SAP

Material Management - MM
 Company
Financial Resources: Physical Resources: Intellectual Resources: Human Resources: Digital
Money or capital is fundamental. It helps you Tangible assets used Intangible assets The people who Resources:
purchase necessary items and cover expenses. to create value. critical for innovation contribute to the Technology-
Examples include: Examples include: and differentiation. organization’s related assets.
Branding: Design, logo, graphics, business cards. Examples include: success. Examples
Manufacturing
Office: Rent, furniture, equipment, storage. Equipment: Intellectual Property Examples include: include:
Web: Hosting, collaboration software, email Machinery, tools. (IP): Patents, Employees: Skills, Software: Tools
services. Facilities: Buildings, copyrights, expertise, for productivity,
Employees: Salaries, taxes, healthcare. warehouses. trademarks. motivation. communication,
Expenses: Travel, meetings, accommodations. Brand: Reputation, Managers: and data
Vehicles: Delivery management.
Insurance: Protection against risks. trucks, company cars. customer perception. Leadership and
Accounting Services: Internal or outsourced. Partnerships: decision-making. Websites and
Inventory: Stock of Apps: Digital
Project Management Tools: Software for Collaborations with Executives: Strategic
products or materials. presence.
managing projects. other entities. vision.
Marketing: Mix of strategies (e.g., chatbots, web Land: Real estate Data: Customer
owned by the Teams:
analytics, PR, SEO, webinars, content marketing). Collaboration across databases,
company. analytics.
Raw Materials/Goods: Basic materials for your functions.
product1.
 ERP (Enterprise Resource Planning)

ERP (Enterprise Resource Planning) is a comprehensive software system that integrates

and manages various critical business processes within an organization. It acts as the
central hub for data flow across functions like finance, human resources, manufacturing,
supply chain, services, and procurement. Modern ERPs leverage technologies such as
cloud computing, artificial intelligence (AI), and machine learning to enhance efficiency
and provide real-time insights. In summary, ERP is crucial for efficient operations and
maintaining a single source of truth across the organization
 Some of the ERP Packages

1) Oracle NetSuite ERP: A cloud-based ERP software that offers a comprehensive suite of modules for finance, HR,
CRM, ecommerce, inventory, and more. It is suitable for small to large businesses across various industries and
regions.
2) SAP ERP: A well-known ERP software that provides solutions for finance, logistics, manufacturing, sales, and service.
It can be deployed on premise or in the cloud, and supports integration with other SAP products and third-party
applications.
3) Microsoft Dynamics 365: A cloud-based ERP software that combines ERP and CRM functionalities, along with AI and
analytics capabilities. It offers solutions for finance, supply chain, commerce, project operations, and more. It is
designed for medium to large businesses that need a flexible and scalable ERP system.
4) JD Edwards
5) BAAN
6) PeopleSoft
7) infor
 Some of the advantages of ERP software:
1. Data security: ERP software can protect your data from unauthorized access, loss, or corruption by using encryption,
backup, and permissions.
2. Standardized/centralized data: ERP software can store all your data in one place and in one format, making it easier
to access, analyze, and share across different departments and functions.
3. Improved efficiency: ERP software can automate and streamline various business processes, such as invoicing,
inventory management, payroll, and more, saving time and resources.
4. Enhanced collaboration and innovation: ERP software can facilitate communication and cooperation among
employees, customers, suppliers, and partners, enabling better problem-solving and innovation.
5. Better decision-making: ERP software can provide real-time and accurate data, as well as analytics and reporting
tools, to help you make informed and strategic decisions.
6. Scalability and flexibility: ERP software can adapt to your changing business needs and requirements, allowing you to
add or remove modules, features, and users as needed.
7. Increased risk management: ERP software can help you comply with various regulations, standards, and best
practices, as well as identify and mitigate potential risks and threats.
8. Lower operating costs: ERP software can help you optimize your resource utilization, eliminate waste and errors, and
increase your profitability and return on investment.
 SAP stands for Systems Applications and Products in Data Processing.

SAP ERP is an enterprise resource planning software developed by the German company SAP SE. SAP ERP incorporates
the key business functions of an organization, such as finance, accounting, HR, payroll, asset management, supply chain,
production, and project management1

SAP ERP was built based on the former SAP R/3 software, which was launched in 1992. SAP R/3 was the third generation
of SAP’s software, which used a client-server architecture and supported real-time data processing. SAP R/3 was later
renamed as SAP ERP Central Component (SAP ECC) in 2004, and enhanced with new features and technologies. The latest
version of SAP ERP (V.6.0) was released in 2006, and has been updated through SAP enhancement packages23

SAP was founded by five former IBM employees, in 1972, to develop a standard ERP business application software, with
the goal of processing business information in real-time. The company, SAP GmbH, was started in Mannheim, Germany45
Module in SAP (A module in SAP is a distinct set of business processes and functionalities that are grouped together
based on their relatedness and common objectives)

Technical Module Functional Module

1. ABAP -Advanced Business Application Programming 1. Human Capital Management (SAP HCM)
2. BASIS -Business Application Software Integrated Solution 2. Production Planning (SAP PP)
3. BI/BW- Business Intelligence (BI) and Business Warehouse (BW) 3. Material Management (SAP MM)
4. XI/PI -XI(Exchange Infrastructure) and PI (Process integration) 4. Financial Supply Chain Management (SAP FSCM)
5. MDM -master data management 5. Sales and Distribution (SAP SD)
6. Project System (SAP PS)
7. Financial Accounting and Controlling (SAP FICO)
8. Plant Maintenance (SAP PM)
9. Quality Management (SAP QM)
10. Investment Management (SAP IM)
New Dimensional Products in SAP:

SRM: Supplier Relationship Management

CRM: Customer Relationship Management
APO: Advanced Planner and Optimizer
EWM: Extended Warehouse Management
BPC: Business Process and Consolidation
Industry Specific Products in SAP:

IS-Retail
IS-Oil and Gas
IS-Utilities
IS-Healthcare
IS-Automotive
IS-Pharmaceutical
IS-Media
What is SAP R/3
R/3 which stands for Real-Time 3-Tier Architecture.

