Dodla Dairy

Limited

USER MANUAL

Material Management

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Table of Contents

1. SAP MM – Procurement of Materials ................................................................................................................. 4

2. Master Data ..................................................................................................................................................................... 5
2.1 Material Creation......................................................................................................................................................................... 8
2.1.1 Material Creation (Packing Material) ........................................................................................................... 21
2.1.2 Material Creation (Packing Material) ........................................................................................................... 21
2.1.2 Material Reports.................................................................................................................................................... 26
2.1.3 Material Change ..................................................................................................................................................... 27
2.2 Vendor Master Record ........................................................................................................................................................... 28
2.2.1 List of Vendors ...................................................................................................................................................... 32

2.3 Enquiry (Request for Quotation) Process .................................................................................................. 34

3. Purchase Requisition Process.............................................................................................................................. 40
3.1 Create Purchase Requisition................................................................................................................................................ 40
3.2 Release Purchase Requisition ............................................................................................................................................. 42
3.2 Change Purchase Requisition .............................................................................................................................................. 42
3.3 Display Purchase Requisition.............................................................................................................................................. 42
3.4 List of Purchase Requisition(s) .......................................................................................................................................... 42

4. Purchase order Process ........................................................................................................................................... 45

4.1 Create Purchase Order ........................................................................................................................................................... 45
4.2 Change Purchase Order ........................................................................................................................................................ 46
4.3 Display Purchase Order ......................................................................................................................................................... 46
4.4 Release Purchase order ......................................................................................................................................................... 46

5. Goods Receipt for Purchase Order ..................................................................................................................... 48

6. Logistics Invoice Verification ................................................................................................................................ 52

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1 SAP MM – Procurement of Materials

Every organization acquires material to complete its business needs. The process of buying
materials and obtaining services from vendors or dealers is procurement. The procurement process
should be done in such a way that it is ordered in the correct quantity, with a proper value at the proper
time.
Procurement of Material having following Steps:

Fig 1.1 Procurement to Pay Cycle

1. Create PR
The process initiate with a PR. PR is an internal document, which does not carry any legal validity. This
document is used to communicate the requirement of an individual, to the procurement department.
The requester would specify, what he wants, how much he wants & by when he wants the goods or
service.
2. Approve PR
Once the PR is created, it’ll flow to an approver. This approver could be a Manager, Head of a Division,
etc. depending on your company’s hierarchy. Approvals in a PR could be either single level or multi-
level. In a single level, the PR is approved by only one approver. However, in a multi-level scenario a PR
is approved by more than one person.

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3. Create RFQ (Request for Quotation)
Once the PR is approved, the procurement division has the option of either converting the approved PR
to a PO or to go for a Quotation process. RFQ (Request for Quotation) is the initiation point of the
Quotation process. The purpose of this document is to obtain quotations from vendors for various goods
and services. When issuing an RFQ, the buyer could specify the terms & conditions also, in addition to
the items, quantities & required delivery dates.

4. Approve RFQ
Similar to a PR, you could configure a release strategy for a RFQ. The purpose of this approval is to get
the consent from the relevant Manager, Head of Procurement, etc. to issue a RFQ to vendors. However,
I’ve never seen this functionality being used by any of the companies which I’ve dealt with.

5. Maintain Quotations
The Quotations received from vendors for the RFQ, would be entered to SAP in this step. Once the details
in Quotations are entered, Quotation evaluation could be carried out.

6. Evaluate Quotations
Under Quotation Evaluation, the buyer would see a comparison of the quotations entered. The
comparison would also provide a ranking for each quotation, based on Price quoted, Delivery Date, etc.
Once the preferred quotation is selected, the remaining quotations could be rejected, in order to prevent
them from getting converted to POs.

7. Create PO
A PO could be created thereafter, with reference to the selected vendor quotation (RFQ). PO is the legally
valid document, issued to a vendor. By issuing a PO, the Buyer becomes ‘liable to pay’. However, no
financial entries are posted at this stage. A PO could also be created with reference to an approved PR, if
the RFQ process is not followed.

8. Approve PO
Similar to the PR approval, the PO created could also be approved. Generally, the PR approvers & the PO
approvers would be different since, it is not logical to approve the same requirement by the same person
twice. Once the PO is approved, an output could be generated to send to the vendor.

