CASE STUDY

Materials Management
A case study guiding through the materials management of a
Product Service System Provider based on a practical use case

Product MOTIVATION PREREQUISITES

SAP S/4HANA 2020 Global This case study describes how GBI Before you use this case study, you
Bike Sharing transforms its material manage- need to have a SAP S/4HANA, on-
SAP Fiori 3.0 ment and procurement process premise edition user. This will be pro-
from a bike manufacturer to a PSS vided by your instructor. Furthermore,
Level provider. The case study is based it is recommended that you completed
on SAP S/4HANA, on-premise edi- LU 3.2, which introduces the main
Undergraduate
tion. The exercises are based on concepts of SAP S/4HANA.
Graduate
the predefined role of a materials
manager.
Focus
Materials Management The main learning objective is to
understand how the digital trans-
Authors formation changes the materials
Nilüfer Faizan management and the procurement
Borys Levkovskyi process of GBI from buying raw
Philipp Landler materials and producing bikes to
buying finished bikes in order to
provide a bike rental service.
Version Thereby, main functionalities of
4.1 SAP S/4HANA and its underlying
capabilities to support the digital
Last Update transformation of enterprises are
August 2022 used within a concrete use case.

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Table of Contents
Teaching Case – Materials Management ........................................................................................... 3
Process Overview: Purchase-to-Pay .................................................................................................. 4
Task 1: Create Material and Supplier Master Data ............................................................................ 5
Task 2: Create Purchase Order ........................................................................................................ 13
Task 3: Post Goods Receipt and Supplier Invoice ........................................................................... 15
Task 4: Review Procurement Process .............................................................................................. 18

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Teaching Case – Materials Management

Learning Objectives
This case study aims at describing the basic steps of the Purchase-to-Pay business process of Global
Bike Sharing. This process differs from the traditional procurement activities of a manufacturing
company in several ways, since it provides the fundamentals to offer a bike rental service instead
of producing and selling finished bikes. However, whereas some parts of the process have changed,
the general steps are similar to the procurement processes of traditional bike manufacturers. To
learn about how to manage a bike sharing business with SAP software, the exercises contain the
main tasks in SAP S/4HANA. Moreover, the basic business terms are depicted as part of a teaching
case, aiming at providing a more comprehensible and integrated view on ERP terminology and
business process information.
Teaching Case
John Smith is sitting in his new office at Global Bike Sharing (GBS) in Munich. Calmly drinking
his coffee, he is looking out of the window. For nearly one decade, he was responsible for the
Materials Management at Global Bike in the United States. His main tasks at the plant in Miami
were the procurement of raw materials for the production of the deluxe touring bikes Global Bike
is offering. However, over the last years, the numbers of sold bikes fell massively. More and more
startups and public transportation providers started to offer alternative transportation services,
which reduced the need for the consumers to own a bike. Therefore, the management of Global
Bike decided to establish a new business model. They set up a new subsidiary in Germany called
GBS, which should establish a bike sharing service instead of selling bikes. Thereby, the falling
sales numbers shall be balanced by offering additional services.

For two weeks now, John is working in Munich. As he had heard about the new subsidiary in
Germany three months ago, he immediately got very excited. Having worked at Global Bike for
ten years since he finished his Information Systems studies, he was ready for a new challenge. He
has already read a lot about Germany and its traditions, and always wanted to go there for a visit
one day. Therefore, getting the chance to work there sounded like a great experience for him. Dur-
ing the planning of the new subsidiary, an open position for a materials manager was announced.
As he heard about the open position as materials manager, he took the chance and applied. Due to
his previous experience in Materials Management and Procurement, he was selected for the posi-
tion, and today, only a few weeks later, he is sitting in his new office in Munich.

John’s main tasks in the Materials Management at Global Bike were the acquisition of new suppli-
ers, the management of supplier contacts and the evaluation of supplier offers. Furthermore, he was
responsible for managing the stock coverage and therefore for ensuring the proper function of the
single tasks in the procurement process, such as creating purchase orders and goods receipts. Over-
all, his new position at GBS still comprises the same tasks. However, due to the change of the
business model at GBS, the materials management has now a different focus. While the efficient
procurement of raw materials was a main part of the Materials Management process at Global Bike,
GBS focuses on the procurement of finished, customized bikes that can be directly used for the

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bike rental services. This leads to a smaller number of available suppliers, which again increases
the necessity for John to acquire new suppliers and develop a strong connection to them.

Finally, John finished his coffee and got ready to start working. Yesterday, he completed the first
agreement with a supplier upon a delivery of customized bikes for the bike rental services. Today,
he wants to go through the procurement process from the newly acquired supplier. He opens a web
browser to access functions relevant to the materials management process. GBS is using the new
ERP system SAP S/4HANA, which provides a new web-based user experience called Fiori. He
already has a first impression of S/4HANA and Fiori from his previous job at Global Bike in Miami,
since they just have introduced it before he left for his new job at GBS. However, GBS comprises
different organizational units, which made it necessary to adapt the system configurations and mas-
ter data in the system accordingly. Furthermore, since he did not have the chance to get familiar
with the procurement process in Fiori, he is currently lacking deeper knowledge about the tasks he
has to go through in the new app-based user interface. Therefore, assuming that this may take a
while, he slowly starts with the first process step…

Process Overview: Purchase-to-Pay

Manage Create
Vendor Goods Invoice
Master Purchase
Shipment Receipt Receipt
Data Order

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Task 1: Create Material and Supplier Master Data

First, John goes through the process of creating master data for the new materials and suppliers
needed to offer the bike sharing services.
1. John opens the app “Create Material”.

