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BBP 2 (Sample)
BBP 2 (Sample)
BBP 2 (Sample)
Material Management
Submitted to
BY
Wipro Limited
Version 1.0
DOCUMENT INFORMATION
Page 1 of 99
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DOCUMENT HISTORY
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TABLE OF CONTENTS
1 EXECUTIVE SUMMARY 3
1.1 BACKGROUND 3
1.2 BUSINESS BLUEPRINT OVERVIEW 4
1.3 Materials Management 6
1.4 Implementation Scope 12
1.5 Module Integration 16
2 ORGANIZATION STRUCTURE 18
2.1 Company 19
2.2 Company Code 19
2.3 Plant 20
2.4 Storage Location 22
2.5 Purchasing Organization 23
2.6 Purchasing Groups 25
3 MASTER DATA 26
3.1 Material Master 27
3.2 Vendor Master 35
3.3 Service Master 38
3.4 Purchasing Info record 38
3.5 Source List 39
4 BUSINESS PROCESSES 40
4.1 Purpose 40
4.2. Purchasing 43
4.3. Inventory management 64
4.4. Material Valuation 75
4.5 Physical Inventory 82
4.6 Logistics Invoice Verification 85
5. TRANSACTION CODES 93
6. STANDARD INFORMATION SYSTEM 96
7. ANNEXURE 97
7.1 – GAPS 97
8. POINTS OF MOM (MM) 26.09.2008 97
9. SIGN OFF/ APPROVAL 98
1 EXECUTIVE SUMMARY
1.1 BACKGROUND
FI Financial Accounting
CO Controlling
PS Project System
MM Materials Management
SD Sales & Distribution
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Purchasing
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The follow up can be carried out with vendors for expediting the
purchase orders.
6. Good Receiving and Inventory Management
Goods receiving personnel can confirm the receipt of goods
simply by entering the PO number. By specifying permissible
tolerances, buyers can limit over- and under deliveries of ordered
goods. At this time we can have quality checking for the material.
7. Invoice Verification
The system supports the checking and matching of invoices. The
account payable department is notified of quantity and price
variances because the system has access to PO and good receipt
data. This speeds the process of auditing and clearing invoices for
payment.
8. Payment
Payments are processed from Accounts payable in FI.
Terminology Match
SAP STERLINGANDWILSON
Purchase Requisition Service Request
Request for Quotation Request for Quotation
Quotation Quotation
Purchase Order Purchase Order
Service Purchase Order PurchaseOrder (hardware items)
Sub Contract Purchase order Purchase order
Terminology Match
Material Valuation
This includes the following application areas:
• Purchasing
• Inventory Management
• Logistics Invoice Verification
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At the first point of sale, the value of goods is Rs.100. The tax on this is 12.5%. Therefore, the
net VAT would be 12.5%. At the second change of sale, the sale value is Rs.120 and the tax
thereon is 15%. The tax that is to be paid at every point is 15%. The input tax is 15%. You will
get a credit for first change in sale of 2.5%-- i.e. 15% -12.5%. Therefore, 2.5% will be the net
rate. At the third change of sale, the sale value is Rs.150 and the tax on this is 18.75%. At the
last stage, the tax paid is 18.75%. The Input Tax is 18.75%. You get a credit for second change
in sale?i.e. 18.75% -15% = 3.75%. Therefore, 3.75% would be the net VAT. This means that
VAT is paid in the last point tax under the sale
• CST - Under the CST Act, the tax is collected at one stage of purchase or sale
of goods. Therefore, the burden of the full tax bond is borne by only one dealer,
either the first or the last dealer. However, under the VAT system, the tax burden
would be shared by all the dealers from first to last. Then, such tax would be
passed upon the final consumers.
• Octroi – local tax levied on incoming foreign
matrl.[Foodstuffs]
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However, under the VAT system, the tax burden would be shared by all the dealers from first to
last. Then, such tax would be passed upon the final consumers.
Under the CST Act, the tax is levied at a single point. Under the VAT system, the retailers are
not subject to tax except for the retail tax.