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9. GRN/ Service Entry
Once the PO is sent, the vendor would be delivering the goods. The goods should generally be
accompanied with a ‘Delivery Note’ or an ‘Invoice’. This supporting document should specify the items
delivered, quantities, prices (if an Invoice), etc. When raising a GRN, the Store Keeper should ensure that
the quantity in PO, quantity delivered & the qty in invoice/ delivery note are in line. However, there
could be scenarios where the delivered quantity is more than the PO quantity.
Eg : In Fertilizer, the PO could be for 100 MT but the delivered could be 100.5 MT due to moisture
absorption. The additional 0.5 MT would become a gain, which could be accommodated with a tolerance.
If the PO was for a service, for example A/C Maintenance there won’t be any GRN. Instead, there would
be a Service Entry Sheet, since there are no tangible goods as such.
10. Invoice Verification
Once the invoice is received, the three-way match is carried out. The invoice is matched against the PO
& the GRN prior to performing the IV. Once the invoice is posted, the liability gets booked against the
vendor. The double entry would be as follows.

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2 Master Data
Data that is created centrally, and is valid for all applications. It remains constant over time
but we need to update it on a regular basis. For example: Vendor is a type of master data that is used for
creating purchase orders or contracts.

2.1 Material Master Data

This is the enterprise main source of material-specific data. This data will include information on the
materials that a company can procure, produce, store, or sell.

Menu Path Logistics  Materials Management  Material Master  Material 

Create (General)

MM01 – Create
T Code
MM02 – Change
MM03 – Display

The Process to create a material is as follows :

fig: material creation initial screen

Fill in all the required details such as material number (since it is an internal number assignment, leave
it blank) material type, industry sector, etc. and then press ENTER.
System will now drive us to the required VIEW selection. Select the required views like basic data vieew,
sales organisation etc as per the requiremnt. Press ENTER.
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2.1.1 : Material Creation (Capital equipment)

Give all the details in the specified field of Plant, storage location, sales organization and distribution
channel.

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Press ENTER on which system will take us to the actual creation screen. Give the Description of material
required; besides all the required inputs.

fig: View Basic data 1

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View: Sales org 1

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View: Sale org 2

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View: General plant data

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View: Purchasing

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 View: intl trade import

(Control code is HSN code which changes from material to material. Take this input from the GST portal or
Vendor / Supplier)

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View: MRP 1

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View: MRP 2

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View: MRP 3

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View: MRP 4

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View: plant data/storage 2

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 View: Accounting 1

(Price for the Material changes from material to material. Take the proper input from trustee source)

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 View: Costing

Make sure the input’s we gave were correct. Save the document (ctrl+s / save icon on the top)

A message with a material number will be generated which tells us that material was saved successfully.

2.1.2: Material Creation (Packing Material)

Views will be changed for packing materials. Select the views as shown below in the screen shot.
Industry Sector: Food Industry
Material Type: ZPKG Packaging materials

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A major change in the process is CLASSIFICATION view. Go to classification view and give the inputs as
shown in below figure. (Assignments tab  PACK_CLASS in class field) and press ENTER.

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Another change we are making regarding packing material is enabling Batch Management. Go to General
Data View and put a tick mark in Batch Management check box.

View: Sales/General plant

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View: Quality Management

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 View: Accounting 1

Follow the same process which we did for the creation of capital equipment material. Make sure the
input’s we gave were correct. Save the document (ctrl+s / save icon on the top)

A message with a material number will be generated which tells us that material was saved successfully.

2.1.3 Material Reports

The List of materials we can get from the T code : MM60

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The report can be filtered on different selections like material, plant, material group etc. lets say if we
are in need of taking the list of materials in 4330 plant. Leave every other field empty and give 4330 in
plant field as input. Then RUN (press f8)the report.

