects

Key Challenge

Integration between SD and MM modules is critical for third-party processing. Focus on document flow and status management.

4 Batch Management in Procurement

Implement advanced batch handling including:

  • Batch Determination Strategies
  • Batch-Specific Procurement
  • Batch Classification
  • Shelf Life Management
  • Batch Where-Used Analysis

Key Challenge

Batch management with multiple batch levels and complex determination strategies requires precise configuration.

Advanced S/4HANA MM Features

S/4HANA offers several advanced features that enhance traditional MM processes:

S/4HANA provides real-time analytics capabilities for advanced procurement:

  • Vendor Evaluation Cockpit with multi-dimensional analysis
  • Procurement Spend Analysis with predictive capabilities
  • Material Flow Analysis across complex supply chains
  • Contract Management Analytics

S/4HANA integrates AI capabilities for advanced procurement:

  • Intelligent supplier selection based on historical performance
  • Predictive quality issue detection
  • Automated invoice matching with ML algorithms
  • Demand prediction for critical materials

S/4HANA's mandatory Material Ledger provides enhanced valuation capabilities:

  • Multiple currency valuation
  • Actual costing with periodic cost splits
  • Advanced profit center valuation
  • Legal valuation and group valuation in parallel

S/4HANA Simplifications

S/4HANA simplifies many advanced MM processes through table mergers and process optimizations. When practicing advanced scenarios, ensure you're using S/4HANA-specific transactions and configuration paths, which may differ from traditional ECC approaches.

Returns and Claims Management Scenarios

Returns processes require precise handling to ensure proper accounting, inventory control, and vendor relationship management.

Returns Process Flow

Return Decision
Return PO Creation
Return Delivery
Credit Memo Request
Settlement

Scenario 1: Standard Returns to Vendor

Returns Advanced

Process a standard return to vendor from existing inventory with credit memo processing.

Practice Steps:

  1. Create Return Purchase Order (Transaction: ME21N)
    • Document Type: RE (Returns)
    • Set Return Reason
    • Reference Original PO (optional)
  2. Create Return Delivery (Transaction: VL01N)
    • Select Delivery Type for Returns
    • Reference Return PO
  3. Post Goods Issue for Return (Transaction: MIGO)
    • Movement Type 122 (Return to Vendor)
    • Reference Return Delivery
  4. Create Credit Memo Request (Transaction: MIRO or MIR7)
    • Reference Return PO
    • Set Credit Memo Indicator
  5. Verify Accounting Documents and Inventory Impact

Configuration Tips

Ensure return reasons are properly configured. These drive subsequent workflows and reporting. For valuable returns, consider using quality notification integration for proper tracking and analysis.

Scenario 2: Returns Related to Quality Issues

Returns Complex

Process a return due to quality issues with QM integration and claim management.

Practice Steps:

  1. Create Quality Notification (Transaction: QM01)
    • Notification Type: Q2 (Vendor Complaint)
    • Document Reference to Original PO/GR
    • Defect Description and Analysis
  2. Create Return PO with QM Reference (Transaction: ME21N)
    • Link Quality Notification
    • Specify Defect Categories
  3. Process Return Delivery and Goods Issue
  4. Create Claim against Vendor (Transaction: WCAP)
    • Claim Type: Material Defect
    • Link Quality Notification and Return PO
    • Calculate Claim Amount (direct and indirect costs)
  5. Process Credit Memo Request
  6. Track Claim Settlement Status

Important Consideration

Quality notifications and claims require proper configuration in QM module. Ensure that notification types and defect codes are properly set up for vendor defects. The claims process may involve negotiations with the vendor and should be tracked properly.

Scenario 3: Returns with Subsequent Replacement

Returns Advanced

Process a return with subsequent replacement delivery from the vendor.

Practice Steps:

  1. Create Return PO (Transaction: ME21N)
  2. Process Return Delivery and Goods Issue
  3. Create Replacement PO (Transaction: ME21N)
    • Reference Original Return PO
    • Set Special Indicator for Replacement
    • Zero-value or Regular Pricing based on Agreement
  4. Process Goods Receipt for Replacement (Transaction: MIGO)
  5. Process Financial Settlement
    • Credit Memo for Return
    • Zero-value or Standard Invoice for Replacement

Configuration Tips

Use document references to link return and replacement for traceability. Consider configuring specific item categories for replacements to simplify reporting and analysis.

