Materials Management with SAP S/4HANA: A Comprehensive Guide
If you are looking for a way to optimize your materials management processes, reduce costs, and improve customer satisfaction, then you might want to consider using SAP S/4HANA. SAP S/4HANA is a powerful and intelligent ERP system that can help you manage your materials from procurement to inventory management, and beyond. In this article, we will explain what materials management is, what SAP S/4HANA is, and why you should use it for your materials management needs. We will also cover the main features and functionalities of materials management with SAP S/4HANA, and how you can get started with it.
What is Materials Management?
Materials management (MM) is a core functionality in SAP S/4HANA that drives logistics and supply chain operations. Its purpose is to manage processes such as purchasing, goods receiving, material storage, consumption-based planning, and inventory. Materials management helps you meet market demand by performing activities such as planning stock levels, minimizing work-in-process inventory, fulfilling customer orders, and collaborating with suppliers and other vendor partners. Materials management revolves around three flows:
materials management with sap s 4hana pdf free download
Material flow: This is focused on the materials themselves, and how they move from supplier to customer. Material flow begins when raw materials are ordered from a supplier, continues as the materials are turned into finished products, and typically ends when headed out into transportation channels. In cases where returns are made by customers, the material flow process will continue as the product is sent back to the manufacturer.
Information flow: This is focused on order management, things such as delivery status and order turnaround time. This is important for providing transparency between the business and its customers, many of whom are looking for accurate and real-time information about the status of their orders.
Financial flow: This is focused on the value of the materials being used in the creation of a product. This is important for calculating values such as cost of goods sold (COGS) and for maintaining accurate bookkeeping in areas such as inventory accounts and accounts payable.
In addition to these flows, materials management plays an important role in larger and end-to-end business processes, such as:
Procure-to-pay: In this process, users identify the raw materials they need to produce certain products, solicit quotes from suppliers, and choose the best offer for their manufacturing needs. Since this deals with acquiring materials, the material and financial flows are affected.
Plan-to-product: In this process, businesses select the amount of raw and packing materials they need from their inventory and begin work on creating the product. Since this deals with transforming materials, the material and information flows are affected.
Order-to-cash: In this process, businesses receive orders from customers, confirm availability of products, deliver products to customers, and collect payments. Since this deals with selling products, the material, information, and financial flows are affected.
Maintenance management: In this process, businesses perform preventive and corrective maintenance on their equipment and facilities, and order spare parts and services as needed. Since this deals with maintaining assets, the material, information, and financial flows are affected.
What is SAP S/4HANA?
SAP S/4HANA is a next-generation ERP system that leverages the power of in-memory computing, cloud technology, and artificial intelligence to deliver a simplified and intelligent business suite. SAP S/4HANA is designed to help businesses run faster, smarter, and more efficiently in the digital age. Some of the key benefits of SAP S/4HANA are:
Real-time insights: SAP S/4HANA uses the SAP HANA database, which can process massive amounts of data in real time and provide instant analytics and reporting. This enables businesses to make faster and better decisions based on live data.
Simplified processes: SAP S/4HANA eliminates redundant data and processes, and streamlines the core business functions. This reduces complexity and improves productivity and performance.
Personalized user experience: SAP S/4HANA offers a modern and intuitive user interface with SAP Fiori, which adapts to different devices, roles, and preferences. Users can access the information and functions they need with ease and convenience.
Innovation potential: SAP S/4HANA enables businesses to leverage new technologies such as artificial intelligence, machine learning, blockchain, and Internet of Things (IoT) to create new business models and opportunities.
Why Use SAP S/4HANA for Materials Management?
Materials management is one of the core functionalities of SAP S/4HANA, and it offers many advantages over traditional ERP systems. Some of the reasons why you should use SAP S/4HANA for materials management are:
Improved visibility and control: With SAP S/4HANA, you can have a complete and accurate view of your materials across the entire supply chain, from sourcing to delivery. You can also monitor and control your inventory levels, stock movements, quality issues, and costs in real time.
Increased efficiency and agility: With SAP S/4HANA, you can automate and optimize your materials management processes, such as procurement, inventory management, goods movement, and invoice verification. You can also adapt to changing market conditions and customer demands with flexible and responsive planning tools.
Enhanced collaboration and integration: With SAP S/4HANA, you can connect and communicate with your suppliers, customers, and other partners seamlessly and securely. You can also integrate your materials management processes with other business functions, such as finance, sales, production, and service.
Better customer satisfaction: With SAP S/4HANA, you can deliver the right products to the right customers at the right time and place. You can also provide them with accurate and timely information about their orders, deliveries, invoices, and returns.
