SAP S/4HANA Materials Management (MM)
Comprehensive Guide to the MM Module in SAP S/4HANA
1. Introduction to SAP S/4HANA MM
SAP S/4HANA is SAP's next-generation business suite designed to help enterprises run simple in the digital economy. Materials Management (MM) is one of the core modules of SAP S/4HANA that handles the procurement and inventory functions of an organization. With the introduction of SAP S/4HANA, the MM module has undergone significant transformations to improve process efficiency, user experience, and analytics capabilities.
The MM module in SAP S/4HANA represents a significant evolution from its predecessor in ECC (ERP Central Component). The major differences include:
- Simplified data model with the introduction of the Universal Journal
- Enhanced real-time capabilities through in-memory computing
- Improved user experience through SAP Fiori apps
- Advanced analytics and reporting capabilities
- Embedded machine learning and predictive analytics
- Integrated supply chain planning and execution
2. Company Structure
Understanding the organizational structure in SAP S/4HANA MM is essential as it forms the foundation for all procurement and inventory processes. The organizational elements define responsibilities, authorizations, and the scope of business activities.
SAP's organizational structure in Materials Management consists of multiple hierarchical levels that define how a company organizes its procurement and inventory management activities:
Enterprise Structure Elements
The client is the highest organizational level in SAP and represents a self-contained unit within the system:
- Each client has its own master data, transactional data, and customizing settings
- Clients are completely separate from each other (data security)
- Cross-client reporting and processes are limited
- Client-level settings affect all lower organizational levels
- Often represents a corporate group or separate legal entities
Client settings are typically set during system implementation and rarely changed afterward.
The company code is the smallest organizational unit for which a complete self-contained set of accounts can be maintained:
- Represents an independent accounting entity
- Legally required to produce financial statements (balance sheet, P&L)
- Has its own chart of accounts and fiscal year variant
- Basis for all financial reporting
- Multiple company codes can exist within a client
In Materials Management, the company code is critical for:
- Valuation of inventory
- Accounting entries for goods movements
- Vendor master data (accounting view)
- Payment terms and methods
Transaction: OX02, OX15
The plant is a key organizational unit for logistics and represents a physical location where materials are produced, stored, or distributed:
- Manufacturing facility, distribution center, warehouse, or regional office
- Manages its own inventory and material requirements planning
- Assigned to exactly one company code for valuation purposes
- Can be assigned to one or more purchasing organizations
- Serves as a default for many MM transactions
In Materials Management, plants are critical for:
- Inventory management and stock levels
- Material requirements planning (MRP)
- Material master data (plant view)
- Storage location assignment
- Goods receipt and goods issue processes
Transaction: OX10, MM01 (Plant View)
Procurement-Specific Organizational Elements
The purchasing organization is responsible for procuring materials and services at optimized prices and conditions:
- Negotiates prices, delivery terms, and conditions with vendors
- Creates and manages purchasing documents (RFQs, POs, contracts)
- Can be assigned to one company code (company-specific) or multiple company codes (cross-company)
- Can be responsible for one or multiple plants
- Handles vendor evaluation and selection
Assignment Types
Purchasing organizations can be structured in different ways:
- Centralized Purchasing: One purchasing organization for multiple plants/company codes
- Decentralized Purchasing: Each plant has its own purchasing organization
- Hybrid Approach: Centralized for strategic purchasing, decentralized for operational purchasing
Transaction: OX08, ME01
The purchasing group represents a buyer or group of buyers responsible for certain procurement activities:
- Subdivides the purchasing organization into areas of responsibility
- Often organized by material group, vendor, or product category
- Used for operational purchasing activities
- Enables analysis of buying patterns by buyer
- Basis for authorization checks in purchasing transactions
Purchasing groups are assigned in:
- Purchase requisitions
- Request for quotations
- Purchase orders
- Contracts and scheduling agreements
- Material master (purchasing view)
Transaction: OME4
The storage location is a physical area where stock is kept within a plant:
- Subdivides a plant's inventory into separate physical areas
- Used for detailed inventory management
- Always assigned to exactly one plant
- Used in goods movements and stock transfers
- Has no valuation impact (valuation occurs at plant level)
In Materials Management, storage locations are used for:
- Stock keeping and inventory reporting
- Goods receipt postings
- Goods issue processes
- Material reservations
- Physical inventory counting
Transaction: OX09
Organizational Structure in S/4HANA
Innovations in S/4HANA Organizational Structure
SAP S/4HANA introduces several enhancements to the traditional organizational structure:
- Central Procurement: Enhanced capabilities for centralized procurement across multiple SAP systems
- Business Partner Approach: Unified handling of vendors, customers, and other business partners
- Extended Plant Concept: More flexible plant definitions and assignments
- Global Visibility: Improved cross-organizational transparency of inventory and procurement
- Enhanced Authorization Concepts: More granular access control options
Organizational Hierarchy in S/4HANA MM
| Organizational Level | Responsible For | S/4HANA Enhancements |
|---|---|---|
| Client | System-wide settings, cross-company processes | Enhanced cross-client reporting capabilities |
| Company Code | Financial accounting, legal reporting | Integration with Universal Journal, simplified legal consolidation |
| Purchasing Organization | Strategic procurement, vendor management | Central procurement hub, enhanced category management |
| Plant | Inventory management, material planning | Real-time inventory visibility, advanced planning capabilities |
| Storage Location | Physical stock keeping | Enhanced integration with warehouse management, simplified stock transfers |
Configuration and Assignment Relationships
Understanding the relationships between organizational elements is crucial for proper MM configuration:
Organizational Assignments
Purchasing Structure
Key assignment rules:
- Each plant is assigned to exactly one company code
- Each storage location belongs to exactly one plant
- A purchasing organization can be assigned to one company code (company-specific) or multiple company codes (cross-company)
- Plants can be assigned to multiple purchasing organizations
- Purchasing groups operate within purchasing organizations but can span across multiple organizations
Transaction: SPRO (Enterprise Structure Implementation Guide)
3. Key Features and Innovations in SAP S/4HANA MM
Major Innovations in SAP S/4HANA MM
In SAP S/4HANA, Material Ledger is mandatory and automatically activated for all materials. This enables:
- Multiple currency valuation
- Parallel valuation approaches
- Actual costing capabilities
- Enhanced transparency in material values
The inventory management processes have been simplified with:
- Merged tables for material documents and accounting documents
- Elimination of summarization for material documents
- Real-time inventory valuation
- Simplified stock balance tables
Central procurement capabilities allow for:
- Centralized purchasing across multiple plants or companies
- Enhanced visibility across the entire procurement process
- Standardized procurement processes
- Improved negotiation power through consolidated volumes
S/4HANA offers enhanced analytics capabilities including:
- Real-time reporting without data replication
- Embedded operational reporting
- Predictive procurement analytics
- Supplier evaluation and performance analytics
4. Business Processes in MM
The Materials Management module in SAP S/4HANA encompasses several key business processes that manage the flow of materials through an organization.
Source-to-Pay Process
Inventory Management Process
Material Valuation Process
5. Master Data Management
Master data in SAP S/4HANA MM forms the foundation for all procurement and inventory processes. Proper master data management is critical for effective system operation.
Key Master Data Objects
Material Master Data
The Material Master is a central repository for all materials used by an organization. It contains comprehensive information about each material including:
- Basic data (description, unit of measure)
- Purchasing data (order unit, purchasing group)
- Sales data (sales unit, pricing)
- Accounting data (valuation, price control)
- Warehouse management data (storage conditions)
- MRP data (lot size, safety stock)
In S/4HANA, material master data management has been simplified with fewer fields and more intuitive organization.
Transaction: MM01, MM02, MM03
Vendor Master Data
The Vendor Master contains information about suppliers and is crucial for the procurement process:
- General data (name, address, contact)
- Purchasing data (terms, incoterms)
- Accounting data (payment terms, reconciliation account)
- Partner functions (contacts for different purposes)
- Tax information
S/4HANA introduces Business Partner as a unified approach to handling vendor master data.
Transaction: XK01, XK02, XK03, BP
Purchasing Info Records
Info Records maintain the relationship between materials and vendors:
- Standard prices and conditions
- Delivery and payment terms
- Material specifications from the vendor
- Performance statistics
Transaction: ME11, ME12, ME13
Source List
The Source List defines which vendors can supply specific materials:
- Valid timeframe for procurement
- Fixed vendor assignment
- Preferred vendor flags
- Procurement block indicators
Transaction: ME01, ME02, ME03
6. Procurement Process
The procurement process in SAP S/4HANA MM encompasses all activities from identifying a need to paying suppliers. The process has been streamlined in S/4HANA with improved usability and additional automation options.
Procurement Cycle
Purchase Requisition
A purchase requisition (PR) is an internal document requesting the procurement of materials or services:
- Can be created manually or generated automatically from MRP
- Contains material details, quantities, delivery dates and account assignments
- May require approval based on value or type
Transaction: ME51N, ME52N, ME53N
Request for Quotation (RFQ) / Quotation
A Request for Quotation is sent to vendors to solicit pricing and conditions:
- Multiple vendors can be included
- Deadlines for submission can be specified
- Quotations are evaluated and compared
Transaction: ME41, ME42, ME43, ME47, ME48, ME49
Purchase Order
A Purchase Order (PO) is a legally binding document sent to vendors:
- Can be created with reference to PR, quotation, or contract
- Contains pricing, delivery terms, and other conditions
- May require approval based on value or type
- Can be released to vendors via various channels
Transaction: ME21N, ME22N, ME23N, ME29N
Goods Receipt
Goods Receipt records the delivery of ordered materials:
- Creates material document and accounting document
- Updates inventory quantities
- Triggers valuation update
- Can be subject to quality inspection
Transaction: MIGO, MB01
Invoice Verification
Invoice Verification validates vendor invoices against POs and goods receipts:
- Three-way matching (PO, GR, Invoice)
- Automatic blocking of problematic invoices
- Tax calculation and checking
- Support for evaluated receipt settlement (ERS)
Transaction: MIRO, MR8M
Advanced Procurement Options
Contracts
Long-term purchasing agreements with vendors, usually with committed values or quantities over a specified period. Contracts can be:
- Value contracts (total value commitment)
- Quantity contracts (total quantity commitment)
Transaction: ME31K, ME32K, ME33K
Scheduling Agreements
Long-term agreements with delivery schedules:
- Contain delivery schedule lines
- Commonly used for JIT (Just-in-Time) deliveries
- Can have releases (with or without JIT schedule)
Transaction: ME31L, ME32L, ME33L
Stock Material Procurement
Procurement of materials that will be held in inventory:
- Subject to inventory valuation
- Managed through material master
- Can be planned through MRP
Consumption-based Procurement
Directly expensed materials or services:
- Account assignment at requisition or PO level
- No inventory valuation
- Includes services and non-stock materials
Subcontracting
Process where components are provided to vendors for processing:
- Components are tracked at the vendor location
- Special stock types are used
- Requires separate subcontracting BOMs
Central Procurement
Enables centralized purchasing across multiple plants or companies:
- Creates transparency across the entire procurement process
- Supports hub deployment scenarios
- Enables central procurement with local execution
Machine Learning for Procurement
S/4HANA incorporates machine learning for enhanced procurement processes:
- Purchase order automation
- Contract consumption recommendations
- Supplier selection recommendations
- Anomaly detection in invoice verification
7. Direct and Indirect Procurement
In SAP S/4HANA MM, direct and indirect procurement represent two distinct procurement approaches with different characteristics, processes, and business requirements. Understanding the differences between these procurement types is crucial for implementing effective procurement strategies and configurations.
Direct and indirect procurement serve different business purposes:
| Characteristic | Direct Procurement | Indirect Procurement |
|---|---|---|
| Definition | Purchasing of materials directly used in production of goods for sale | Purchasing of materials and services needed for operational activities |
| Examples | Raw materials, components, packaging materials | Office supplies, IT equipment, facilities services, travel |
| Planning Method | Often driven by MRP based on production requirements | Usually ad-hoc or consumption-based |
| Inventory Management | Typically stock materials with inventory valuation | Often direct consumption or low-value inventory |
| Accounting Impact | Affects cost of goods sold (COGS) | Affects operational expenses (OPEX) |
Strategic Differences
Direct Procurement Details
Key Features
Distinctive aspects of direct procurement:
- High impact on product quality and customer satisfaction
- Often involves long-term supplier relationships
- Closely integrated with production planning
- Typically involves higher volumes and values
- Subject to strict quality control requirements
- Often includes schedule-driven procurement
Typical Materials
Categories commonly procured through direct procurement:
- Raw materials for production
- Components and subassemblies
- Packaging materials
- Semi-finished goods for further processing
- OEM parts for product assembly
- Chemicals and ingredients
Transaction: ME21N, ME31K, ME31L, MM01
Process Flow for Direct Procurement
Planning-Driven Procurement
How material requirements planning drives direct procurement:
- MRP evaluates demand from production plans or sales forecasts
- System considers current inventory and open orders
- Purchase requisitions generated automatically
- Source determination based on source lists or quota arrangements
- Purchase orders created with reference to requisitions
- Delivery schedules managed based on production needs
Transaction: MD01, MD04, ME59, ME21N
Strategic Approaches
Recommended strategies for direct procurement:
- Supplier Integration: Close collaboration with key suppliers
- Long-term Agreements: Framework contracts and scheduling agreements
- Quality Management: Integrated supplier quality assurance processes
- Just-in-Time: Synchronized delivery with production schedules
- Supplier Development: Investing in supplier capabilities
- Risk Management: Multiple sourcing strategies for critical materials
S/4HANA Enablers for Direct Procurement
Key features in S/4HANA that enhance direct procurement:
- Enhanced MRP Live for real-time planning
- Advanced ATP (Available-to-Promise) capabilities
- Improved scheduling agreement management
- Better integration between MM and production planning
- Real-time inventory visibility
- Embedded analytics for supply performance monitoring
Indirect Procurement Details
Key Features
Distinctive aspects of indirect procurement:
- Wider variety of goods and services
- Often involves larger number of suppliers
- Typically more decentralized requisitioning
- Usually involves more approval steps
- Often focuses on process efficiency and cost control
- May have higher transaction volume but lower value per transaction
Typical Categories
Categories commonly procured through indirect procurement:
- Office supplies and equipment
- Maintenance, repair, and operations (MRO) items
- IT hardware, software, and services
- Professional services (consulting, legal)
- Facilities management services
- Travel and entertainment
Transaction: ME21N, ME51N, ME31K, MIRO
Process Flow for Indirect Procurement
User-Driven Procurement
Characteristics of the user-initiated procurement process:
- Requisitioning often starts with end users rather than planners
- Self-service procurement through catalogs and shopping carts
- Multi-level approval workflows based on value or category
- Account assignment at requisition creation
- Three-way matching for goods/service confirmation and invoicing
- Focus on process compliance and spend visibility
Service Procurement
Special considerations for indirect service procurement:
- Service specifications rather than material masters
- Service entry sheets to document delivery
- Acceptance processes for service completion
- Time and material or fixed-price contracts
- Performance-based acceptance criteria
- Integration with project systems for project-based services
Transaction: ME51N, ML81N, MIRO, ME58
8. Pricing Procedure
The Pricing Procedure in SAP S/4HANA MM defines how the system calculates prices and conditions for purchasing documents. It provides a structured and flexible approach to determining the final cost of procured materials or services based on various conditions and calculation rules.