2.1.4 Material Change (MM02)

It may be needed to change certain option in our material master (due to the organizational changes,
or changes in processes). We cannot use MM01 as that is the transaction code used only for creating
views that are not maintained for certain material. In this case, we need to use MM02 and MM03
transaction codes
 Enter transaction code MM02 in the command prompt.
 Enter the material number whose material master data we want to change, press ENTER

The next step is choosing the views for which data is to be changed. For example, we will choose sales
organization data 2 view. You can choose one or more organizational levels for change.
Click on Organizational Levels and give the required data for which we tend to make changes.
 Make the desired changes.
 Check the changes made.
 Click the save button, to save the changes.
use transaction MM03 to display Material Master Data. In MM03, we can only display data without the
possibility to change it (fields are greyed out)

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2.2 VENDOR CODE CREATION
Vendor Master contains a list of vendors from where a company can procure or sell goods. A Vendor
Master can be created by following the steps given below.
Menu Path Logistics  Materials Management  Purchasing  Master Data
create Vendor (centrally)

T Code
BP

The initial screen of a T code BP will give us an access to deal with creation, change and display of a
vendor in a single screen. To change or display another business partner, click the open icon. In the
popup that appears, enter the business partner number. To hide the left-hand Find function to display
in full screen mode, click the close icon. To switch between displaying and changing a business partner,
click the change/display icon.

Organization TAB

Fig: BP Initial Screen

Go to the Organization tab and select the inputs from dropdown of the GROUPING CATEGORY and BP
ROLE. For instance we selected ZDOM (Domestic vendor) as a vendor grouping and DDL_VENDOR Role
in a BP role (shown in figure below). You might deal with the different vendors like service vendor, Scrap
Vendor, Import Vendor etc. select the appropriate vendor group from the drop-down menu.

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Give the required Vendor Name, Address, Phone no, Mail ID and MSME Details. Take this information
from trust worthy source.

After giving the input to the ADDRESS tab, go to PAYMENT TRANSACTIONS tab and fill the required
detail such as Vendor’s IFSC code in a BANK KEY field and bank account number in BANK ACCT field.

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 Company Code view Purchasing View

Give Company Code details in COMPANY VIEW  VENDOR: ACCOUNT MANAGEMENT TAB

Inputs to be noted: Reconcilation acct, sort key, planning group. Then on go to VENDOR: PAYMENT
TRANSACTIONS tab. Input the details as shown in figure below. Make sure to enable Double check
invoice Check box.

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Now go to PURCHASING VIEW. There on, go to PURCHASING DATA tab and input the required details.

Scroll the screen down where we can see the Additional Purchasing Data column. Input Z1 in Schema
Group Supplier field.

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In GENERAL view, Give PAN card details in a PAN field in a WITHHOLDING TAX column.

Make sure the details are driven in and properly; click in save (ctrl + S). The system will generate a
vendor number which needs to be noted for future usage.

2.2.1 List of Vendors (MKVZ)

We can find get the list of Vendors through the T code: MKVZ. We can filter the search BY Purchase
Organisation and account group. Give the Vendor Code if you know any in the SUPPLIER field or simply
give the Account Group and run the Report (Choose icon / Execute) by which the system will give the
list of Vendors of the mentioned account group.

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 RUN icon (f8)

Fig: MKVZ initial screen

Fig: MKVZ Output

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2.3 Request for quotation
Vendor selection is an important process in the procurement cycle. Once requirements are
gathered, we start looking for possible suppliers who can fulfil the requirements at the best possible
price. So, a request is made to the vendors to submit their quotations indicating the price of the material
along with their terms and conditions. This request is known as the request for quotation (RFQ). Listed
below are the key points to note about a request for quotation.
Menu Path logistics  Materials Management  Purchasing  RFQ/Quotation 
Request for Quotation  Create

ME41 – Create
T Code
ME42 – Change
ME43 – Display

Go to ME41 T code. Give all the required inputs. The sample inputs were shown in figure below. Make
sure to give deadline date.

Reference tab

Fig: RFQ initial screen

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We can do RFQ with reference to PR or reference to outline agreement. For instance we are doing reference to
PR. After filling the inputs, click on the Reference to PReq button on the top. Give the PR number in the dialog
box, Purchase Req field. Requisition Item is the line item number of a PR.

fig: RFQ pop up dialog box.

Sample PR number 40 is taken for the reference with purchase group R04. Press ENTER.

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The sample inputs were shown in the above figure. Make sure to give collective number (coll. no) and press
ENTER. System will take us to another screen.

