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How to Create a Global Template to Configure SAP MM Processes in Implementations and Rollouts

by M.S. Baraneedharan, SAP MM/SRM Consultant, Infosys Ltd.

April 7, 2014

Learn how to create a global template for configuring material management (MM) processes. Follow the MM configuration steps involved in SAP implementation and roll-out projects and see how to optimize the global template.


 

Consider a large manufacturing organization that has a global presence. It has implemented an SAP system. For its ongoing business needs of acquisitions, mergers, and organization split activities, it has to roll out the SAP system continuously into new organizational units. Organization split refers to divesting of a particular business unit or division for some business reasons. That involves creating new company codes, plants, and sales org and profit centers. The need for a global template for continuous business development arises.

I explain the steps involved in creating a template for configuring an SAP material management (MM) process. However, the design methodology is the same for creating a template for other SAP processes, including sales and distribution (SD), FI, managerial accounting (CO), and production planning (PP). The assumption is that other related activities in integrated modules (FI/CO, SD, and PP) would be maintained by their respective teams.

Step 1. Create a Plant

A plant is an organizational logistics unit that structures the enterprise from the perspective of production, procurement, plant maintenance, and materials planning. Company code creation is a prerequisite for plant creation. You can create a new plant by copying data from an existing plant so that all the relevant plant customizing and tables are copied into the new plant. Enter transaction code SPRO in the SAP Easy Access screen (Figure 1).


Figure 1
The initial Easy Access screen

Follow menu path Display SAP Reference IMG > Enterprise Structure > Definition > Logistics – General > Define, copy, delete, check plant (Figure 2). Select Copy, delete, check plant to copy the customizing and tables from an existing plant. Click the Choose button.


Figure 2
Copy a plant

If a new plant is created in the existing company code, then choose the plant from the same company code to copy any of the company-code-specific settings.

Step 2. Edit the Plant Address

When a new plant is created by copying an existing plant, the plant address also is copied to the new plant. This needs to be edited with the new plant address. Follow menu path SPRO > Display SAP Reference IMG > Enterprise Structure > Definition > Logistics-General > Define, Copy, Delete, Check Plant > Define Plant (Figure 3). Click the Define Plant line and then click the Choose button.


Figure 3
Choose the Define Plant option

This action takes you to a screen in which you click the required plant line and then click the address icon . On the next screen (Figure 4) enter the fields with the required address details. The Name and Street Address fields are required; the other details are optional. If the name is too long, use the subsequent lines to complete it. After completing the address details, click the enter icon . After you edit the address, click the save icon.


Figure 4
Enter address details

Step 3. Assign the Plant to a Company Code

A plant can be assigned to only one company code. If the plant is copied from the plant of the same company code, then the new plant would be assigned to the same company code by default. If the plant is copied from the plant of a different company code, then delete the wrong company code assignment to the plant and assign the plant to the required new company code. To assign the company code by default, follow menu path SPRO > Display SAP Reference IMG > Enterprise Structure > Assignment > Logistics-General > Assign plant to company code. Click the Assign plant to company code execute icon.

If the plant is not assigned to the right company code, then select the plant line in the Overview screen. Click the delete icon , and then click the save icon. To assign the plant to the right company code, select the New Entries button and then in the screen shown in Figure 5 enter the company code and plant. Click the save icon.


Figure 5
Save the new company code and plant

Step 4. Assign a Purchasing Organization to the Plant

A plant can be assigned to one purchasing organization or multiple purchasing organizations depending on the business requirements. If the plant is copied from the plant of same purchasing organization, then the new plant would be assigned to the same purchasing organization by default.

If the plant is copied from the plant of a different purchasing organization, then delete the wrong purchasing organization assignment to the plant and then assign the plant to the required new purchasing organization. Follow menu path SPRO > Display SAP Reference IMG > Enterprise Structure > Assignment > Material Management > Assign purchasing organization to plant. Click the Assign purchasing organization to plant execute icon.

If the plant is not assigned to the right purchasing organization, the current assignment of plant to purchasing organization should be deleted. To do that, select the Assign Purchasing Organization to Plant line as shown in Figure 6. Click the delete icon and then click the save icon to delete the current assignment.


Figure 6
Delete the current assignment of plant to purchasing organization

To assign the plant to the right purchasing organization, select the New Entries button. In the next screen (Figure 7) enter the required purchasing organization in the POrg field and plant in Plnt field and then click the save icon.


Figure 7
Select the purchasing organization and plant

Step 5. Maintain Storage Locations

Storage location is an organizational unit that allows the differentiation of material stocks within a plant. Inventory management and physical inventory are carried out at the storage location level. When a new plant is created from copying an existing plant, the storage location also is copied to the new plant. You need to delete this and create a new storage location in the new plant.

