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The PROCESS of ISSUING the material back to the stock of material is KNOWN as a goods ISSUE reversal. For example, if goods issued to the production order are 500 kg of material and only 300 kg is consumed, then the rest 200 kg is returned to stock.

The process of issuing the material back to the stock of material is known as a goods issue reversal. For example, if goods issued to the production order are 500 kg of material and only 300 kg is consumed, then the rest 200 kg is returned to stock.

While posting the GOODS to the goods RECEIPT in the PURCHASE order, you NEED to enter the ITEMS that can be returned to the vendor. There is no need to explicitly reference the purchase order.

While posting the goods to the goods receipt in the purchase order, you need to enter the items that can be returned to the vendor. There is no need to explicitly reference the purchase order.

The following are the MOVEMENT types USED for unplanned goods RECEIVED:

•  501
•  561
•  531

The following are the movement types used for unplanned goods received:

The movement acts as a controlling factor in inventory MANAGEMENT. It handles the following activities:

•  Updating of quantity
•  Updating of CONSUMPTION and STOCK
•  Displaying of PARTICULAR fields in a document

The movement acts as a controlling factor in inventory management. It handles the following activities:

While implementing the goods movement in an organization, the movement type is required to be ENTERED. It is a three-digit identification key that is entered as PER the movement type. The FOLLOWING are the common movement types that are used in SAP:

•  102: Goods that are receipt against a purchase order
•  201: Goods that are issued
•  321: Goods released from QUALITY inspection STOCK

While implementing the goods movement in an organization, the movement type is required to be entered. It is a three-digit identification key that is entered as per the movement type. The following are the common movement types that are used in SAP:

The goods can be received as per the reference to INBOUND delivery. The following are the different WAYS of RECEIVING the goods:

•  Order
•  Others
•  Outbound Delivery
•  Purchase Order
•  Reservation
•  Transport
•  Transport ID CODE

The goods can be received as per the reference to inbound delivery. The following are the different ways of receiving the goods:

You NEED to use the MC49 transaction code to find the LOGICAL value of the stock ITEMS by DATE.

You need to use the MC49 transaction code to find the logical value of the stock items by date.

The goods from the PRODUCTION can be POSTED EITHER to the WAREHOUSE or consumption. They are posted with the same movement type.

The goods from the production can be posted either to the warehouse or consumption. They are posted with the same movement type.

If the goods receipt does not have a purchase order, some companies do not accept the goods receipt and refuses to accept the DELIVERY. On the other hand, other companies accept the delivery of materials and keep the materials into the quality or blocked stock till the SITUATION is resolved. For OBTAINING the goods receipt without a purchase order number, the companies USE the MIGO transaction. After entering the REQUIRED details of the material, the goods receipt is posted and the material becomes a part of the plant stock.

If the goods receipt does not have a purchase order, some companies do not accept the goods receipt and refuses to accept the delivery. On the other hand, other companies accept the delivery of materials and keep the materials into the quality or blocked stock till the situation is resolved. For obtaining the goods receipt without a purchase order number, the companies use the MIGO transaction. After entering the required details of the material, the goods receipt is posted and the material becomes a part of the plant stock.

If the PO number is not known, you MUST enter the SEARCH criteria for the PO in the initial screen. As a result, the list of purchase ORDERS is displayed. The desired PO items can then be copied.

If the PO number is not known, you must enter the search criteria for the PO in the initial screen. As a result, the list of purchase orders is displayed. The desired PO items can then be copied.

GOODS RECEIPT indicates a receipt or inward movement of stock of materials or goods. When an external vendor provides stock to the company, the goods receipt is generated as a PURCHASE ORDER and when the material is produced in-house, the goods receipt is generated as a production order. A goods receipt is important to a company as using a goods receipt moves material into stock, UPDATES the stock levels, and thereby indirectly enables the production process.

Goods receipt indicates a receipt or inward movement of stock of materials or goods. When an external vendor provides stock to the company, the goods receipt is generated as a purchase order and when the material is produced in-house, the goods receipt is generated as a production order. A goods receipt is important to a company as using a goods receipt moves material into stock, updates the stock levels, and thereby indirectly enables the production process.

