Materials Management with SAP ERP: Functionality and Technical Configuration

A native of London, England, Martin Murray joined the computer industry upon his graduation from Middlesex University in 1986. In 1991, he began working with SAP R/2 in the Materials Management area for a London-based multi-national beverage company. In 1994, he moved to the United States to work as an SAP R/3 consultant. Since then, he's been implementing the Materials Management (MM) and Warehouse Management (WM) functionality in projects throughout the world. He works for IBM Global Business Services. Martin is the author of six best-selling books from SAP PRESS: Materials Management with SAP ERP, Warehouse Management with SAP ERP, Discover Logistics with SAP ERP, Maximize Your Warehouse Operations with SAP ERP, Understanding the SAP Logistics Information System, and SAP Transaction Codes: Your Quick Reference to T-Codes in SAP ERP.

* ... Preface ... 29 * 1 ... Materials Management Overview ... 35 * 1.1 ... Materials Management as a Part of SAP ERP ... 35 * 1.1.1 ... SAP History ... 35 * 1.1.2 ... Core SAP ERP Functionality ... 36 * 1.1.3 ... Business Suite Functionality ... 37 * 1.2 ... Materials Management as Part of Logistics ... 38 * 1.2.1 ... Definition of Logistics and Supply Chain ... 38 * 1.2.2 ... Management of the Supply Chain ... 38 * 1.2.3 ... SAP and Logistics ... 38 * 1.3 ... MM Integration ... 39 * 1.3.1 ... The Material Flow of the Supply Chain ... 40 * 1.3.2 ... The Information Flow of the Supply Chain ... 40 * 1.3.3 ... The Financial Flow of the Supply Chain ... 41 * 1.4 ... Summary ... 42 * 2 ... Materials Management Organizational Structure ... 43 * 2.1 ... Client Structure ... 43 * 2.1.1 ... What Is a Client? ... 43 * 2.1.2 ... Creating the Client Landscape ... 44 * 2.1.3 ... Defining a Client ... 45 * 2.1.4 ... Correction and Transport System (CTS) ... 45 * 2.2 ... Company Code ... 46 * 2.2.1 ... What Is a Company? ... 46 * 2.2.2 ... Creating a Company Code ... 47 * 2.2.3 ... Assigning a Company Code ... 48 * 2.3 ... Plants ... 48 * 2.3.1 ... What Is a Plant? ... 48 * 2.3.2 ... Prerequisites for a Plant ... 48 * 2.3.3 ... Defining a Plant ... 49 * 2.3.4 ... Valuation Level ... 50 * 2.3.5 ... Assigning a Plant ... 51 * 2.4 ... Storage Locations ... 51 * 2.4.1 ... What Is a Storage Location? ... 51 * 2.4.2 ... Defining a Storage Location ... 52 * 2.4.3 ... Automatic Creation of Storage Locations ... 53 * 2.5 ... Warehouse and Storage Types ... 55 * 2.5.1 ... Assign a Warehouse to a Plant and Storage Location ... 56 * 2.5.2 ... Storage Type ... 56 * 2.5.3 ... Storage Sections and Storage Bins ... 57 * 2.6 ... Purchasing Organization ... 57 * 2.6.1 ... What Is a Purchasing Organization? ... 58 * 2.6.2 ... Types of Purchasing Organizations ... 58 * 2.6.3 ... Create a Purchasing Organization ... 59 * 2.6.4 ... Purchasing Groups ... 60 * 2.7 ... Business Examples Organizational Structure ... 61 * 2.7.1 ... Client Structure ... 61 * 2.7.2 ... Plants ... 61 * 2.7.3 ... Storage Locations ... 62 * 2.7.4 ... Warehouse Management ... 63 * 2.7.5 ... Purchasing Organization ... 64 * 2.8 ... Summary ... 64 * 3 ... Master Data in Materials Management ... 65 * 3.1 ... Material Master ... 65 * 3.1.1 ... Material Master Overview ... 65 * 3.1.2 ... Material Master Tables ... 65 * 3.1.3 ... Material Numbering ... 66 * 3.1.4 ... Material Number Range ... 68 * 3.1.5 ... Material Type ... 69 * 3.2 ... Vendor Master ... 70 * 3.2.1 ... Definition of a Vendor ... 70 * 3.2.2 ... Vendor Master in SAP ... 70 * 3.2.3 ... Vendor Account Groups ... 71 * 3.2.4 ... Vendor Number Range ... 74 * 3.3 ... Purchasing Information Data ... 76 * 3.3.1 ... Purchasing Information Record ... 76 * 3.3.2 ... Purchasing Information Record for a Non-Stock Material ... 76 * 3.3.3 ... Purchasing Information Record Numbering ... 76 * 3.3.4 ... Purchasing Information Record-Screen Layout ... 77 * 3.4 ... Batch Management Data ... 79 * 3.4.1 ... What Is a Batch? ... 79 * 3.4.2 ... Batch Level ... 79 * 3.4.3 ... Changing the Batch Level ... 