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Logistics Materials Management

Simone Engelhardt
SAP AG
SAP AG LMM0001D Jan'96/ 1

Structure
Integrated turnkey solutions MM FI Comprehensive functionality

Sales & Distrib.

SD

Financial Accounting Controlling

Open systems

Materials ManagePP Management Production Planning

CO

R/3
IS

Asset Management

AM

Client / server architecture

Quality ManageManagement PM Plant MaintenMaintenance HR Human Resources

QM

Client / Server ABAP/4

Workflow Industry Solutions

WF

Project System

PS

Industryneutral

Enterprise data model

Multinational

SAP AG LMM0001D Jan'96/ 2

Overview of Materials Management


BASIC DATA
Material Special stock Batch Vendor/one-time customer Purchasing info record Service specifications Workflow Optical archive Texts Mail Communication Classification Documents Conditions
SAP AG LMM0001D Jan'96/ 3

PURCHASING
Purchase requisition
MRP Direct requisition Release procedures

SD PP PM QM FI AM CO PS

Third-party order Requirements Service / spare parts Inspection lot G/L accounts Cash management and forecast Fixed assets Cost center / Budget Project

Purchasing information system Vendor evaluation

RFQ/Quotation

Material/service Price comparisons Price comparison list Purchase orders Outline agreements Scheduling agreements

Purchasing

INVENTORY MANAGEMENT
Goods receipt/issue Transfer posting Quantities and values Physical inventory Storage bins

INVOICE VERIFICATION
Check and post Price update

Overview
Organizational structures Master data Requirements planning Purchasing Inventory management and material valuation Warehouse management Physical inventory Invoice verification External services management Information systems

MM
PP

SD

FI CO

QM PM HR

R/3
WF IS

AM

PS

SAP AG LMM0001D Jan'96/ 4

Overview
Basic data
Customers Vendors Material Bill of material, CAD Work plan, plant maintenance plan, inspection plan, CAP Work center Production resources and tools Rough-cut planning profile Equipment Document Classification

SD
Customer order processing Customer requirements

Sales planning
Profit planning
SOP Planned requirements Forecasts

Project system
Network Projects

PP
Demand management Materials planning

QM MM

Inspection lot Inspection order

Rough-cut capacity planning Planned orders Opening period Order: - Creation - Release - Confirmation Shop floor control Capacity leveling CAP

Direct requisition Purchasing Inventory management Goods receipt Material valuation Invoice verification Warehouse management

WORKFLOW Word processing MAIL Communication TELEFAX, EDI, Internet

PM

Repair Maintenance

Product costing
SAP AG LMM0001D Jan'96/ 5

SD

Shipping, billing, transport

Organizational Structures
Views
Cost accounting External logistics

Levels
Group Controlling areas Sales organization Purchasing organiz.

Company codes Financial accounting Valuation areas Internal logistics


(MRP/Production)

Plants
Storage locations/batches/special stocks

Inventory mgmt
SAP AG LMM0001D Jan'96/ 6

Organizational Structures
Group
Company code Purchasing organization Sales organization Plants Warehouse
SAP AG LMM0001D Jan'96/ 7

0001
0001 0002

1000

2000

3000

4000

0001

0002

0003

0004

0005

special stock

0002

0001 MM-WM

Basic Data: Material Master


Centralized/ decentralized maintenance Views Multilingual texts Units of measure Prices Organizational units Material types

Material master

Work scheduling Financial accounting Classification MRP Production resources Costing Engineering/design Warehouse Forecast Quality management Warehouse management Sales Stock (plant/warehouse)

SAP AG LMM0001D Jan'96/ 8

Basic Data: Material Master


Material master

Immediate changes Change material master

Planned changes Change material master with change date

Planned changes Engineering change management for several objects

immediately active

activation on date

separate/ automatic activation

SAP AG LMM0001D Jan'96/ 9

Classification
Characteristics freely definable Classes any characteristic from the hierarchy graphics characteristic inheritance various Truck
hierarchy class

Tire
hierarchy class

Automobile
hierarchy class

SUMMER
real class

WINTER
real class

OTHER
dummy class

SAP AG LMM0001D Jan'96/ 10

Classification

Classification different objects multiple classification Selection via key word hierarchy characteristics Change service Transfer DIN4000, DIN4001 CAD connection

Routings

Documents

Materials

Vendor evaluation Class


Trading units/batches

Equipment

Functional locations Inspection methods Specifications

Inspection features

SAP AG LMM0001D Jan'96/ 11

Basic Data: Vendor Master


General data Account number Description/address Vendor sub-range Supply region

Purchasing data
Purchasing organization Service data Partner roles Purchasing group Purchase order currency Supplying organization Default data Service data Partner roles Terms of payment Plant Service data Partner roles Purchasing group Purchase order currency