Goods movement refers to the movement of stock. This movement of stock COULD be either inbound from the vendor, outbound to a customer, between different PLANTS, or even between different stocks within a PLANT. After goods movement, the SAP system creates two types of documents: material DOCUMENT and accounting document.

Goods movement refers to the movement of stock. This movement of stock could be either inbound from the vendor, outbound to a customer, between different plants, or even between different stocks within a plant. After goods movement, the SAP system creates two types of documents: material document and accounting document.

The steps for the inventory management are as follows:

•  DEFINING plant parameters
•  Defining system message ATTRIBUTES
•  Defining Number Assignment
•  Defining good issue, transfer posting, screen layout
•  MAINTAINING copy rules for reference documents
•  Setting up DYNAMIC availability CHECKS
•  Confirmation of the negative items

The steps for the inventory management are as follows:

The inventory management is directly linked with the material management module because any MOVEMENT of goods to/from the inventory comes under the MM module. The material REQUIREMENT planning, purchasing, and invoice VERIFICATION are some of the MM components that are also linked with inventory management. After the ordering of the material it is posted as a goods receipt with reference to the purchase ORDER. The actual data of the quantities are checked in the VENDOR's invoice.

The inventory management is directly linked with the material management module because any movement of goods to/from the inventory comes under the MM module. The material requirement planning, purchasing, and invoice verification are some of the MM components that are also linked with inventory management. After the ordering of the material it is posted as a goods receipt with reference to the purchase order. The actual data of the quantities are checked in the vendor's invoice.

The inventory management is an important constituent in the SAP MM module. The business activity of an organization revolves around the inventory of materials that serves as the input for the manufacturing process or the inventory of prepared goods for DELIVERY or selling. The material is purchased from the concerned vendors on the basis of request from the Material Requirement Planning (MRP) module. The delivered items are recorded in the inventory management as the goods receipt. The material are then stored either for delivery to the customer or for manufacturing processes. Inventory management is INTEGRATED with other modules, such as FI, SD, PP, PS and QM.

The inventory management is an important constituent in the SAP MM module. The business activity of an organization revolves around the inventory of materials that serves as the input for the manufacturing process or the inventory of prepared goods for delivery or selling. The material is purchased from the concerned vendors on the basis of request from the Material Requirement Planning (MRP) module. The delivered items are recorded in the inventory management as the goods receipt. The material are then stored either for delivery to the customer or for manufacturing processes. Inventory management is integrated with other modules, such as FI, SD, PP, PS and QM.

The STEPS for the purchase acquisition are as follows:

•  Defining the default values for physical inventory document
•  REPORTING batch INPUTS
•  Recording tolerances for physical inventory differences
•  Inventory SAMPLING as well as configuration of cycle counting

The steps for the purchase acquisition are as follows:

Physical inventory is a process in which all the transactions related to the MOVEMENT of GOODS are stopped and the company physically COUNTS inventory. It is required in financial ACCOUNTING rules or for regulating taxes by placing an accurate value on the inventory.

Physical inventory is a process in which all the transactions related to the movement of goods are stopped and the company physically counts inventory. It is required in financial accounting rules or for regulating taxes by placing an accurate value on the inventory.

The inventory management is an important part of the material management. The optimal inventory management not only ENSURES the uninterrupted supply of the material at the required time, but also prevents WASTAGE of the items. The material management covers the FOLLOWING tasks:

•  Material stock management
•  Planning, ENTRY and documentation of goods transfers from/to the inventory
•  Physical stocking of items

The inventory management is an important part of the material management. The optimal inventory management not only ensures the uninterrupted supply of the material at the required time, but also prevents wastage of the items. The material management covers the following tasks:

INVENTORY management in SAP SYSTEM helps in recording and TRACKING of stocks of materials. It also involves planning and DOCUMENTATION of all goods movements.

Inventory management in SAP system helps in recording and tracking of stocks of materials. It also involves planning and documentation of all goods movements.

The fence, which protects the master plan from automatic changes in the master plan ITEMS, is called the Planning Time Fence. The system does not create or update the ORDER proposals for the planning time fence during the planning run. It DYNAMICALLY calculates the end date of the planning time fence BEGINNING from the planning date. The planning time fence is used for materials planned in MRP, master schedule items in master production scheduling, and materials in long-term planning.