80 * 3.4.4 ... Batch-Status Management ... 80 * 3.4.5 ... Initial Batch Status ... 81 * 3.4.6 ... Batch-Number Assignment ... 81 * 3.5 ... Serial Number Data ... 82 * 3.5.1 ... What Is a Serial Number? ... 82 * 3.5.2 ... Serial Number Profile ... 82 * 3.5.3 ... Serializing Procedures ... 83 * 3.6 ... Business Examples Master Data in Materials Management ... 85 * 3.6.1 ... Material Master Data ... 85 * 3.6.2 ... Vendor Master Data ... 85 * 3.6.3 ... Purchasing Data ... 86 * 3.6.4 ... Batch Management ... 87 * 3.6.5 ... Serial Numbers ... 87 * 3.7 ... Summary ... 88 * 4 ... Material Master Data Part 1 ... 89 * 4.1 ... Industry Sector ... 89 * 4.2 ... Material Type ... 90 * 4.2.1 ... Standard Material Types ... 90 * 4.2.2 ... Configuring Material Types ... 94 * 4.2.3 ... Changing a Material Type ... 96 * 4.3 ... Basic Data ... 97 * 4.3.1 ... Creating a Material Master Record - Immediately ... 97 * 4.3.2 ... Creating a Material Master Record - Schedule ... 98 * 4.3.3 ... Creating a Material Master Record - Special ... 98 * 4.3.4 ... Organizational Levels ... 99 * 4.3.5 ... Basic Data Screen ... 101 * 4.4 ... Classification Data ... 107 * 4.4.1 ... Class Type ... 107 * 4.4.2 ... Classes ... 108 * 4.4.3 ... Characteristics ... 108 * 4.5 ... Purchasing Data ... 109 * 4.5.1 ... General Data ... 110 * 4.5.2 ... Purchasing Value Key ... 112 * 4.5.3 ... Other Data/Manufacturer Data ... 114 * 4.5.4 ... Manufacturer Parts ... 116 * 4.5.5 ... Foreign Trade Data ... 117 * 4.5.6 ... Origin/EU Market Organization/Preferences ... 118 * 4.5.7 ... Legal Control ... 119 * 4.6 ... Forecasting Data ... 120 * 4.6.1 ... General Data ... 121 * 4.6.2 ... Number of Periods Required ... 122 * 4.6.3 ... Control Data ... 123 * 4.7 ... Work Scheduling Data ... 124 * 4.7.1 ... General Data ... 125 * 4.7.2 ... Tolerance Data ... 126 * 4.7.3 ... In-House Production Time in Days ... 127 * 4.8 ... Sales Organizational Data ... 128 * 4.8.1 ... General Data ... 129 * 4.8.2 ... Tax Data ... 130 * 4.8.3 ... Quantity Stipulations ... 131 * 4.8.4 ... Grouping Items ... 132 * 4.8.5 ... Material Groups ... 133 * 4.8.6 ... Product Attributes ... 134 * 4.9 ... Sales General Data ... 134 * 4.9.1 ... General Data ... 135 * 4.9.2 ... Shipping Data ... 135 * 4.9.3 ... General Plant Parameters ... 136 * 4.10 ... Business Examples Material Master Data ... 137 * 4.10.1 ... Material Type ... 137 * 4.10.2 ... Classification Data ... 138 * 4.10.3 ... Purchasing Data ... 139 * 4.10.4 ... Sales Data ... 139 * 4.11 ... Summary ... 140 * 5 ... Material Master Data Part 2 ... 141 * 5.1 ... Production Resources/Tools (PRT) Data ... 141 * 5.1.1 ... General Data ... 141 * 5.1.2 ... Default Values for Task List Assignment ... 142 * 5.2 ... Plant Data/Storage Location ... 144 * 5.2.1 ... General Data ... 144 * 5.2.2 ... Shelf Life Data ... 147 * 5.3 ... Warehouse Management Data ... 149 * 5.3.1 ... General Data ... 149 * 5.3.2 ... Storage Strategies ... 150 * 5.3.3 ... Palletization Data ... 153 * 5.3.4 ... Storage Bin Stock ... 154 * 5.4 ... Quality Management Data ... 155 * 5.4.1 ... General Data ... 155 * 5.4.2 ... Procurement Data ... 157 * 5.5 ... Material Requirements Planning Data ... 158 * 5.5.1 ... General Data ... 159 * 5.5.2 ... MRP Procedure ... 160 * 5.5.3 ... Lot Size Data ... 161 * 5.5.4 ... Procurement ... 164 * 5.5.5 ... Net Requirements Calculations ... 165 * 5.5.6 ... Forecast Requirements ... 167 * 5.5.7 ... Planning ... 168 * 5.5.8 ... Availability Check ... 169 * 5.5.9 ... Bill of Materials Explosion/Dependent Requirements ... 171 * 5.5.10 ... Discontinued Parts ... 172 * 5.5.11 ... Repetitive Manufacturing/Assembly/Deployment Strategy ... 172 * 5.5.12 ... Storage Location MRP ... 174 * 5.6 ... Accounting Data ... 175 * 5.6.1 ... General Data ... 175 * 5.6.2 ... Current Valuation ... 176 * 5.6.3 ... Determination of Lowest Value ... 178 * 5.6.4 ... LIFO Data ... 179 * 5.7 ... Costing Data ... 180 * 5.7.1 ... General Data ... 180 * 5.7.2 ... Quantity Structure Data ... 181 * 5.7.3 ... Standard Cost Estimate ... 182 * 5.7.4 ... Planned Prices ... 