Scenario 4: Partial Returns and Mixed Settlements

Returns Complex

Process a partial return with mixed settlement options (credit, replacement, repair).

Practice Steps:

  1. Create Partial Return PO (Transaction: ME21N)
    • Return Only Specific Quantities
    • Multiple Items with Different Return Reasons
  2. Process Return Goods Issue
  3. Process Mixed Settlement Scenarios
    • Credit Memo for Some Items
    • Replacement Order for Some Items
    • Repair Order for Repairable Items
  4. Process Different Inbound Deliveries
    • Goods Receipt for Replacements
    • Goods Receipt for Repaired Items
  5. Reconcile Financial Settlement

Configuration Tips

Complex returns with mixed settlement require strong document links and careful tracking. Consider using order reasons and item categories to differentiate settlement types. Create custom reports to track the status of all return-related processes.

Advanced Subcontracting Scenarios

Subcontracting involves sending components to vendors who transform them into finished products. These advanced scenarios cover complex subcontracting processes.

Subcontracting Process Flow

BOM Definition
Subcontracting PO
Component Issue
Finished Goods Receipt
Settlement

Scenario 1: Advanced Component Tracking

Subcontracting Advanced

Implement subcontracting with detailed component tracking, batch management, and serialization.

Practice Steps:

  1. Create BOM for Subcontracting (Transaction: CS01)
    • Include Multiple Component Levels
    • Configure Batch-Managed Components
    • Set up Serial Number Requirements
  2. Create Subcontracting Info Record (Transaction: ME11)
    • Configure Special Processing Indicators
    • Set up Component Provisioning Control
  3. Create Subcontracting Purchase Order (Transaction: ME21N)
    • Item Category L (Subcontracting)
    • Reference BOM Components
  4. Issue Components to Vendor with Tracking (Transaction: MIGO)
    • Issue Batch-specific Components
    • Record Serial Numbers
    • Document Exact Quantities
  5. Process Component Consumption Confirmation
  6. Receive Finished Product (Transaction: MIGO)
    • Verify Batch and Serial Number Inheritance
    • Confirm Component Consumption
  7. Analyze Component Status and Vendor Stock Reports

Configuration Tips

Proper configuration of the component update indicator is critical for accurate tracking. Consider implementing backflush for high-volume components while maintaining explicit tracking for critical or high-value items.

Scenario 2: Multi-Level Subcontracting

Subcontracting Complex

Implement a multi-level subcontracting process where components flow through multiple subcontractors.

Practice Steps:

  1. Create Multi-level BOMs for Each Subcontracting Stage
  2. Configure Primary and Secondary Subcontractors
    • Set up Partner Function Definitions
    • Configure Subcontractor Chain
  3. Create Primary Subcontracting PO (Transaction: ME21N)
  4. Create Secondary Subcontracting POs
    • Reference Primary PO
    • Configure Component Flow
  5. Process Component Issues to First Subcontractor
  6. Process Inter-subcontractor Transfers
    • Track Semi-finished Components
    • Manage Component Flow
  7. Receive Final Product from Last Subcontractor
  8. Manage Multi-level Settlement and Vendor Payments

Important Consideration

Multi-level subcontracting requires precise configuration of subcontracting chains and partner functions. Consider implementing custom tracking for component transfers between subcontractors as standard functionality may be limited.

Scenario 3: Subcontracting with Byproducts

Subcontracting Advanced

Implement subcontracting with byproduct handling and return of scrap/residual materials.

Practice Steps:

  1. Create BOM with Byproducts (Transaction: CS01)
    • Configure Main Product
    • Add Byproducts
    • Define Scrap/Residual Components
  2. Create Subcontracting PO (Transaction: ME21N)
    • Include Main Product
    • Configure Byproduct Returns
  3. Issue Components to Vendor
  4. Receive Main Product (Transaction: MIGO)
  5. Receive Byproducts and Residual Materials
    • Document Quantities and Conditions
    • Assign Values to Byproducts
  6. Process Differential Settlement
    • Account for Byproduct Values
    • Reconcile Material Flows

Configuration Tips

Proper valuation of byproducts and residual materials is critical for accurate accounting. Configure separate item categories for byproducts to enable proper tracking and valuation.

Scenario 4: Subcontracting with In-process Quality Inspection

Subcontracting Complex

Implement subcontracting with in-process quality inspections and conditional component releases.