A pricing procedure in SAP MM determines how prices and conditions are calculated in purchasing documents:
- Controls the sequence of price elements and calculations
- Defines which condition types are relevant for different purchasing scenarios
- Determines how individual conditions influence the final price
- Controls which conditions appear on printouts and documents
- Enables consistent pricing logic across the organization
Benefits of Structured Pricing Procedures
Key Components of Pricing Procedures
Condition types are the building blocks of pricing procedures that represent different price elements:
| Condition Type | Description | Usage |
|---|---|---|
| PBXX | Gross Price | Basic price from vendor |
| PDXX | Discount | Percentage or amount reduction |
| PRXX | Surcharge | Additional percentage or amount |
| PFXX | Freight | Transportation costs |
| PCXX | Customs Duty | Import/export duties |
| SKTO | Cash Discount | Discount for early payment |
| NAVS | Net Price | Calculated final price |
Condition Type Configuration
Each condition type has specific attributes that control its behavior:
- Calculation Type: Percentage, fixed amount, quantity-based, etc.
- Accrual Relevancy: Whether it affects accruals
- Tax Relevancy: Whether it's included in tax calculations
- Statistical: Informational only, doesn't affect price
- Group Condition: Bundled with other conditions
- Print Relevancy: Whether it appears on printouts
Transaction: OVK1, VOFM
Condition Tables
Condition tables define where and how condition records are stored:
- Determine which key fields are used to store condition values
- Define the criteria for searching condition records
- Control the level of detail for pricing (e.g., vendor-specific, general)
- Support different pricing scenarios (e.g., material-specific, material group)
Common Condition Tables in MM
- 231: Material + Vendor
- 232: Material Group + Vendor
- 233: Vendor
- 234: Material
- 235: Plant
- 485: Info Record
Access Sequences
Access sequences determine the order in which the system searches for condition records:
- Define a hierarchy of condition tables to be checked
- Control the prioritization of specific vs. general conditions
- Allow for fallback logic if specific conditions aren't found
- Enable flexible pricing strategies
Transaction: V/06, V/07
Structure and Function
The calculation schema defines how condition types interact to determine the final price:
- Specifies the sequence of condition types in the calculation
- Determines which conditions are added to or subtracted from the base price
- Controls subtotals and intermediate calculation steps
- Defines how condition values are rounded
- Specifies scale quantities for graduated prices
Calculation Steps
A typical calculation schema follows these general steps:
- Determine gross price (e.g., from info record, contract)
- Apply discounts (percentage or fixed amount)
- Calculate subtotal (gross price - discounts)
- Add surcharges (e.g., freight, packaging)
- Apply tax if applicable
- Calculate final net price
Transaction: VOFM, M/06
Pricing Procedure Determination
The system determines which pricing procedure to use based on various factors:
- Document Type: Different procedures for POs, RFQs, contracts
- Organization: Purchasing organization-specific procedures
- Document Category: Service vs. material procurement
- Item Category: Stock item vs. consignment vs. subcontracting
- Account Assignment Category: Affects pricing for different cost objects
Pricing Procedure Determination Process
Transaction: M/67, M/68, M/69
Condition Records Maintenance
Condition Record Creation
Condition records store the actual values for pricing elements:
- Can be created manually or through mass maintenance
- Contain condition rates (percentage or amount)
- Have validity periods (start and end dates)
- Can include scale quantities for graduated pricing
- May be linked to specific materials, vendors, or combinations
Sources of Condition Records
Condition records can originate from various sources:
- Info Records: When created or updated
- Contracts: Prices negotiated in outline agreements
- Quotations: Prices from vendor quotes
- Manual Entry: Direct creation by purchasing agents
- Mass Updates: Batch updates for multiple conditions
Transaction: ME21N, ME31K, ME11, ME12, MR21
Enhancing Condition Records
Condition supplements provide additional information for condition records:
- Scale Values: Graduated pricing based on quantity
- Validity Periods: Date ranges when conditions apply
- Notes and Texts: Additional information about the condition
- Formulas: Calculation rules for dynamic pricing
- Rebate Agreements: Links to rebate arrangements
Scales for Graduated Pricing
Scale conditions allow for quantity-dependent pricing:
- Different prices or discounts based on ordered quantity
- Encourages larger order quantities
- Can be based on weight, volume, or other criteria
- Supports tiered pricing strategies
Transaction: ME11, ME12, ME13
Pricing in S/4HANA
S/4HANA Innovations for Pricing Procedures
SAP S/4HANA introduces several enhancements to the pricing procedure functionality:
- Simplified Configuration: More intuitive setup of pricing procedures
- Enhanced Performance: Faster price determination due to HANA in-memory capabilities
- Real-time Price Simulation: Immediate visualization of pricing impacts
- Advanced Analytics: Better insights into pricing effectiveness and trends
- Machine Learning Integration: AI-driven price recommendations
- Unified Pricing Approach: More consistency between MM and SD pricing
Fiori Apps for Pricing Management
| App Name | Description | User Role |
|---|---|---|
| Manage Purchasing Info Records | Create and maintain vendor-material pricing | Purchaser, Pricing Specialist |
| Price Simulation | Analyze pricing scenarios and impacts | Purchasing Manager, Pricing Specialist |
| Contract Pricing Analysis | Review pricing effectiveness in contracts | Contract Manager, Category Manager |
| Price Comparison Dashboard | Compare pricing across vendors and materials | Purchaser, Category Manager |
| Price Variance Analysis | Monitor and analyze price variances | Purchasing Manager, Cost Controller |
Best Practices for Pricing Procedures
Pricing Procedure Design Considerations
- Standardization: Minimize the number of pricing procedures to reduce complexity
- Transparency: Design procedures that provide clear price breakdowns
- Flexibility: Balance standardization with the flexibility needed for different purchasing scenarios
- Documentation: Maintain clear documentation of pricing logic and calculations
- Future-proofing: Consider potential business changes when designing procedures
Implementation Approach
Recommended implementation methodology:
- Document current pricing processes and requirements
- Design standardized condition types across the organization
- Create clear access sequences with logical prioritization
- Test thoroughly with all business scenarios
- Train users on maintaining and troubleshooting pricing
- Establish governance for pricing procedure changes
Maximizing Pricing Procedure Effectiveness
- Regular Review: Periodically audit pricing procedures for relevance and efficiency
- Access Control: Limit condition maintenance access to appropriate personnel
- Data Quality: Ensure accurate and up-to-date condition records
- Price Monitoring: Implement processes to monitor price variances and exceptions
- User Training: Ensure purchasing staff understand pricing mechanics
- Pricing Analysis: Regularly analyze pricing effectiveness and compliance
- Supplier Communication: Clearly communicate pricing structures to suppliers
9. Release Strategy
Release Strategy in SAP S/4HANA MM is a powerful approval mechanism that controls the release (approval) process for procurement documents such as purchase requisitions, purchase orders, and contracts. It ensures that expenditures are properly authorized before commitments are made to vendors.
A Release Strategy defines the approval workflow for procurement documents:
- Determines who needs to approve which documents
- Specifies the sequence of approvals required
- Controls when documents can be used for subsequent processes
- Ensures compliance with organizational spending policies
- Creates an audit trail of approval decisions
Benefits of Release Strategies
Release Strategy Components
Release Codes
Release codes identify individual release points (approvers or approval levels):
- Assigned to specific individuals or positions
- Can be sequential or parallel in the approval process
- May have different authority levels
- Can be mandatory or optional
- Form the building blocks of the release procedure
Release Groups
Release groups combine release codes into logical sets:
- Define which release codes are required for a specific scenario
- Determine the sequence of approvals
- Control parallel vs. sequential approval flows
- Can be assigned based on document characteristics
Transaction: ME54, ME55, ME57, ME59
Release Procedure Definition
A release procedure is the overall approval framework:
- Contains one or more release groups
- Defines the complete approval path for a document
- Specifies the number of release levels required
- May include classification indicators for determining which procedure applies
- Controls whether partial releases are allowed
Release Procedure Determination
The system determines which release procedure to apply based on:
- Document Type: PR, PO, RFQ, Contract, etc.
- Document Value: Total value triggers different approval levels
- Material Group: Different approvals for different categories
- Plant/Purchasing Organization: Organization-specific approval paths
- Account Assignment: Different approvals based on cost object
- Custom Classification: User-defined criteria
Transaction: SPRO (MM > Purchasing > Release Procedure)
Release Characteristics
Release characteristics are the criteria used to determine which release procedure applies:
| Characteristic | Description | Example |
|---|---|---|
| Document Value | Total value of the document | $0-10k, $10k-50k, $50k+ |
| Material Group | Category of material being purchased | Raw materials, IT equipment, Services |
| Account Assignment | Cost object being charged | Cost center, Project, Asset |
| Plant | Location where material is needed | Manufacturing plant, Distribution center |
| Purchasing Organization | Entity responsible for procurement | Global purchasing, Regional purchasing |
| Document Type | Type of purchasing document | Standard PO, Contract, Service PO |
Release Strategies
Common release strategy approaches in organizations:
- Value-based: Different approval levels based on document value
- Hierarchical: Approval flows up the organizational hierarchy
- Matrix: Combines functional and hierarchical approvals
- Dual Control: Requires approvals from both requester's department and procurement
- Category-specific: Different approvals for different material categories
Release Process
Release Process Flow
Document Status During Release
Documents go through different statuses during the release process:
- Created: Initial status after document creation
- Awaiting Release: Pending approval
- Partially Released: Some but not all required approvals received
- Released: All required approvals completed
- Rejected: Approval denied by one or more approvers
- In Revision: Document being modified after rejection
Approver Actions
Approvers can take various actions on documents requiring release:
- Release: Approve the document
- Reject: Deny approval
- Return: Send back for revision
- Forward: Delegate approval to another authorized user
- Display: View document details without approval action
Transaction: ME54N, ME55, ME29N, ME28, ME57
Authorization Management
Release authority is controlled through user authorizations:
- Users must have proper authorization objects to release documents
- Release codes are assigned to specific users or roles
- Authority can be limited by document type, value, organization
- Substitution rules can be configured for absences
- Release authority often mirrors organizational hierarchy
Delegation and Substitution
Mechanisms for handling approver absence:
- Substitution: Temporary transfer of release authority to another user
- Delegation: Ad-hoc forwarding of specific documents for approval
- Time-based Authority: Automatic transfer of authority based on availability
- Escalation: Automatic forwarding if approval not completed within timeframe
Transaction: SU01, PFCG, ME57
Monitoring Release Status
Tools and reports for tracking the release process:
- Release monitoring reports by document type
- Documents awaiting release by approver
- Release history and audit logs
- Release time analysis
- Bottleneck identification
Release Management
Administrative functions for release processes:
- Mass release of documents (with proper authority)
- Release strategy adjustment for exceptional cases
- Release history visualization
- Release substitution management
- Release process reporting
Transaction: ME55, ME5A, ME5F, ME28
Release Strategies in S/4HANA
S/4HANA Enhancements for Release Strategies
SAP S/4HANA introduces several improvements to the release strategy functionality:
- Simplified Configuration: More intuitive setup of release procedures
- Enhanced Workflow Integration: Better integration with SAP Business Workflow
- Mobile Approvals: Ability to release documents on mobile devices
- Real-time Notifications: Immediate alerts for pending approvals
- Machine Learning Integration: Intelligent routing and approval recommendations
- Advanced Analytics: Better insights into approval processes and bottlenecks
Fiori Apps for Release Management
| App Name | Description | User Role |
|---|---|---|
| My Inbox | Central inbox for all approval tasks | Approver, Manager |
| Approve Purchase Orders | Release or reject purchase orders | PO Approver |
| Approve Purchase Requisitions | Release or reject purchase requisitions | PR Approver |
| Approve Contracts | Release or reject contracts and agreements | Contract Approver |
| Monitor Purchase Document Approval | Track approval status and bottlenecks | Procurement Manager |
| Manage Approval Substitutions | Configure approver substitutions for absences | System Administrator |
Best Practices for Release Strategies
Release Strategy Design Principles
- Simplicity: Keep release procedures as simple as possible while meeting control requirements
- Risk-Based Approach: Apply more rigorous approvals to higher-risk or higher-value purchases
- Efficiency: Balance control needs with operational efficiency
- Clarity: Ensure approvers understand their responsibilities
- Consistency: Maintain consistent approval hierarchies across similar documents
Implementation Approach
Recommended implementation methodology:
- Document current approval processes and authority levels
- Identify control objectives and organizational policies
- Design standardized release procedures
- Configure release codes, groups, and procedures
- Test thoroughly with various scenarios
- Train approvers and document creators
- Monitor and refine after implementation
Maximizing Release Strategy Effectiveness
- Regular Review: Periodically audit release procedures to ensure they remain appropriate
- Performance Monitoring: Track approval times and identify bottlenecks
- Approver Education: Ensure approvers understand what they are approving and why
- Substitution Management: Maintain current substitution rules for absences
- Delegation Control: Monitor and audit delegation patterns
- Exception Handling: Define clear procedures for urgent approvals
- Documentation: Maintain clear documentation of release procedures and authorities
10. Quota Arrangement
Quota Arrangement in SAP S/4HANA MM is a powerful functionality that enables organizations to distribute procurement requirements for the same material among multiple sources or vendors according to predefined percentages or quantities. This feature helps optimize supplier relationships, mitigate supply risks, and balance purchasing volumes strategically.