183 * 5.8 ... Business Examples Material Master Data ... 183 * 5.8.1 ... Plant and Storage Location Data ... 184 * 5.8.2 ... Warehouse Data ... 184 * 5.8.3 ... Quality Management Data ... 185 * 5.8.4 ... Material Requirements Planning Data ... 185 * 5.8.5 ... Accounting Data ... 186 * 5.9 ... Summary ... 187 * 6 ... Vendor Master Data ... 189 * 6.1 ... General Data ... 189 * 6.1.1 ... Address Screen ... 190 * 6.1.2 ... Control Screen ... 192 * 6.1.3 ... Payment Transactions ... 196 * 6.2 ... Accounting Information ... 199 * 6.2.1 ... Accounting Information ... 199 * 6.2.2 ... Payment Transactions ... 203 * 6.2.3 ... Correspondence Screen ... 206 * 6.3 ... Purchasing Data ... 209 * 6.3.1 ... Conditions ... 209 * 6.3.2 ... Sales Data ... 211 * 6.3.3 ... Control Data ... 212 * 6.3.4 ... Default Data Material ... 215 * 6.3.5 ... Service Data ... 216 * 6.3.6 ... Partner Functions ... 217 * 6.4 ... Business Examples Vendor Master Data ... 218 * 6.4.1 ... General Data ... 218 * 6.4.2 ... Purchasing Data ... 219 * 6.5 ... Summary ... 220 * 7 ... Purchasing Information Data ... 221 * 7.1 ... Purchasing General Data ... 221 * 7.1.1 ... Create a Purchasing Information Record ... 221 * 7.1.2 ... Create a Purchasing Information Record with Material Number ... 223 * 7.1.3 ... Create a Purchasing Information Record without a Material Number ... 224 * 7.1.4 ... General Data Screen ... 224 * 7.2 ... Purchasing Organization Data ... 226 * 7.2.1 ... Conditions ... 227 * 7.2.2 ... Text Screen ... 230 * 7.2.3 ... Statistical Data ... 232 * 7.3 ... Business Examples Purchasing Information Data ... 233 * 7.3.1 ... Standard Purchasing Information Record ... 233 * 7.3.2 ... Subcontracting Purchasing Information Record ... 234 * 7.4 ... Summary ... 235 * 8 ... Batch Management Data ... 237 * 8.1 ... Batch Management Overview ... 237 * 8.1.1 ... Batch Definition ... 237 * 8.1.2 ... Pharmaceutical Industry ... 238 * 8.2 ... Batch Master Record ... 239 * 8.2.1 ... Creating a Batch ... 239 * 8.2.2 ... Changing a Batch ... 245 * 8.2.3 ... Deleting a Batch ... 246 * 8.3 ... Batch Determination ... 248 * 8.3.1 ... Batch Determination Condition Tables ... 248 * 8.3.2 ... Batch Determination Access Sequences ... 249 * 8.3.3 ... Batch Strategy Types ... 249 * 8.3.4 ... Batch Search Procedure ... 251 * 8.4 ... Batch Information Cockpit ... 252 * 8.4.1 ... Batch Information Cockpit Overview ... 252 * 8.4.2 ... BIC Standard Configuration ... 253 * 8.4.3 ... BIC User-Defined Configuration ... 255 * 8.5 ... Business Examples Batch Management Data ... 257 * 8.5.1 ... Batch Management Record ... 257 * 8.5.2 ... Batch Determination ... 258 * 8.6 ... Summary ... 258 * 9 ... Material Master Record ... 261 * 9.1 ... Creating a Material Master Record ... 261 * 9.1.1 ... Create a Material Master Record Through a Schedule ... 261 * 9.2 ... Changing a Material Master Record ... 262 * 9.2.1 ... Change a Material Master Record - Immediately ... 262 * 9.2.2 ... Change a Material Master Record Schedule ... 264 * 9.2.3 ... Change a Material Master Record Activate ... 265 * 9.3 ... Material Master Deletion ... 267 * 9.3.1 ... Flag for Deletion Immediately ... 267 * 9.3.2 ... Flag for Deletion Schedule ... 268 * 9.3.3 ... Flag for Deletion Proposal List ... 269 * 9.3.4 ... Material Master Archiving ... 269 * 9.3.5 ... Remove a Material-Deletion Flag ... 270 * 9.4 ... Loading Material Master Records ... 270 * 9.4.1 ... Loading Material Master Records via Direct Input ... 270 * 9.4.2 ... Distribution of Material Master Records via ALE ... 272 * 9.5 ... Production Versions ... 272 * 9.5.1 ... Production Version Overview ... 272 * 9.5.2 ... Creating a Production Version ... 273 * 9.5.3 ... Production Versions Mass Processing ... 276 * 9.6 ... Revision Levels ... 276 * 9.6.1 ... Revision Level Overview ... 276 * 9.6.2 ... Revision Level Configuration ... 277 * 9.7 ... Business Examples Material Master Record ... 277 * 9.7.1 ... Creating and Changing a Material Master Record ... 278 * 9.7.2 ... Material Master Deletion ... 278 * 9.7.3 ... Version Control ... 279 * 9.8 ... Summary ... 