Under the CST Act, general and specific exemptions are granted on certain goods while VAT
does not permit such exemptions. Under the CST law, concessional rates are provided on
certain taxes. The VAT regime will do away with such concessions as it would provide the full
credit on the tax that has been paid earlier. Under VAT law, first, the dealer pays tax on the sale
or purchase of goods. The subsequent dealer pays tax on the portion of the value added upon
such goods. Thus, the tax burden is shared equally by the last dealer. To illustrate the whole
procedure of VAT, we give you an example as follows:
At the first point of sale, the value of goods is Rs.100. The tax on this is 12.5%. Therefore, the
net VAT would be 12.5%. At the second change of sale, the sale value is Rs.120 and the tax
thereon is 15%. The tax that is to be paid at every point is 15%. The input tax is 15%. You will
get a credit for first change in sale of 2.5%-- i.e. 15% -12.5%. Therefore, 2.5% will be the net
rate. At the third change of sale, the sale value is Rs.150 and the tax on this is 18.75%. At the
last stage, the tax paid is 18.75%. The Input Tax is 18.75%. You get a credit for second change
in sale?i.e. 18.75% -15% = 3.75%. Therefore, 3.75% would be the net VAT. This means that
VAT is paid in the last point tax under the sale
Project Unit(
West Mumbai Electrical/HVAC/Plumb/firefighting)
Project Unit(
Pune Electrical/HVAC/Plumb/firefighting)
Baroda Project Unit(
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Project Unit(
East Calcutta Electrical/HVAC/Plumb/firefighting)
Project Unit(
South Chennai Electrical/HVAC/Plumb/firefighting)
Project Unit(
Coimbatore Electrical/HVAC/Plumb/firefighting)
Project Unit(
Bangalore Electrical/HVAC/Plumb/firefighting)
Project Unit(
Hyderabad Electrical/HVAC/Plumb/firefighting)
• Purchasing
o Purchase Requisition
o RFQ/Quotation
o Purchase Order
o Master Data
▪ Info Record
▪ Source List
▪ Vendor
▪ Vendor Evaluation
▪ Conditions
▪ Messages
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• Inventory Management
o Goods Movement
o Material Document
o Periodic Processing
o Environment(Std SAP Reports)
• Valuation
o Change in Material Price
• Service Entry Sheet
o Maintain
o List Analyses
• Service Master
o Service
• Material Master
o Material
o Special Stock
o Other
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Inventory Management
Good Receipt Process for External Procurement
− Goods received at site against purchase order & WBS
− Confirmation Receipt send to respective head office with
authorized signatory
− GRN based on the confirmation receipt from respective
site
− Return of Rejected material to Vendor
Goods Issue Processing
− Identifying the purchase requisition quantity and WBS.
− Checking the Quantity in store.
− Physical Transfer of Goods to Project site with reference
to the Purchase requisition
− Post the Goods issue.
Physical Inventory
Invoice Verification
Material Valuation
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3 ORGANIZATION STRUCTURE
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3.1 Company
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3.3 Plant
Introduction
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Reporting Flexibility:
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4 MASTER DATA
• Material Master
• Service Master
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• Vendor Master
• Info Records
• Source list
• Industry
• Material Type
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• Material Numbering
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H A V c W A T E R X X X 1 2 3 4 5 6
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
• Material Group
Material Group
S. Material Group
Description
No. (max 9 characters
ALLUMINIUM EARTHING
3
STRIP ELEC1003
ALLUMINIUM EARTHING
4
STRIP ELEC1004
5 ALUMINIUM CABLES ELEC1005
6 ALUMINIUM EARTHING WIRE ELEC1006
7 AUDIO VISUAL SYSTEM ELEC1007
8 BARREL NIPPLE ELEC1008
Need to be finalized by Client
Unit of measure:
The SAP R/3 System distinguishes between the following units of
measure:
Order unit
• Sales unit
• Unit of issue
Material Valuation
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a) Valuation price
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89-Stock Dr (Debit)
99-Stock Cr (Credit)
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General Data
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If required, default data for the material master like the planned
delivery time, purchasing groups, etc. can be maintained at the
vendor level in the vendor master. The data maintained in the
vendor master will be defaulted and can be changed when
purchasing. Inco terms are international commercial terms
negotiated with vendor. Tax codes and payment terms are
discussed and would be given by S&W in next phase.
• Service number
• Service category
• Descriptive texts (short and long text)
• Base unit of measure
• Material group
• Valuation class
In Sterling and Wilson, the source list will be used to maintain the
preferred vendor list. If a contract/Schedule Agreement exists it
will be maintained in the Source list.