Single Tier: Refers to a standalone system, like a personal computer.

Two Tier: Involves a database and application layer, exemplified by IBM mainframes.
Three Tier: The structure of SAP R/3, consisting of:
Presentation Layer: The graphical user interface (GUI).
Application Layer: The web application.
Database Layer: A single location for data storage, which can be Oracle, DB2,
Sybase.
Versions in SAP:

3.0
4.0
4.5
4.6
4.7
ECC 5.0
ECC 6.0
ECC 6.0 EHP 5 / EHP6
Where ECC stands for Enterprise Central Component and EHP stands for Enhanced Package.

These versions represent the evolution of SAP’s software over time, with ECC 6.0 EHP 5 / EHP6 being among the
more recent updates that include enhanced features and functionalities.
 R/3 Functional Modules

Logistics: Encompasses processes in purchasing, materials management,

manufacturing, warehousing, quality management, plant maintenance, service
management, and sales and distribution. All applications share a consistent database
supported by production data management.

MM (Materials Management): Optimizes purchasing processes with workflow-driven

functions, enables automated supplier evaluation, reduces procurement and
warehousing costs through accurate inventory and warehouse management, and
integrates invoice verification.
 R/3 Functional Modules

PP (Production Planning and Control): Provides comprehensive processes for all types of
manufacturing, including repetitive, make-to-order, assemble-to-order, process, lot, and
make-to-stock manufacturing. It also offers integrated supply chain management with
extended MRP functions.

SD (Sales & Distribution): Supports sales and distribution activities with functions for pricing,
order processing, delivery, interactive variant configuration, and a direct interface to
profitability analysis and production.
 R/3 Functional Modules

QM (Quality Management): Monitors and manages quality assurance processes along

the supply chain, coordinates inspection processing, initiates corrective measures, and
integrates laboratory information systems.

PM (Plant Maintenance): Provides planning, control, and processing for maintenance,

inspection, and service management to ensure operational system availability, including
plants and equipment delivered to customers.
 R/3 Functional Modules

FI (Financial Accounting): Collects all data relevant to accounting, providing complete

documentation and comprehensive information, serving as a basis for enterprise-
wide control and planning.

CO (Controlling): Offers a complete array of planning and control instruments for

company-wide controlling systems, with a uniform reporting system for coordinating
the contents and procedures of a company’s internal processes.
 R/3 Functional Modules

SM (Service Management): Provides highly integrated customer service functionality to compete in

today’s global markets.

HR (Human Resources): Offers solutions for planning and managing a company’s human resources,
using integrated applications that cover all personnel management tasks and help simplify and speed
up the process.
 R/3 Technical Modules

ABAP (Advanced Business Application Programming): ABAP is an SAP programming

language. ABAP/4 is a fourth-generation programming language that supports
structured programming and is used in the development of business applications. It
contains elements necessary to call external relational databases through open SQL
calls or database-specific native SQL calls, and it precludes developer knowledge of
underlying infrastructure.

BASIS Administration: BASIS Administration is the technical way to support the SAP
environment. This encompasses SAP, UNIX, and Oracle.
Procurement Types
Procurement Types are two categories, they are
1. External Procurement
2. Internal Procurement

A Customer (Alex) or a company needs a finished

material for example Material - D, and to manufacture
finished material we need raw material or sub
components for example Material - A, B, C. The
Customer requirement of the finished material per
month is 100000 tons of the material and therefore the
customer approaches to the company for example
XYZ.
 External / Internal Procurement Process
Sales Order

Demand Management / Independent Requirement

Availability Check

MRP (Material Requirement Planning)

External Procurement (No Stock Available)
1.Planned Order
2. Purchase Requisition (PR)
3. Source Determination
4. Create RFQ to vendor (RFQ - Request for Quotation)
5. Receive and Maintain RFQ for Vendor
6. Price Comparison for RFQ's
7. Select the Source of Supply or Vendor
8. Purchase Order (PO) Creation
9. Purchase Order Approval
10. Purchase Order Confirmation
11. GR with reference to PO (GR - Goods Receipt)
12. Receive Invoice from Vendor
13. Verify Invoice Document
14. Payment to Vendor (done by the Financial Dept)
MM module is also called Purchase to Pay or else Order to Pay
(P2P or 02P). External Procurement leads to MM Module.
Internal Procurement (Stock Available)
1. Planned Order
2. Production Order
3. Release Production Order
4. Gl with reference to Production Order (GI - Goods Issue)
5. Confirm Production Order
6. GR with reference to Production Order
7. Technically Complete Production Order
8. Production Order Settlement
9. Material delivery to the Customer
10. Sales Billing or Sales Invoice
11. Receive Payment from the Customer (Received by the Financial
Dept)

Internal Procurement leads to PP Module