The fence, which protects the master plan from automatic changes in the master plan items, is called the Planning Time Fence. The system does not create or update the order proposals for the planning time fence during the planning run. It dynamically calculates the end date of the planning time fence beginning from the planning date. The planning time fence is used for materials planned in MRP, master schedule items in master production scheduling, and materials in long-term planning.

The planning of all materials that are related to requirement planning is known as total planning . It includes the Bill of MATERIAL (BOM) explosion for the materials. The total planning can be used for a single PLANT. It can also be used to control the total planning run for multiplant. Total planning can be used in the following areas:

• SEVERAL plant areas
•  One MRP AREA
•  Several MRP areas
•  A combination of plants and MRP areas

The planning of all materials that are related to requirement planning is known as total planning . It includes the Bill of Material (BOM) explosion for the materials. The total planning can be used for a single plant. It can also be used to control the total planning run for multiplant. Total planning can be used in the following areas:

MD14 is the TRANSACTION code to convert PLANNED ORDER into PR.

MD14 is the transaction code to convert planned order into PR.

The condition to create planned orders is that the SYSTEM CREATES an internal procurement proposal and then planned orders are CREATED. In the CASE of VENDOR procurement, a planned order is created by the MRP Controller.

The condition to create planned orders is that the system creates an internal procurement proposal and then planned orders are created. In the case of vendor procurement, a planned order is created by the MRP Controller.

The planning process flow describes the business process and the TECHNICAL system process that are involved in CBP. The system accomplishes the following partial processes in the planning run:
1. The system first checks the planning file entries and also checks whether or not the material is changed in the planning run.
2. The system accomplishes a net requirement calculation for EVERY material. It checks whether, or not the requirement quantity is covered by available warehouse stock.
3. After CARRYING out a net requirement calculation for every material, the system then carries out the log-sizing calculation.
4. The scheduling is done for the start and finish dates of the procurement proposals.
5. The system determines the type of procurement proposals and creates planned orders, purchase requisitions, or schedule lines for the materials.
6. The system creates exception messages and accomplishes a rescheduling check to recognize critical situations of the planner that has to be PROCESSED manually in the planning results.
7. The system also computes the actual days SUPPLY and the receipt days supply of the materials.

The planning process flow describes the business process and the technical system process that are involved in CBP. The system accomplishes the following partial processes in the planning run:
1. The system first checks the planning file entries and also checks whether or not the material is changed in the planning run.
2. The system accomplishes a net requirement calculation for every material. It checks whether, or not the requirement quantity is covered by available warehouse stock.
3. After carrying out a net requirement calculation for every material, the system then carries out the log-sizing calculation.
4. The scheduling is done for the start and finish dates of the procurement proposals.
5. The system determines the type of procurement proposals and creates planned orders, purchase requisitions, or schedule lines for the materials.
6. The system creates exception messages and accomplishes a rescheduling check to recognize critical situations of the planner that has to be processed manually in the planning results.
7. The system also computes the actual days supply and the receipt days supply of the materials.

TIME-phased planning is an MRP procedure, where materials are planned to be delivered in a particular time interval. In the time-phased planning technique, there is a planning file that contains an MRP date to plan the delivery of materials. When the material MASTER is CREATED and is reset for each running plan, then MRP date is set. If you need to plan the delivery of a material earlier than the specified MRP date, you can ENTER an MRP date while running the plan. For example, if the running plan is set to WEDNESDAY, you can get it forwarded to Monday.

Time-phased planning is an MRP procedure, where materials are planned to be delivered in a particular time interval. In the time-phased planning technique, there is a planning file that contains an MRP date to plan the delivery of materials. When the material master is created and is reset for each running plan, then MRP date is set. If you need to plan the delivery of a material earlier than the specified MRP date, you can enter an MRP date while running the plan. For example, if the running plan is set to Wednesday, you can get it forwarded to Monday.