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5 BUSINESS PROCESSES
5.1 Purpose
Supply management and related activities are carried out at
sterling and Wilson to ensure that the purchased products and
services, including imports, confirm to the required specification
and are supplied on time, for smooth execution of the projects to
the satisfaction of the customers.
▪ Material Master
▪ Vendor master
▪ Purchase Info Record
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▪ Source List
The BOQ has an Item master, descriptions and units. S&W Head
office issue the item of master of BOQ to Respective site engineer
for every project.
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HOD.
4.2. Purchasing
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When you order a material for stock, the system does not require
an account assignment. This is because the posting to the
appropriate stock and consumption accounts occurs automatically
after each goods movement (for example, after a material is
received by the stores or issued from stores). Furthermore, the
value and the quantity of the stocked material are updated in the
material master record.
To order a material for stock, the material must have a master
record.
Accounting Entries:
Vendor Account Cr
GR/IR Account Dr
VAT Clearing Dr
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Accounting Entries:
Consumption Account DR
GR/IR Account CR
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Vendor Account Cr
GR/IR Account Dr
Accounting Entries:
Vendor Account Cr
GR/IR Account Dr
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Purchase Requisition:
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Sr Doc
No Purchasing Order Doc Types Type
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client
Purchase order
4.2.1. Purpose
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• Material master
• Vendor master
• Service master
• Purchasing info record
• Source list
• Condition record
• Work breakdown structure
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• Identifying requirement
Through the price comparison screen SAP ranks all the quotations
based on the price. Price comparison can have the break of
pricing components like discount, packing, freight, insurance etc.
along with taxes. The other details such as delivery date and
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Item Categories:
L Subcontracting
D Service
S Third Party
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F Order
K Cost center
Q Proj. Make-to-order
D Ind.cust/settlm.proj
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Types of Services:
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These main criteria are again sub divided into sub criterion to
calculate the scores of these main criteria.
Following are the sub criteria’s for the main criteria:
• Price
o Price level
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o Price history
• Quality
o Goods receipt
o Quality audit
o Complaints/rejection level
• Delivery
o On-time delivery performance
o Quantity reliability
o Compliance with shipping instructions
o Confirmation date
It involves
• Management of material stocks on a quantity and value
basis
• Planning, Entry, and Documentation of all Goods Movements
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Movem Description
ent
Number
101 Goods receipt for purchase order into
warehouse/stores
103 Goods receipt for purchase order into GR
blocked stock
105 Release GR blocked stock for warehouse
561 Initial entry of stock – unrestricted use
563 Initial entry of stock – quality inspection
565 Initial entry of stock – blocked stock
• Goods issue
A goods issue (GI) is a goods movement with which a material
withdrawal or material issue, a material consumption, or a
shipment of goods to a customer is posted. A goods issue leads to
a reduction in warehouse stock.
The Inventory Management system supports the following types
of goods issues:
1. Withdrawal of material for projects
2. Scrapping and withdrawal of material for sampling
3. Return deliveries to vendors
4. Other types of internal staging of material
5. Deliveries to vendors without the involvement of the SD
Shipping component
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Movem Description
ent
Number
122 Return delivery to vendor
124 Return delivery from GR blocked stock
201 Goods issue to cost centre
221 Goods Issue to project
241 Goods Issue to asset
261 Goods issue to order
551 Goods issue to scrapping from unrestricted
stock
555 Goods issue to scrapping from blocked
stock
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• Stock transfer
A stock transfer is the removal of material from one storage
location and its transfer to another storage location. Stock
transfers can occur either within the same plant or between two
plants.
There are two methods of stock transfer without delivery.
One-Step Procedure:
• During a one-step stock transfer, the system creates issue
of stock at sender plant & receipt of stocks at receiver plant
with in the same step. Material will be transferred at the
MAP/Standard Price at the Issuing Plant.
Two-Step Procedure:
• During two-step process, system transfers material from
issuing plant to stock in transit. At receiver plant after
receipt document is posted stock in transit gets transferred
to receiver plant. Material will be transferred at the
MAP/Standard Price at the Issuing Plant.