Practice Steps:

  1. Create Subcontracting PO with Quality Plans (Transaction: ME21N)
    • Link Quality Info Records
    • Define Inspection Points
  2. Issue Initial Components to Vendor
  3. Record In-process Inspection Results (Transaction: QE51)
    • Document Inspection at Vendor Site
    • Trigger Conditional Component Releases
  4. Issue Conditional Components Based on Quality Results
  5. Process Final Inspection and Product Receipt
    • Quality Inspection at Goods Receipt
    • Usage Decision Processing
  6. Analyze Quality Records and Component Usage

Configuration Tips

Proper integration between QM and MM modules is essential for in-process quality inspections. Create a comprehensive inspection plan that covers critical process points and triggers the appropriate actions.

Third-Party Order Processing Scenarios

Third-party processing (direct shipment) involves vendors shipping directly to customers while your company handles the commercial process.

Third-Party Process Flow

Sales Order
Purchase Order
Vendor Shipment
Goods Receipt
Billing

Scenario 1: Basic Third-Party Order Processing

Third-Party Advanced

Process a complete third-party order with direct shipment from vendor to customer.

Practice Steps:

  1. Create Sales Order with Third-Party Flag (Transaction: VA01)
    • Set Item Category TAS
    • Configure Delivery Address
  2. Create Purchase Order from Sales Order (Transaction: ME21N)
    • Reference Sales Order
    • Set Shipping Instructions for Direct Delivery
  3. Alternatively, use the Automatic PO Creation (Transaction: ME57)
    • Select Third-Party Sales Orders
    • Generate POs with Customer References
  4. Process Goods Receipt (Transaction: MIGO)
    • Special GR for Third-Party (No Physical Receipt)
    • Based on Vendor Shipping Confirmation
  5. Process Customer Billing (Transaction: VF01)
  6. Process Vendor Invoice (Transaction: MIRO)
  7. Verify Document Flow and Accounting

Configuration Tips

Ensure that the special stock indicator is correctly set for third-party processes. Configure shipping notifications and confirmations to maintain accurate timing for goods receipt posting.

Scenario 2: Third-Party with Multiple Vendors

Third-Party Complex

Process a third-party order split across multiple vendors with consolidated customer billing.

Practice Steps:

  1. Create Sales Order with Multiple Third-Party Items (Transaction: VA01)
  2. Split Requirements between Vendors
    • Configure Source List with Multiple Vendors
    • Use Quota Arrangements for Distribution
  3. Create Multiple Purchase Orders (Transaction: ME21N)
    • Assign Different Items/Quantities to Various Vendors
    • Ensure Each PO References Same Sales Order
  4. Process Multiple Goods Receipts as Vendors Ship
  5. Track Partial Deliveries and Confirmations
  6. Process Consolidated Customer Billing
    • Partial Billing Option
    • Complete Delivery Billing
  7. Process Multiple Vendor Invoices

Configuration Tips

Configure proper delivery tolerance parameters to handle partial deliveries. Implement a monitoring process to track the fulfillment status across multiple vendors.

Scenario 3: Third-Party with Value-Added Services

Third-Party Complex

Process a third-party order where the vendor provides additional services before customer delivery.

Practice Steps:

  1. Create Sales Order with Materials and Services (Transaction: VA01)
    • Configure Product Items
    • Add Service Items (Customization, Installation, etc.)
  2. Create Purchase Order with Materials and Services (Transaction: ME21N)
    • Item Category: Standard for Materials
    • Item Category: Service for Value-added Services
  3. Process Service Acceptance Procedure
    • Document Service Performance
    • Customer Confirmation of Services
  4. Process Goods Receipt for Materials
  5. Process Service Entry Sheet for Services (Transaction: ML81N)
  6. Process Combined Billing to Customer
  7. Process Vendor Invoice for Materials and Services

Configuration Tips

Configure proper service master data and service acceptance procedures. Link service specifications to the sales and purchasing processes to ensure proper documentation and billing.

Scenario 4: Third-Party with Cross-Company Processing

Third-Party Complex

Process a third-party order across multiple company codes with intercompany settlement.

Practice Steps:

  1. Create Sales Order in Selling Company Code (Transaction: VA01)
  2. Create Purchase Order in Procurement Company Code (Transaction: ME21N)
    • Cross-Company Code Configuration
    • Intercompany Pricing Setup
  3. Process Intercompany Stock Transfer Requirements
  4. Process Goods Receipt in Procurement Company
  5. Process Intercompany Billing
  6. Process Customer Billing from Selling Company
  7. Process Vendor Invoice in Procurement Company
  8. Reconcile Intercompany Accounts

Important Consideration

Cross-company third-party processing requires proper configuration of intercompany pricing and accounting. Ensure that all financial postings between companies are properly configured for legal compliance and internal settlement.