Master Data in Materials Management with SAP S/4HANA
Master data is the foundation of materials management in SAP S/4HANA. It is the data that defines the characteristics and attributes of the materials, vendors, business partners, purchasing information, etc. Master data is used throughout the materials management processes to ensure consistency and accuracy. The main types of master data in materials management with SAP S/4HANA are:
Material Master Data
Material master data is the data that describes the physical properties, technical specifications, procurement details, valuation methods, storage conditions, and sales data of a material. Material master data is organized into different views, such as basic data, purchasing data, sales data, accounting data, etc. Each view contains specific fields that are relevant for a particular business function. For example, the purchasing data view contains fields such as purchasing group, order unit, delivery time, etc. Material master data is identified by a unique material number, which can be either internally or externally assigned.
Vendor Master Data
Vendor master data is the data that describes the general information, company code data, and purchasing organization data of a vendor. Vendor master data is used to manage the relationship between the business and its suppliers. Vendor master data is organized into different views, such as general data, company code data, purchasing organization data, etc. Each view contains specific fields that are relevant for a particular business function. For example, the company code data view contains fields such as reconciliation account, payment terms, payment methods, etc. Vendor master data is identified by a unique vendor number, which can be either internally or externally assigned.
Business Partner Data
Business partner data is the data that describes the general information, role-specific data, and relationship data of a business partner. Business partner data is used to manage the interaction between the business and its customers, suppliers, employees, and other stakeholders. Business partner data is organized into different categories, such as person, organization, group, etc. Each category contains specific fields that are relevant for a particular type of business partner. For example, the person category contains fields such as first name, last name, date of birth, gender, etc. Business partner data is identified by a unique business partner number, which can be either internally or externally assigned.
Purchasing Information Data
Purchasing information data is the data that describes the conditions and terms of a purchasing agreement between the business and a vendor. Purchasing information data is used to store and retrieve information such as prices, discounts, delivery dates, quantities, etc. Purchasing information data is organized into different types, such as info records, contracts, scheduling agreements, etc. Each type contains specific fields that are relevant for a particular type of purchasing agreement. For example, the info record type contains fields such as material number, vendor number, purchasing organization, etc. Purchasing information data is identified by a unique combination of key fields, such as material number, vendor number, purchasing organization, etc.
Procurement Processes in Materials Management with SAP S/4HANA
Procurement processes are the processes that involve acquiring materials from external sources, such as suppliers or vendors. Procurement processes are part of the procure-to-pay business process, and they affect the material and financial flows. The main steps of procurement processes in materials management with SAP S/4HANA are:
Purchase Requisition
A purchase requisition is a document that contains a request for materials or services from an internal source, such as a production department or a project team. A purchase requisition specifies the quantity, delivery date, and cost center of the requested materials or services. A purchase requisition can be created manually by a user, or automatically by a system, such as material requirements planning (MRP). A purchase requisition can be approved or rejected by an authorized person, such as a manager or a buyer.
Request for Quotation
A request for quotation (RFQ) is a document that contains a request for prices and conditions from one or more external sources, such as suppliers or vendors. An RFQ is created based on a purchase requisition, and it contains the same information as the purchase requisition, plus additional details such as delivery terms, payment terms, validity period, etc. An RFQ can be sent to potential suppliers or vendors via different channels, such as email, fax, or online portal. The suppliers or vendors can respond to the RFQ by sending back a quotation, which is a document that contains their offer for the requested materials or services.
Purchase Order
A purchase order (PO) is a document that contains a binding order for materials or services from an external source, such as a supplier or vendor. A PO is created based on a quotation, and it contains the same information as the quotation, plus additional details such as order number, delivery address, confirmation control, etc. A PO can be sent to the selected supplier or vendor via different channels, such as email, fax, or online portal. The supplier or vendor can confirm or reject the PO by sending back an order confirmation or an order rejection.
Goods Receipt
A goods receipt (GR) is a document that contains a confirmation of the receipt of materials or services from an external source, such as a supplier or vendor. A GR is created based on a PO, and it contains the same information as the PO, plus additional details such as goods receipt number, goods movement type, quantity received, etc. A GR can be posted in the system by scanning a barcode, entering a transaction code, or using a mobile app. The GR updates the inventory and the financial accounts of the business.
Invoice Verification
Invoice verification (IV) is a document that contains a verification of the invoice from an external source, such as a supplier or vendor. IV is created based on a GR, and it contains the same information as the GR, plus additional details such as invoice number, invoice date, tax amount, etc. IV can be performed in the system by matching the invoice with the PO and the GR, or by using an optical character recognition (OCR) tool. The IV updates the accounts payable and the financial accounts of the business.