Since one of his colleagues has already created an exemplary master record for the new bikes,
GBS wants to offer as part of their bike sharing services, he uses this record as copy material.
He enters the following values and clicks on Continue:

 Material: DXTRP1###
 Industry Sector: 1 (Retail)
 Material type: HAWA (Trading Good)
 Copy from material: DXTL1000

2. Since he wants to maintain the material master data for purchasing, he has to manage basic
information, company code specific information and purchasing specific information for the
material. Therefore, he selects the following views:
 Basic Data 1
 Basic Data 2

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 Purchasing
 General Plant Data / Storage 1
 Accounting 1

3. Material master data for purchasing may vary between different organizational units and is
defined for specific plants and storage locations. Hence, John enters the following
organizational levels:
 Plant: MU00
 Stor. Location: SG00
 Copy from plant: MU00
 Copy from Stor. Location: SG00

4. Since all necessary values were taken from the copy material, John confirms the five views
by pressing enter. He notices the information that the currency is converted to other

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currencies after confirming the view “Accounting 1”, and finally presses Save on the bottom
right. Thereby, the material is created. Afterwards he clicks on the Home Icon.

5. Next, John wants to create the new supplier master record for the supplier “Garching Bike
Shop”, with whom he sucessfully agreed upon a delivery of customized bikes for the bike
rental services. He opens the app “Maintain Business Partner”.

On the top of the screen, he first clicks on Locator On/Off, in order to remove the locator on
the left. Afterwards, he clicks on Organization, as he wants to create a new supplier
organization for GBS.

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6. In the field Create in BP role, he chooses “FLVN00 FI Vendor”. When he is asked if he

wants to save the current values when changing the role, he clicks on Create, since he wants
to create a completely new supplier master record. In the field Grouping he makes sure it is
“0001 Internal number assignment”.

7. John enters the following values for the new supplier:

 Title: 003 Company
 Name: Garching Bike Shop ###
 Search Term 1/2: ###
 Street/House number: Boltzmannstraße 2
 Postal Code/City: 85758 Garching
 Country: DE
 Region: 09 Bavaria
 Language: English

8. After entering the values, John wants to maintain company code specific data. Therefore, on
the top of the screen, he clicks on Company Code (depending on the screen size, the Company
Code button can be found either directly in the menu bar or in the submenu More->Company

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Code). He enters company code DE00, confirms the entry, and enters Reconciliation acct.
3300000. Thereby, he specifies that supplier invoices are posted to Trade-Payables
Accounts.

9. John presses Save, and writes down the number into the field of Business Partner number
shown with the success message on the bottom of the screen.
 Business Partner: ____________________

10. In the application toolbar, John clicks on General Data, to go back to the general supplier
data. He clicks on Switch Between Display and Change. Afterwards, he changes to the
role Vendor (FLVN01). In the application toolbar, he clicks on Purchasing (depending on
the screen size, the Purchasing button can be found either directly in the menu bar or in the
submenu More->Purchasing).
11. John now wants to maintain purchasing organization specific data. Therefore, he enters
purchasing organization DE00, confirms the entry, and enters order currency EUR. He
presses , and ignores the Warning Message of VAT registration number, then goes back
to the General Data view.

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12. Finally, in order to finalize the supplier master data for productive use, some additional roles
have to be created. Therefore, John clicks on Switch Between Display and Change. Af-
terwards changes to role “FS0000 Financial Services BP”, and just presses Save. There is no
need to change any values. He repeats this step for the following roles:
 TR0602 Landlord w.Vendor Account
 TR0606 Manager w.Vendor Acct
 TR0604 Partner w.Vendor Account
 TR0821 Tax Office
13. After saving the last role, John finished the creation of the supplier master. He clicks on big
Logo and goes back to the home page of the Fiori Launchpad.

14. As already mentioned at the beginning, John agreed with the Garching Bike Shop upon a
price of 4.000€ for the customized bike. He wants to store this information in a purchasing
info record. Hence, he opens the app “Create Purchasing Info Record”.

15. In the opening screen, John enters the following data and presses enter
 Supplier: his vendor number from step 9
 Material: DXTRP1###
 Purchasing organization: DE00
 Plant: MU00

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16. Afterwards, John clicks on Purch. Org. Data 1. He enters the following values (cf. screenshot
on next page):
 Pl. Deliv. Time: 1 Days
 Purch. Group: E00 (Europe)
 Standard Qty: 1
 Net Price: 4000
 Qty Conv.: 1

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17. Finally, John presses Save, and the purchasing info record becomes valid.