Accounting data Reconciliation account Terms of payment Bank details

Transaction figures

SAP AG LMM0001D Jan'96/ 12

Requirements Planning: Lot Sizing Procedure


Standard procedure Exact purchase order quantity Fixed purchase order quantity Pad to the maximum stock level Day periods Week periods Month periods Flexible period length created by the combination of several periods Sliding economic lot size Balancing of piece and period Groff procedure Dynamic planning invoice Rounding value Minimum purchase order Maximum purchase order quantity Storage costs Scrap

Period procedure

Dynamic lot-sizing procedure

Parameter

SAP AG LMM0001D Jan'96/ 13

Requirements Planning
MRP procedure Consumption-driven MRP - manual/automatic reorder point - random MRP Requirement-driven MRP - with or without BOM explosion Regenerative planning Net change Net change in short-term planning horizon Single-stage single-segment planning Display Change Conversion

Planning runs

Planned order management

Reporting

Current requirement/stock situation Planned order overview Planning file

SAP AG LMM0001D Jan'96/ 14

Purchasing: Purchase Requisition


Release procedure Source determination
Outline agreement

OK
Source list Quota arrangement

Fixed vendor

assign and process Change


Purch. req. Change document

Piece % DM

Generate
Purchase order

Conditions

Release

RFQ

Work list

Requirements planning

Direct entry

SAP AG LMM0001D Jan'96/ 15

Purchasing: Release Procedure for Purchase Requisition


Release conditions

Release strategy Value Material group Account assignment category Plant Release indicator

Number of release points Sequence of release points Release indicator

Released/blocked for purchase order Released/blocked for requests for quotation Fixed/unfixed for MRP

SAP AG LMM0001D Jan'96/ 16

Purchasing: Release Procedure for Purchasing Documents


Purchase requisition Request for quotation Purchase order Contract Scheduling agreement Entry sheet

Communications structure Classification Material group Requisitioner Order value ... Office supplies Johnson 1000 DM relevant relevant relevant ...

Release strategy

Release points Alternatives


SAP AG LMM0001D Jan'96/ 17

1. 5.

2.

3.
flo Work w

Purchasing doc. authorized !

Purchasing: Request for Quotation/Quotation


RFQ One-time vendor

!
Vendor B

Quotation price comparison list

Manual/automatic data update


Statistics Certificates Reminder Quantities Texts Conditions

Purch. info record Vendor A RFQ


Purch. order

?
Stock material Consumable material Service

Collective request for quotation

Rejection
Purch. order

BANF req Purch.

SAP AG LMM0001D Jan'96/ 18

Purchasing: Source List


Manual maintenance Maintenance from outline agreement Maintenance from purchase info record Generation from purchase info record or outline agreement

Validity period Fixed vendor

Source list

Fixed outline agreement

Default in purchase requisition during source determination Check purchase requisition and purchase order against valid source list entry

SAP AG LMM0001D Jan'96/ 19

Purchasing: Quota Arrangement


Manual maintenance Automatic data update of quoted quantities

Quota file

Validity period Procurement type (own/other)

Special procurement type Vendor Quota Quota quantity

Default in purchase requisition during source determination

SAP AG LMM0001D Jan'96/ 20

Purchasing: Highlights
Purchasing info record price history Joint conditions management with sales Purchasing organization permits structuring of the purchasing department in centralized and decentralized purchasing Integrated management of requisition note numbers Automatic purchase order Volume rebate arrangements and agreements - Monitoring (deadline, contract fulfillment) - Reminder (delivery, request for quotation) - Urging letter (delivery) - Order acknowledgment Communication - Message control - Flexible purchase order printout (form) - Fax - Internet - Connection to optical archive Buyers negotiation sheet

SAP AG LMM0001D Jan'96/ 21

Purchasing: Ordering
Reference and copy function
Stock material Account assignment - Single Consumable material - Multiple Service Material provided Deadline item

Contract
Purch. order
Purch. info rec.

Req. for quot.

PURCHASE ORDER - Normal - Subcontracting - Consignment - Third-party - Stock transfer - Text

Generation from purchase requisition processing

Statistics
Direct entry

Purchase order history

SAP AG LMM0001D Jan'96/ 22

Purchasing: Contract/Scheduling Agreement


Contract Quantity contract Value contract Consignment contract Central contract Supplement Sched. agreement
Schedule update

Monitoring: degree of fulfillment


Contract release order

manual from MRP Supplement

SAP AG LMM0001D Jan'96/ 23

Purchasing: Centrally Agreed Contract


Prices and conditions Plant 1 Plant 2 Plant 3 Centrally agreed contract Steel Inc. Material A 500,000t Contract release order
Metal Processing Ltd.