A Quota Arrangement defines how procurement requirements for a material are distributed among different sources:
- Allocates procurement quantities among multiple vendors
- Distributes requirements based on predefined quotas (percentages)
- Influences vendor determination during the procurement process
- Supports diverse supply strategies and risk management
- Can be used in both manual and automated purchasing
Business Benefits of Quota Arrangements
Quota Arrangement Structure
Quota Arrangement Elements
Key components that make up a quota arrangement:
- Material: The product for which quotas are established
- Plant: The location where the material is required
- Validity Period: Date range when the quota arrangement applies
- Vendors: Suppliers included in the arrangement
- Quota Percentages: Distribution percentages for each vendor
- Quota Quantities: Fixed quantities allocated to each vendor
Quota Types
Different approaches to defining quotas:
- Percentage-Based: Distribution based on percentage allocation (e.g., Vendor A: 60%, Vendor B: 40%)
- Quantity-Based: Fixed quantities assigned to each vendor
- Hybrid: Combination of fixed quantities and percentages
- Sequential: Vendors used in sequence until quotas are fulfilled
Transaction: MEQ1, MEQ2, MEQ3
Control Parameters
Configuration options that influence quota behavior:
- Fixed/Variable Split: Balance between fixed quantities and percentage-based allocation
- Quota Usage Tracking: How quota consumption is monitored
- Reset Period: When quota tracking is reset (monthly, quarterly, yearly)
- Rounding Rules: How to handle fractional quantities
- Override Criteria: Conditions when quotas can be bypassed
Vendor Ranking
Within a quota arrangement, vendors can be prioritized:
- Rank: Order of preference within equal quota percentages
- Fixed Quota First: Priority for vendors with fixed quantity quotas
- Performance-Based: Ranking based on vendor performance metrics
- Price Preference: Consideration of price in ranking
Transaction: MEQ1, OME6
Quota Arrangement Process
Quota Determination Process Flow
Source Determination with Quotas
How the system determines vendors based on quota arrangements:
- System checks if valid quota arrangement exists for material and plant
- Evaluates current quota fulfillment status for each vendor
- Considers remaining quantities or percentages to be fulfilled
- Proposes vendor with highest under-fulfillment relative to quota
- Updates quota records when purchase orders are created
Quota Monitoring
Tools and methods for tracking quota fulfillment:
- Quota usage reports by material and vendor
- Variance analysis between planned and actual distribution
- Periodic review of quota effectiveness
- Alerts for significant deviations from quota plan
Transaction: ME01, ME57, ME59, MEQ5
Source Determination Sequence
The priority sequence for vendor determination:
- Fixed vendor assignment in purchase requisition
- Source list with fixed vendor flag
- Quota arrangement
- Source list without fixed vendor flag
- Purchasing info records
Integration with MRP
How quota arrangements work with Material Requirements Planning:
- MRP can generate purchase requisitions with vendors derived from quota arrangements
- Purchase requisitions can be converted to purchase orders maintaining quota-based vendor selection
- Quota arrangements influence the planning and distribution of requirements
- MRP can consider lead times and other parameters from quota-assigned vendors
Transaction: MD01, MD03, ME58, ME59
Manual Overrides
Situations when quota-based sourcing can be bypassed:
- Urgent requirements with delivery time constraints
- Special quality or specification requirements
- Price advantages for specific orders
- Temporary supplier capacity issues
- Contract-specific requirements
Exception Handling
Processes for managing quota exceptions:
- Authorization controls for quota overrides
- Documentation of exception reasons
- Special approval workflows for exceptions
- Periodic review of exception patterns
- Quota adjustment based on recurring exceptions
Transaction: ME21N, ME51N
Quota Arrangements in S/4HANA
S/4HANA Enhancements for Quota Arrangements
SAP S/4HANA introduces several improvements to the quota arrangement functionality:
- Enhanced Analytics: Better insights into quota fulfillment and effectiveness
- Improved Visualization: Graphical representation of quota distribution and usage
- Real-time Monitoring: Instant visibility into quota status
- Integration with Sourcing Cockpit: Streamlined sourcing decisions
- Machine Learning Integration: Intelligent quota suggestions based on historical data
- Simplified Configuration: More intuitive setup of quota arrangements
Fiori Apps for Quota Management
| App Name | Description | User Role |
|---|---|---|
| Manage Quota Arrangements | Create and maintain quota arrangements | Procurement Specialist, Category Manager |
| Monitor Quota Fulfillment | Track quota consumption and variance | Procurement Manager, Buyer |
| Quota Distribution Analysis | Analyze vendor distribution patterns | Category Manager, Supply Chain Analyst |
| Quota Exception Dashboard | Monitor and analyze quota exceptions | Procurement Manager |
| Supplier Split Analysis | Analyze actual vs. planned supplier splits | Strategic Sourcing, Category Manager |
Best Practices for Quota Arrangements
Quota Strategy Development
- Strategic Alignment: Ensure quota arrangements support overall procurement strategy
- Risk-Balancing: Distribute across vendors to mitigate supply risks
- Supplier Strengths: Consider vendor specialization and strengths
- Performance Incentives: Use quotas to motivate supplier performance
- Market Leverage: Maintain competitive tension while ensuring supply security
Material Selection for Quotas
Characteristics of materials well-suited for quota arrangements:
- Strategic importance to the organization
- Multiple qualified supply sources available
- Regular procurement requirements
- Standardized specifications
- Supply risk concerns
- Volume-based pricing opportunities
Maximizing Quota Arrangement Effectiveness
- Regular Review: Periodically review and adjust quotas based on performance
- Vendor Communication: Clearly communicate quota expectations to suppliers
- Balanced Metrics: Consider price, quality, delivery, and innovation in quota decisions
- Gradual Changes: Implement quota changes incrementally to allow supplier adjustment
- Exception Analysis: Regularly review quota exceptions for patterns
- Seasonal Adjustments: Adjust quotas for seasonal capacity or demand fluctuations
- Performance Feedback: Provide suppliers with feedback on quota fulfillment
11. Special Procurement Types
SAP S/4HANA MM supports various special procurement types that address specific business scenarios beyond standard purchasing. These specialized processes help organizations manage complex supply chain relationships and optimize inventory management.
Special procurement types enable unique inventory and purchasing scenarios that differ from standard procurement processes. In S/4HANA, these processes have been enhanced with improved visibility, tracking, and integration capabilities.
Consignment Procurement
Consignment is a procurement process where the vendor maintains ownership of materials stored at the customer's location until consumption:
- Materials are physically at your location but legally owned by the vendor
- Payment occurs only when materials are withdrawn for use (consumption)
- Reduces tied-up capital while ensuring material availability
- Special stock indicator "K" tracks consignment stock
- Consignment fill-up often managed through scheduling agreements
Consignment Process Flow
Transaction: ME31L, MIGO, MB1B, MRKO
Key Features
- Enhanced consignment settlement processes with improved automation
- Real-time visibility into consignment stock levels
- Improved integration with vendor collaboration tools
- Automated inventory level notifications
- Fiori apps for consignment management
Consignment Configuration
Key configuration elements for consignment processing:
- Material master settings (special procurement type)
- Vendor master settings (consignment indicator)
- Info record configurations
- Valuation class for consignment stock
- Consignment settlement parameters
Subcontracting
Subcontracting is a process where components are provided to vendors who assemble or process them into a finished product:
- Components are tracked at the vendor location as special stock
- Subcontracting BOM defines component requirements
- Payment covers only the processing or assembly service
- Components retain their value while at the vendor
- Special stock indicator "O" tracks components at the subcontractor
Subcontracting Process Flow
Transaction: ME21N, ME2O, MIGO
Key Features
- Enhanced component tracking and visibility
- Simplified processing of subcontracting orders
- Improved integration with production planning
- Batch management for components
- Fiori apps for subcontracting management
Subcontracting Configuration
Key configuration elements for subcontracting:
- Material master settings (special procurement type)
- Vendor master settings
- Subcontracting BOM maintenance
- Account determination for subcontracting
- Pricing procedures for subcontracting
Stock Transfer and Pipeline Processing
Stock transfers involve moving materials between plants or storage locations:
- Stock transfer order (STO) manages inter-plant transfers
- Direct stock transfers (one-step) or in-transit processing (two-step)
- Special stock indicator "E" tracks stock in transit
- Can be handled with or without delivery documents
- Transfer postings between storage locations within a plant
Stock Transfer Process Flow
Transaction: ME21N, MIGO, MB1B
Pipeline processing is a specialized form of stock transfer used primarily for continuously flowing materials:
- Commonly used for liquids, gases, or bulk materials
- Materials "in pipeline" are tracked as special stock
- Withdrawals can be posted directly from pipeline stock
- Special stock indicator "I" tracks pipeline inventory
- Often requires periodic reconciliation based on measurements
Pipeline Configuration
Key configuration elements for pipeline processing:
- Material master settings (special procurement type)
- Pipeline networks configuration
- Metering point configuration
- Account determination for pipeline stock
Third-Party Processing (Direct Ship)
Third-party processing (also called direct shipment or drop shipping) involves vendors delivering goods directly to customers:
- Products never physically enter your inventory
- Reduces handling and shipping costs
- Accelerates delivery to customer
- Requires coordination between sales and purchasing
- Special item category in purchase order
Third-Party Process Flow
Transaction: VA01, ME21N, MIGO, MIRO
Key Features
- Enhanced integration between sales and purchasing processes
- Improved visibility of third-party orders
- Streamlined confirmation process
- Advanced delivery monitoring
- Fiori apps for third-party order management
Third-Party Configuration
Key configuration elements for third-party processing:
- Item category determination for sales orders
- Account assignment for third-party transactions
- Integration with delivery processing
- Pricing procedure configuration
- Output determination for third-party documents
Special Stock Types in S/4HANA
Special Stock Management
S/4HANA provides enhanced visibility and control over special stock types:
| Special Stock | Indicator | Description | Use Case |
|---|---|---|---|
| Sales Order Stock | E | Stock reserved for specific sales orders | Make-to-order production, project-specific materials |
| Consignment Stock | K | Vendor-owned stock at customer location | High-value items, Just-in-time procurement |
| Subcontracting Components | O | Company-owned components at vendor | Assembled products, processing services |
| Pipeline Stock | I | Stock in pipeline between locations | Fuel, chemicals, bulk materials |
| Project Stock | Q | Stock assigned to specific projects | Construction, plant maintenance, large projects |
| Stock in Transit | T | Stock being transferred between locations | Inter-plant movements, distribution networks |
12. Blanket Purchase Orders
Blanket Purchase Orders (BPOs) in SAP S/4HANA MM are specialized procurement documents used to establish long-term agreements with suppliers for recurring purchases, providing benefits like streamlined procurement, simplified administration, and favorable pricing.
A Blanket Purchase Order is a long-term agreement with a supplier that allows multiple delivery schedules or releases against a single contract document:
- Framework agreement for recurring purchases
- Typically covers a specific time period (e.g., one year)
- Can specify agreed prices, terms, and conditions
- Enables streamlined processing of repetitive orders
- Reduces administrative overhead for frequent purchases
Blanket PO Benefits
Types of Blanket Purchase Orders in SAP
Value contracts are blanket orders based on a total monetary value commitment:
- Specify a total contract value to be released over time
- Track remaining value as releases are made
- May or may not specify individual items in detail
- Useful when exact quantities are unknown but spending amount is planned
- Often used for MRO items, services, and indirect procurement
Key Features
- System monitors contract value consumption
- Alerts when approaching contract value limits
- Can include price breaks based on cumulative value
- Allows for different materials or services against the same contract
- Supports limit monitoring and approvals
Transaction: ME31K, ME32K, ME33K with Contract Type MK
Quantity contracts are blanket orders based on specific quantities of materials:
- Specify target quantities for specific materials
- Track remaining quantities as releases are made
- Have fixed prices and conditions for the contract duration
- Useful when specific quantities are known in advance
- Often used for direct materials with predictable consumption
Key Features
- System monitors quantity consumption
- Allows for scheduled deliveries over time
- Can include price breaks based on quantity tiers
- Often has more detailed item specifications than value contracts
- Provides better planning visibility for both buyer and supplier
Transaction: ME31K, ME32K, ME33K with Contract Type MK
Scheduling agreements are specialized blanket orders with detailed delivery schedules:
- Specify delivery dates and quantities in detail
- Include forecast delivery schedules
- Often used in just-in-time (JIT) manufacturing
- Provide detailed material planning information to suppliers
- Support both individual deliveries and JIT calls
Key Features
- Delivery schedule lines with specific dates
- Firm and forecast horizons
- JIT call-offs for precise delivery timing
- Integration with production planning
- EDI capabilities for automated schedule transmission
Transaction: ME31L, ME32L, ME33L
Blanket PO Process
Creation and Management Process
Release Process Options
Several methods exist for creating releases against a blanket PO:
- Direct Release: Manual creation of a release order referencing the blanket PO
- MRP-Generated Release: Material requirements planning automatically creates releases
- Release Order: Standard purchase order referencing the contract
- Schedule Releases: Delivery schedule updates for scheduling agreements
- JIT Call-offs: Just-in-time deliveries with precise quantities and times
Transaction: ME21N, ME59, MD04, ME38, ME80, ME83
Contract Monitoring
SAP S/4HANA provides tools for monitoring blanket PO usage:
- Contract consumption analysis
- Remaining value/quantity tracking
- Expiration date monitoring
- Variance analysis between contracted and actual prices
- Compliance reporting on contract utilization
Analytical Capabilities
Key analytics for blanket purchase orders:
- Contract utilization reports
- Spend analysis by contract
- Supplier performance against contract terms
- Price variance analysis
- Contract expiration forecasts
Transaction: ME3L, ME3M, ME80, ME80FN, CDS Views
Blanket POs in S/4HANA
S/4HANA Enhancements for Blanket POs
SAP S/4HANA introduces several improvements for blanket purchase order management:
- Improved Contract Management: Enhanced visibility and monitoring of contracts
- Predictive Contract Analytics: AI-powered forecasting of contract consumption
- Simplified Processing: Streamlined workflows for contract creation and management
- Mobile Approvals: Approve contracts and releases on mobile devices
- Enhanced Collaboration: Better supplier communication and collaboration tools
- Real-time Monitoring: Instant visibility into contract consumption and status
Key Fiori Apps for Blanket PO Management
| App Name | Description | User Role |
|---|---|---|
| Manage Purchase Contracts | Create and maintain blanket purchase orders | Contract Manager |
| Monitor Purchase Contracts | Track contract consumption and expiration | Purchaser, Manager |
| Create Contract-Based Purchase Orders | Create release orders against contracts | Purchaser |
| Manage Scheduling Agreements | Create and maintain scheduling agreements | Purchaser |
| Contract Consumption Analysis | Analyze contract utilization patterns | Procurement Manager |
Best Practices for Blanket POs
When to Use Blanket POs
Best scenarios for implementing blanket purchase orders:
- Repetitive purchases of the same materials or services
- When volume pricing is available for larger commitments
- For strategic suppliers with long-term relationships
- When administrative overhead needs to be reduced
- For materials with stable specifications but variable demand
- When supplier capacity planning is important
Implementation Considerations
Key factors to consider when implementing blanket POs:
- Contract validity periods and renewal processes
- Approval workflows based on contract value
- Integration with material planning processes
- Contract monitoring and reporting requirements
- Supplier integration and communication channels
- Balance between contract flexibility and commitment
Maximizing Blanket PO Benefits
Best practices for effective blanket PO management:
- Regular Monitoring: Implement routine review of contract consumption
- Proactive Renewal: Address expiring contracts before they lapse
- Performance Reviews: Evaluate supplier performance against contract terms
- Price Verification: Periodically verify contract prices against market rates
- Contract Consolidation: Combine similar requirements into single contracts
- Spend Optimization: Analyze spending patterns to identify new contract opportunities
- Compliance Management: Ensure purchases utilize available contracts
13. Request for Quotation (RFQ)
The Request for Quotation (RFQ) process in SAP S/4HANA MM is a critical component of strategic sourcing that helps organizations obtain competitive pricing and terms from potential suppliers before making procurement decisions.