280 * 10 ... Vendor Master Record ... 281 * 10.1 ... Creating the Vendor Master Record ... 281 * 10.2 ... Changing the Vendor Master Record ... 285 * 10.2.1 ... Change Vendor Master Record - Current ... 285 * 10.2.2 ... Change Vendor Master Record - Planned ... 286 * 10.2.3 ... Display Planned Changes to Vendor Master Records ... 287 * 10.2.4 ... Activate Planned Changes ... 287 * 10.2.5 ... Change Vendor Account Group ... 288 * 10.3 ... Deleting Vendor Master Record ... 289 * 10.3.1 ... Flag a Vendor Master Record for Deletion ... 289 * 10.3.2 ... Deleting Vendor Records via Archiving ... 290 * 10.4 ... Display Vendor Master Record ... 291 * 10.4.1 ... Display Vendor Master Record Current ... 291 * 10.4.2 ... Display Vendor Master Record Per Key Date ... 291 * 10.4.3 ... Display Vendors Purchasing List ... 292 * 10.5 ... Blocking Vendors ... 292 * 10.5.1 ... Block a Vendor Purchasing ... 292 * 10.6 ... One-Time Vendor ... 294 * 10.7 ... Vendor Sub-Range Functionality ... 295 * 10.8 ... Business Examples Vendor Master ... 296 * 10.8.1 ... Creating and Changing a Vendor Master Record ... 296 * 10.8.2 ... Vendor Master Deletion ... 297 * 10.8.3 ... One Time Vendor ... 298 * 10.9 ... Summary ... 298 * 11 ... Purchasing Overview ... 301 * 11.1 ... Purchase Requisition ... 301 * 11.2 ... Request for Quotation ... 302 * 11.3 ... Quotation ... 304 * 11.4 ... Purchase Order ... 305 * 11.5 ... Source List and Source Determination ... 307 * 11.5.1 ... Single Source ... 307 * 11.5.2 ... Multi-Source ... 308 * 11.5.3 ... Generate a Source List ... 310 * 11.5.4 ... Source Determination ... 311 * 11.6 ... Conditions in Purchasing ... 312 * 11.6.1 ... Condition Processing ... 312 * 11.6.2 ... Pricing Conditions ... 313 * 11.6.3 ... Taxes ... 314 * 11.6.4 ... Delivery Costs ... 314 * 11.7 ... Vendor Evaluation ... 314 * 11.7.1 ... Vendor Evaluation Overview ... 315 * 11.7.2 ... Vendor Evaluation Criteria ... 315 * 11.7.3 ... Vendor Evaluation Weighting ... 318 * 11.7.4 ... Points Scoring for Criteria ... 318 * 11.7.5 ... Maintain Vendor Evaluation ... 320 * 11.7.6 ... Scoring for Automatic and Semi-Automatic Criteria ... 321 * 11.7.7 ... Evaluation for a Material ... 322 * 11.8 ... Business Examples - Purchasing ... 322 * 11.8.1 ... Purchase Requisitions ... 323 * 11.8.2 ... Source List ... 323 * 11.8.3 ... Conditions ... 324 * 11.8.4 ... Vendor Evaluation ... 324 * 11.9 ... Summary ... 325 * 12 ... Purchase Requisition ... 327 * 12.1 ... Indirectly Created Requisition ... 327 * 12.1.1 ... Purchase Requisition Created by Production Order ... 327 * 12.1.2 ... Purchase Requisition Created by Plant Maintenance Order ... 328 * 12.1.3 ... Purchase Requisition Created by Project Systems ... 328 * 12.1.4 ... Purchase Requisition Created by Materials Planning ... 328 * 12.2 ... Directly Created Requisition ... 329 * 12.2.1 ... Create a Purchase Requisition with a Material Master Record ... 329 * 12.2.2 ... Create a Purchase Requisition without a Material Master Record ... 334 * 12.3 ... Processing a Purchase Requisition ... 335 * 12.3.1 ... Change a Purchase Requisition ... 335 * 12.3.2 ... Display a Purchase Requisition ... 335 * 12.3.3 ... Close a Purchase Requisition ... 337 * 12.3.4 ... Follow-On Functions ... 338 * 12.4 ... Business Examples Purchase Requisitions ... 341 * 12.4.1 ... Indirectly Created Purchase Requisition ... 341 * 12.4.2 ... Directly Created Purchase Requisition ... 341 * 12.5 ... Summary ... 342 * 13 ... Request for Quotation ... 343 * 13.1 ... Creating a Request for Quotation ... 343 * 13.1.1 ... RFQ Type ... 343 * 13.1.2 ... RFQ Date ... 345 * 13.1.3 ... Quotation Deadline ... 345 * 13.1.4 ... RFQ Document Number ... 345 * 13.1.5 ... Organizational Data ... 345 * 13.1.6 ... Default Data for Items ... 345 * 13.1.7 ... Collective Number ... 347 * 13.1.8 ... Validity Start/Validity End ... 347 * 13.1.9 ... Apply By ... 347 * 13.1.10 ... Binding Period ... 348 * 13.1.11 ... Reference Data ... 348 * 13.1.12 ... RFQ Item Detail ... 348 * 13.1.13 ... RFQ Delivery Schedule ... 