Batch Management in Procurement Scenarios

Batch management is critical for industries like pharmaceuticals, chemicals, and food. These scenarios focus on advanced batch management in procurement.

Batch Management Process Flow

Batch Definition
Purchasing with Batch
Batch Receipt
Batch Classification
Batch Determination

Scenario 1: Batch-Specific Procurement

Batch Advanced

Process procurement where specific batch characteristics are required from vendors.

Practice Steps:

  1. Configure Batch Classification System (Transaction: CL20N)
    • Create Class Type for Material
    • Define Batch Characteristics (Concentration, pH, etc.)
  2. Create Purchase Requisition with Batch Specifications (Transaction: ME51N)
    • Include Text with Batch Requirements
    • Attach Specification Document
  3. Create Purchase Order with Batch Requirements (Transaction: ME21N)
  4. Process Goods Receipt with Batch Creation (Transaction: MIGO)
    • Auto-create Batch
    • Enter Batch Characteristics
  5. Process Batch Classification (Transaction: MSC2N)
    • Assign Batch to Class
    • Enter Characteristic Values
  6. Perform Batch Determination Test (Transaction: MSC3N)
  7. Process Quality Inspection Based on Batch Data

Configuration Tips

Define comprehensive batch classification structures relevant to your industry. Implement batch status management to control the availability of batches based on inspection results.

Scenario 2: Shelf Life Management in Procurement

Batch Advanced

Process procurement with shelf life management and expiration date tracking.

Practice Steps:

  1. Configure Material Master for Shelf Life Management
    • Set Total Shelf Life
    • Configure Minimum Remaining Shelf Life
    • Set Period Indicator
  2. Create Purchase Order with Shelf Life Requirements (Transaction: ME21N)
    • Include Expiration Date Requirements
    • Specify Minimum Shelf Life at Delivery
  3. Process Goods Receipt with Expiration Date (Transaction: MIGO)
    • Enter Manufacturing Date
    • Enter Expiration Date
    • System Check for Minimum Remaining Shelf Life
  4. Verify Remaining Shelf Life Calculation
  5. Run Remaining Shelf Life Analysis (Transaction: MC48)
  6. Process Quality Inspections with Shelf Life Verification

Configuration Tips

Configure alerts for materials approaching expiration thresholds. Implement automated workflows for materials nearing expiration to trigger rework or disposal processes.

Scenario 3: Batch Derivation in Production Supply

Batch Complex

Implement batch-specific procurement to supply production with required batch characteristics.

Practice Steps:

  1. Create Production Order with Batch Requirements (Transaction: CO01)
    • Define Output Material Batch Requirements
    • Specify Input Material Batch Specifications
  2. Generate Purchase Requisition from MRP (Transaction: MD01)
    • Include Batch Requirement Specifications
  3. Create Purchase Order with Batch Specifications (Transaction: ME21N)
  4. Process Goods Receipt with Batch Creation
  5. Classify Batches with Required Characteristics
  6. Implement Batch Determination for Production
    • Configure Batch Determination Procedure
    • Set up Batch Search Strategies
  7. Process Material Reservation with Batch Determination
  8. Analyze Batch Where-Used List

Important Consideration

Integration between MM, PP, and QM modules is essential for this scenario. Ensure that batch determination strategies align with production requirements and quality specifications.

Scenario 4: Multi-Level Batch Management

Batch Complex

Implement advanced batch management with multiple batch levels and inheritance of characteristics.

Practice Steps:

  1. Configure Material Master for Multi-Level Batch Management
    • Define Batch Levels (e.g., Vendor Batch, Internal Batch, Production Batch)
    • Configure Batch Level Hierarchies
  2. Process Procurement with Vendor Batch (Transaction: ME21N, MIGO)
    • Capture Vendor Batch Details
    • Create Internal Batch Reference
  3. Configure Batch Inheritance Rules
    • Define Characteristic Inheritance
    • Set up Batch Genealogy
  4. Process Batch Transformations
    • Merging Multiple Vendor Batches
    • Splitting Batches for Different Uses
  5. Implement Batch Genealogy Tracking
  6. Generate Batch Traceability Reports

Configuration Tips

Multi-level batch management is crucial for industries with strict traceability requirements. Implement comprehensive batch genealogy for bidirectional traceability from raw materials to finished products.