Inventory Management Processes in Materials Management with SAP S/4HANA
Inventory management processes are the processes that involve managing the stock of materials within the business. Inventory management processes are part of the plan-to-product and order-to-cash business processes, and they affect the material and information flows. The main steps of inventory management processes in materials management with SAP S/4HANA are:
Material Requirements Planning (MRP)
Material requirements planning (MRP) is a process that calculates the optimal quantity and timing of materials needed for production or sales. MRP is based on various inputs, such as sales orders, production orders, stock levels, lead times, safety stocks, etc. MRP generates various outputs, such as planned orders, purchase requisitions, stock transfer orders, etc. MRP helps to optimize inventory levels, reduce stock-outs, and increase customer satisfaction.
Stock Overview
Stock overview is a process that provides a comprehensive and real-time view of the stock situation of materials in different locations and statuses. Stock overview is based on various data sources, such as material master data, inventory data, warehouse data, etc. Stock overview displays various information, such as total stock, available stock, blocked stock, quality inspection stock, etc. Stock overview helps to monitor and control inventory levels, identify potential issues, and take corrective actions.
Goods Issue and Goods Movement
Goods issue (GI) is a process that records the removal of materials from the inventory due to various reasons, such as sales, consumption, scrap, etc. Goods issue reduces the inventory quantity and value, and updates the financial accounts of the business. Goods issue is based on various documents, such as sales orders, production orders, reservation orders, etc. Goods issue can be posted in the system by scanning a barcode, entering a transaction code, or using a mobile app.
Goods movement (GM) is a process that records the movement of materials within or between different locations or statuses. Goods movement changes the inventory quantity and value, but does not affect the financial accounts of the business. Goods movement is based on various documents, such as stock transfer orders, goods receipt orders, physical inventory documents, etc. Goods movement can be posted in the system by scanning a barcode, entering a transaction code, or using a mobile app.
Physical Inventory and Cycle Counting
Physical inventory (PI) is a process that verifies the actual quantity and quality of materials in the inventory by physically counting and inspecting them. Physical inventory is performed periodically or on demand to ensure the accuracy and reliability of the inventory data. Physical inventory can be done in different ways, such as full count, partial count, zero count, etc. Physical inventory can be recorded in the system by scanning a barcode, entering a transaction code, or using a mobile app.
Cycle counting (CC) is a process that verifies the actual quantity and quality of materials in the inventory by randomly sampling and inspecting them. Cycle counting is performed continuously or at regular intervals to maintain the accuracy and reliability of the inventory data. Cycle counting can be done in different ways, such as ABC analysis, frequency analysis, location analysis, etc. Cycle counting can be recorded in the system by scanning a barcode, entering a transaction code, or using a mobile app.
Advanced Features in Materials Management with SAP S/4HANA
Besides the basic features and functionalities of materials management with SAP S/4HANA, there are also some advanced features that can enhance your materials management processes and outcomes. Some of these advanced features are:
Batch Management
Batch management is a feature that allows you to manage materials that are produced or procured in batches. A batch is a group of materials that have the same characteristics and quality specifications. Batch management enables you to track and trace the origin and destination of each batch, as well as its shelf life and expiration date. Batch management also enables you to assign serial numbers to each batch, and to use barcodes or RFID tags to identify and manage each batch. Batch management can be activated in the material master data, and it can be integrated with other processes, such as procurement, production, quality management, and sales.
Special Procurement Types
Special procurement types are features that allow you to manage materials that are procured or produced in special ways. Some examples of special procurement types are:
Consignment: This is a type of procurement where the materials are stored at the business premises, but they belong to the vendor until they are consumed or sold by the business. The business only pays for the materials when they are used or sold.
Subcontracting: This is a type of procurement where the business provides some components or materials to a vendor, who then processes them and returns them as a finished product. The business only pays for the processing service, not for the materials.
Stock transfer: This is a type of procurement where the materials are transferred from one plant or storage location to another within the same company. The business does not pay for the materials, but it may incur some costs for transportation or handling.
Special procurement types can be defined in the material master data, and they can be integrated with other processes, such as procurement, production, inventory management, and accounting.
Early Warning System
Early warning system (EWS) is a feature that allows you to monitor and detect potential problems or risks in your materials management processes. EWS can alert you to issues such as stock shortages, delivery delays, quality defects, invoice discrepancies, etc. EWS can also provide you with suggestions or solutions to resolve the issues. EWS can be configured in the system by defining the criteria, thresholds, and actions for each type of issue. EWS can also be accessed via SAP Fiori apps, such as Monitor Purchase Order Items or Monitor Stock.