The RFQ process allows buyers to collect and compare offers from multiple vendors before making purchasing decisions:
- Standardizes the solicitation of vendor quotations
- Facilitates fair and transparent vendor comparison
- Provides documentation for auditing and compliance
- Supports negotiation with potential suppliers
- Serves as a basis for subsequent purchase orders
RFQ Process Flow
RFQ Creation and Management
RFQs can be created with or without reference to existing documents:
- Creation with reference to purchase requisitions
- Creation with reference to another RFQ
- Creation with reference to a contract or scheduling agreement
- Manual creation without reference
Key RFQ Fields
Important information included in RFQs:
- Material or service specifications
- Required quantities
- Delivery dates and schedules
- Quality requirements
- Deadline for submission
- Special terms and conditions
- Selection criteria
Vendor Selection for RFQs
Vendors can be selected for RFQs through various methods:
- Manually selecting individual vendors
- Using vendor lists for specific material groups
- Based on previous suppliers for the material
- Based on source lists
Transaction: ME41, ME42, ME43
RFQ Output Management
RFQs can be communicated to vendors through various channels:
- Printed documents
- Email with PDF attachments
- EDI (Electronic Data Interchange)
- Supplier portals and collaboration platforms
- Integration with eSourcing platforms
Bidding Deadlines and Management
The RFQ process includes deadline management:
- Setting submission deadlines for quotations
- Monitoring response status
- Sending reminders to non-responding vendors
- Extending deadlines when necessary
Transaction: ME9F, ME47
Quotation Management
Quotations received from vendors are recorded in the system:
- Entry of pricing, delivery terms, and conditions
- Documentation of vendor-specific material specifications
- Handling of alternative offers
- Recording quantity-dependent prices or discounts
- Attachment of supporting documents from vendors
Quotation Validity
Quotations typically include validity information:
- Valid-from and valid-to dates
- Binding periods for prices and conditions
- Validity for specific quantities or order values
Transaction: ME47, ME48, ME49
Price Comparison
SAP provides tools for comparing quotations based on various criteria:
- Unit price comparison
- Total cost comparison (including freight, taxes, etc.)
- Delivery time comparison
- Payment term comparison
- Calculation of landed costs
Quotation Scoring and Ranking
Advanced evaluation can include weighted scoring of multiple factors:
- Price weighting (typically 50-70%)
- Delivery reliability weighting
- Quality rating weighting
- Service level weighting
- Generation of ranking reports
Transaction: ME49
Quotation to Purchase Order
After evaluating and selecting a winning quotation, it can be converted directly to a purchase order:
- Direct conversion of selected quotation to PO
- Adoption of negotiated pricing and terms
- Automatic referencing of quotation number in PO
- Optional adoption of delivery schedules
- Optional workflow for approval before conversion
Quotation History
The system maintains a history of quotation processing:
- Documentation of all submitted quotations
- Tracking of selection decisions
- Audit trail for compliance purposes
- Reference for future procurement decisions
Transaction: ME21N, ME59
S/4HANA Innovations for RFQ Process
RFQ Process Enhancements in S/4HANA
- Simplified User Experience: Intuitive Fiori apps for RFQ creation and management
- Enhanced Analytics: Real-time insights into supplier quotations and response patterns
- Machine Learning Integration: Intelligent supplier suggestions based on past performance
- Collaborative Bidding: Improved supplier collaboration tools for clarifications and negotiations
- Mobile Approval: On-the-go approval of quotation selections
- Document Management: Enhanced attachment handling and version control for specifications
Key Fiori Apps for RFQ Process
| App Name | Description | User Role |
|---|---|---|
| Manage Requests for Quotation | Create and manage RFQs | Purchaser |
| Manage Quotations | Record and process quotations from vendors | Purchaser |
| Compare Quotations | Side-by-side comparison of vendor quotations | Purchaser, Category Manager |
| RFQ Response Status | Monitor vendor responses to RFQs | Purchaser |
| Quotation Analysis | Analyze quotation patterns and pricing trends | Category Manager, Procurement Manager |
14. Service Procurement
Service procurement in SAP S/4HANA MM addresses the purchasing of services rather than physical materials. The process includes requisitioning, contracting, monitoring, and payment for services performed by vendors.
Service procurement differs from material procurement in several key aspects:
- Services cannot be physically received or stored in inventory
- Services typically require performance confirmation and acceptance
- Service specifications may be less standardized than material specifications
- Service delivery often spans longer periods and requires monitoring
- Services frequently require detailed work documentation
Common Service Categories
Service Master Data
Service master records define the services that can be purchased:
- Service numbers and descriptions
- Service hierarchies and grouping
- Standard units of measure for services
- Standard prices and pricing units
- Service specifications and requirements
Service Master vs. Material Master
Unlike material masters, service masters:
- Do not have physical inventory attributes
- Can be organized in hierarchical structures (service catalog)
- Typically include more detailed textual descriptions
- Often require specifications sheets
- May include performance metrics or SLAs
Transaction: AC01, AC02, AC03
The service catalog provides a structured hierarchy of available services:
- Organizes services into logical groups and categories
- Simplifies service selection during procurement
- Standardizes service descriptions and specifications
- Can be integrated with supplier catalogs
- Supports standard price agreements
Catalog Structure
A typical service catalog structure includes:
- Service categories (top level grouping)
- Service groups (sub-categories)
- Individual services with specifications
- Standard performance metrics
- Reference to standard pricing
Transaction: AC04, AC05, AC06
Service Procurement Process
Service Procurement Process Flow
Service Requisitioning
Service requisitions specify the services needed and include:
- Detailed service descriptions and specifications
- Required quantities and timeframes
- Account assignments for cost allocation
- Approval workflows based on value or service type
- Reference to service master or catalog entries
Transaction: ME51N, ME52N, ME53N
Service Purchase Orders and Contracts
Service purchase documents include:
- Service specifications and scope of work
- Service level agreements (SLAs)
- Pricing mechanisms (fixed price, time & material)
- Performance schedules and milestones
- Acceptance criteria and procedures
Transaction: ME21N, ME31K
Service Entry Sheet
Service entry sheets document services performed:
- Record actual services delivered against the PO
- Capture quantities, hours, or units of service
- Document completion dates and milestones
- May require approval workflow before acceptance
- Can be created by vendor or internally
Transaction: ML81N, ML82, ML84, ML85N
SES Types and Usage
Different types of service entry sheets are available:
- Standard SES for regular service documentation
- Milestone SES for project-based services
- Recurring SES for periodic services
- Collective SES covering multiple service PO items
SES Processing
Service entry sheet processing includes:
- Creation (by internal staff or by vendor)
- Approval workflow
- Technical acceptance (confirmation of service delivery)
- Financial approval (approval of costs)
- Release for invoicing
SES and Invoice Verification
Service entry sheets are a prerequisite for invoice verification:
- SES creates service acceptance document
- Invoice verification matches against accepted SES
- Partial acceptances allow for partial invoicing
- SES can trigger evaluated receipt settlement (ERS)
Service-Specific Features in S/4HANA
Enhanced Service Management
- Improved service categorization and catalog management
- Enhanced service specification capabilities
- Simplified service entry sheet processing
- Mobile solutions for service acceptance
- Machine learning for service procurement automation
Integration Capabilities
- Integration with project systems (PS) for project-based services
- Integration with plant maintenance (PM) for maintenance services
- Supplier collaboration portals for service documentation
- Integration with workforce management systems
- Fiori-based approval workflows
Service-Specific KPIs
- Service spend by category and vendor
- Service performance metrics and SLA compliance
- Service delivery timeliness
- Service quality ratings
- Price variance analysis for services
S/4HANA Analytics Features
- Real-time service spend analysis
- Embedded analytics for service management
- Service contract utilization monitoring
- Service vendor performance dashboards
- Predictive analytics for service needs
Fiori Apps for Service Procurement
Key Fiori Apps for Service Management
| App Name | Description | User Role |
|---|---|---|
| Manage Service Entry Sheets | Create and manage service entry sheets for purchase orders | Service Requester, Procurement Specialist |
| My Service Entry Sheets | Overview of service entry sheets for the current user | Service Requester |
| Approve Service Entry Sheets | Review and approve/reject service entry sheets | Service Approver |
| Monitor Service Contracts | Track service contract utilization and expiration | Contract Manager |
| Service Provider Performance | Analytics on vendor performance for services | Category Manager, Procurement Manager |
| Service Spend Analysis | Analysis of service spend by category and vendor | Procurement Manager, Finance |
15. Inventory Management
Inventory Management in SAP S/4HANA MM handles the tracking and control of material stocks within an organization. The inventory management processes have been simplified in S/4HANA with a streamlined data model and improved real-time capabilities.
Stock Types
| Stock Type | Description | Usage |
|---|---|---|
| Unrestricted Stock | Stock that is freely available for use | Regular production, sales, or consumption |
| Quality Inspection | Stock awaiting quality inspection | Materials requiring approval before use |
| Blocked Stock | Stock not available for use | Defective materials or pending decisions |
| In Transit | Stock being moved between locations | Stock transfers between plants or storage locations |
| Consignment | Stock owned by vendors but stored on-site | JIT supply arrangements |
| Project Stock | Stock reserved for specific projects | Project-based manufacturing or services |
Key Inventory Processes
Goods movements record the physical movement of materials affecting inventory levels:
- Goods receipts from vendors or production
- Goods issues to cost centers, production, or customers
- Stock transfers between storage locations or plants
- Stock transfers between different stock types
In S/4HANA, goods movements create both material documents and accounting documents simultaneously.
Transaction: MIGO, MB01, MB31, MB1A, MB1B, MB1C
Physical inventory processes verify actual stock levels against system records:
- Physical inventory document creation
- Count recording
- Difference analysis and approval
- Posting of inventory differences
S/4HANA offers improved mobile solutions for physical inventory counting.
Transaction: MI01, MI02, MI03, MI04, MI07
Reservations earmark stock for future use:
- Created manually or automatically (e.g., from production orders)
- Include material, quantity, and recipient information
- Considered in MRP calculations
- Can be subject to availability checking
Transaction: MB21, MB22, MB23, MB25, MB27
Innovations in S/4HANA Inventory Management
Simplified Data Model
S/4HANA introduces a simplified data model for inventory management:
- Elimination of summary records for material documents
- Single source of truth with the universal journal
- Real-time stock and value reporting
- Reduced data redundancy
Real-time Analytics
Enhanced real-time analytics capabilities in S/4HANA include:
- Instant visibility into inventory positions
- Real-time inventory valuation
- Stock aging analysis
- Slow-moving and obsolete inventory identification
- Inventory turnover metrics
Mobile Inventory Management
Mobile-enabled inventory management in S/4HANA:
- Goods movement processing via mobile devices
- Mobile physical inventory counting
- Barcode and RFID integration
- On-the-go inventory reporting
Fiori Apps for Inventory Management
| App Name | Description | User Role |
|---|---|---|
| Manage Stock | Overview and management of material stock | Inventory Manager |
| Process Goods Movements | Processing of goods receipts, issues, and transfers | Warehouse Clerk |
| Stock Overview | Real-time view of inventory levels | Inventory Manager, Planner |
| Physical Inventory | Manage physical inventory counts | Inventory Manager |
| Stock Analysis | Analytics on inventory levels and movements | Inventory Analyst |
15.1 Stock Transport Orders (STO)
Stock Transport Orders (STO) in SAP S/4HANA MM are specialized purchasing documents used to manage and control the movement of materials between different plants within the same company or across different company codes. STOs ensure proper tracking, valuation, and accounting of inter-plant material movements.
