Akila Wedasinghe
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SAP MM-SD Integration
A comprehensive guide to understanding the integration between Materials Management and Sales & Distribution modules in SAP
MM Materials Management Overview
The Materials Management (MM) module handles the procurement and inventory management processes within SAP. It manages the materials required, purchased, received, and issued in your organization.
Procurement
Manages the complete procurement cycle from purchase requisition to vendor payment.
Inventory Management
Handles storage locations, goods movements, and physical inventory management.
Material Master
Central repository for all material-related information across the organization.
Valuation & Account Assignment
Manages material valuation and accounting impact of MM processes.
SD Sales & Distribution Overview
The Sales and Distribution (SD) module manages customer relationships, sales order processing, shipping, billing, and other sales activities in SAP.
Sales
Handles inquiries, quotations, and sales orders from customers.
Shipping & Transportation
Manages delivery, picking, packing, and goods issue processes.
Billing
Processes invoices, credit/debit memos, and billing plans.
Pricing & Conditions
Manages complex pricing structures and conditions for customers.
↔ MM-SD Integration Points
The integration between MM and SD modules is critical for efficient business operations, ensuring material availability for sales orders, accurate pricing, and timely deliveries.
Master Data Integration
Master data serves as the foundation for MM-SD integration. The consistency and accuracy of this data are crucial for seamless operations.
Material Master
- Central to both MM and SD processes
- MM views: Purchasing, Inventory, Accounting
- SD views: Sales, Foreign Trade, General Data
- Integrated through material number
Pricing & Conditions
- Price determination across modules
- Condition techniques for purchasing & sales
- Pricing procedures integration
- Material valuation impacts sales pricing
Batch Management
- Consistent batch determination
- Batch master data shared between MM and SD
- Batch where-used functionality
- Batch characteristics impact sales
Business Partners
- Vendor master (MM) / Customer master (SD)
- One-time customers/vendors
- Partner roles and functions
- Integrated through partner determination
Material master serves as the central integration point between MM and SD. Sales views contain data relevant for SD processing, while MM views hold procurement and inventory information. Both must be properly maintained for seamless integration.
Process Flow Integration
The end-to-end business process flow demonstrates the critical integration points between MM and SD modules.
The Availability Check is a critical integration point between MM and SD modules. It ensures that materials ordered by customers are available in sufficient quantities.
Key components:
- Available to Promise (ATP): Calculates material availability based on current stock, reserved quantities, and planned receipts/issues
- Stock requirements list: Central place where all stock requirements (reservations, planned movements) are listed
- Check rules: Define how the system should react to availability issues (delivery proposal, backorder processing, etc.)
- Scope of check: Determine what elements to check (plant, storage location, batch)
The Goods Issue process creates a critical link between SD and MM modules, transferring inventory management responsibility from MM to SD during shipping.
Process flow:
- SD creates delivery document (VL01N)
- Picking takes place with reference to delivery (VL02N)
- Post goods issue (VL02N with delivery and save)
- Material document created automatically
- Inventory reduced in MM
- Accounting document created (stock account credited, COGS debited)
The goods issue process links SD with MM by creating material documents that update inventory. This ensures accurate stock levels, valuation, and financial postings when products are shipped to customers.
Key Configuration Elements
Proper configuration is essential for smooth MM-SD integration. These settings determine how the modules interact.
| Configuration Element | Purpose | Impact |
|---|---|---|
| Material Master Views | Define which views are required for materials | Determines what information is available to both MM and SD |
| Availability Check | Configure ATP check rules and scope | Controls how system determines if material is available for sales |
| Requirements Transfer | Settings for transferring requirements from SD to MM | Impacts MRP and planning for sales requirements |
| Item Category Determination | Determine how items are processed in sales documents | Controls relevance for delivery and whether it reduces stock |
| Movement Types | Define and control inventory movements | Determines accounting and inventory impact of goods movements |
| Batch Determination | Configure rules for batch selection | Controls which batches are selected during goods issue |
| Copy Control | Rules for data transfer between documents | Determines data flow from sales order to delivery to billing |
Batch determination is essential for industries with batch-managed materials, linking MM batch management with SD processes.
Configuration steps:
- Activate batch management in material master
- Define batch search strategy
- Set up search procedure
- Define classification criteria (if using classification)
- Set up batch determination in SD
- Link batch criteria to customer requirements
Item category determines how an item is processed in the SD module and its integration with MM.