348 * 13.1.14 ... Additional Data ... 349 * 13.1.15 ... Vendor Selection ... 351 * 13.2 ... Changing a Request for Quotation ... 352 * 13.3 ... Releasing an RFQ ... 354 * 13.3.1 ... Release Code/Release Group/Release Strategy ... 355 * 13.3.2 ... Set Release/Cancel Release ... 355 * 13.3.3 ... Release Prerequisite Fulfilled ... 355 * 13.3.4 ... List with Items ... 356 * 13.3.5 ... Scope of List ... 356 * 13.3.6 ... Purchasing Document Category ... 356 * 13.3.7 ... Other Selection Criteria ... 356 * 13.4 ... Issuing a Request for Quotation to a Vendor ... 356 * 13.5 ... Business Examples Request for Quotation ... 358 * 13.5.1 ... Creating and Changing a Request for Quotation ... 358 * 13.5.2 ... Releasing a Request for Quotation ... 359 * 13.6 ... Summary ... 359 * 14 ... Quotation ... 361 * 14.1 ... Entering a Quotation ... 361 * 14.2 ... Comparing Quotations ... 363 * 14.2.1 ... Price Comparison Factor in Quotations ... 363 * 14.2.2 ... Other Qualitative Factors in Quotations ... 365 * 14.3 ... Rejecting Quotations ... 366 * 14.3.1 ... Flagging the Quotation as Rejected ... 367 * 14.3.2 ... Printing the Quotation Rejection ... 367 * 14.3.3 ... Advising Unsuccessful Bidders ... 368 * 14.4 ... Business Examples Quotations ... 368 * 14.4.1 ... Comparing Quotations ... 369 * 14.4.2 ... Rejecting Quotations ... 369 * 14.5 ... Summary ... 370 * 15 ... Purchase Order ... 371 * 15.1 ... Create a Purchase Order ... 371 * 15.1.1 ... Create a Purchase Order with Vendor Known ... 371 * 15.1.2 ... Create a Purchase Order Where the Vendor Is Unknown ... 372 * 15.2 ... Maintaining a Purchase Order ... 374 * 15.3 ... Blocking and Canceling a Purchase Order ... 375 * 15.3.1 ... Block a Purchase Order Line Item ... 375 * 15.3.2 ... Canceling a Purchase Order Line Item ... 376 * 15.4 ... Account Assignment in a Purchase Order ... 377 * 15.4.1 ... Account Assignment Overview ... 377 * 15.4.2 ... Account Assignment Categories ... 377 * 15.4.3 ... Single Account Assignment ... 379 * 15.4.4 ... Multiple Account Assignment ... 380 * 15.5 ... Outline Purchase Agreement ... 381 * 15.5.1 ... Outline Purchase Agreement Overview ... 381 * 15.5.2 ... Outline Purchase Agreement Types ... 381 * 15.6 ... Scheduling Agreement ... 382 * 15.6.1 ... Scheduling Agreement Overview ... 382 * 15.6.2 ... Create a Scheduling Agreement Manually ... 382 * 15.6.3 ... Create a Scheduling Agreement with Reference ... 384 * 15.7 ... Contracts ... 386 * 15.7.1 ... Contract Overview ... 386 * 15.7.2 ... Centrally Agreed Contract ... 386 * 15.7.3 ... Creating a Contract ... 387 * 15.7.4 ... Release Order Against a Contract ... 389 * 15.8 ... Vendor Confirmation ... 390 * 15.8.1 ... Vendor Confirmation Overview ... 390 * 15.8.2 ... Confirmation Configuration ... 391 * 15.8.3 ... Enter a Manual Confirmation ... 392 * 15.9 ... Messages and Outputs ... 394 * 15.9.1 ... Message Overview ... 394 * 15.9.2 ... Message Creation ... 394 * 15.9.3 ... Message Output Definition ... 395 * 15.9.4 ... Output Messages ... 395 * 15.10 ... Pricing Procedures ... 396 * 15.10.1 ... Pricing Conditions ... 396 * 15.10.2 ... Condition Types ... 397 * 15.10.3 ... Condition Tables ... 398 * 15.10.4 ... Access Sequences ... 399 * 15.10.5 ... Calculation Schema ... 400 * 15.10.6 ... Price Determination ... 401 * 15.10.7 ... Standard Pricing Condition Type PB00 ... 401 * 15.10.8 ... Calculation Schema for Condition Type PB00 ... 401 * 15.11 ... Reporting ... 402 * 15.11.1 ... Reporting Overview ... 402 * 15.12 ... Release Procedures ... 403 * 15.12.1 ... Introduction to Release Procedures ... 403 * 15.12.2 ... Release with Classification for a Purchase Requisition ... 403 * 15.13 ... Business Examples Purchase Orders ... 407 * 15.13.1 ... Blocking a Purchase Order ... 407 * 15.13.2 ... Outline Purchase Agreement ... 407 * 15.13.3 ... Scheduling Agreement ... 408 * 15.13.4 ... Contracts ... 408 * 15.13.5 ... Releasing a Purchase Order ... 409 * 15.14 ... Summary ... 409 * 16 ... External Service Management (ESM) ... 411 * 16.1 ... Service Master Record ... 411 * 16.1.1 ... Activity Number ... 