A Stock Transport Order is a procurement document that facilitates the transfer of materials between plants:
- Combines procurement and inventory movement functionalities
- Enables tracking of materials during transit between locations
- Provides proper valuation and accounting for inter-plant movements
- Supports both one-step and two-step transfer processes
- Can be used within a company code or across company codes
Key Benefits of Stock Transport Orders
Stock Transport Order Types
One-Step Stock Transport
Direct transfer where goods issue and receipt occur in a single transaction:
- Material is directly posted from sending plant to receiving plant
- No tracking of in-transit inventory
- Simplified process for quick transfers or short distances
- Suitable for same-location transfers between plants
- No separate goods receipt required at destination
Two-Step Stock Transport
Transfer process with separate goods issue and goods receipt steps:
- Material is first issued from sending plant to in-transit stock
- Material remains in stock in transit until received at destination
- Enables tracking of materials during transportation
- Suitable for longer transit times or when tracking is essential
- Separate goods receipt required at destination plant
Transaction: ME21N, MIGO
Intra-Company Stock Transport
Transfers within the same company code:
- Simplest form of stock transport
- No change in ownership of materials
- No invoicing process required
- Valuation based on moving average price or standard price
- Primarily inventory and logistics transaction
Cross-Company Stock Transport
Transfers between plants belonging to different company codes:
- Involves change of ownership between legal entities
- Requires invoice verification process
- Creation of accounting documents across company codes
- Internal pricing considerations (transfer pricing)
- May have tax implications depending on plant locations
Transaction: ME21N with item category L, MIGO, MIRO
Stock Transport Order Process
Two-Step Stock Transport Process
Document Flow
The typical document flow for a stock transport order:
- Purchase Requisition (optional): Request for material transfer
- Stock Transport Order: Procurement document for transfer
- Delivery Document (optional): If integrated with SD for shipping
- Material Document (Issue): Documents goods issue from sending plant
- Material Document (Receipt): Documents goods receipt at receiving plant
- Accounting Documents: Financial postings for the transfer
Transaction: ME21N, MIGO, VL01N, MIRO
Batch Management
Handling batch-managed materials in stock transport orders:
- Batch information carried through from sending to receiving plant
- Option to maintain same batch number or create new batch
- Batch characteristics can be transferred or redetermined
- Batch-specific valuation considerations
- Batch where-used list tracks movements between plants
Serial Number Management
Handling serialized materials in stock transport orders:
- Serial numbers tracked throughout the transfer process
- Individual serial number assignment at goods issue
- Verification of serial numbers at goods receipt
- Complete traceability across locations
Handling Units and Packaging
Managing packaging in stock transport processes:
- Handling units can be created at sending plant
- Packaging materials can be included in the transport
- Handling unit contents verified at receiving plant
- Option to track returnable packaging
Transaction: MIGO, MSC1N, IQ01, MSC2N
Stock Transport Orders in S/4HANA
S/4HANA Enhancements for Stock Transport Orders
SAP S/4HANA introduces several improvements to the stock transport order functionality:
- Simplified Data Model: Streamlined tables for better performance
- Enhanced Visibility: Improved tracking of in-transit inventory
- Real-time Insights: Instant visibility into transfer status
- Embedded Analytics: Better reporting on inter-plant movements
- Improved Integration: Better connection with Transportation Management
- Global Trade Services: Enhanced compliance for cross-border transfers
Fiori Apps for Stock Transport Management
| App Name | Description | User Role |
|---|---|---|
| Manage Stock Transport Orders | Create and maintain STOs | Purchasing Specialist, Inventory Manager |
| Monitor Stock in Transit | Track and analyze in-transit inventory | Supply Chain Manager, Inventory Manager |
| Process Goods Movements | Execute goods issues and receipts | Warehouse Manager, Inventory Clerk |
| Inter-Plant Transfer Analysis | Analyze transfer patterns and performance | Supply Chain Analyst, Logistics Manager |
| Stock Transport Costs | Monitor and analyze transfer costs | Controller, Cost Analyst |
16. Batch Management
Batch Management in SAP S/4HANA MM enables organizations to track and trace materials in batches throughout the supply chain. This functionality is essential for industries with quality, regulatory, or tracking requirements such as pharmaceuticals, chemicals, food, and electronics.
Batch management allows materials to be tracked in distinct groups (batches) with unique properties and characteristics:
- Enables tracking of materials with the same specifications but different attributes
- Supports quality management and traceability requirements
- Facilitates product recalls and compliance with regulatory standards
- Manages material-specific attributes like expiration dates and production information
- Supports first-expired-first-out (FEFO) and other specialized inventory strategies
Batch Management Benefits
Batch Definition and Creation
What is a Batch?
A batch in SAP represents a quantity of material with the same characteristics:
- Identified by a unique batch number
- Always associated with a specific material
- Can have specific attributes (physical, chemical, production information)
- May have different quality status from other batches of the same material
- Can be managed at plant or client level
Batch Number Assignment
SAP supports different methods for batch number assignment:
- Internal Assignment: System automatically generates batch numbers
- External Assignment: User manually assigns batch numbers
- Vendor Batch: Vendor's batch number can be captured and linked
- Numbering Ranges: Configurable ranges for different material types or plants
- Classification-Based: Batch numbers that reflect classification characteristics
Transaction: MSC1N, OMCJ
Batch Creation in Business Processes
Batches can be created at various points in business processes:
- Goods Receipt: When receiving materials from vendors
- Production: When producing materials internally
- Manual Creation: Direct creation in batch management transactions
- Quality Inspection: During quality management processes
- Goods Movement: During certain inventory movements
Batch Creation Process Flow
Transaction: MIGO, CO01, MSC1N, QA32
Batch Characteristics and Classification
Classification System
SAP's classification system allows detailed batch attributes to be defined and managed:
- Uses classes and characteristics to define batch properties
- Enables search and selection based on specific batch attributes
- Supports numeric, alphanumeric, date, and other data types
- Can have required or optional characteristics
- Supports value ranges and validation
Common Batch Characteristics
Typical batch characteristics for different industries:
- Pharmaceutical: Potency, pH level, stability data
- Chemical: Concentration, viscosity, density
- Food: Sugar content, acidity, color intensity
- Electronics: Resistance, voltage tolerance, performance metrics
- General: Production date, expiration date, country of origin
Transaction: CL20N, CT04, CT05, MSC3N
Batch Determination Strategies
SAP offers various strategies for determining which batches to use for goods movements:
- FEFO (First-Expired-First-Out): Use batches with earliest expiration dates first
- FIFO (First-In-First-Out): Use oldest batches first
- LIFO (Last-In-First-Out): Use newest batches first
- Characteristic-Based: Select batches based on specific characteristics
- Manual Selection: User manually selects appropriate batches
Batch Search and Selection
SAP provides tools for finding and selecting appropriate batches:
- Batch Where-Used List shows where batches are used
- Batch Information Cockpit provides comprehensive batch information
- Batch classification search allows finding batches with specific characteristics
- Batch availability check ensures sufficient quantities are available
Transaction: MSC2N, MB51, MB5B, MSC3N
Batch-Specific Processes
Procurement with Batch Management
Batch handling in the procurement process:
- Vendor batch information can be captured at goods receipt
- Quality inspection can be triggered for batch-managed materials
- Batch classification can be performed during goods receipt
- Batch status controls whether material can be used
- Batch-specific pricing and valuation is possible
Inventory Management with Batches
Impact of batch management on inventory processes:
- Stock is managed at both material and batch level
- Stock transfers require batch specification
- Physical inventory takes batch information into account
- Batch-specific valuation is possible with split valuation
- Batch-specific reservation ensures availability
Production with Batch Management
Batch handling in production processes:
- Automatic batch derivation from component batches
- Batch inheritance of characteristics from components to finished products
- Batch genealogy traces parent-child relationships between batches
- Production version control for batch-specific BOM and routing
Transaction: MIGO, MB1A, MB1B, CO01, COOIS
Batch Status Concept
Batch status indicates the current state of a batch and controls its usability:
- Determines if batch can be used for specific processes
- Controls availability for goods issues, production, etc.
- Can be updated manually or automatically
- Integrated with quality management
- Supports controlled release procedures
Common Batch Statuses
Typical batch statuses used in various industries:
- Restricted: Limited usage due to inspection or quality issues
- Released: Fully available for use
- Blocked: Not available for use due to quality issues
- In Quality Inspection: Currently undergoing quality testing
- Returned: Material returned from customer
Transaction: MSC2N, QA32, MMBE
Shelf Life Management
Shelf Life Concepts
SAP provides comprehensive shelf life management for batch-managed materials:
- Production Date: When the material was produced
- Shelf Life Expiration Date: When material expires
- Total Shelf Life: Maximum usable period in days
- Minimum Remaining Shelf Life: Required remaining life for specific usages
- Remaining Shelf Life: Current remaining days until expiration
Shelf Life Monitoring
Tools and processes for monitoring shelf life:
- Expiration date monitoring reports
- Alert mechanisms for approaching expiration
- Automatic status change for expired materials
- FEFO (First-Expired-First-Out) picking strategy
- Minimum shelf life verification at goods issue
Transaction: MSC2N, MC49, MC.9
Batch Management in S/4HANA
S/4HANA Enhancements for Batch Management
SAP S/4HANA introduces several improvements for batch management:
- Simplified Data Model: Streamlined tables and improved performance
- Advanced Batch Search: Enhanced search capabilities using HANA's in-memory database
- Global Batch Management: Improved cross-plant and cross-company batch visibility
- Batch Genealogy: Enhanced traceability of parent-child relationships
- Embedded Analytics: Real-time batch analytics and reporting
- Predictive Shelf Life: AI-powered prediction of actual shelf life based on conditions
Fiori Apps for Batch Management
| App Name | Description | User Role |
|---|---|---|
| Manage Batches | Create and maintain batch information | Quality Manager, Inventory Manager |
| Batch Information Cockpit | Comprehensive batch information display | Quality Manager, Production Supervisor |
| Batch Where-Used Analysis | Trace batch usage across processes | Quality Manager, Compliance Officer |
| Batch Expiration Monitor | Track batches approaching expiration | Warehouse Manager, Quality Manager |
| Batch Trace Analysis | Genealogy and traceability analysis | Quality Manager, Compliance Officer |
17. Material Requirements Planning (MRP)
Material Requirements Planning (MRP) in SAP S/4HANA MM is a systematic approach to ensuring material availability by determining what materials are needed, in what quantities, and when they should be procured or produced. MRP is a critical link between inventory management and procurement.
MRP is a planning technique that translates finished product requirements into time-phased requirements for all components and raw materials, considering:
- Existing inventory levels
- Open purchase orders and production orders
- Lead times for procurement and production
- Safety stock requirements
- Lot-sizing rules
MRP Objectives
MRP Planning Parameters
Key planning parameters in the material master that affect MRP:
| Parameter | Description | Impact on Planning |
|---|---|---|
| MRP Type | Determines if and how material is planned (e.g., reorder point, forecast-based) | Defines the overall planning approach |
| Lot Size | Method for determining order quantities (fixed, period, economic order quantity) | Controls procurement/production quantity |
| Safety Stock | Minimum stock level to buffer against uncertainties | Creates additional procurement requirements |
| Reorder Point | Stock level that triggers replenishment | Used for reorder point planning |
| Planning Time Fence | Period during which planning is frozen | Prevents changes to near-term plan |
| Procurement Type | In-house production or external procurement | Determines if PR, planned order, or production order is created |
| Lead Time | Time needed to procure or produce the material | Determines when orders need to be placed |
MRP Types
Different MRP types address various planning scenarios:
- MRP Type ND (No Planning): Material is not included in MRP
- MRP Type PD (Manual Planning): Planning is done manually without automatic MRP
- MRP Type VB (Reorder Point Planning): Planning based on reaching minimum stock level
- MRP Type VM (Forecast-Based Planning): Planning based on forecasted requirements
- MRP Type VV (Consumption-Based Planning): Planning based on historical consumption patterns
Planning Strategies
Planning strategies determine the overall approach to material planning:
- Make-to-Stock: Materials are produced or procured to maintain stock levels
- Make-to-Order: Materials are produced or procured specifically for customer orders
- Project-Based Planning: Materials are planned specifically for projects
- Kanban/JIT Planning: Just-in-time approach with pull-based replenishment
MRP Run Process
MRP Run Process Flow
MRP Run Parameters
Key parameters to control the MRP run:
- Planning Horizon: How far into the future to plan
- Planning Mode: Regenerative (complete replanning) or net change (only changed materials)
- Create Purchase Requisition: Automatically create procurement documents
- Deliver Schedule Lines: Include or exclude schedule lines
- Planning Scope: Which materials, plants, MRP controllers to include
- Display/Processing Options: Interactive processing or background processing
Transaction: MD01, MD02, MD03, MD04, MD05
MRP Lists and Analysis
The MRP run generates results that can be analyzed and processed:
- MRP List: Detailed planning results for each material
- Stock/Requirements List: Time-phased view of inventory, requirements, and planned orders
- Exception Messages: Alerts for potential issues (e.g., delayed orders, shortages)
- Planning Calendar: Graphical view of the planning situation
- Pegged Requirements: Linkage between requirements and their sources
Exception Messages
MRP generates exception messages to highlight planning issues:
- Shortage: Material will not be available when needed
- Late Orders: Existing orders will arrive too late
- Rescheduling Alerts: Suggestions to move orders earlier or later
- Excess Stock: Inventory exceeds maximum stock level
- Expired Lot: Materials may expire before consumption
Transaction: MD04, MD05, MD06, MD07
Procurement Proposals
MRP results are converted into actionable procurement documents:
- Purchase Requisitions: For externally procured materials
- Planned Orders: For in-house production or external procurement
- Scheduling Agreement Release: For materials procured via scheduling agreements
- Production Orders: Convert planned orders to production orders
Collective Processing
Tools for mass processing of MRP results:
- Collective Conversion of PRs to POs: Convert multiple purchase requisitions to purchase orders
- Collective Conversion of Planned Orders: Convert multiple planned orders to production orders
- Firm Planned Orders: Protect critical orders from automated changes
Transaction: ME59, CO41, CO40, MD15
S/4HANA Innovations for MRP
MRP Live in S/4HANA
S/4HANA introduces MRP Live, which leverages the HANA in-memory database for real-time planning:
- Real-time Processing: MRP runs execute significantly faster than in traditional ECC systems
- On-demand Planning: Plan individual materials instantly when needed
- Continuous Planning: Support for continuous rather than batch-oriented planning
- Simplified Data Model: Elimination of aggregation tables for improved performance
- Enhanced Analytics: Real-time insights into planning situations
- Predictive Material Planning: Incorporation of machine learning for demand forecasting
Fiori Apps for MRP
| App Name | Description | User Role |
|---|---|---|
| Monitor Material Coverage | Analyze material availability and coverage | MRP Controller |
| Manage Procurement Proposals | Process proposed purchase requisitions | Purchaser |
| MRP Cockpit | Central dashboard for material planning | MRP Controller |
| Stock-Requirement Analysis | Interactive analysis of stock and requirement situation | MRP Controller |
| Material Shortage Analysis | Identify and resolve material shortages | MRP Controller, Production Planner |
18. Material Valuation
Material valuation in SAP S/4HANA MM determines the value of inventory for financial reporting. In S/4HANA, material valuation has been significantly enhanced with the mandatory activation of the Material Ledger.