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Give the proposed material code in material field along with the quantity required. Give also the delivery date. If
system ask for the conversion factor, give the conversion factor (Example: 1 each  1kg). confirm the inputs
given save the document (ctrl + S). the system will give the RFQ number which need to be noted down.
We can display the created RFQ in T code ME43, and if any changes needed go to T code ME42  give RFQ
number and then on change the required field. Save the document.
Maintain the RFQ in T code ME47. Go to ME47 T code to maintain the quotations. Give quotation date and
quotation number. Press ENTER.

fig: Maintain RFQ [ME47]

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Once all necessary header data has been maintained, the user can then enter the price information in one of two
fashions:

Enter the price in the Net Price field on the Maintain Quotation: Item Overview screen by Choosing
overview icon on toolbar.
b. To enter more detailed information in addition to the net price, select the line item and choose the Item
Details icon. Choose the green Back arrow to return to the ‘Overview’ screen once data has been maintained.
i. A vendor’s quoted price can be entered in one of two ways.
Enter the net price per unit in the Net price field. This price includes the vendor's normal discounts and
surcharges only. Cash discounts (for prompt payment) and taxes are calculated separately.
iii. Enter the gross price in the Net price field and maintain the conditions for the item. Then the system
automatically replaces the entered gross price with the calculated net price. If the net price for an item is
entered for which pricing conditions have been maintained, the system always replaces the price entered with
the calculated net price.

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iv. Enter the Tax Code for any relevant taxes (for example, Excise Duty, Sales Taxes etc.) in the Tax code field. If a
purchase order is created by referencing an RFQ, this code facilitates the determination of the tax amount when
the invoice is entered in the system.
v. After entering tax code, after choosing this system may give an information message showing the effective
price, Choose Enter to continue.
7. Once all quotation information has been successfully entered, save the data by Choosing on the Save button,
or Choose the <Ctrl + S> keys. A message will be displayed that the data has been saved.
We can compare the quotations in T code : ME49 . give quotation number and press ENTER. The system will give
the screen list which shows the different quotations maintained.

fig: Price Comparison

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3 Purchase Requisition.
A Purchase Requisition is created to indicate purchase department to procure materials or services with details
like how much quantity is required, when required.

Menu Path Logistics  Materials Management  Purchasing  Purchase

Requisition  Create

ME51N – Create
T Code
ME52N – Change
ME53N – Display

To Create PR, go to T code ME51N, choose document type from the drop down and enter the specified fields
such as, Material code, Quantity, plant, storage location, Price etc.

Document Type

Plant and storage

loc

Document type NB1-standard PR is used in figure shown above to show an example. The standard inputs were
enough for the standard PR. The Account assignment category and item Category plays a role in different
document types.

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 Account Category

Item Category

The Account Category and Item Category usages for different Document types were mentioned below.

DOC Type Description Account Item

category Category

NB1 Standard

NB2 Production items NR NR

NB3 Capital A

NB4 Projects / Expansion NR NR

NB5 Local Purchases NR NR

NB6 Services K D

NB7 Non Valuated Items NR NR

NB8 Market Requirements NR NR NR: Not Required

NB9 Marketing Department NR NR

NB10 Sub Contracting NR NR

UB1 Internal Transfer NR NR

Press Enter and on Confirmation with the details given, save the document. The system will give a PR number
saying PR was created with the XX…YY number.

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3.1 Release purchase Requisition:
Every PR we make should be released or in another words , it should be authorised by higher authorised person.
To release the PR, go to T code ME54N. enter PR number which need to be released, and then press ENTER.

Click on the release Icon (tick mark) which was shown in the figure above. The tick mark will change its shape
which says PR was release. Save the document which confirms the Document Release.

3.2 Display PR
We can get the Display of the created PR from the T code ME53N. Give the PR number in the dialog pop up box
and Press Enter. The Information in the PR will be displayed.

3.3 List of PR
The Report which gives the list of PR’s we can get from T code ME5A.

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The List can be filtered by the categories Plant, Document Type, date etc. Give the required Input and RUN the
program (press f8 or click on execute icon).

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Fig: ME5A output

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4 Purchase Order Process
A purchase order is a legal document used to record an individual purchase with the vendor.
It also provides the vendor with a reference document to link to shipping (goods receipt) and invoicing
(invoice verification) processes. The purchase order is a commitment to a vendor for a given material,
in a specified quantity at a predetermined price and delivery date.
Menu Path Logistics  Materials Management  Purchasing Purchase Order 
Create.