412 * 16.1.2 ... Service Category ... 412 * 16.1.3 ... Material/Service Group ... 413 * 16.1.4 ... Tax Indicator ... 413 * 16.1.5 ... Valuation Class ... 413 * 16.1.6 ... Formula ... 413 * 16.1.7 ... Graphic ... 415 * 16.2 ... Standard Service Catalog (SSC) ... 415 * 16.2.1 ... Overview ... 415 * 16.2.2 ... Creating a SSC Entry ... 415 * 16.3 ... Conditions in ESM ... 417 * 16.3.1 ... Total Price Condition ... 417 * 16.4 ... Procurement of Services ... 419 * 16.4.1 ... Using a Purchase Order ... 419 * 16.5 ... Entry of Services ... 422 * 16.5.1 ... Service Entry Sheet ... 422 * 16.6 ... Blanket Purchase Order ... 423 * 16.6.1 ... Creating a Blanket Purchase Order ... 423 * 16.7 ... Business Examples - External Service Management ... 425 * 16.7.1 ... Service Master Record ... 425 * 16.7.2 ... Procurement of Services ... 426 * 16.7.3 ... Blanket Purchase Order ... 426 * 16.8 ... Summary ... 427 * 17 ... Consumption-Based Planning ... 429 * 17.1 ... Master Data in CBP ... 429 * 17.1.1 ... Material Master Record ... 429 * 17.1.2 ... Planning Calendar ... 430 * 17.2 ... Planning Process ... 432 * 17.2.1 ... Planning at the Plant Level ... 432 * 17.2.2 ... Planning at the Storage Location Level ... 432 * 17.3 ... Planning Evaluation ... 434 * 17.3.1 ... MRP List ... 434 * 17.3.2 ... Stock/Requirements List ... 435 * 17.4 ... Procurement Proposal ... 436 * 17.4.1 ... Purchase Requisitions ... 437 * 17.4.2 ... Schedule Lines ... 437 * 17.4.3 ... Planned Orders ... 437 * 17.5 ... Business Examples Consumption-Based Planning ... 437 * 17.5.1 ... Planning Process ... 437 * 17.5.2 ... Planning Evaluation ... 438 * 17.6 ... Summary ... 439 * 18 ... Material Requirements Planning ... 441 * 18.1 ... Reorder-Point Planning ... 441 * 18.1.1 ... Manual Reorder-Point Planning ... 442 * 18.1.2 ... Automatic Reorder-Point Planning ... 442 * 18.2 ... Forecast-Based Planning ... 443 * 18.3 ... Time-Phased Planning ... 444 * 18.4 ... Business Examples Material Requirements Planning ... 446 * 18.4.1 ... Reorder Point Planning ... 446 * 18.4.2 ... Forecast-Based Planning ... 447 * 18.4.3 ... Time-Phased Planning ... 448 * 18.5 ... Summary ... 449 * 19 ... Forecasting ... 451 * 19.1 ... Forecast Models ... 451 * 19.1.1 ... Constant Model ... 451 * 19.1.2 ... Trend Model ... 452 * 19.1.3 ... Seasonal Model ... 452 * 19.1.4 ... Seasonal Trend Model ... 453 * 19.2 ... Forecast Parameters ... 453 * 19.2.1 ... Create Forecast Profile ... 453 * 19.3 ... Forecast Options ... 457 * 19.3.1 ... Manual Forecast Model Selection ... 457 * 19.3.2 ... Automatic Forecast Model Selection ... 457 * 19.4 ... Business Examples Forecasting ... 459 * 19.4.1 ... Forecast Models ... 459 * 19.5 ... Summary ... 461 * 20 ... Inventory Management Overview ... 463 * 20.1 ... Goods Movements ... 463 * 20.1.1 ... Stock Overview ... 464 * 20.1.2 ... Material Document ... 465 * 20.1.3 ... Movement Types ... 466 * 20.2 ... Goods Issue ... 467 * 20.3 ... Goods Receipt ... 468 * 20.4 ... Physical Inventory ... 468 * 20.5 ... Returns ... 469 * 20.5.1 ... Introduction to Returns ... 469 * 20.5.2 ... Creating a Return ... 469 * 20.5.3 ... Configuring Reason for Movement ... 470 * 20.5.4 ... Material Documents ... 472 * 20.6 ... Reservations ... 474 * 20.6.1 ... Introduction to Reservations ... 474 * 20.6.2 ... Creating a Manual Reservation ... 475 * 20.6.3 ... MRP and Reservations ... 476 * 20.6.4 ... Reservations Management Program ... 477 * 20.7 ... Stock Transfers ... 480 * 20.7.1 ... Stock Transfer and Transfer Posting ... 480 * 20.7.2 ... Transfer Between Storage Locations Using Transaction MB1B ... 480 * 20.7.3 ... Transfer Between Plants Using Transaction MB1B ... 483 * 20.7.4 ... Transfer Between Storage Locations Using MIGO_TR ... 484 * 20.7.5 ... Transfer Between Plants Using MIGO_TR ... 485 * 20.7.6 ... Transfer Between Company Codes ... 485 * 20.8 ... Business Examples Inventory Management ... 486 * 20.8.1 ... Physical Inventory ... 486 * 20.8.2 ... Returns ... 487 * 20.8.3 ... Reservations ... 487 * 20.9 ... Summary ... 488 * 21 ... Goods Issue ... 