Partner roles Vendor 1 Vendor 2 Vendor 3 Vendor 4

Steel inc. Vendor 1 Munich Vendor 2 Stuttgart Vendor 3 Berlin Vendor 4 Hamburg

Plant 1 Ulm

Plant 2 Potsdam Plant 3 Bremen


SAP AG LMM0001D Jan'96/ 24

Purchasing: Distributed Contracts


Metal Inc., Frankfurt Central SAP system Contract Material A. 10,000 pcs. Rel. docu 10,000 - 2,000 - 1,000 - 3,000 Central SAP system

ALE
inContract dependent decentral- Rel. docu ized SAP 2,000 pcs. systems

Mannheim Plant
Contract rel. order 2,000

Stuttgart Plant
Contract Rel. docu 1,000 pcs. Contract rel. order 1,000

SW Steel Ltd. Saarbrcken


Contract Rel. docu 3,000 pcs. Contract rel. order 3,000

independent decentralized SAP systems

SAP AG LMM0001D Jan'96/ 25

Automatic distribution of data via ALE - Application Link Enabling Degree of fulfillment monitored at head office through the combination of all releases Separate release documentation in a decentralized system

Purchasing: Source Determination


Direct requisition Purchase requisition
Contract
Sched. agr.

Requirements planning

Contract/sched. agreement?

yes

Release/delivery schedule

Source list

Fixed vendor?
Quotation

yes

Automatic purchase order

Quotation

Quotation available?

no yes

Request for quotation

Vendor selection

Entry of quotation data

Opening of purch. ord.


SAP AG LMM0001D Jan'96/ 26

Purchasing: Vendor Evaluation


Overall rating of vendor

Price Price level Price behavior Other

Quality
Inspec. of goods rec. Shopfloor complaint

Delivery On-time delivery Quantity reliability Shipping instructs. Other

Service Technology Other

Quality audit Other

automatically determined other eligible criteria weighting in % SAP AG LMM0001D Jan'96/ 27

Company Code: Comprehensive Stock Transfer with Delivery and Invoice


Corporate group
Company 1 (G) Company 2 (F) Company 3 (I)

Plant 1 Berlin

Plant 2 Munich
Vendor 4711 = plant 4 Purchase order

Plant 3 Lille

Plant 4 Milan

Delivery Invoice SD functionality: Availability check, delivery, picking, transport, pricing, invoicing Delivery plant = vendor
SAP AG LMM0001D Jan'96/ 28

Inventory Management: Overview


Consumption statistics Quantity and values
Dec 95 Movement

Goods receipt

Stock

in-/outward Stock transfer Transfer post. Goods receipt/ ... issue slip

Inventory
Storage location stock

Warehouse mgmt Storage bins

Special stock

Analysis/ inventory controlling


SAP AG LMM0001D Jan'96/ 29

Inventory Management: Goods Receipt


Goods receipt
Material PP CO PS Purch. order Stock quantity Consumption statistics Point of consumption Cost center Order

Warehouse mgmnt.: transport req. Purchasing data Purchase order item Purchase order history

Goods receipt blocked stock Delivery costs

Goods receipt posting

Mail to orderer Goods rec. slip Material document Accounting document


G/L account Goods/invoice rec. ctrl. acc. Balance sheet account Consumption account

FI
SAP AG LMM0001D Jan'96/ 30

Inventory Management: Material Movements


External purchase order Diverse inward movement Internal purchase order

Vendor

Production

Inspec. sample Blocked storage Quality inspection Special warehouses: - Consignment - Empties - Prov. of material by customers Transfer posting

Stock transfer

Scrapping Physical inventory difference

Consumption: cost center, production order, project, sales order, asset Withdrawal via bills of material / reservation lists
SAP AG LMM0001D Jan'96/ 31

Inventory Management: Integration of Quality Management

Freely usable stock Quality inspec.