Price Control and Valuation
Moving Average Price
The moving average price method recalculates the material price with each goods receipt:
- Value = Total Value / Total Quantity
- Price updated with each goods receipt
- Price control type V (Moving Average Price)
Standard Price
The standard price method uses a fixed price for valuation:
- Price set manually or via price change
- Price differences posted to price difference accounts
- Price control type S (Standard Price)
Impact on Accounting
Material valuation directly affects financial accounting:
- Updates inventory accounts on the balance sheet
- Affects cost of goods sold on the income statement
- Influences profitability reports
- Determines variance postings
Material Ledger in S/4HANA
Material Ledger Fundamentals
In S/4HANA, the Material Ledger is mandatory and provides enhanced valuation capabilities:
- Multiple currency valuation
- Parallel valuation for different accounting principles (e.g., IFRS, GAAP)
- Actual costing with period-end price determination
- Price difference splits (purchase price difference, exchange rate difference)
- More detailed cost component view
Benefits of Material Ledger
Material Ledger provides several key benefits:
- Transparent cost flow tracking
- Better control over inventory valuation
- Enhanced compliance with accounting standards
- Improved cost analysis
- Support for global organizations with multiple currencies
Material Ledger Configuration
Key configuration aspects of Material Ledger in S/4HANA:
- Automatically activated for all materials
- Currency types configuration
- Valuation view setup
- Legal valuation and group valuation
- Cost component structure definition
Price Change Process
For materials using standard price control:
- New price can be entered with a future validity date
- System recalculates inventory value at cutover
- Price difference is posted to a price difference account
- Revaluation postings update general ledger
- History of price changes is maintained
Price Change Process Flow
Transaction: MR21, MMPV
The actual costing process in Material Ledger:
- Collects all actual costs throughout the period
- Performs single-level and multilevel price determination
- Updates actual prices for manufactured materials
- Creates accounting postings for price differences
- Provides detailed cost component analysis
Actual Costing Process Steps
Transaction: CKMLCP, MMPV
Material Valuation in S/4HANA
S/4HANA Enhancements for Material Valuation
SAP S/4HANA introduces several improvements to material valuation:
- Universal Journal Integration: Material values are directly reflected in the Universal Journal
- Real-time Valuation Reporting: Instant access to current inventory values
- Simplified Period-End Closing: Streamlined processes for inventory valuation
- Enhanced Cost Component Analysis: More detailed breakdown of material costs
- Improved Performance: Faster processing of valuation-related transactions
Fiori Apps for Material Valuation
| App Name | Description | User Role |
|---|---|---|
| Manage Material Prices | Create and maintain material prices | Cost Accountant, Inventory Manager |
| Material Valuation Analysis | Analyze material values and variances | Cost Accountant, Controller |
| Inventory Value Report | Report on inventory values by various dimensions | Finance Manager, Controller |
| Monitor Material Ledger | Track material ledger activities and statuses | Cost Accountant |
| Price Change Analysis | Analyze impact of price changes | Cost Accountant, Inventory Manager |
19. Split Valuation
Split Valuation in SAP S/4HANA MM allows organizations to value the same material at different prices based on specific characteristics such as origin, batch, or vendor. This capability provides more accurate cost accounting and inventory valuation.
Split valuation creates separate valuation segments for a single material, enabling:
- Different inventory values for the same material based on defined characteristics
- Separate tracking of costs for different sources or qualities
- More precise cost allocation in manufacturing
- Enhanced reporting for inventory value by segment
- Compliance with regulatory requirements for certain industries
Common Use Cases for Split Valuation
Split Valuation Configuration
SAP supports different split valuation types for various business scenarios:
| Split Valuation Type | Description | Use Case |
|---|---|---|
| A - Procurement Type | Based on procurement source (e.g., domestic vs. imported) | Different duties or transportation costs based on origin |
| B - Valuation Category | Custom categories defined by the organization | General-purpose split valuation, customizable for various needs |
| C - Country of Origin | Based on the country where material was produced | Compliance with trade regulations, origin-based costing |
| D - Vendor | Separate valuation by supplier | Tracking cost differences between suppliers |
| E - Batch Level Valuation | Individual valuation for each batch | Pharmaceutical, chemical industries with batch-specific costs |
Configuration Steps
Implementing split valuation requires several configuration steps:
- Activate Split Valuation: Enable at client level in customizing
- Define Valuation Types: Select and configure the relevant split valuation types
- Define Valuation Categories: For type B, create custom categories
- Assign Valuation Categories: Link categories to valuation classes
- Configure Material Master: Enable split valuation for specific materials
- Set Up G/L Account Determination: Configure accounting for each valuation type
Material Master Settings
Material master configuration for split valuation includes:
- Split valuation indicator in the accounting view
- Valuation category assignments
- Price control settings for each valuation segment
- Separate pricing parameters for each segment
Transaction: OMWN, OMWB, MM01, MM02
Split Valuation Process
Split Valuation Process Flow
Goods Movement with Split Valuation
When processing goods movements for split-valued materials:
- Goods receipts require valuation type specification
- System maintains separate stocks for each valuation type
- Goods issues may require selection of specific valuation type
- Different valuation segments can have different moving average prices or standard prices
- Inventory reporting shows quantities and values by segment
Consumption Strategies
When consuming split-valued materials, different strategies determine which segment is used:
- Manual Selection: User selects specific valuation type at goods issue
- FIFO/LIFO: Consumption based on receipt sequence
- Lowest/Highest Value First: Based on valuation price
- Custom Exit: Programmed strategy for specific business rules
Materials can be transferred between valuation segments when necessary:
- Specialized transaction for moving stock between segments
- May result in price differences if segments have different values
- Price differences are posted to configured variance accounts
- Full audit trail of transfers is maintained
- Requires appropriate authorization
Transaction: MIGO, MB1B with BWART 309/349
Split Valuation in S/4HANA
Split Valuation Enhancements in S/4HANA
- Universal Journal Integration: Improved integration with the Universal Journal for real-time financial reporting
- Material Ledger Synergy: Enhanced interaction with the mandatory Material Ledger
- Simplified Data Model: Streamlined tables and data structures for split valuation
- Real-time Reporting: Instant valuation reporting by segment without reconciliation
- Embedded Analytics: Enhanced reporting capabilities for segment-based analysis
- Multiple Valuation Approaches: Support for parallel legal and group valuation with split segments
Split Valuation Reporting
S/4HANA provides enhanced reporting capabilities for split-valued materials:
- Segment-specific inventory reports
- Material value analysis by valuation type
- Variance analysis between valuation segments
- Consumption patterns by valuation type
- Integration with embedded analytics for custom reports
Transaction: MMBE with split valuation, S_ALR_87012326, CDS Views
Best Practices for Split Valuation
When to Use Split Valuation
Split valuation should be considered in these scenarios:
- Significant cost differences between sources of the same material
- Regulatory requirements for tracking origin-based costs
- Need for differentiated costing in production
- Management reporting requirements for segmented inventory value
- Complex consignment or third-party ownership scenarios
Implementation Challenges
Common challenges when implementing split valuation:
- Increased complexity in material management
- Additional data entry requirements for goods movements
- More complex inventory counting procedures
- Training needs for warehouse and accounting personnel
- Custom reporting requirements
Optimizing Split Valuation in S/4HANA
Best practices for system performance with split valuation:
- Limit split valuation to materials where truly needed
- Use consistent valuation types across similar materials
- Regularly review and clean up unused valuation segments
- Configure appropriate archiving strategies
- Leverage HANA-optimized reporting rather than traditional reports
- Monitor system performance, particularly during period-end closing
20. Invoice Verification
Invoice Verification in SAP S/4HANA MM is the process of validating vendor invoices against purchase orders and goods receipts before payment. The process has been enhanced in S/4HANA with improved automation and machine learning capabilities.
Invoice Verification Process
Three-way Matching
The three-way matching process validates:
- Purchase Order: prices, quantities, and terms
- Goods Receipt: received quantities
- Invoice: vendor's charges
Invoice Blocking
Invoices can be blocked for payment due to:
- Price variances exceeding tolerance limits
- Quantity variances exceeding tolerance limits
- Missing goods receipts
- Tax discrepancies
Invoice Release
Blocked invoices can be released after:
- Review and approval of variances
- Correction of errors
- Receipt of missing goods
Types of Invoice Verification
| Type | Description | Usage |
|---|---|---|
| Logistics Invoice Verification | Standard invoice processing with PO reference | Most common form of invoice verification |
| Evaluated Receipt Settlement (ERS) | System generates invoice based on goods receipt | Trusted vendors with consistent performance |
| Subsequent Debit/Credit | Processing of additional charges or credits | Price adjustments, rebates, or corrections |
| Recurring Invoices | Regular invoices with fixed amounts | Rent, leasing, subscription services |
S/4HANA Innovations in Invoice Verification
Machine Learning for Invoice Processing
S/4HANA introduces machine learning capabilities for invoice verification:
- Automatic extraction of invoice data
- Anomaly detection for fraud prevention
- Intelligent PO assignment for non-PO invoices
- Prediction of approval decisions for blocked invoices
21. Integration with Other Modules
The MM module in SAP S/4HANA is tightly integrated with other modules, enabling end-to-end business processes. With the simplified data model of S/4HANA, these integrations have become even more seamless.
Key Integrations
Detailed Integration Points
Integration points between MM and Finance:
- Automatic accounting document creation for goods movements
- Vendor master data sharing (central Business Partner)
- Material valuation updates
- Payment processing for invoices
- Unified reporting via Universal Journal
In S/4HANA, the integration is tighter with real-time financial impacts of MM processes.
Integration points between MM and Production Planning:
- Material requirements planning (MRP)
- Automatic reservation creation from production orders
- Component issue to production
- Production order receipts
- Subcontracting process
Integration points between MM and Quality Management:
- Automatic creation of inspection lots from goods receipts
- Quality-related stock postings
- Certificate management for materials
- Quality scores in vendor evaluation
Integration points between MM and Sales & Distribution:
- Stock availability check for sales orders
- Material reservations from sales orders
- Outbound delivery processing
- Special procurement types (e.g., direct delivery)
21.1 MM-FI Integration
The integration between Materials Management (MM) and Financial Accounting (FI) in SAP S/4HANA ensures that all material-related business transactions are properly reflected in the financial accounts. This integration has been significantly enhanced in S/4HANA with the introduction of the Universal Journal, providing real-time financial visibility into procurement and inventory processes.
The MM-FI integration covers all financial aspects of procurement and inventory management:
- Automatic creation of accounting documents for goods movements
- Valuation of inventory in financial accounts
- Vendor invoice processing and payment
- Accruals for goods received/invoice received variances
- Period-end closing processes for inventory
Benefits of MM-FI Integration
Key Financial Integration Points
GR/IR Account
The Goods Receipt/Invoice Receipt (GR/IR) account manages timing differences between deliveries and invoices:
- Reconciliation account for goods received but not yet invoiced
- Ensures accurate period-end liability reporting
- Credited at goods receipt, debited at invoice receipt
- Helps identify missing invoices or goods receipts
- Supports GR/IR clearing processes
Three-way Matching Process
Financial validation through comparison of key documents:
- Purchase Order: Authorized commitment
- Goods Receipt: Confirmation of delivery
- Invoice Receipt: Vendor billing document
- Validates prices, quantities, and terms
- Identifies discrepancies for resolution
Transaction: MIGO, MIRO, MR11, FBRA
Material Valuation Methods
Approaches for valuing inventory in the financial accounts:
- Moving Average Price: Value adjusted with each receipt (price control V)
- Standard Price: Fixed value with variances posted separately (price control S)
- FIFO/LIFO: Value based on first-in/first-out or last-in/first-out (requires Material Ledger)
- Actual Costing: Periodic revaluation based on actual costs (requires Material Ledger)
Financial Inventory Accounts
Key accounts used for inventory valuation:
- Inventory Accounts: Balance sheet accounts for material value
- Consumption Accounts: Expense accounts for material usage
- Price Difference Accounts: Capture variances between expected and actual prices
- Revaluation Accounts: Used for adjusting inventory values
- Exchange Rate Difference Accounts: For currency-related valuation changes
Transaction: MMBE, MB5B, MR21, CKMLCP
Account Assignment Logic
How the system determines which G/L accounts to post to:
- Based on transaction type (goods receipt, issue, transfer)
- Influenced by material type and valuation class
- Considers account assignment category
- Uses valuation area (plant) specific settings
- Applies movement type specific rules
Account Determination Configuration
Key elements in account determination setup:
- Valuation Classes: Group materials with similar accounting treatment
- Movement Types: Define specific inventory transactions
- Valuation Grouping Codes: Link valuation classes to account assignments
- Transaction/Event Keys: Identify specific business events for accounting
- Account Determination Tables: Map business events to G/L accounts
Transaction: OMWB, OBYC, OMWD, OMWN
MM-FI Integration in S/4HANA
S/4HANA Enhancements for MM-FI Integration
SAP S/4HANA brings significant improvements to the integration between MM and FI:
- Universal Journal (ACDOCA): Single source of truth combining FI and MM data
- Material Ledger Mandatory: Enhanced valuation capabilities for all materials
- Real-time Reporting: Instant financial visibility without reconciliation
- Simplified Data Model: Reduced table complexity for better performance
- Line-Item Display: Detailed view of materials both in quantity and value
- Parallel Valuations: Support for multiple accounting principles simultaneously
Key Changes in S/4HANA
| Traditional SAP ECC | SAP S/4HANA | Benefits |
|---|---|---|
| Separate tables for MM and FI data | Universal Journal with integrated MM-FI data | No reconciliation needed, real-time financial reporting |
| Material Ledger optional | Material Ledger mandatory for all materials | Enhanced valuation options, multi-currency support |
| Summarized posting for material documents | Line-item display of material values | Detailed traceability between MM and FI |
| Complex data models with redundancy | Simplified data model with fewer tables | Better performance, reduced data footprint |
| Batch-oriented integration | Real-time integration | Up-to-date financial information for decision making |
Financial Reporting for Materials Management
Operational and Financial Views
S/4HANA enables reporting that combines operational and financial perspectives:
- Inventory values by material, plant, and storage location
- Material consumption analysis with financial impact
- Procurement spend analysis with accounting dimensions
- GR/IR balances with aging and vendor details
- Price variance analysis with accounting implications
Embedded Analytics
Real-time analytical capabilities leveraging the Universal Journal:
- Material value analysis with various accounting dimensions
- Inventory KPIs with financial perspective
- Procurement analysis with cost center view
- Vendor performance with financial implications
- Material price trend analysis
Transaction: S_ALR_87012326, CDS Views, Fiori Apps
MM Closing Activities
Key period-end processes related to Materials Management:
- GR/IR Clearing and Reconciliation: Resolve discrepancies between goods and invoices
- Inventory Physical Count: Verify and adjust book inventory to physical count
- Material Ledger Closing: Perform actual costing runs and revaluations
- Open Purchase Order Analysis: Review status of outstanding commitments
- Accruals for Goods Received: Record liabilities for uninvoiced receipts
Simplifications in S/4HANA
S/4HANA streamlines period-end processes for MM-FI:
- Reduced reconciliation requirements due to integrated data model
- Accelerated closing processes with in-memory processing
- Streamlined actual costing with improved Material Ledger
- Real-time monitoring of closing activities
- Improved accrual calculation accuracy
Transaction: MRGN, MI31, CKMLCP, MIRO
21.2 MM-SD Integration
The integration between Materials Management (MM) and Sales & Distribution (SD) in SAP S/4HANA establishes a seamless connection between procurement and sales processes. This integration ensures that materials are available for customer orders, and that the flow of goods from procurement to customer delivery is coordinated and efficient.