The FOLLOWING are the DIFFERENT TYPES of FORECAST model:

•  Constant
•  Trend
•  SEASONAL
•  Seasonal trend

The following are the different types of forecast model:

Forecast-based planning is a process USED in consumption-based planning which DEPENDS on PREDICTIONS of future requirements calculated on the BASIS of forecast.

Forecast-based planning is a process used in consumption-based planning which depends on predictions of future requirements calculated on the basis of forecast.

The FORECAST MODEL can be selected automatically by ENTERING the value J in the Forecast Model field in the Material Master record where the value J is used for Automatic Model Selection.

The forecast model can be selected automatically by entering the value J in the Forecast Model field in the Material Master record where the value J is used for Automatic Model Selection.

FORECASTING is a future PREDICTION which is an uncertain process. Most business decisions are based on forecasts, such as decision of material requirements. While making business decisions, forecasts are continuously needed. The impact of the FORECAST on actual results is first evaluated and the initial forecasts are updated and then accordingly the decisions are MODIFIED.

Forecasting is a future prediction which is an uncertain process. Most business decisions are based on forecasts, such as decision of material requirements. While making business decisions, forecasts are continuously needed. The impact of the forecast on actual results is first evaluated and the initial forecasts are updated and then accordingly the decisions are modified.

You need to MAINTAIN the source list and select the source list indicator record. In case of more than ONE source code list, one of them is fixed. You then need to run the MRP. As a result, a purchase requisition is generated with the pre-assigned list of the SUPPLY source. Lastly, the ME59 T-code is entered for automatic creation of purchase ORDER from the purchase requisition.

You need to maintain the source list and select the source list indicator record. In case of more than one source code list, one of them is fixed. You then need to run the MRP. As a result, a purchase requisition is generated with the pre-assigned list of the supply source. Lastly, the ME59 T-code is entered for automatic creation of purchase order from the purchase requisition.

Procurement proposals are created by the system and are based on the settings defined by the purchasing department. They help in ascertaining the required materials.

The DIFFERENT TYPES of procurement proposals are:

• PURCHASE requisitions: Required for a material that is PROCURED externally.
• Schedule lines: Required when a material is procured externally and the material has an identifiable source and scheduling AGREEMENT.
• Planned orders: Required for materials that are procured internally.

Procurement proposals are created by the system and are based on the settings defined by the purchasing department. They help in ascertaining the required materials.

The different types of procurement proposals are:

The following IMPORTANT values are USED to define the reorder point:

•  SAFETY STOCK
•  Replenishment LEAD time
•  Average consumption

The following important values are used to define the reorder point:

MRP and Consumption-based PLANNING are two types of SAP planning USED to determine a product's requirements. When you plan materials by using MRP, you need to plan the materials requirement based on SALES and Operations Planning (SOP). When you follow the consumption-based planning approach to plan the materials, you need to plan the FUTURE demand of the product. This can be done by using the HISTORICAL demand of materials.

MRP and Consumption-based planning are two types of SAP planning used to determine a product's requirements. When you plan materials by using MRP, you need to plan the materials requirement based on Sales and Operations Planning (SOP). When you follow the consumption-based planning approach to plan the materials, you need to plan the future demand of the product. This can be done by using the historical demand of materials.

The MRP list is a static list which is the INITIAL working document for the MRP controller to start working from and contains the planning RESULT information for a material.
You can access the MRP list for an individual item by using the MD05 transaction code. You can ALSO access the MRP list by using the FOLLOWING navigation path: SAP menu->Logistics-> MATERIALS Management->MRP->Evaluations->MRP List - Material.

The MRP list is a static list which is the initial working document for the MRP controller to start working from and contains the planning result information for a material.
You can access the MRP list for an individual item by using the MD05 transaction code. You can also access the MRP list by using the following navigation path: SAP menu->Logistics-> Materials Management->MRP->Evaluations->MRP List - Material.

The three types of MRP are as follows:

•  Reorder-point planning — In this TYPE of MRP, the procurement starts when the existing stock and the receipts fall below the reorder point.
•  FORECAST-based planning — In this type of MRP, the forecast values and the future requirements of the material is decided by the forecasting program.
•  Time-based planning— In this type of MRP, the DATE of the planned REQUIREMENT should match with a known date, such as the date when the vendor delivers. If the vendor delivers the material on the same date, then you can start the planning procedure from that date itself.