Critical settings:
- Relevancy for delivery: Determines if item creates delivery document
- Relevancy for billing: Determines if item creates billing document
- Account assignment category: Controls accounting integration
- Relevancy for requirements planning: Determines if item impacts MRP
- Inventory management: Controls if item reduces stock
Proper configuration of item categories is crucial for MM-SD integration. The item category determines whether an item reduces inventory, requires delivery processing, and how it impacts material requirements planning.
↔ Material Availability and Delivery Processing
Material availability checking and delivery processing represent the most critical integration points between MM and SD.
Material Availability Check
When a sales order is created, the system must check if the requested material is available in sufficient quantity.
Availability Elements
- Current stock (MM)
- Safety stock (MM)
- Reserved quantities (MM)
- Planned receipts (MM)
- Planned issues (SD)
Check Types
- ATP (Available to Promise)
- Checking against stock
- ATP with product allocation
- Stock/Requirements simulation
Requirements Transfer
- Sales order requirements
- Planned independent requirements
- Schedulelines for procurement
- MRP integration
Check Results
- Confirmed quantity
- Confirmed dates
- Backorder processing
- Shortage handling
Delivery Processing Integration
When a delivery is processed, MM and SD modules interact to update inventory and account for shipped goods.
↔ Valuation and Accounting Integration
MM and SD modules also integrate through valuation and accounting processes, ensuring consistent financial reporting.
MM Valuation
- Material valuation (standard price, moving average)
- Stock account management
- Goods receipt postings
- Invoice verification postings
SD Accounting
- Revenue recognition
- Customer account postings
- Sales deductions
- Billing document postings
Integration Points
- COGS determination from MM valuation
- Goods issue accounting impact
- Inventory reconciliation
- Profitability analysis
Configuration Elements
- Account determination (OBYC/VKOA)
- Movement types for goods issue
- Revenue account determination
- Cost of goods sold calculation
| Process | MM Impact | SD Impact | Integration Document |
|---|---|---|---|
| Goods Issue for Delivery | Reduce inventory valuation, post to COGS | Update delivery status | Material document (601) |
| Billing | No direct impact | Post revenue, customer receivable | Accounting document |
| Returns Processing | Increase inventory valuation | Handle credit memo | Material document (602) |
| Consignment Processing | Special stock handling | Consignment fill-up/issue/billing | Material document + special stock indicator |
The cost of goods sold value used in SD billing is derived from the material's valuation in MM. This ensures consistent profitability reporting across procurement and sales processes.
↔ Common MM-SD Integration Challenges
Despite careful configuration, organizations often face challenges with MM-SD integration. Understanding these challenges helps in troubleshooting and process optimization.
Availability check issues are among the most common MM-SD integration problems.
Common causes:
- Incorrect ATP configuration
- Material master missing MM or SD views
- Incorrect item category settings
- Checking group misconfiguration
- MRP areas not properly set up
Troubleshooting:
- Check stock/requirements list (MD04)
- Verify availability check configuration
- Review material master settings
- Examine item category settings
Issues during goods issue processing can disrupt MM-SD integration and cause inventory discrepancies.
Common causes:
- Insufficient stock for goods issue
- Batch determination failures
- Movement type configuration issues
- Missing MM or SD views in material master
- Authorization problems across modules
Troubleshooting:
- Check material document flow (VL03N > Environment > Document Flow)
- Verify stock status (MMBE)
- Review movement type configuration
- Check batch determination strategy if relevant
Inconsistencies in valuation and COGS determination can cause financial reporting problems between MM and SD.
Common causes:
- Inconsistent price determination
- Account determination misconfiguration
- Valuation class issues
- Split valuation problems
- Missing accounting integration settings
Troubleshooting:
- Review accounting documents (FB03)
- Check material valuation (MM03)
- Verify account determination (OBYC/VKOA)
- Analyze material price history
↔ MM-SD Integration Best Practices
Following best practices for MM-SD integration can help ensure smooth operations and reduce integration issues.
Master Data Management
- Maintain complete material master data across MM and SD views
- Implement governance processes for master data changes
- Regularly validate material master completeness
- Use classification for complex products
Configuration Approach
- Document all integration settings
- Test changes in development before production
- Understand impact of configuration changes
- Review integration settings after upgrades
Process Design
- Design end-to-end processes with integration in mind
- Document touch points between MM and SD
- Define clear responsibilities for each module
- Establish standards for cross-module processes
Monitoring & Reconciliation
- Implement regular reconciliation routines
- Monitor integration error logs
- Create dashboards for integration health
- Establish KPIs for integration performance
Successful MM-SD integration requires both technical configuration and organizational alignment. Ensure that teams responsible for MM and SD understand the interdependencies between their modules and collaborate effectively.