The MM-SD integration covers key touchpoints between procurement and sales:
- Availability checks for sales orders against inventory
- Material reservations from sales documents
- Special procurement types linked to sales (e.g., direct delivery)
- Shared master data between procurement and sales
- Coordinated processes for customer-specific materials
Benefits of MM-SD Integration
Key Integration Points
Available-to-Promise (ATP)
Mechanism that checks material availability for sales orders:
- Confirms whether requested delivery dates can be met
- Considers current stock and future receipts and issues
- Includes planned production orders and purchase orders
- Influences both sales order processing and procurement planning
- Can trigger procurement or production through MRP
ATP Configuration and Strategies
Different approaches to availability checking:
- Daily ATP: Checks availability by date
- Individual/Collective ATP: Individual or combined requirements checking
- Product Allocation: Controls availability across sales channels
- Rules-Based ATP: Advanced checking with business rules
- Global ATP: Cross-plant availability checking
Transaction: VA01, MD04, OVZ2
Third-Party Processing (Direct Delivery)
Process where a vendor delivers directly to the customer:
- Sales order triggers purchase order to vendor
- Material ships directly from vendor to customer
- No physical handling of goods by the company
- Purchase order references sales order
- Goods receipt posted against purchase order when customer confirms receipt
Special Stock Types
Special inventory categories related to sales:
- Sales Order Stock: Materials specifically procured or produced for sales orders
- Project Stock: Materials assigned to customer projects
- Consignment Stock (Outbound): Company-owned stock at customer location
- Returnable Packaging: Tracking and managing packaging materials
Transaction: ME21N, VA01, MMBE
Sales-Driven Reservations
Process of earmarking inventory for specific sales orders:
- Created automatically from sales orders or manually
- Prevents allocated stock from being used for other purposes
- Considered in material requirements planning
- Linked to specific storage locations and batches
- Released when goods issue is posted for delivery
Reservation Management
Handling material reservations in integrated processes:
- Prioritization of reservations based on business rules
- Automatic creation during sales order processing
- Visibility of reservations in inventory management
- Impact on available stock for other sales orders
- Integration with picking and warehouse management
Transaction: MB21, MB22, MB23, VA01, VL01N
Integrated Business Processes
Make-to-Stock with Delivery
Make-to-Order Process
Direct Delivery (Third-Party) Process
Transaction: VA01, MD01, ME21N, MIGO, VL01N, VF01
MM-SD Integration in S/4HANA
S/4HANA Enhancements for MM-SD Integration
SAP S/4HANA introduces several improvements to the integration between MM and SD:
- Simplified Data Model: Reduced table complexity for better performance
- Advanced ATP: Enhanced availability checking with predictive capabilities
- Real-time Insights: Instant visibility across procurement and sales
- Embedded Analytics: Integrated analysis of supply chain performance
- Predictive MRP: Forward-looking material planning based on sales patterns
- Unified Order Management: More seamless connection between sales and procurement
Fiori Apps for Integrated Processes
| App Name | Description | User Role |
|---|---|---|
| Monitor Material Coverage | Track material availability against demands | Material Planner, Sales Support |
| Manage Product Allocations | Control material distribution across sales channels | Supply Chain Manager, Sales Manager |
| Schedule Delivery Creation | Plan and create deliveries from sales orders | Shipping Specialist, Logistics Manager |
| Check ATP Situation | Analyze availability for sales orders | Sales Representative, Order Manager |
| Manage Third-Party Orders | Handle direct delivery process | Purchaser, Sales Support |
21.3 MM-PP Integration
The integration between Materials Management (MM) and Production Planning (PP) in SAP S/4HANA creates a seamless connection between procurement and manufacturing processes. This integration ensures that materials required for production are available at the right time, in the right quantity, and at the right quality, while optimizing inventory levels and procurement costs.
The MM-PP integration encompasses key touchpoints between procurement and production:
- Material requirements planning (MRP) for production components
- Component availability for production orders
- Material reservations for production
- Component issues to production
- Receipt of manufactured goods to inventory
- Handling of co-products and by-products
Benefits of MM-PP Integration
Key Integration Points
MRP for Production Components
Planning process for materials needed in manufacturing:
- Calculates component requirements based on planned production
- Considers bill of materials (BOM) and routings
- Generates purchase requisitions for externally procured components
- Creates planned orders for internally manufactured components
- Considers lead times for procurement and production
BOM Explosion in MRP
Process of calculating detailed component requirements:
- Converts finished product demand into component requirements
- Applies scrap factors and batch sizes
- Considers alternative components and BOM variants
- Handles multi-level production structures
- Integrates with procurement planning
Transaction: MD01, MD03, MD04, CS01, CS02
Production Order Component Reservation
Process of earmarking materials for specific production orders:
- Created automatically when production order is released
- Reserves specific quantities of components
- Can include specific batches or storage locations
- Considered in available stock calculations
- Used as basis for component withdrawal
Component Issue to Production
Process of providing materials to the production process:
- Goods issue against production order reservation
- Reduces inventory and increases work in process (WIP)
- Can be performed as backflushing (automatic consumption)
- Can be done via pick lists or warehouse management
- Updates material availability for other orders
Transaction: CO01, CO02, MIGO, MB1A, CO11N
Goods Receipt for Production
Process of receiving manufactured goods into inventory:
- Creates material document for finished product
- Increases inventory of manufactured material
- Relieves work in process (WIP)
- Updates production order status
- Can trigger inventory valuation updates
Handling Special Production Scenarios
Integration for specific manufacturing processes:
- Co-Products: Multiple main products from one production process
- By-Products: Secondary products from manufacturing
- Process Manufacturing: Continuous production with different yield rates
- Engineering Change Management: Handling BOM and component changes
- Rework Processing: Reintroduction of quality issues into production
Transaction: MIGO, CO15, CO02
Production Costing and Valuation
Standard Cost Estimate
Process of determining planned costs for manufactured materials:
- Calculates material cost based on BOM components
- Includes production costs from routings (labor, machine)
- Considers overhead costs and surcharges
- Used for inventory valuation of finished products
- Basis for variance analysis
Actual Costing
Determination of actual production costs:
- Captures actual component costs from goods issues
- Records actual production costs from confirmations
- Calculates variances against standard costs
- Can lead to inventory revaluation
- Provides cost transparency for manufactured goods
Transaction: CK11N, CK40N, CK24, CKMLCP
MM-PP Integration in S/4HANA
S/4HANA Enhancements for MM-PP Integration
SAP S/4HANA introduces several improvements to the integration between MM and PP:
- Simplified Data Model: Streamlined tables for better performance
- Advanced Planning Engine: Enhanced MRP with improved algorithms
- Material Ledger Mandatory: Better cost traceability for production
- Real-time Cost Analysis: Immediate visibility into production costs
- Embedded Production Analytics: Integrated analysis of component consumption
- Predictive Material Planning: Forward-looking component planning
Fiori Apps for MM-PP Integration
| App Name | Description | User Role |
|---|---|---|
| Manage Production Orders | Create and manage manufacturing orders | Production Planner, Production Supervisor |
| Material Availability | Check component availability for production | Production Planner, Material Planner |
| Process Component Issue | Issue materials to production orders | Warehouse Operator, Production Operator |
| Process Production Confirmation | Confirm operations and report completions | Production Operator, Shop Floor Supervisor |
| Monitor Material Shortages | Identify and resolve component shortages | Materials Manager, Production Planner |
Best Practices for MM-PP Integration
Integration Design Principles
- Consistent Master Data: Ensure alignment between material masters, BOMs, and routings
- Streamlined Processes: Design clear workflows between procurement and production
- Clear Responsibilities: Define roles between production and procurement teams
- Integrated Planning: Synchronize production and procurement planning
- Performance Optimization: Balance detailed planning with system performance
Implementation Approach
Recommended implementation methodology:
- Document current production procurement processes
- Identify integration points and optimization opportunities
- Design standardized processes between MM and PP
- Configure master data with integration in mind
- Test end-to-end scenarios thoroughly
- Train users on cross-module processes
- Monitor and refine after implementation
Maximizing MM-PP Integration Effectiveness
- Component Availability Monitoring: Proactively manage component supply for production
- Consumption-Based Planning: Implement efficient replenishment strategies for production materials
- Just-in-Time Procurement: Synchronize component arrivals with production schedules
- Regular BOM Maintenance: Keep bills of material accurate and up-to-date
- Performance Metrics: Track key indicators like component availability and production delays
- Cross-Functional Collaboration: Foster communication between procurement and production teams
- Regular Process Review: Continuously improve the integration between MM and PP
22. SAP Fiori Apps for MM
SAP Fiori provides a modern, responsive user interface for SAP S/4HANA MM processes. These apps are designed for specific roles and tasks, offering an intuitive user experience.
Key Fiori Apps for Materials Management
| App Name | Description | Role |
|---|---|---|
| Manage Purchase Requisitions | Create and manage purchase requisitions | Requisitioner |
| My Purchase Requisitions | Overview of own purchase requisitions | Requisitioner |
| Manage Purchase Orders | Create and process purchase orders | Purchaser |
| Monitor Purchase Contracts | Track contract consumption and validity | Purchaser |
| Manage Supplier Confirmation | Track and process order confirmations | Purchaser |
| App Name | Description | Role |
|---|---|---|
| Manage Stock | Overview and management of material stock | Inventory Manager |
| Goods Movement | Process various goods movements | Warehouse Clerk |
| Physical Inventory | Create and process physical inventory counts | Inventory Manager |
| Material Documents | Search and display material documents | Inventory Manager |
| App Name | Description | Role |
|---|---|---|
| Manage Supplier Invoices | Process incoming invoices | Accounts Payable |
| My Inbox - Approve Supplier Invoices | Approve blocked invoices | Invoice Approver |
| Track Invoice Status | Monitor invoice processing status | Accounts Payable |
23. Key Transactions and Tables
While SAP S/4HANA promotes the use of Fiori apps, traditional transactions remain available and are still widely used. The data model has been simplified, but many key tables remain familiar to SAP MM users.
Essential Transactions
| Transaction | Description |
|---|---|
| MM01/MM02/MM03 | Create/Change/Display Material Master |
| XK01/XK02/XK03 | Create/Change/Display Vendor (Central) |
| BP | Business Partner Maintenance |
| ME11/ME12/ME13 | Create/Change/Display Purchasing Info Record |
| ME01/ME02/ME03 | Create/Change/Display Source List |
| SPRO | Implementation Guide (Configuration) |
| Transaction | Description |
|---|---|
| ME51N/ME52N/ME53N | Create/Change/Display Purchase Requisition |
| ME41/ME42/ME43 | Create/Change/Display RFQ |
| ME21N/ME22N/ME23N | Create/Change/Display Purchase Order |
| ME31K/ME32K/ME33K | Create/Change/Display Contract |
| ME31L/ME32L/ME33L | Create/Change/Display Scheduling Agreement |
| ME9F | Message Output for Purchasing Documents |
| Transaction | Description |
|---|---|
| MIGO | Goods Movement (Goods Receipt, Issue, Transfer) |
| MB01/MB31 | Goods Receipt/Goods Issue for Purchase Order |
| MB1A/MB1B/MB1C | Goods Receipt/Issue/Transfer |
| MB51/MB52/MB53 | Material Document List/Stock List/Material Document Report |
| MI01/MI02/MI03/MI04 | Create/Change/Display/Count Physical Inventory |
| MB21/MB22/MB23 | Create/Change/Display Reservation |
| Transaction | Description |
|---|---|
| MIRO | Enter Incoming Invoice |
| MIR7 | Park Incoming Invoice |
| MR8M/MR8N | Display/Change Invoice Document |
| MRBR | Release Blocked Invoices |
| MR01/MR02/MR03 | Create/Change/Display Evaluated Receipt Settlement |
| MRM1/MRM2 | Create Subsequent Debit/Credit |
Important Tables in S/4HANA MM
| Table | Description | S/4HANA Notes |
|---|---|---|
| MARA | General Material Data | Still primary material master table |
| MARC | Plant Data for Material | Contains MRP settings |
| MARD | Storage Location Data for Material | Contains storage location specific data |
| MBEW | Material Valuation | Still used but with Material Ledger enhancement |
| BUT000 | Business Partner Master | Central table for all business partners |
| LFA1/LFB1 | Vendor Master General/Company Code Data | Still used but linked to Business Partner |
| Table | Description | S/4HANA Notes |
|---|---|---|
| EKKO/EKPO | Purchase Document Header/Item | Used for POs, Contracts, Scheduling Agreements |
| EBAN | Purchase Requisition | Still primary PR table |
| MKPF/MSEG | Material Document Header/Item | Still used for material movements |
| MATDOC | Material Document | New S/4HANA simplification table |
| ACDOCA | Universal Journal Entry | New S/4HANA table for accounting documents |
| RBKP/RSEG | Invoice Document Header/Item | Still used for invoice verification |
23.1 Output Management
Output Management in SAP S/4HANA MM enables the generation, formatting, and distribution of business documents such as purchase orders, contracts, RFQs, and other procurement-related communications. It ensures that the right documents reach the right recipients in the appropriate format and through the correct channel.
Output Management controls the sending of business documents to business partners:
- Manages communication of procurement documents to suppliers
- Controls format, content, and transmission method of documents
- Maintains history and tracking of sent communications
- Supports various output channels (print, email, EDI, etc.)