The three types of MRP are as follows:

Material REQUIREMENT PLANNING guarantees the procurement and production of the required quantities of materials on time. The MRP helps a company to determine which materials are to be PRODUCED and in what quantity they are to be produced.

Material requirement planning guarantees the procurement and production of the required quantities of materials on time. The MRP helps a company to determine which materials are to be produced and in what quantity they are to be produced.

The tax CODE defines how the tax will be calculated and posted in SAP R/3 SYSTEM. Each item on which the tax is APPLICABLE is ALLOCATED to a tax code. The R/3 System reads this tax code for each item and calculates tax for it. This tax and tax code is a part of Purchase order.

The tax code defines how the tax will be calculated and posted in SAP R/3 System. Each item on which the tax is applicable is allocated to a tax code. The R/3 System reads this tax code for each item and calculates tax for it. This tax and tax code is a part of Purchase order.

Schedule LINES — The Schedule lines are GENERALLY created adjacent to the schedule agreements. For example, you have a material that is procured through a subcontract and you are required to ensure the DELIVERY of this material on specific days. For this, you can create a schedule LINE for the schedule agreement of that material. In the source list of the schedule line, you have to provide information regarding the VENDOR and schedule agreement along with the validity dates of delivery and also specify the agreement, which is relevant for MRP.

Schedule Lines — The Schedule lines are generally created adjacent to the schedule agreements. For example, you have a material that is procured through a subcontract and you are required to ensure the delivery of this material on specific days. For this, you can create a schedule line for the schedule agreement of that material. In the source list of the schedule line, you have to provide information regarding the vendor and schedule agreement along with the validity dates of delivery and also specify the agreement, which is relevant for MRP.

You can create a Scheduling Agreement (SA) in SAP either manually or by using the referencing techniques. To create a SA manually, you have to enter all the information on scheduling agreement manually. You can even USE reference documents from where you will copy the information related to the scheduling agreement. These reference documents can be PURCHASE requisitions, Request for QUOTATIONS, and Centrally agreed Contract.

You can create a Scheduling Agreement (SA) in SAP either manually or by using the referencing techniques. To create a SA manually, you have to enter all the information on scheduling agreement manually. You can even use reference documents from where you will copy the information related to the scheduling agreement. These reference documents can be Purchase requisitions, Request for Quotations, and Centrally agreed Contract.

The ITEM category M is used when the material ISSUED is UNKNOWN. The item category W is used when the value and QUANTITY of material are unknown.

The Item category M is used when the material issued is unknown. The item category W is used when the value and quantity of material are unknown.

A purchase order that has a validity period and contains a simple process of PROCURING materials or services is referred as a blanket purchase order. For creating a blanket purchase order, USE the ME21 or ME21N transaction CODE.

A purchase order that has a validity period and contains a simple process of procuring materials or services is referred as a blanket purchase order. For creating a blanket purchase order, use the ME21 or ME21N transaction code.

A service entry sheet is a transaction in which the data related to the service that has been ordered is recorded using a purchase ORDER. You can use the ML81N transaction code to LOCATE the service entry sheet. You can also locate the service entry sheet by using the following PATH: SAP menu->Logistics->MATERIALS Management -> Service Entry SHEETS Maintain.

A service entry sheet is a transaction in which the data related to the service that has been ordered is recorded using a purchase order. You can use the ML81N transaction code to locate the service entry sheet. You can also locate the service entry sheet by using the following path: SAP menu->Logistics->Materials Management -> Service Entry Sheets Maintain.

The services can be purchased by first creating a document in SYSTEM which forms the base of the purchasing process. This document can be a purchase requisition, an RFQ, or a purchase order. Now, determine the possible sources that can PROVIDE the service. For this, you can either select a new service or a service that has been previously used. If the service is requested for the first time, a bid invitation process is started. In the bid invitation process, you first NEED to create an RFQ and then record the incoming quotations in it. The best quotation is determined based upon CERTAIN factors, such as price, warranty period. The order is then placed to the successful bidder who receives either a standard purchase order or a RELEASE order issued against an existing contract.