Batch Management Strategies Comparison

Feature Basic Batch Shelf Life Derivation Multi-Level
Complexity Low Medium High Very High
Classification Required Required Required Required
Determination Optional Required Required Required
Traceability Limited Medium High Complete
Best For Simple Materials Perishables Production Supply Regulated Industries

Service Procurement Scenarios

Service procurement involves purchasing non-material items and requires different handling compared to material procurement.

Service Procurement Process Flow

Service Definition
Service PO
Service Performance
Service Entry Sheet
Invoice Verification

Scenario 1: Time-Based Service Procurement

Service Advanced

Procure time-based services with service entry sheets and performance documentation.

Practice Steps:

  1. Create Service Master (Transaction: AC03)
    • Define Service Types
    • Configure Service Hierarchy
  2. Create Service Purchase Order (Transaction: ME21N)
    • Item Category D (Service)
    • Account Assignment (Cost Center, Project, etc.)
    • Define Service Quantities and Rates
  3. Process Service Acceptance
    • Define Acceptance Procedures
    • Document Service Performance
  4. Create Service Entry Sheet (Transaction: ML81N)
    • Document Time Spent
    • Record Service Details
    • Add Attachments as Needed
  5. Process Service Entry Sheet Approval
  6. Process Invoice Verification against Service Entry (Transaction: MIRO)

Configuration Tips

Configure detailed service specifications to ensure proper service delivery and documentation. Implement approval workflows for service entry sheets to ensure proper verification before payment.

Scenario 2: Limit-Based Service Procurement

Service Advanced

Implement service procurement with value limits and progressive release.

Practice Steps:

  1. Create Service Value Contract (Transaction: ME31K)
    • Define Overall Limit
    • Configure Service Categories
    • Set Validity Periods
  2. Create Release Order against Contract (Transaction: ME21N)
    • Reference Value Contract
    • Define Sub-limit for Specific Work
  3. Process Progressive Service Entry Sheets (Transaction: ML81N)
    • Document Service Milestones
    • Track Consumption against Limit
  4. Monitor Limit Consumption (Transaction: ME2L)
  5. Process Partial Invoicing against Service Entries
  6. Manage Contract Extensions or Limit Increases as Needed

Important Consideration

Limit-based service procurement requires careful monitoring of consumption to prevent overruns. Implement alerts for approaching limits and establish approval procedures for limit increases.

Scenario 3: Service Procurement with Performance Metrics

Service Complex

Implement service procurement with KPI tracking and performance-based payment.

Practice Steps:

  1. Create Service Specifications with KPIs
    • Define Measurable Performance Indicators
    • Set Target Values and Tolerances
    • Configure Performance-based Pricing
  2. Create Service Purchase Order with KPI References (Transaction: ME21N)
  3. Process Performance Documentation
    • Record Actual Performance Values
    • Document Deviations
  4. Create Service Entry Sheet with Performance Data (Transaction: ML81N)
  5. Calculate Payment Adjustments Based on Performance
    • Apply Bonuses or Penalties
    • Document Calculation Basis
  6. Process Invoice Verification with Adjustments

Configuration Tips

Define clear and measurable KPIs that can be objectively evaluated. Implement a standardized methodology for performance measurement and establish dispute resolution procedures for performance disagreements.

Scenario 4: Complex Service Packages

Service Complex

Procure complex service packages combining materials, services, and expenses.

Practice Steps:

  1. Create Service Package Definition
    • Configure Service Components
    • Include Material Components
    • Define Expense Categories
  2. Create Mixed Purchase Order (Transaction: ME21N)
    • Item Category D for Services
    • Item Category Standard for Materials
    • Item Category K for Expenses
  3. Process Material Receipts (Transaction: MIGO)
  4. Process Service Entry Sheets (Transaction: ML81N)
  5. Document Expense Claims with Attachments
  6. Process Consolidated Service Package Acceptance
  7. Process Invoice Verification for Complete Package
    • Handle Multiple Account Assignments
    • Manage Tax Differences by Component

Configuration Tips

Configure proper item categories for each component type and establish clear boundaries between service, material, and expense items. Implement comprehensive documentation requirements to ensure proper verification of all components.