- Enables conditional output determination based on business rules
Key Benefits of Output Management
Output Management Concepts
Common MM Output Types
Output types define the kind of document to be sent:
| Output Type | Description | Application |
|---|---|---|
| NEU | Purchase Order | Send new purchase order to vendor |
| NEUI | Purchase Order Change | Send PO changes to vendor |
| NEAN | Request for Quotation | Send RFQ to potential suppliers |
| NELK | Scheduling Agreement | Send scheduling agreement to vendor |
| NELI | Scheduling Agreement Release | Send release schedule to vendor |
| NEMR | Contract | Send contract information to vendor |
Transaction: NACE, ME9F
Determining When and How to Send Documents
Output determination uses conditions to control document output:
- Condition Types: Different types of conditions that control output selection
- Access Sequences: Define the order in which conditions are checked
- Condition Tables: Store the values that determine when to generate output
- Condition Records: Specific settings for when a condition applies
- Determination Procedures: Overall framework for output determination
Condition Factors
Factors that can influence output determination:
- Purchasing Organization: Different outputs based on purchasing org
- Document Type: Specific output for different document types
- Vendor: Vendor-specific communication preferences
- Material Group: Different outputs for certain material categories
- Plant: Location-specific output requirements
- Item Category: Different handling for various item types
Transaction: NACE, V/74
Communication Channels
Different methods for sending documents to business partners:
- Print: Traditional printed output
- Email: PDF or other attachments via email
- EDI: Electronic Data Interchange for system-to-system transfer
- Fax: Fax transmission
- XML: XML-formatted data exchange
- Portal: Publication to supplier portals
- Mobile Apps: Push notifications and mobile-formatted content
Format Options
Different document format possibilities:
- Smart Forms: Traditional SAP form technology
- SAP Script: Legacy form technology
- PDF: Standard portable document format
- Adobe Forms: Enhanced form capabilities
- HTML: Web-based format
- Raw Data: Unformatted data for system processing
Transaction: ME9F, SPAD, NACE
Output Processing
Output Processing Flow
Processing Modes
Different approaches to output processing:
- Immediate Processing: Document sent immediately upon creation/change
- Background Processing: Documents queued for batch processing
- Manual Processing: User-initiated output generation
- Event-Driven: Output triggered by specific system events
- Scheduled Processing: Regular batch runs for document output
Transaction: ME9F, VF03, SOST
Purchase Order Output Process
The specific process for PO output management:
- Output determined when PO is created or changed
- Output status visible in purchasing document
- Manual triggering possible via ME9F
- Multiple outputs possible for same document (different media)
- Output history maintained with document
PO Output Configuration
Key configuration elements for PO output:
- Output Type Configuration: Define behavior of PO output types
- Condition Records: Determine when to create outputs
- Form Configuration: Design and layout of PO forms
- Partner Configuration: Define communication partners and methods
- Processing Settings: Control how and when outputs are processed
Transaction: ME9F, ME23N, NACE
Output Management in S/4HANA
S/4HANA Output Management Innovations
SAP S/4HANA introduces a new approach to output management:
- Form-based Output Management (FOM): New framework replacing classic output management
- Simplified Configuration: More intuitive setup through guided procedures
- Enhanced Template Management: Improved form design capabilities
- Digital Signatures: Built-in support for document signing
- Enhanced Preview: Better document preview capabilities
- Mobile Integration: Optimized for mobile document delivery
Key Fiori Apps for Output Management
| App Name | Description | User Role |
|---|---|---|
| Manage Output Templates | Create and maintain document templates | Template Designer |
| Output Parameter Configuration | Configure output determination rules | Output Administrator |
| Monitor Outputs | Track output processing status | Output Manager |
| Email Template Maintenance | Manage email templates for documents | Communication Manager |
| Output Reprocessing | Reprocess failed outputs | Output Administrator |
Best Practices for Output Management
Output Management Design Considerations
- Standardization: Create consistent templates across document types
- Vendor Preferences: Consider supplier communication preferences
- Legal Requirements: Ensure compliance with legal document requirements
- Digital Transformation: Prioritize electronic over paper documents
- Multilingual Support: Design for international business needs
- Exception Handling: Define processes for output failures
Implementation Approach
Recommended implementation methodology:
- Document current and future output requirements
- Design standardized templates for common documents
- Configure output determination based on business rules
- Test thoroughly with all possible scenarios
- Train users on output management capabilities
- Monitor and optimize after implementation
Maximizing Output Management Efficiency
- Output Monitoring: Regularly check for failed outputs
- Template Management: Maintain centralized control of document templates
- Digital Prioritization: Encourage vendors to use electronic channels
- Output Analytics: Track document transmission patterns and success rates
- Communication Testing: Periodically verify communication channels
- Fallback Procedures: Define clear processes for communication failures
- Regular Reviews: Evaluate and optimize output management processes
24. Reporting and Analytics
SAP S/4HANA provides enhanced reporting and analytics capabilities for Materials Management through the use of embedded analytics, SAP Analytics Cloud integration, and CDS views.
Reporting Approaches in S/4HANA MM
Embedded Analytics
Embedded analytics provide real-time insights directly within operational processes:
- Integrated with Fiori apps
- Real-time data analysis
- No data replication required
- Context-specific insights
CDS Views
Core Data Services (CDS) views provide semantically rich data models:
- Foundation for analytics and reporting
- Business semantics at database level
- Reusable data models
- Performance optimized for HANA
SAP Analytics Cloud
Cloud-based analytics solution that works with S/4HANA:
- Advanced visualizations
- Business planning capabilities
- Machine learning enhanced insights
- Story-telling features
Key Reports and Analytics for MM
Key Reports
- Purchasing Spend Analysis
- Supplier Evaluation and Performance
- Purchase Price Variance Analysis
- Contract Compliance and Utilization
- Purchase Order Status and Monitoring
Key KPIs
- Spend by Vendor/Material/Category
- Contract Coverage Ratio
- Purchase Price Variance
- Lead Time Analysis
- On-time Delivery Performance
Key Reports
- Stock Overview and Aging Analysis
- Slow-moving and Obsolete Inventory
- Inventory Turnover Analysis
- ABC Analysis (Value-based)
- XYZ Analysis (Consumption-based)
Key KPIs
- Inventory Value and Turnover
- Days of Supply
- Stock Coverage
- Dead Stock Percentage
- Inventory Accuracy
Universal Journal Analytics
The Universal Journal (table ACDOCA) enables integrated reporting across MM and Finance:
- Combined material and financial views
- Real-time inventory valuation reporting
- Integrated GR/IR reporting
- Detailed cost component analysis
Predictive Analytics
Machine learning capabilities enable predictive insights:
- Demand forecasting
- Price prediction
- Delivery date prediction
- Supplier risk assessment
25. Implementation Considerations
Implementing SAP S/4HANA MM requires careful planning and consideration of various factors. Whether implementing as a new system or converting from an existing SAP ERP, there are specific considerations for the MM module.
Implementation Approaches
New Implementation (Greenfield)
Starting with a fresh S/4HANA implementation:
- Clean slate approach
- Opportunity to redesign processes
- Requires complete master data migration
- Longer implementation time but cleaner result
System Conversion (Brownfield)
Converting an existing SAP ERP system to S/4HANA:
- Maintains historical data and customizing
- Shorter implementation time
- Legacy issues may be carried forward
- Less opportunity for process redesign
Selective Data Transition (Hybrid)
Mix of conversion and new implementation:
- Selective master and transactional data migration
- Balance between clean start and historical data
- More complex but offers flexibility
- Can be phased by module or company code
MM-Specific Implementation Considerations
Key considerations for master data readiness:
- Material master data cleansing and enrichment
- Vendor consolidation and cleansing
- Business Partner conversion preparation
- Material numbering strategy
- Material classification system
- Extension fields and custom fields strategy
Since Material Ledger is mandatory in S/4HANA, special attention is needed:
- Material Ledger activation for all materials
- Currency configuration
- Price determination configuration
- Valuation approach decisions
- Period-end closing process redesign
- Training for finance and MM teams on Material Ledger
Areas to consider for process simplification:
- Review and adoption of standard S/4HANA processes
- Custom code remediation and simplification
- Fiori app adoption strategy
- Process standardization across business units
- Automation opportunities identification
- Integration of machine learning capabilities
Technical aspects to consider for MM implementation:
- Database size estimation (HANA sizing)
- Table structure changes and data migration
- Custom code remediation for MM-specific functionality
- Interfaces with external systems
- Reporting and analytics strategy
- Archive data handling
26. Best Practices
Implementing and running SAP S/4HANA MM effectively requires adherence to best practices. These practices ensure optimal system performance, process efficiency, and business value realization.
Master Data Management Best Practices
- Material Master Data Governance: Establish clear ownership and processes for material master data creation and maintenance.
- Data Quality Metrics: Implement data quality KPIs and regular monitoring for master data.
- Material Classification System: Develop a comprehensive material classification system for improved reporting and analysis.
- Vendor Master Consolidation: Maintain a unified vendor master with business partner approach to avoid duplicates.
- Regular Data Cleansing: Perform regular data cleansing activities to maintain master data quality.
Procurement Process Best Practices
- Contract Utilization: Maximize contract coverage and utilization to improve spend control.
- Catalog-based Purchasing: Implement catalog-based purchasing for standard materials to streamline requisitioning.
- Purchasing Channel Strategy: Define clear rules for purchasing channel selection (e.g., PO, contract, p-card).
- Approval Workflow Optimization: Design approval workflows that balance control and efficiency.
- Vendor Evaluation System: Implement a comprehensive vendor evaluation system with performance feedback.
Inventory Management Best Practices
- ABC/XYZ Analysis: Use ABC/XYZ analysis for inventory control strategy definition.
- Cycle Counting: Implement cycle counting programs instead of annual physical inventory.
- Min/Max Level Optimization: Regularly review and optimize min/max levels based on consumption patterns.
- Shelf Life Management: Implement FEFO (First Expired, First Out) for shelf-life managed materials.
- Stock Transfer Optimization: Optimize inter-plant stock transfers to reduce overall inventory.
S/4HANA-Specific Best Practices
- Fiori App Adoption: Maximize the use of standard Fiori apps for improved user experience.
- Embedded Analytics Utilization: Embed analytics within operational processes for real-time decision making.
- Material Ledger Usage: Fully utilize Material Ledger capabilities for enhanced valuation transparency.
- Machine Learning Enablement: Enable machine learning features for process automation and insights.
- Simplified Data Model Advantages: Take advantage of the simplified data model for reporting and integration.
27. Glossary of Terms
This comprehensive glossary explains key terminology used throughout SAP S/4HANA Materials Management. Understanding these terms is essential for both new users and experienced professionals working with the MM module.
| Term | Definition |
|---|---|
| ACDOCA | The Universal Journal table in SAP S/4HANA that serves as a single source of truth by combining financial (FI) and controlling (CO) documents. Enables real-time reporting without reconciliation. |
| CDS Views | Core Data Services views that provide semantically rich data models for reporting and analytics. They form the foundation for S/4HANA embedded analytics and Fiori apps. |
| Fiori | SAP's modern user experience design paradigm and collection of role-based apps for S/4HANA. Provides a responsive, intuitive interface across devices for MM users. |
| HANA | High-Performance Analytical Appliance - SAP's in-memory database technology that powers S/4HANA, enabling real-time analytics and dramatically improved processing speed. |
| MATDOC | The simplified material document table in S/4HANA that replaces multiple legacy tables and enables line-item display of material movements. |
| Universal Journal | Single integrated financial ledger in S/4HANA that combines data from financial accounting, controlling, asset accounting, material ledger and more into one table (ACDOCA). |
| Term | Definition |
|---|---|
| Business Partner | Unified approach to managing vendor, customer, and other business relationships in S/4HANA. Replaces separate vendor and customer master records with a single concept. |
| Info Record | Contains purchasing information for a specific material-vendor combination, including prices, delivery times, and purchasing units. Essential for vendor selection and price determination. |
| Material Master | Central repository of all information about materials in the system, including basic data, purchasing data, MRP settings, accounting information, and storage information. |
| Source List | Defines which vendors can supply specific materials in a certain timeframe. Controls vendor selection during the procurement process with fixed vendor options. |
| Valuation Class | Classification used to group materials with similar accounting treatment for inventory valuation and account determination. |
| Term | Definition |
|---|---|
| Blanket Purchase Order | Long-term agreement with a vendor for material supply over a specified period, with predetermined prices and conditions (also known as Contract). |
| ERS | Evaluated Receipt Settlement - process where the system automatically creates an invoice based on goods receipt data, eliminating the need for vendor invoices. |
| Purchase Requisition | Internal request for the procurement of materials or services. It can be created manually or generated automatically by MRP and serves as the basis for purchase orders. |
| Quota Arrangement | Mechanism to distribute procurement requirements for the same material among multiple vendors based on predefined percentages or quantities. |
| Release Strategy | Approval workflow that controls the authorization process for procurement documents based on various criteria such as value, material group, or account assignment. |
| Scheduling Agreement | Long-term arrangement with a vendor that includes detailed delivery schedules. Commonly used for just-in-time (JIT) delivery scenarios. |
| Three-way Match | Verification process that compares purchase order, goods receipt, and invoice data to ensure consistency before payment is approved. |
| Term | Definition |
|---|---|
| Batch Management | Process of tracking materials in separate batches with specific characteristics, enabling traceability and quality control. |
| Consignment | Inventory owned by the vendor but stored at the customer's location. Payment occurs only when materials are withdrawn for use (consumed). |
| GR/IR Account | Goods Receipt/Invoice Receipt clearing account that manages timing differences between goods receipt and invoice receipt for accurate liability reporting. |
| Material Document | Document created for every goods movement that records the quantity, material, storage location, and accounting impact of inventory transactions. |
| Physical Inventory | Process of counting actual stock quantities and reconciling them with system quantities to ensure inventory accuracy. |
| Special Stock | Inventory categories with special handling requirements, such as consignment stock, project stock, sales order stock, or subcontracting components. |
| Stock Transfer | Movement of materials between different plants or storage locations, managed through stock transfer orders in cross-plant scenarios. |
| Term | Definition |
|---|---|
| Actual Costing | Periodic process in the Material Ledger that determines the actual cost of materials based on all actual costs and price differences collected during the period. |
| Material Ledger | Component that enables multiple currency valuation, parallel valuation approaches, and actual costing. Mandatory in S/4HANA for all materials. |
| Moving Average Price | Valuation method where material price is recalculated with each goods receipt by dividing the total value by the total quantity (price control type V). |
| MRP | Material Requirements Planning - systematic process to calculate material needs based on demands, current stock, and planned receipts to ensure material availability. |
| MRP Live | S/4HANA enhancement that enables real-time material planning using in-memory technology, dramatically improving processing speed. |
| Split Valuation | Capability to value the same material at different prices based on characteristics such as origin, batch, or vendor for more precise cost accounting. |
| Standard Price | Valuation method using a fixed price for material valuation with price differences posted to separate accounts (price control type S). |
| Term | Definition |
|---|---|
| ATP | Available-to-Promise - function that checks material availability for sales orders, considering current stock and future receipts and issues. |
| BOM | Bill of Materials - structured list of components required to produce a material, used in integration between MM and Production Planning. |
| Embedded Analytics | Analytical capabilities integrated directly into operational processes, providing real-time insights without data replication. |
| MM-FI Integration | Connection between Materials Management and Finance that ensures proper financial recording of material transactions. |
| MM-PP Integration | Connection between Materials Management and Production Planning that ensures component availability for production and proper recording of production results. |
| MM-SD Integration | Connection between Materials Management and Sales & Distribution that enables availability checks, reservations, and direct deliveries. |
| Subcontracting | Process where components are provided to vendors for processing or assembly, requiring special tracking and accounting treatment. |