• Transfer posting
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Material-to-Material Transfers
In some cases, a transfer posting from material to material is
necessary. This might be the case, for example, if a material
changes over time in such a way that it no longer corresponds to
the features defined in the material master record, but it
corresponds to the features defined in another material master
record. A transfer posting from material to material results in the
transferred quantity being managed under another material
number. A prerequisite for posting a transfer from material to
material is that both materials be managed in the same stock-
keeping unit.
Movement Description
Number
311 Transfer posting storage location to storage
location unrestricted to unrestricted(project –Q)
313 Transfer posting SLoc to SLoc – remove from
storage
315 Transfer posting SLoc to SLoc – place into storage
325 Transfer posting storage location to storage
location blocked stock to blocked stock
321 Transfer posting stock to stock – quality inspection
to unrestricted
343 Transfer posting stock to stock – blocked to
unrestricted
349 Transfer posting stock to stock – blocked to quality
inspection
453 Transfer posting stock to stock – own stock from
returns
457 Transfer posting stock to stock – quality inspection
from returns
459 Transfer posting stock to stock – blocked stock
from returns
541 Own stock to stock at subcontractor
4.3.1. Purpose
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• Goods receipts
• Vendor returns
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• Goods Issue
• Transfer posting
Transfer posting from one location to other location will be done
against reservation in case if Material is to be transferred to
Production Storage Location.
• Stock transfer
One step stock transfer will be used for transferring the materials
between the plants of same location.
• Performing revaluations
• Executing balance sheet valuation
System setting
Plant level materials will be valuated.
Movement types will decide which are relevant for financial
posting.
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Split Valuation
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The fact that these stocks are in different storage locations is not
important for valuation.
• Valuation area
• Valuation class
You group together different materials with similar properties into
valuation classes so that you do not have to manage a separate
stock account for every material.
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• Valuation category
Criterion according to which split valuation is carried out:
• Procurement
You can valuate a material differently depending on whether
it is manufactured in-house or procured externally.
• Origin
You can valuate a material differently depending on where it
comes from (such as home or abroad).
• Status
You can valuate a material differently depending on its
status (such as new, used, and repaired).
• Valuation type
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• Material type
You assign every material to a material type when you
create it. Examples of material types in the standard system
include raw materials, operating supplies and finished
products.
• Movement type
For every material movement, there is a movement type in
the SAP System. The movement type controls the properties
of the movement, for example, which entries you must
make when entering a material movement, and which
updates are carried out when the movement is posted. The
following control features are important for valuation:
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4.4.1. Purpose
▪ Material master
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All the materials will be created in the system with accounting &
costing views which needs to be valuated either with price
control S or V. Initial price will be updated in material master
while creation. Based on receipts value moving average price will
keep on getting updated online for every receipt. Material having
standard price will have moving average price Up-dation only for
statistical purpose. Every issue will be with corresponding price
in the material master with relevant financial posting.
• Unrestricted-use
• Quality inspection stock
• Blocked stock
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Periodic Inventory
In a periodic inventory, all stocks of the company are physically
counted on the balance sheet key date. In this case, every
material must be counted. During counting, the entire warehouse
must be blocked for material movements.
Continuous Inventory
In the continuous inventory procedure, stocks are counted
continuously during the entire fiscal year. In this case, it is
important to ensure that every material is physically counted at
least once during the year.
Cycle Counting
Cycle counting is a method of physical inventory where inventory
is counted at regular intervals within a fiscal year. These intervals
(or cycles) depend on the cycle counting indicator set for the
materials.
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4.5.1 Purpose
• Material master
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You can also group together individual phases and carry them out
in a single step, as follows:
• Posting the physical inventory count without reference to a
physical inventory document
In this step, the following are combined:
– A physical inventory document is created.
– The count is posted.
• If a Posting the physical inventory count and inventory
differences physical inventory document exists, the following
are combined in this step:
– The count is posted.
– Any inventory differences are posted.
• Posting the physical inventory count without reference to a
physical inventory document
In this step, the following are combined:
– A physical inventory document is created.
– The count is posted.
– Any inventory differences are posted.
Document Parking
Tolerance
When the system performs the three-way matching it also takes
the tolerance limits into consideration if variances occur. The
tolerances, which can be defined, are listed below. Tolerances can
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Delivery Costs
Delivery costs are costs that are invoiced for a delivery over and
above the value of the delivery itself. This includes freight
charges, customs duty, or other costs.
