Tuesday, July 28, 2009

MM Module - SAP

MM stands for Materials Management. The following steps are involved in purchasing goods and services through the MM module in SAP:
  1. User requirements
  2. Service/Material specification
  3. Purchase Requisition (PR)
  4. PR Release
  5. Request For Quotation (RFQ)
  6. Compare vendor terms
  7. Choose vendor
  8. Purchase Order (PO)
  9. PO Release
  10. Service entry
  11. Service accepted
  12. Invoice Verification
  13. Payment
In the case of goods, steps 10 and 11 are replaced by Goods Receipt (GR).
The vendor can be chosen according to different criterion. Normally L1 method is used whereby the vendor with lowest bid is chosen. Goods to be purchased can be classified into three categories :
  • Revenue expenditure - day to day expenditure
  • Capital expenditure - funds allocated for a new project or maintenance
  • Destined for warehouse - items to be stored in warehouse bins
MRP (Material Requirements Planning) based procurement ensures that shortage of a material item never occurs. MRP maintains three limits for a material, namely safety stock, minimum stock and maximum stock. When th level of an item falls below the minimum stock, MRP automatically generates PR for (maximum stock - minimum stock) numbers of that item.

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