An uninterrupted supply chain is essential for companies to avoid material shortages. In order to prevent this, a well-functioning materials management is required, which is based on optimally coordinated procurement and logistics processes. With SAP Materials Management (MM), SAP offers a module for its Enterprise Resource Planning software (ERP) that is designed for procurement and inventory management. In this article you will learn which functions SAP MM offers and how it helps companies to map and control the material flow.
SAP Materials Management is one of several logistics components for SAP ERP. It is also available as a revised version under the name Sourcing & Procurement (S&P) for SAP S/4HANA. SAP MM transparently maps internal and external procurement processes for materials and services in the areas of purchasing, determination of sources of supply and logistical invoice verification.
The module enables Management of logistic master data such as material numbers, batches and serial numbers and the planning and control of all material movements. The SAP solution is also used to determine requirements and process payments, thus creating holistic material management. With SAP MM, companies can, among other things, prevent a potential lack of material at an early stage and create a high level of process reliability by displaying all orders from ordering to delivery in a traceable manner.
In which areas is SAP MM used?
SAP MM is often referred to as backbone of logistics called because it is a prerequisite for mapping material procurement and inventory management in SAP. The module is used in logistics and covers the areas Purchasing, inventory management and administration, logistical invoice verification and inventory away. By being networked with other modules, it can also be used in controlling, finance, human resource management, quality management, sales and maintenance, and production planning.
What are the advantages of using SAP MM?
The advantage of SAP MM is that the module complete procurement process shown transparently. It can therefore be used to determine requirements and sources of supply, supplier selection, order processing, order monitoring and invoice verification including payment processing. By mapping all the necessary materials management processes, it ensures a high level of process reliability. It enables a quick and clear overview of all material movements and the current material stock. In addition, it offers the following advantages:
- Real-time inventory management
- Centralization of procurement processes
- optimized and transparent order processing
- saving of costs
- easier planning of the flow of goods
- Transparency along the entire value chain
What functions does SAP MM include?
The SAP solution covers the qualitative, timely and quantitative planning and control of all material movements within a company as well as with external customers and suppliers. Thus the materials management also one of the main functions of SAP MM. With the module you can also use these functions:
- Purchasing (determination of needs and sources of supply),
- Warehouse management and inventory management (posting of goods receipts)
- Material and supplier master data management
- Supplier invoice verification
- Inventory (material counts)
SAP MM can be divided into two areas: SAP MM-PUR for purchasing and SAP MM-IM for the warehouse and goods movements.
SAP MM-PUR is a submodule for the external procurement of materials and services. It helps to determine possible sources of supply for a requirement that arose during planning or in a department. Employees can, for example, choose from suppliers that have already been stored and thus save time researching and creating new suppliers. SAP MM-PUR also enables the monitoring of the entire ordering process from the delivery of the goods to their payment.
Die warehouse management is done using the submodule SAP MM IM implemented by planning, recording and documenting the movement of goods. It also enables the inventory and value of goods to be checked. With every movement of goods, the system automatically updates data such as quantity and value updates for inventory management, account assignment for cost accounting and general ledger accounts for financial accounting using automatic account determination.
With SAP MM-IM, companies record the current stock of materials in stock. The module calculates goods in the warehouse that are intended for onward transport to the customer from the actual stock quantity. The same applies to goods that have been ordered but not yet delivered. Planning and carrying out an inventory is also possible with SAP MM-IM. The status stored in SAP MM-IM can be used as a comparison for manual inventory. The manual count is then entered in the system and the difference is posted.
SAP MM in SAP S/4HANA
With SAP S/4HANA, lines of business (LoBs) are used instead of modules. SAP MM is included in S/4HANA in the LoB S/4HANA Sourcing & Procurement, but other LoBs such as S/4HANA Supply Chain and S/4HANA Manufacturing also contain components for materials management. Under S/4HANA, materials management benefits from one higher functionality, higher performance and user-friendly interfaces. S/4HANA Sourcing & Procurement also offers many automation options and greater networking with other LoBs, so that more efficient processes are possible.
SAP Materials Management is an important component in SAP ERP and especially for the logistics area. With its extensive functions, it is elementary for inventory management and the control of purchasing activities. Using the module helps companies to establish a holistic materials management, with which you can map and control the material flow. Companies benefit from efficient processes and reduce their logistics costs through automation and optimization.
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Niklas Ludwig has been Communication Manager at CONET since March 2020 and is responsible for the internal and external communication of the CONET group of companies.