There are the following types of delivery costs:
• Invoice
The vendor invoices for the goods that have ordered from
the company. Passing the same bill submitted by him.
• Credit memo
The vendor has invoiced too much for the last delivery, for
example, less than the agreed quantity was delivered and
that at the agreed total price, or returned part of a delivery
to the vendor due to quality problems.
• Subsequent debit
Already received & posted an invoice from vendor for all the
goods received. Subsequently, freight costs are to be taken
into account; however, the invoice quantity remains the
same.
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•Subsequent credit
Already received a credit memo from vendor for all the goods
received. Subsequently, freight costs & rate difference are to be
credited to company; however, the credit memo quantity
remains the same.
4.6.1. Purpose
• Material master
• Vendor master
Vendor Accounts
There is a separate account in the sub-ledger for each vendor
that all amounts concerning this vendor are posted to. Making a
posting to the vendor account is not the same as making a
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Stock Accounts
In the R/3 System, there is no separate account for each
material. Instead, different materials with similar features are
grouped together in a common account (for example: raw
materials). The account relevant for a material is defined in the
material master record when a material is created.
The system only posts to the stock account when a price
difference occurs for an invoice provided stock of Material Exists.
Tax Accounts
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Type of Procurement
Site Engg issue Site Engg issue(gr1,gr2) Site Engg issue Site Engg issue
confirmation to office confirmation to office confirmation to office confirmation to office
5. TRANSACTION CODES
T.code Description
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T.code Description
MM01 Create Material &
MM02 Change Material &
MM03 Display Material &
MM50 List Extendable Materials
MMBE Stock Overview
AC03 Service Master
AC06 List Display: Service Master
ME1E Quotation Price History
ME1L Info Records Per Vendor
ME1M Info Records per Material
ME1P Purchase Order Price History
ME01 Maintain Source List
ME03 Display Source List
ME04 Changes to Source List
ME05 Generate Source List
ME0M Source List for Material
MB90 Output Processing for Mat. Documents
ME9A Message Output: RFQs
ME9F Message Output: Purchase Orders
ME9K Message Output: Contracts
ME51N Create Purchase Requisition
ME52N Change Purchase Requisition
ME53N Display Purchase Requisition
ME5A Purchase Requisitions: List Display
ME5J Purchase Requisitions for Project
ME5K Requisitions by Account Assignment
MELB Purch. Transactions by Tracking No.
ME54 Release Purchase Requisition
ME55 Collective Release of Purchase Reqs.
ME5F Release Reminder: Purch. Requisition
ME1P Purchase Order Price History
ME21 Create Purchase Order
ME22 Change Purchase Order
ME23 Display Purchase Order
ME25 Create PO with Source Determination
ME2B POs by Requirement Tracking Number
ME2C Purchase Orders by Material Group
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T.code Description
ME2J Purchase Orders for Project
ME2K Purch. Orders by Account Assignment
ME2L Purchase Orders by Vendor
ME2M Purchase Orders by Material
ME2N Purchase Orders by PO Number
ME2O SC Stock Monitoring (Vendor)
ME2S Services per Purchase Order
ME57 Assign and Process Requisitions
ME58 Ordering: Assigned Requisitions
ME80 Purchasing Reporting
ME81 Analysis of Order Values
ME1P Purchase Order Price History
ME21N Create Purchase Order
ME22N Change Purchase Order
ME23N Display Purchase Order
ME24 Maintain Purchase Order Supplement
ME25 Create PO with Source Determination
MB1C Other Goods Receipts
MB90 Output Processing for Mat. Documents
MB01 Post Goods Receipt for PO
MB02 Change Material Document
MB03 Display Material Document
MB0A Post Goods Receipt for PO
MB51 Material Doc. List
MB90 Output Processing for Mat. Documents
ML81N Maintain Service Entry Sheet
MN13 Create Message: Service Entry
MN14 Change Message: Service Entry
MN15 Display Message: Service Entry
MBRL Return Delivery per Mat. Document
MR2M Change Invoice Document
MR3M Display Invoice Document
MR5M Delete Invoice Document
MR8M Cancel Invoice Document
MR90 Messages for Invoice Documents
MIRO Enter Invoice
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7. ANNEXURE
7.1 – GAPS
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Consultant
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