SAP S/4HANA Materials Management (MM)

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)

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

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

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

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

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

Condition types are the building blocks of pricing procedures that represent different price elements:

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:

1. Determine gross price (e.g., from info record, contract)
2. Apply discounts (percentage or fixed amount)
3. Calculate subtotal (gross price - discounts)
4. Add surcharges (e.g., freight, packaging)
5. Apply tax if applicable
6. Calculate final net price

Transaction: VOFM, M/06

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 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

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:

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

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 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

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

Source Determination Sequence

The priority sequence for vendor determination:

1. Fixed vendor assignment in purchase requisition
2. Source list with fixed vendor flag
3. Quota arrangement
4. Source list without fixed vendor flag
5. 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 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

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 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 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 (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

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

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

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

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

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

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

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)

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

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

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

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

Integration with MRP

How stock transport orders interact with material planning:

• MRP can generate purchase requisitions for stock transport
• Plant MRP considers receiving plant's requirements
• Transfer lead times included in planning
• Supply network planning optimizes inter-plant movements
• In-transit stock visible in material availability

Integration with SD

Optional integration with Sales and Distribution:

• Delivery documents can be created for stock transport
• Shipping processes applied to inter-plant movements
• Transportation planning and execution
• Picking and packing functionality
• Goods issue triggered by delivery processing

Integration with Financial Accounting

Financial implications of stock transport:

• Automated accounting entries for stock movements
• Valuation updates in sending and receiving plants
• Internal settlement for cross-company transfers
• Handling of transfer costs and price differences
• Tax considerations for cross-border movements

Transaction: MD01, VL01N, MIRO, OBYC

Stock Transport Order Design

• Process Selection: Choose appropriate process (one-step vs. two-step) based on distance and tracking needs
• Transfer Pricing: Establish clear transfer pricing policies for cross-company movements
• Plant Setup: Ensure proper plant configuration for smooth transfers
• Document Types: Define specific document types for stock transport orders
• Item Categories: Configure appropriate item categories for different transfer scenarios

Operational Recommendations

• Transit Monitoring: Implement processes to monitor materials in transit
• Performance Measurement: Track transfer times and compliance with schedules
• Exception Handling: Define procedures for handling discrepancies in quantity or quality
• Periodic Reconciliation: Regularly reconcile in-transit inventory
• Regular Cleanup: Process or clear aged in-transit stock

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

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 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 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

Shelf Life Verification

During goods movements, SAP performs shelf life verification:

• Checks remaining shelf life against minimum requirements
• Can block movements if shelf life requirements aren't met
• Supports exceptions with approval workflows
• Records shelf life data for traceability
• Updates batch status based on shelf life

Batch Split and Merge

Processes for reorganizing batches:

• Batch Split: Divide one batch into multiple batches
• Batch Merge: Combine multiple batches into a single batch
• Characteristic handling during split/merge operations
• Status management during reorganization
• Documentation of split/merge history

Transaction: MSU1, MSU2, MIGO

When to Use Batch Management

Batch management should be considered in these scenarios:

• Regulatory requirements mandate traceability
• Quality variations exist between production runs
• Shelf life management is needed
• Material properties vary but still meet the same specifications
• Recall capabilities are required
• Different production sources need to be tracked

Implementation Considerations

Key factors to consider when implementing batch management:

• Batch numbering strategy (internal vs. external assignment)
• Classification system design for batch characteristics
• Integration requirements with quality management
• Batch determination strategy selection
• Batch status management approach
• Reporting and compliance requirements

Maximizing Batch Management Benefits

Best practices for effective batch management:

• Streamlined Classification: Design an efficient classification system with only necessary characteristics
• Automated Documentation: Maximize automatic capture of batch data
• Proactive Expiration Management: Implement alerts and reports for approaching expirations
• Consistent Batch Determination: Use consistent strategies for batch selection
• Regular Data Cleanup: Archive obsolete batch data to maintain system performance
• Batch-Level Analytics: Implement analytics for batch quality trends and performance
• Integration with GR Processing: Streamline batch creation during goods receipt

Key planning parameters in the material master that affect MRP:

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 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

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

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

Transaction: CKMLCP, MMPV

SAP supports different split valuation types for various business scenarios:

Configuration Steps

Implementing split valuation requires several configuration steps:

1. Activate Split Valuation: Enable at client level in customizing
2. Define Valuation Types: Select and configure the relevant split valuation types
3. Define Valuation Categories: For type B, create custom categories
4. Assign Valuation Categories: Link categories to valuation classes
5. Configure Material Master: Enable split valuation for specific materials
6. 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

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

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

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)

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

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

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

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

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

Common MM Output Types

Output types define the kind of document to be sent:

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

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 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

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

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