Inspection stock in another storage location laboratory


. pec ins

Goods receipt Goods receipt blocked stock

SAP AG LMM0001D Jan'96/ 32

Inventory Management: Analyses

Liste

Analyses Material movement lists

X X X X X

X X

Stock overviews Stocks per material Avail. of plant stock Requirement lists Stock lists

Stock controlling ABC analyses Stock values Range of coverage Slow-moving item Inventory turnover LIS Dead stock LIS Parameter controlling

SAP AG LMM0001D Jan'96/ 33

Inventory Management: Highlights

Batch status management Batch finding Connection to serial number management Connection to optical archive Management of expiration date Pipeline - withdrawal Reservations Missing parts processing Dynamic availability check

SAP AG LMM0001D Jan'96/ 34

Valuation: Balance Sheet Valuation Procedure

Determine lowest value LIFO FIFO

SAP AG LMM0001D Jan'96/ 35

Physical Inventory: Procedure


2

Periodic inventory Permanent inventory

6789

Cycle counting (periodic inventory) Inspect sample inventory - Integrated - Interface

SAP AG LMM0001D Jan'96/ 36

Physical Inventory: Flow


Add physical inventory document Batch input Set block indicators Batch input Print physical inventory document

Physical inventory count

Initiate recount

Difference lists

Change count

Charge off differences

SAP AG LMM0001D Jan'96/ 37

Warehouse Management: Integration


MM
Ordering Inventory management Invoice verification

PP
Materials planning Production orders Time management

SD
Sales orders Shipping Billing

Storage bin management Storage via strategies Stock removal via strategies Transport orders Storage bin related inventory Storage unit management Warehouse management

SAP AG LMM0001D Jan'96/ 38

Warehouse Management: Characteristics


Modeling of complex warehouse structures Integration with the MM and SD systems Support of different warehouse organizations via storage / removal strategies Consideration of material characteristics (fast-moving item / slow-moving item) Support of bar code Transport requirement /order / posting change notice Local use with online link to the R/2 - R/3 System Connection to warehouse control units Warehouse utility management Warehouse-related physical inventory processing Hazardous material processing Connection to batch status management Expiration date Cycle counting

SAP AG LMM0001D Jan'96/ 39

Warehouse Management: Organizational Structure


Plant

0001 0001 0088 001 001 005 0088

0002 0002

Storage location

Warehouse number

Storage type

Storage section

001 05-04-03 Material 1 05-04-04 05-04-05

Storage bin

Storage quant
SAP AG LMM0001D Jan'96/ 40

Material 2

Warehouse Management: Data Structures


Warehouse Warehouse number structure Storage type
Storage section General data Material Warehouse number master Storage type Hazardous material data

Storage bin Stocks Warehouse utility

SAP AG LMM0001D Jan'96/ 41

Warehouse Management: Integration of Inventory Management


Warehouse no. 001

Goods receipt

Storage type 902 GR zone Storage type 001 HRL 1

Storage type 004 block storage area Storage type 910 GI zone

Goods issue

Storage type 914


commission warehouse

SAP AG LMM0001D Jan'96/ 42

Warehouse Management: Flow of Goods Receipt


Enter material movement

GR zone

Transport requirement + quantity posting to GR zone

Place goods in storage

Generate transport requirement Determine destination storage bin Print transport order

Warehouse

Check quantity

Confirm transport requirements goods available

SAP AG LMM0001D Jan'96/ 43

Invoice Verification: Variants


Logistics invoice verification Material Quantity Deadline Invoice parking Doc. 0721
Material document

Financial accounting FI Inspection Account determination Posting FI


doc.

Inspection and posting


Doc. 3725

Automatic invoice verification


Inventory management

Purchase order

Invoice verification Incoming invoice


with reference to purchase order with reference to delivery note / GR

Financial accounting Open items Creditors

FI

Purchase
Goods receipt

Invoice verification without reference


Receipt
SAP AG LMM0001D Jan'96/ 44

Invoice Verification: Highlights


Tolerance inspection / action report Simulation function Automatic price fixing and updating
Account assignment transfer from purchase order

Posting gross / posting net Down payment clearing Tool amortization Consignment consumption billing GR / invoice receipt account maintenance Release function for blocked invoices Material debit / credit

SAP AG LMM0001D Jan'96/ 45

External Services Management: Areas of Use

Building Planning Approval Interior work

Repairs Inspection

Cleaning buildings Data entry Secretarial services Marketing activities Graphics

SAP AG LMM0001D Jan'96/ 46

External Services Management: Characteristics

Much (redundant) text

Service specifications

Many items in the service specifications Planning insecurity Invoice verification not on individual service

Outline overview

Limit anagement Total values, entry / purchase as basis

SAP AG LMM0001D Jan'96/ 47

External Services Management: Flow


Determination of requirements through

PM Plant Maintenance PS Project System

External procurement: Purchasing

Entry of services performed

Invoice receipt Invoice verification

Update of account assignment

Master data: Service master Standard service specification Material Creditor G/L accounts