ME21N – Create
T Code ME22N – Change
ME23N – Display

4.1 Purchase Order creation [ME21N]

Go to T code ME21N. If you want to create a purchase order with reference to the purchase requisition,
on item details screen enter the purchase requisition number and item number at Purch. Req. field
System will automatically adopt all the data from requisition.

fig: PO creation

Tax codes will be V0 or TP or A0 etc based on the requirement. Confirm this input with the concerned
persons and maintain the correct TAX code.

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 fig: PO check

On the final confirmation, save the document (ctrl + s) by which system will generate a PO number.
Maintain the same process for different Document types. Mak sure to select the right Document from
the dropdown menu besides the right account and item category as we did in PR creation.
4.2 Purchase Order change [ME22N]
If in a need of making a change(s) to the PO created, go to T code ME22n, specify the PO number which
needed to make a change(s), press ENTER. Go to the required field such as Quantity or UOM etc. make
the required changes and save the document. It is to be noted that only system allowed fields can be
changed. System will throw an error if the quantity in PO is larger than the quantity we mentioned in
Purchase Requisition.
4.2 Release Purchase Order [ME29N]
Every Purchase order needed to be approved by the authorised person(s). The approval of a PO can be
done through release procedure. Make sure PO to be released before processing to further.

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Save the document after releasing it. Now PO can be processed further.

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5. Goods Receipt for Purchase Order (GRN) [MIGO]
Goods received from the Vendor on reference to a Purchase Order at the receiving plant. A goods
movement is supposed to be entered into the system referencing this PO and a goods receipt material
document to be posted. Appropriate general ledger accounts and stocks are also to be posted.
Menu Path Logistics  Materials Management  Inventory Management  Goods
Movement  Goods Receipt  For Purchase Order

T Code
MIGO

On the Goods Receipt Purchase Order screen, make the following entries:

After pressing Enter system will fetch all the data from the Purchase Order as shown below

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Go to the WHERE tab in item level, there in the storage location field, give the storage location in which
the specified material exists.

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Make sure to enter the details in Delivery note, Header text, Bill of lading and posting date fields. Refer
The table below for the proper inputs to be driven.
Field name Description Action and values

Purchase Order Purchase Order input the PO number

Movement Type 101
Document Date Enter document date
Delivery Note Delivery Number from Vendor
Vendor Vendor Defaulted from purchase order
Posting Date Posting date Enter posting date
Bill of lading Bill of lading Enter bill of lading
Header text Header text Enter Header text

✏Close the header detail data to enlarge the detailed data. Now select the material tab

Material Material tab Defaulted from purchase order

Qty Qty in unit of entry Enter the quantity you have
received from vendor. As a

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 default system will give
purchase order quantity
Qty in delivery note Quantity in delivery note Enter the quantity as per vendor
delivery challan

✏Select Where tab in Detail data

Movement type Movement type Defaulted from Header tab
Stock type Stock type Defaulted from material master
or purchase order
Plant Plant Defaulted from purchase order
Goods Recipient Goods Recipient Enter the name of person who
received goods
Text Text Enter the text if required

✏Select PURCHASE ORDER tab in Detail data

Del. completed ind. Delivery completion Defaulted by system if PO Qty
indicator = GR Qty
Select the Check box Item OK, after entering all the data. Reconfirm the details mentioned. Save the
document (ctrl + S). system will generate GRN number on the successful completion.

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6 Logistics Invoice Verification
In this process of Logistics Invoice Verification all the Incoming Invoices are verified in terms of their
content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The
system updates the data saved in the invoice documents in Materials Management and Financial
Accounting.

Menu Path Accounting  Financial Accounting  Account Payable  Document

Entry  Document Parking  invoice Parking general

T Code
MIR7

Enter Company Code on the initial Screen and press ENTER.

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To check the document credit and debit is balanced on the top right corner of your screen a traffic light
is displayed. Beside that Balance of the document is displayed. Ensure that the Balance is ZERO before
posting the document and the traffic light is green or yellow color. Save the Document. Note down the
system generated parked invoice document which needed to be posted later after authentication.

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