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Everything to Know About SAP Material Management

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The introduction of the SAP modules has majorly expanded the use of software to handle various distributed tasks. In fact, industries like manufacturing, retail, finance, and utilities use a built-in suite of these features to control the overall supply chain management. However, SAP provides a separate, well-defined software only for logistics processes.

Yes! SAP material management approaches are particularly inclined to drive ERP and SCM operations. They provide consumption-based plans to actively manage goods purchase, shipping, inventory, etc., tasks at a low cost. Continue reading for more related insights.

What is SAP material management? 

SAP material management is a core functionality of the SAP S/4 HANA suite. It aims to ensure that an organization’s ordered materials are maintained in the right quantities at suitable warehouses. Thus guaranteeing no shortages and zero supply gaps. Further, it helps warehouse and inventory managers to complete good purchases for low costs timely.

Unlike other platforms, SAP MM provides online study materials and video classes for learning. So, if anyone is looking to get certification in this field, they need to clear one of the SAP certifications, like SAP Ariba Procurement, SAP S/4HANA cloud, etc. Thereupon, you will get high-paying jobs like SAP MM consultant, SAP team lead, supply chain specialist, logistics manager, material manager, etc.

So, why should you be studying SAP MM; well, here are some of its benefits in the workplace:

  • Enhance the inventory management
  • Minimises product damage or material wastage
  • Less expenditure on unwanted materials
  • Reduces the need for manpower
  • Transparent processes and reports
  • Accelerated delivery to market. 

In the next section, let’s learn about SAP material management architecture.

Key components of SAP material management

The architecture of SAP MM indicates several components that work together. Basically, this integration simplifies the data-sharing issue between departments. Also, information will be updated in real-time. So, let’s see those five components of SAP MM with sub-modules and characteristics below:

MM-CBP

Consumption-based planning, or CBP, falls under the SAP warehouse management module. It statistically analyzes the past records of consumption values to forecast future needs. The main purpose is to administer stock and automatically prepare proposals for the next production and purchase whenever the stock goes below the pre-defined reorder point.

MM-PUR

The purchasing or PUR of SAP material management ensures smooth communication with all the procurement ports. Thereupon, it empowers the organization to run seamlessly. This component handles external orders of materials, monitors deliveries from vendors, tracks transactions to vendors, determines sources to supply for requirements, etc.

MM-SRV

Another component is SRV or External services management. It supports bid invitations, acceptance of services, and invoices. To put it differently, it supports collaborating with external services in two ways. For planned services, the cost is fixed and the requirement is stated early. As for unplanned services, the scope and procurement depend on the value limit. So costly than basic order.

MM-IV(Inventory)

Here, IU or Inventory management follows the SAP inventory management process. To handle various tasks like tacking and managing raw materials based on quality and value. Similarly, it overviews the physical inventory of goods. Also, documents the plans, entering times, shipping, etc., as well as all movement of the goods in the facility.

MM-IV(Invoice)

The logistics invoice verification process comes at the very end stage of the supply chain. It handles tasks like SAP warehouse management, purchasing, and invoices. In other words, this component verifies all the incoming invoices in terms of prices, content, and quantity. This helps vendors place orders and send shipping details to financial and other necessary departments.

All the above components showcase the different workflow phases in the SAP material management module. Moving on, let’s see how order procurement is placed and its various categories in detail.

What are the types of procurements in SAP material management modules?

Up to now, you’ve seen the internal components of SAP consulting services. In this section, you will witness how real-time items are procured, or product orders are selected and placed to suffice the facility’s needs on demand. Also, understand how they change based on the situation and urgency. So, let’s learn the two broad categories in this:

Basic Procurement

Just as the name suggests, this procedure is used to buy necessary materials and services. Basically, it suggests to clients the right time to get the accurate amounts of material for lower prices. First, it gathers information about certain products or items, and depending on the requirement, the module contacts appropriate suppliers. 

Later, it verifies whether contacted suppliers fulfill the order on a given demand or not. Next, all the stock is sent to the materials management team to validate the quality and performance of products or services. So, if the product rating is higher, the team will contact the same suppliers for repeat orders on a negotiable cost ratio.

Special Procurement

Special procurement means buying products that don’t belong to the company. It includes three kinds of procurement processes from outside vendors. The first one is consignment stocks, which are available on the premises of the store. All the sellers have to pay directly to use them. This ownership is a straight pay-to-use relation.

Secondly, we have third-party processing procurement. Here, sellers transfer the orders to vendors who deliver the products directly to consumers. The best example is Amazon. Next, we have pipeline handling where the vendor stocks the material on their premise. So when a customer places the order, sellers gets items from the vendor and takes care of delivery.

In reality, vendors are typical manufacturers or distributors that bulky sell their products to third-party sellers or online stores. Meanwhile, the seller buys from vendors and sells those products in a marketplace. Further, let’s look at some functional sub-modules of SAP material management and their usage. 

List of Functional SAP MM sub-modules

The SAP MM has built-in submodules like ECC, PM, SD, etc., to provide an overview of the overall logistics facility. They take control and handle the production planning, maintenance, human capital management, and even sales distribution. Thus enforcing nothing but ideal workflow in the ERP organizations. Let’s see some of them below:

SAP FI

The FI or finance SAP module controls and streamlines all the financial operations within the business. So, tasks like carrying out general banking accounting, collecting and paying bills, recording assets, expense reporting, etc, are autonomously performed.

SAP CO

The Cost Management (CO) sub-module is famous in SAP material management. It provides current data on the expenditure and costs of a firm. In other words, all the legal and additional company-related expenses are tracked. Thus estimating your profitability.

SAP SD

The SAP SD or Sales and distribution sub-module possesses powerful capabilities. It optimizes existing cost control, credit management and allocation, material classification, bills, international shipping, contacts with suppliers, transportation, and more.

SAP PP

Another popular SAP MM sub-module, PP, helps with production control and planning. This enables businesses to examine their manufacturing planning systems. Also provides tools to improve work. Similarly manages SAP warehouse management, suppliers, and logistics.

SAP QM

Quality Management module is used to conduct quality tests on the processes. Along with workflows and equipment. Sellers can use this to perform strict internal audits and inspections. Thereupon, the logistics of the supply chain must be assessed and certified as reliable. 

SAP BW

Next, we have the SAP warehouse management module, i.e., the business warehouse. Basically, it’s used to store and analyze the business data. Thereby adding external data sources and creating reports to simplify the process of making informed decisions.

SAP HCM

As for employees, we have the SAP HCM or human resource management sub-module. So, once you enter and store all the staff details. Then, based on the manager’s request, it allocates and optimizes tasks like payroll control, work distribution, vacations, and more.

SAP SFA

Sales teams use the salesforce automation module of SAP material management. It helps them to automate required processes. This allows them to easily streamline and compare the performance to success metrics and analyzes data to forecast sales.

These are only some of the many sub-modules. However, the main aim is to make you understand the level of integrations that SAP MM offers and automates in logistics.

Conclusion

The SAP material management module is the best way to refine SAP logistics at reduced costs. Just after a quick setup, it will start overviewing and optimizing all phases like planning, materials purchasing, control, receiving goods, invoice verification, etc. Thus reducing the labor time and capital expenditure spent on inventory management. Similarly, improves the manufacturing cycle times to maximum potential.

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