Document Management System
Document management system (DMS) is a feature that allows you to store and manage documents related to your materials management processes. DMS can help you to organize and classify documents, such as drawings, specifications, certificates, contracts, invoices, etc. DMS can also help you to link documents to other objects, such as materials, vendors, purchase orders, etc. DMS can also help you to search and retrieve documents, as well as to control the access and version of documents. DMS can be integrated with other systems, such as SAP S/4HANA, SAP Content Server, SAP ArchiveLink, etc.
Reporting and Monitoring with SAP Fiori Apps
Reporting and monitoring are features that allow you to analyze and evaluate your materials management processes and outcomes. Reporting and monitoring can help you to measure and improve your performance, efficiency, quality, and profitability. Reporting and monitoring can be done with SAP Fiori apps, which are user-friendly and role-based applications that run on any device. Some examples of SAP Fiori apps for materials management are:
Analyze Purchase Order Values: This app allows you to view the purchase order values by different dimensions, such as purchasing organization, purchasing group, material group, vendor, etc. You can also filter, sort, drill down, and export the data.
Manage Purchase Requisitions: This app allows you to create, display, change, and approve purchase requisitions. You can also search for purchase requisitions by different criteria, such as status, priority, material, vendor, etc.
Track Purchase Order Acknowledgment: This app allows you to monitor the status of the purchase order confirmations from the vendors. You can also view the details of the purchase orders and the confirmations, as well as send reminders or messages to the vendors.
Monitor Material Coverage: This app allows you to check the availability of materials for production or sales. You can also view the details of the material requirements, the stock levels, the planned receipts, and the planned issues.
Manage Physical Inventory: This app allows you to create, display, change, and post physical inventory documents. You can also search for physical inventory documents by different criteria, such as status, plant, storage location, material, etc.
Conclusion
In conclusion, materials management with SAP S/4HANA is a comprehensive and intelligent solution that can help you optimize your materials management processes, reduce costs, and improve customer satisfaction. Materials management with SAP S/4HANA covers the entire lifecycle of materials, from procurement to inventory management, and beyond. Materials management with SAP S/4HANA also offers many advanced features, such as batch management, special procurement types, early warning system, document management system, and reporting and monitoring with SAP Fiori apps. If you are interested in learning more about materials management with SAP S/4HANA, you can download a free PDF guide from this link: [Materials Management with SAP S/4HANA PDF Free Download].
FAQs
Here are some frequently asked questions about materials management with SAP S/4HANA:
Q: What are the prerequisites for using materials management with SAP S/4HANA?
A: To use materials management with SAP S/4HANA, you need to have the following prerequisites:
A valid license for SAP S/4HANA.
A compatible hardware and software environment for SAP S/4HANA.
A sufficient knowledge and experience in materials management and SAP S/4HANA.
A reliable and secure network connection for SAP S/4HANA.
Q: How can I migrate my existing materials management data to SAP S/4HANA?
A: To migrate your existing materials management data to SAP S/4HANA, you can use the following methods:
The SAP S/4HANA Migration Cockpit, which is a tool that allows you to transfer data from legacy systems to SAP S/4HANA using predefined templates and mappings.
The SAP Data Services, which is a tool that allows you to extract, transform, and load data from various sources to SAP S/4HANA using custom scripts and rules.
The SAP Landscape Transformation, which is a tool that allows you to convert and optimize data from existing SAP systems to SAP S/4HANA using automated processes and best practices.
Q: How can I customize and configure materials management with SAP S/4HANA?
A: To customize and configure materials management with SAP S/4HANA, you can use the following tools:
The SAP Implementation Guide (IMG), which is a tool that allows you to define and adjust the settings and parameters for materials management according to your business requirements.
The SAP Fiori Launchpad, which is a tool that allows you to access and manage the SAP Fiori apps for materials management according to your user role and preference.
The SAP Cloud Platform, which is a tool that allows you to extend and enhance the functionality and user experience of materials management with cloud-based services and applications.
Q: How can I troubleshoot and resolve issues in materials management with SAP S/4HANA?
A: To troubleshoot and resolve issues in materials management with SAP S/4HANA, you can use the following resources:
The SAP Help Portal, which is a website that provides comprehensive documentation and guidance for materials management with SAP S/4HANA.
The SAP Community, which is a platform that connects you with other users and experts who can share their knowledge and experience in materials management with SAP S/4HANA.
The SAP Support Portal, which is a website that allows you to report and track issues, request assistance, and access updates and patches for materials management with SAP S/4HANA.
Q: What are the best practices for using materials management with SAP S/4HANA?
A: Some of the best practices for using materials management with SAP S/4HANA are:
Keep your master data clean and consistent.
Use standard processes and workflows as much as possible.
Leverage the advanced features and functionalities of materials management with SAP S/4HANA.
Monitor and analyze your performance and results regularly.
Stay updated and informed about the latest developments and innovations in materials management with SAP S/4HANA.
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