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Task 2: Create Purchase Order

After John has finished the creation of the master data, the system is ready for recording the material
purchase from the new supplier. Therefore, after he agreed with his boss about the procurement of
the bikes, he directly creates the purchase order to meet the demand.
1. John talked to the responsible person for the provision of the bike sharing services in Munich.
He was told that GBS wants to add the new bikes DXTRP1### to their location, in order to
increase their bike sharing offer. Therefore, John initially checks the current stock of the
bikes. He opens the app “Transfer Stock (In-Plant)”, and enters plant MU00 and material
DXTRP1### (in this order).

Then he enters plant Plant Munich and material DXTRP1### (in this order). After checking
the stock, he goes back to the home page by pressing the home button.

2. John notices that the stock of the bikes is currently empty. Therefore, he wants to create a
new purchase order and opens the app “Manage Purchase Orders” in the first step.

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3. John clicks on . In the opening page, he enters the following information into the
General Data area:
 Purchase Order Type: Standard PO (NB)
 Supplier: Supplier number from task 1
 Currency: EUR
 Purchasing Group ID: E00
 Purchasing Organization: DE00
 Company Code: DE00

4. In order to add an item to the purchase order, John enters the following data into the Items
Section of the General Information tab:

 Material: DXTRP1###
 Plant: MU00
 Quantity: 2

5. After John checked all values, he clicks on . Finally, the purchase order is created.
John notes the purchase order number

 Purchase order number: ____________________

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Task 3: Post Goods Receipt and Supplier Invoice

After John created the purchase order, it was transferred to the supplier “Garching Bike Shop”. Since
the Garching Bike Shop already had the materials on stock, they were immediately transported to
GBS. With the simplified Materials Management in SAP S/4HANA, John easily finishes the pro-
curement process by posting the goods receipt and supplier invoice.
6. John opens the app “Post Goods Receipt for Purchasing Document”.

He enters the purchase order number. In the opening page, he enters storage location SG00
(Station Garching). Afterwards, he clicks on Post.

7. To check if the materials are now on stock, he opens the app “Transfer Stock – In plant”.

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He enters material DXTRP1### and plant Plant Munich. He notices that there now are two
bike for unrestricted use.

8. Together with the goods receipt, GBS received an invoice from the Garching Bike Shop. To
record this invoice in the system, John opens the app on “Create Supplier Invoice”.

He enters the following data:

 Company Code: DE00
 Gross Invoice Amount: 8.000€
 Invoice Date: current date

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 Invoicing Party: Supplier number from Task 1 for Garching Bike Shop ###
 Purchaser Order/Scheduling Agreement: Purchase order number from the previous
task

9. By confirming the values, the balance should become Zero. If there is an error message,
please scroll down the page to the Tax and make sure that the Tax Amount is 0 EUR. After
checking the invoice, John clicks on simulate. Thereby, the planned booking for the invoice
creation is shown. Since the simulation results are correct, John clicks on . He notes
that the invoice is currently blocked for payment, which will be solved later by the financial
department. He clicks on No for creating a new supplier invoice.

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Task 4: Review Procurement Process

John finally wants to review the procurement process. For this, he first displays the purchasing doc-
uments. Afterwards, he takes a look at the material documents, which he created in the previous
steps. Finally, he displays the financial statement to review the financial impact of the executed
transactions.
1. To review the purchasing documents, John opens the app “My Purchasing Document Items”.

He enters material number DXTRP1### and the supplier number, and presses Go.

2. John first takes a look at the purchase order. There, he notices that the status is Completed,
and the identical ordered and delivered quantity.

3. The goods receipt, which can be reviewed in the next tab, also has the status Completed.

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4. Finally, John reviews the supplier invoice. He notices that the status is Created. This is
because the invoice was not yet cleared. Clearing invoices lies in the responsibility of the
financial department. Therefore, the procurement process ended with this step.

5. Next, John takes a look at the material documents. Therefore, he opens the app “Material
Documents Overview”.

He enters material DXTRP1###, and presses Go.

6. The results show a materials document which was created when the goods receipt was
posted. John clicks on it to get to a more detailed view. There, he clicks on the Process Flow
tab. The document flow consists of the purchase order, goods receipt, and supplier invoice.

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7. To finally see the financial impact of the transactions, John opens the app “Display Financial
Statement”.

He enters company code DE00, Financial Statement Version G### and presses Go.

8. John expands the path Assets -> Current Assets and checks the Period Balance for the
Finished goods (inventories). He notes that with the procurement of the two bikes, the
Finished goods (inventories) and therefore the Short-Term Assets increased by 8.000€.

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9. John expands the liabilities, and checks the Trade Payables Accounts. He checks the Period
Balance for the described case, and notices that the Trade Payables Accounts increased by
8.000€. This was caused by the creation of the invoice for the purchase order.
10. Finally, John finished reviewing the transactions he performed in the system. Therefore, he
goes back to the home page, and logs off from the system. Satisfied from the completion of
the whole materials management process, he gets up in order to grab a coffee and make a
short break.

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