The services can be purchased by first creating a document in system which forms the base of the purchasing process. This document can be a purchase requisition, an RFQ, or a purchase order. Now, determine the possible sources that can provide the service. For this, you can either select a new service or a service that has been previously used. If the service is requested for the first time, a bid invitation process is started. In the bid invitation process, you first need to create an RFQ and then record the incoming quotations in it. The best quotation is determined based upon certain factors, such as price, warranty period. The order is then placed to the successful bidder who receives either a standard purchase order or a release order issued against an existing contract.

A STANDARD SERVICE Catalog (SSC) is a general standardized catalog that contains the DETAILED EXPLANATION of services. The descriptions of these services are stored as master records and help to remove data DUPLICATION.

A Standard Service Catalog (SSC) is a general standardized catalog that contains the detailed explanation of services. The descriptions of these services are stored as master records and help to remove data duplication.

The IMPORTANT fields of a Service MASTER RECORD are as follows:

• Service number— Defined for external or INTERNAL numbering of the service
• Service Category— Distinguishes between the types of services
• Descriptive text— Contains a short or long description of the service
• Base unit of measurement— Contains the unit in which you can measure the service
• Material/Service group— ALLOWS the service to be selected for grouping purpose
• Valuation class— Finds the general ledger accounts that are related with the service

The important fields of a Service Master Record are as follows:

A centrally agreed contract type is created without specifying the name of the PLANT. The plant specification is provided at the time of creating the contract release order. In centrally agreed contract, different conditions for individual plants can be maintained easily. Moreover, different ordering addresses or goods suppliers in the vendor master record can also be specified in this type of centrally agreed contract. The centrally agreed contract is USEFUL in the enterprises that have a central purchasing department and the MATERIALS are required to be bought for different plants. In this case, they create a high-level contract USED by the other department-specific purchase organizations within the enterprise. The use of such centrally agreed contracts usually results in more favorable conditions of purchase and helps MAINTAIN consistency in process of purchasing throughout the enterprise.

A centrally agreed contract type is created without specifying the name of the plant. The plant specification is provided at the time of creating the contract release order. In centrally agreed contract, different conditions for individual plants can be maintained easily. Moreover, different ordering addresses or goods suppliers in the vendor master record can also be specified in this type of centrally agreed contract. The centrally agreed contract is useful in the enterprises that have a central purchasing department and the materials are required to be bought for different plants. In this case, they create a high-level contract used by the other department-specific purchase organizations within the enterprise. The use of such centrally agreed contracts usually results in more favorable conditions of purchase and helps maintain consistency in process of purchasing throughout the enterprise.

Quantity Contracts— When the total quantity to be ordered is known in ADVANCE during the validity period, the QUALITY contract is USED. This contract is considered as FULFILLED when totaling of release orders of a given quantity has been issued.

Value Contracts — When the total value of the release orders does not exceed a definite and predefined value, the Value contract is used. The contract is considered as fulfilled when totaling of release orders of a given value has been issued.

Quantity Contracts— When the total quantity to be ordered is known in advance during the validity period, the quality contract is used. This contract is considered as fulfilled when totaling of release orders of a given quantity has been issued.

Value Contracts — When the total value of the release orders does not exceed a definite and predefined value, the Value contract is used. The contract is considered as fulfilled when totaling of release orders of a given value has been issued.

The TRANSACTION CODE OMW1 is USED to set price CONTROL for RECEIPTS (goods/invoice).

The transaction code OMW1 is used to set price control for receipts (goods/invoice).

At the time of creating PO, we take the reference of PURCHASE Requisition, REQUEST for Quotation, and any other Purchase ORDERS. However, it is not necessary to take the reference of these documents as most of the values are automatically TAKEN by the SAP R/3 system.

At the time of creating PO, we take the reference of Purchase Requisition, Request for Quotation, and any other Purchase orders. However, it is not necessary to take the reference of these documents as most of the values are automatically taken by the SAP R/3 system.

Mark the item as FREE in the PURCHASE order. The price for such PO ITEMS will be ZERO.

Mark the item as FREE in the Purchase order. The price for such PO items will be zero.