489 * 21.1 ... Goods Issue to a Production Order ... 489 * 21.1.1 ... Planned Goods Issue Using MB1A ... 489 * 21.1.2 ... Planned Goods Issue Using Transaction MIGO_GI ... 491 * 21.1.3 ... Unplanned Goods Issue Using Transaction MB1A ... 492 * 21.1.4 ... Backflushing ... 493 * 21.2 ... Goods Issue to Scrap ... 494 * 21.2.1 ... Goods Issue to Scrap Using Transaction MB1A ... 495 * 21.2.2 ... Goods Issue to Scrap Using Transaction MIGO_GI ... 496 * 21.3 ... Goods Issue for Sampling ... 497 * 21.3.1 ... Goods Issue for Sampling Using Transaction MB1A ... 497 * 21.3.2 ... Goods Issue for Sampling Using Transaction MIGO_GI ... 498 * 21.4 ... Goods Issue Posting ... 498 * 21.4.1 ... Material Document ... 499 * 21.4.2 ... Accounting Document ... 499 * 21.4.3 ... Goods Issue Slip ... 499 * 21.4.4 ... Stock Changes ... 499 * 21.4.5 ... General Ledger Account Changes ... 499 * 21.5 ... Goods Issue Reversal ... 500 * 21.5.1 ... Goods Issue Reversal with Reference to a Material Document ... 500 * 21.6 ... Business Examples Goods Issue ... 501 * 21.6.1 ... Goods Issue to Scrap ... 501 * 21.6.2 ... Goods Issue to Sampling ... 502 * 21.6.3 ... Backflushing ... 503 * 21.7 ... Summary ... 503 * 22 ... Goods Receipt ... 505 * 22.1 ... Goods Receipt for a Purchase Order ... 505 * 22.1.1 ... Goods Receipt with a Known Purchase Order Number ... 505 * 22.1.2 ... Goods Receipt with an Unknown Purchase Order Number ... 507 * 22.1.3 ... Goods Receipt Posting ... 508 * 22.2 ... Goods Receipt for a Production Order ... 510 * 22.3 ... Initial Entry of Inventory ... 511 * 22.3.1 ... Initial Inventory Load ... 512 * 22.4 ... Other Goods Receipts ... 513 * 22.4.1 ... Goods Receipt Without a Production Order ... 513 * 22.4.2 ... Goods Receipt of By-Products ... 514 * 22.4.3 ... Goods Receipt for Free Goods ... 515 * 22.4.4 ... Goods Receipt for Returnable Transport Packaging (RTP) ... 516 * 22.5 ... Business Examples Goods Receipts ... 516 * 22.5.1 ... Goods Receipt for a Purchase Order ... 517 * 22.5.2 ... Goods Receipt Without a Purchase Order ... 517 * 22.5.3 ... Goods Receipt for Returnable Transport Packaging (RTP) ... 518 * 22.6 ... Summary ... 519 * 23 ... Physical Inventory ... 521 * 23.1 ... Physical Inventory Preparation ... 521 * 23.1.1 ... Preparations for a Physical Inventory Count ... 522 * 23.1.2 ... Creating the Physical Inventory Count Document ... 522 * 23.1.3 ... Printing the Physical Inventory Count Document ... 524 * 23.2 ... Counting and Recounts ... 526 * 23.2.1 ... Entering the Count ... 526 * 23.2.2 ... Difference List ... 527 * 23.2.3 ... Missing Material ... 529 * 23.2.4 ... Recounts ... 529 * 23.3 ... Physical Inventory Posting ... 530 * 23.3.1 ... Posting the Count Document ... 530 * 23.3.2 ... Posting a Count Without a Document ... 532 * 23.3.3 ... Accounting of Inventory Differences ... 533 * 23.4 ... Business Examples Physical Inventory ... 534 * 23.4.1 ... Physical Inventory Preparation ... 534 * 23.4.2 ... Physical Inventory Posting ... 535 * 23.5 ... Summary ... 536 * 24 ... Invoice Verification ... 537 * 24.1 ... Standard Three-Way Match ... 537 * 24.1.1 ... Entering an Invoice ... 537 * 24.1.2 ... Simulate Posting ... 540 * 24.1.3 ... Invoice Posting ... 541 * 24.2 ... Evaluated Receipt Settlement ... 542 * 24.2.1 ... Benefits of ERS ... 542 * 24.2.2 ... Running the Evaluated Receipt Settlement ... 543 * 24.3 ... Document Parking ... 544 * 24.3.1 ... Benefits of Document Parking ... 544 * 24.3.2 ... Parking an Invoice ... 544 * 24.4 ... Variances ... 545 * 24.4.1 ... Variances Overview ... 545 * 24.4.2 ... Tolerance Limits ... 545 * 24.5 ... Blocking Invoices ... 548 * 24.5.1 ... Blocking Invoices ... 548 * 24.5.2 ... Manual Block ... 548 * 24.5.3 ... Stochastic or Random Block ... 550 * 24.5.4 ... Block Due to Amount of an Invoice Item ... 551 * 24.5.5 ... Block Due to Variance of an Invoice Item ... 553 * 24.6 ... Releasing Invoices ... 554 * 24.6.1 ... Releasing Invoices Automatically ... 554 * 24.7 ... Business Examples Invoice Verification ... 555 * 24.7.1 ... Evaluated Receipt Settlement ... 