Accounting

SAP AG LMM0001D Jan'96/ 48

External Services Management: Flow


Ordering Ordering // monitoring monitoring

Entry Entry of of quotation quotation Bid Bid invitation invitation Construction Construction of of service service specifications specifications
Determination Determination of of requirements requirements

Vendor Vendor selection selection

Service Service entry/ entry/ purchase purchase Invoice Invoice verification verification

User department PM Plant Maintenance PS Project System

SAP AG LMM0001D Jan'96/ 49

External Services Management: Request for Quotation / Bid Invitation

01
Outline level Service definition

Electrical works
01 Laying tubes Lay empty tubes Install sockets 02 End installation Master Install sockets 120 m at 3 80 h at 12 30 h at 100 56 h at 18

Service specifications

02

Sanitary works
Wash basin Skilled worker 6 m at 45 70 h at 80

?
SAP AG LMM0001D Jan'96/ 50

unplanned services up to max. 60,000 Value Value limit limit

External Services Management: Service Specification Outline

SAP AG LMM0001D Jan'96/ 51

External Services Management: Service Specification Outline (Graphical)

SAP AG LMM0001D Jan'96/ 52

External Services Management: Bid Invitation


ROWAB
HeWe Wohnungsbau Am Berg 5 65011 Weinheim Angebotsfrist 31.10.1995 Ausfhrungsdatum: 06.11.1995 Zahlungsbedingung: sofort zahlbar ohne Abzug Bitte unterbreiten Sie uns ein Angebot ohne Verpflichtung und Kosten fr uns. Objekt: Wohnhaus Mller, Am Giebel 4, Ltzelsachsen ------------------------------------------------------------------------------------------Pos Material Bezeichnung Anfrage Einheit ------------------------------------------------------------------------------------------00010 Elektroarbeiten 1 Leistungseinheit die Position enthlt folgende Leistungen: *1 Rohrverlegung 10 20 30 *2 150m Schlitze klopfen 150m Leerrohr einziehen 150m Schlitze zuputzen Anfrage Nr. 600004 Datum 18.09.95 Ansprechp. /Telefon C.Keh/06227-34123

Endinstallation .... 00020 Leerrohr schwarz, 3 cm Durchmesser 150 m Leerrohr soll auf Papprollen geliefert werden ....

SAP AG LMM0001D Jan'96/ 53

External Services Management: Purchase Order

Dienstleistung

Material
SAP AG LMM0001D Jan'96/ 54

External Services Management: Entry of Services Performed

Abnahmekennzeichen

SAP AG LMM0001D Jan'96/ 55

Information Systems
Early warning system Customer Mr White Ms Jones Mr Davis Sales 100,000 300,000 150,000 Key figures
Customers

Logistics information system Inventory management Plant maintenance

ABC analysis Purchasing Stock value Quality management A B C

Sales and distribution Production

Materials (%)

Forecasting and planning Early warning system Drill-down


Buyer Order value

Order value

Sales

Automatic updating Integration in Open Information Warehouse Analysis of tools


SAP AG LMM0001D Jan'96/ 56

Classification
Materials (%)

Mr Smith 150,000 Ms BakerBuyer: 70,000 Ms Baker Mr Brown Materials 80,000 Order value 4711 4712 4713 150,000 70,000 80,000

Sales (%)

Information Systems
Time base

Characteristics
Vendor Material Month Week Buyer group Vendor 11

394 005 157 Net order value No. purchase order items Pick up technique Buyer group Invoiced amount Net order value No. purchase order items

Key figures

...

March 1995
Net order value No. purchase order items

April 1995
Net order value No. purchase order items

Total 200,000 DM Schulz KG 90,000 DM Printer 6512 40,000 DM Computer H217 50,000 DM Meyer KG 110,000 DM

66 24 18 8 42

240,000 DM 100,000 DM 40,000 DM 60,000 DM 140,000 DM

75 26 16 10 49

SAP AG LMM0001D Jan'96/ 57

Open Information Warehouse


Enterprise controlling
on i s ci p su rt o p
EIS EIS
Result ROI Employees Incoming orders Market position

Re

po

De

rtin g

Management information system


LIS LIS CIS CIS
ROI OP's
R1 : :: R4

FIS FIS

Operative controlling

Employee / qualification

HIS HIS

Orders Stocks Capacity Result / costs

1988 ........ 1994 ------- ------- ------------- ------- ------------- ------- ------------- ------- ------------- ------- -------

time

Specialized information systems

Day-to-day activities

R/3

R/3

non-SAP systems

R/2

External data

Operative systems

SAP AG LMM0001D Jan'96/ 58