Cross-Company Procurement Scenarios

Cross-company procurement involves purchasing processes that span multiple company codes within an organization.

Cross-Company Process Flow

Procurement Request
Cross-Company PO
Goods Receipt
Intercompany Billing
Settlement

Scenario 1: Central Procurement Model

Cross-Company Advanced

Implement a central procurement model with a procurement hub and multiple receiving companies.

Practice Steps:

  1. Configure Company Code Relationships
    • Set up Procurement Hub Company
    • Configure Receiving Companies
    • Define Intercompany Pricing
  2. Create Procurement Request from Receiving Company
  3. Create Purchase Order in Procurement Hub (Transaction: ME21N)
    • Reference Receiving Company
    • Configure Shipping and Delivery Instructions
  4. Process Goods Receipt in Receiving Company (Transaction: MIGO)
  5. Process Intercompany Billing
    • Generate Intercompany Invoice
    • Apply Transfer Pricing
  6. Process Vendor Invoice in Procurement Hub (Transaction: MIRO)
  7. Reconcile Intercompany Accounts

Configuration Tips

Configure proper intercompany pricing models that comply with tax regulations. Implement automated intercompany billing procedures to ensure timely settlement between companies.

Scenario 2: Intercompany Stock Transfer

Cross-Company Advanced

Implement stock transfers between company codes with proper valuation and settlement.

Practice Steps:

  1. Configure Intercompany Stock Transfer Model
    • Set up Plant Relationships
    • Define Valuation Approaches
    • Configure Transfer Pricing
  2. Create Stock Transport Order (Transaction: ME21N)
    • Item Category U (Stock Transport)
    • Cross-Company Configuration
  3. Process Outbound Delivery from Sending Plant (Transaction: VL01N)
  4. Post Goods Issue from Sending Company
  5. Process Goods Receipt in Receiving Company (Transaction: MIGO)
  6. Process Intercompany Billing
    • Generate Settlement Document
    • Apply Transfer Price
  7. Reconcile Stock Transfer Accounts

Important Consideration

Intercompany stock transfers must comply with tax regulations and transfer pricing rules. Ensure that the valuation approach is properly configured and documented for audit purposes.

Scenario 3: Global Sourcing with Local Execution

Cross-Company Complex

Implement global contracts with local ordering and settlement processes.

Practice Steps:

  1. Create Global Contract in Central Company (Transaction: ME31K)
    • Configure Global Terms and Conditions
    • Define Base Pricing
  2. Configure Contract Distribution to Local Companies
  3. Create Local Purchase Orders with Reference to Global Contract (Transaction: ME21N)
    • Apply Local Adjustments
    • Reference Global Contract
  4. Process Local Goods Receipt and Invoice Verification
  5. Report Contract Consumption to Global Level
  6. Process Volume-Based Rebates at Global Level
  7. Distribute Rebate Benefits to Local Companies

Configuration Tips

Implement proper contract distribution mechanisms and ensure local pricing adjustments comply with the global contract framework. Establish clear rebate calculation and distribution rules to ensure fair benefit allocation.

Scenario 4: Cross-Company Projects Procurement

Cross-Company Complex

Implement procurement for projects spanning multiple company codes with cross-charging.

Practice Steps:

  1. Configure Cross-Company Project Structure
    • Set up Project Definition
    • Configure WBS Elements across Companies
    • Define Procurement Responsibilities
  2. Create Project-Based Purchase Requisitions across Companies
  3. Process Purchasing by Responsible Companies (Transaction: ME21N)
    • Account Assignment to Project WBS
    • Cross-Company References
  4. Process Goods/Service Receipt against Project
  5. Process Invoice Verification with Project Assignment
  6. Execute Project Settlement
    • Cross-Company Cost Collection
    • Settlement to Appropriate Companies
  7. Process Project Reporting across Companies

Configuration Tips

Configure proper project structures that span multiple company codes. Implement clear procurement responsibilities and settlement rules to ensure proper cost allocation and control.

Cross-Company Models Comparison

Feature Central Procurement Stock Transfer Global Sourcing Project Procurement
Complexity Medium Medium High Very High
Procurement Control Centralized Mixed Global Framework Project-driven
Local Autonomy Low Medium Medium Based on Project
Settlement Complexity Medium Medium High Very High
Best For Leverage, Control Distribution Networks Global Operations Multi-entity Projects

Advanced SAP S/4HANA MM Processes Guide

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