555 * 24.7.2 ... Variances ... 556 * 24.7.3 ... Blocking Invoices ... 557 * 24.8 ... Summary ... 558 * 25 ... Balance Sheet Valuation ... 559 * 25.1 ... LIFO Valuation ... 559 * 25.1.1 ... Configuration for LIFO ... 560 * 25.1.2 ... Preparation for LIFO ... 562 * 25.1.3 ... Running a LIFO Valuation ... 563 * 25.2 ... FIFO Valuation ... 565 * 25.2.1 ... Configuration for FIFO ... 565 * 25.2.2 ... Preparation for FIFO ... 566 * 25.2.3 ... Running a FIFO Valuation ... 567 * 25.3 ... Lowest Value Determination ... 568 * 25.3.1 ... Lowest Value Determination Based on Market Prices ... 568 * 25.3.2 ... Lowest Value Determination Based on Range of Coverage ... 570 * 25.3.3 ... Lowest Value Determination Based on Movement Rate ... 572 * 25.4 ... Business Examples Balance Sheet Valuation ... 574 * 25.4.1 ... LIFO Valuation ... 574 * 25.4.2 ... FIFO Valuation ... 575 * 25.4.3 ... Lowest Value Determination ... 575 * 25.5 ... Summary ... 576 * 26 ... Material Ledger ... 577 * 26.1 ... Material Ledger Overview ... 577 * 26.1.1 ... Activating the Material Ledger and Actual Costing ... 578 * 26.1.2 ... Benefits of Using the Material Ledger ... 578 * 26.2 ... Material Ledger Data ... 579 * 26.2.1 ... Material Master Record ... 579 * 26.2.2 ... Data for the Material Ledger ... 581 * 26.3 ... Material Price Determination ... 582 * 26.3.1 ... Material Price Analysis ... 582 * 26.3.2 ... Single-Level Material Price Determination ... 583 * 26.3.3 ... Multi-Level Material Price Determination ... 585 * 26.3.4 ... Transaction-Based Material Price Determination ... 585 * 26.4 ... Business Examples Material Ledger ... 586 * 26.4.1 ... Material Ledger Overview ... 586 * 26.4.2 ... Material Price Determination ... 587 * 26.5 ... Summary ... 587 * 27 ... Classification System ... 589 * 27.1 ... Classification Overview ... 589 * 27.1.1 ... What Is the SAP ERP Classification System? ... 589 * 27.1.2 ... Describing an Object ... 590 * 27.2 ... Characteristics ... 591 * 27.2.1 ... Create Characteristics ... 591 * 27.2.2 ... Configuring Characteristics ... 592 * 27.3 ... Classes ... 595 * 27.3.1 ... Create Classes ... 596 * 27.4 ... Class Type ... 597 * 27.4.1 ... Class Type Overview ... 597 * 27.4.2 ... Configuring a Class Type ... 598 * 27.5 ... Class Hierarchies ... 600 * 27.5.1 ... Creating a Class Hierarchy ... 601 * 27.5.2 ... Inherited Characteristics ... 601 * 27.6 ... Object Dependencies ... 602 * 27.6.1 ... Object Dependency Overview ... 602 * 27.6.2 ... Dependency Creation ... 602 * 27.7 ... Finding Objects Using Classification ... 603 * 27.7.1 ... Classifying Materials ... 603 * 27.7.2 ... Classifying Objects ... 604 * 27.7.3 ... Finding Objects ... 606 * 27.8 ... Business Examples Classification ... 607 * 27.8.1 ... Characteristics and Classes ... 607 * 27.8.2 ... Finding Objects Using Classification ... 608 * 27.9 ... Summary ... 608 * 28 ... Document Management ... 611 * 28.1 ... Document Management Overview ... 611 * 28.2 ... Document Information Record ... 611 * 28.2.1 ... Document Number ... 612 * 28.2.2 ... Document Type ... 612 * 28.2.3 ... Document Part ... 613 * 28.2.4 ... Document Version ... 613 * 28.2.5 ... Document Status ... 613 * 28.3 ... Creating a Document ... 614 * 28.3.1 ... Create a Document ... 614 * 28.4 ... Linking an Object to a Document ... 615 * 28.4.1 ... Configuration for Linking Documents ... 616 * 28.4.2 ... Linking a Document to a Material Master Record ... 616 * 28.4.3 ... Linking a Document to a Vendor Master Record ... 617 * 28.5 ... Documents and Classification ... 618 * 28.5.1 ... Using Classification for Documents ... 618 * 28.6 ... Business Examples Document Management ... 619 * 28.6.1 ... Document Information Record ... 619 * 28.6.2 ... Linking an Object to a Document ... 620 * 28.7 ... Summary ... 620 * 29 ... Conclusion ... 621 * 29.1 ... Lessons Learned ... 621 * 29.2 ... Future Direction ... 623 * ... Appendices ... 625 * A ... Bibliography ... 627 * B ... Glossary ... 629 * C ... List of Materials Management Transaction Codes ... 635 * D ... The Author ... 643 * ... Index ... 645