Follow menu path SPRO > Display SAP Reference IMG > Enterprise Structure > Definition > Material Management > Maintain storage location. Click the Maintain storage location execute icon. In the screen shown in Figure 8 enter the plant number (e.g., 0001) and then click the continue icon.


Figure 8
Create a new storage location

In the next screen (Figure 9) if any storage location assigned to the plant needs to be deleted, select the storage location line (the SLoc field) and click the delete icon. Click the save icon.


Figure 9
Maintain a storage location

To create a new storage location, click the New Entries button. Enter the storage location and description details and then click the save icon.

Step 6. Allow for Negative Stocks

Negative stocks refer to the book inventory count of the materials that shows fewer than zero numbers, but materials are physically present in the storage location to complete a goods issue. (Goods issue refers to a goods movement that is used to post materials consumed in production or ship to the customers as final products.) Once the pending goods receipts are done, the book inventory balance is not negative.

Negative stocks are not selected by default. Negative stocks should be allowed at the plant and storage location level for unrestricted-use stocks to fulfill goods issues arising from urgent business needs. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Inventory Management and Physical Inventory > Goods Issue / Transfer Postings > Allow Negative Stocks. Click the Allow Negative Stocks execute icon (not shown).

In the next screen (Figure 10) the valuation area is generally set at the plant level. Select the Neg. stocks allowed check box for the required valuation area and then click the save icon. Now negative stocks are set at the plant level.


Figure 10
Set negative stocks at the plant level

To select negative stocks at the storage location level, select the Valuation area button in Figure 10 and double-click the Storage location folder. Click the continue icon, which takes you to Figure 11. Select the Neg.stocks check box for the required storage location and then click the save icon.


Figure 11
Set negative stocks at the storage location

Step 7. Check for Quantity and Value Update for Material Type

The quantity and value updates of material types are set by default at the valuation area level when a new plant is copied from an existing plant. However, sometimes this does not happen when the existing plant does not have quantity and value update settings for some material types. It is a good idea to make sure that both the values are set in the new valuation area/plant for the required material types. Follow menu path SPRO > Display SAP Reference IMG > Logistics General > Material Master > Basic Settings > Material Types > Define Attributes of Material Types. Click the Define Attributes of Material Types execute icon.

In the screen that appears (Figure 12), select the required material type. In my example I selected FERT (Finished products) as the material type. Material type refers to grouping of materials based on same basic attributes such as raw materials, semi-finished products, and finished products. Quantity and value update refers to stock quantity and value update during inventory transactions.


Figure 12
Maintain material types

Double-click the Quantity/value update folder. In the screen shown in Figure 13 select the check boxes in the quantity updating (Qty updati…)  and value updating (Value Upd…) columns for the required valuation areas. Click the save icon to update quantity and value during inventory transactions. In Figure 13, while copying from another plant, the three valuation area (0003, 0008, and 0009) settings are copied. However, for the valuation area 0001, the quantity and value updates are not copied because the reference plant does not have these fields checked. Therefore, you need to select the check the boxes for valuation area 0001 and save your data.


Figure 13
Quantity and value update for material types

Step 8. Group Valuation Areas Together

When a plant is copied, the valuation grouping code is copied by default. However, it is necessary to make sure that the right valuation grouping code is assigned to the plant. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Valuation and Account Assignment > Account Determination > Account Determination Without Wizard > Group Together Valuation Areas. After you click the Group Together Valuation Areas execute icon the screen shown in Figure 14 appears.

Enter the valuation grouping code (Val.Grpg Code) for the required valuation area and then click the save icon. The valuation grouping code defines account determination for single or multiple valuation areas within the same chart of accounts.


Figure 14
Enter the valuation grouping code

Step 9. Set Tolerance Limits for Purchase Order Price Variance

Tolerance limits for price variances between the purchase order item effective price and material master valuation price need to be set. This variance is controlled by a tolerance key that is maintained at the company code level. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Purchase Order > Set Tolerance Limits for Price Variance. After you click the Set Tolerance Limits for Price Variance execute icon the screen shown in Figure 15 appears.


Figure 15
Maintain tolerance limits

Select the required company code line for the price variance tolerance key PE and then click the details icon to go to the next screen (Figure 16). Tolerance key PE refers to price variance limit when processing a purchase order with a material valuation price from the material master record.

Set the lower and upper limit tolerance either as an absolute value or as a percentage for purchasing price variance and then click the save icon.


Figure 16
Set the tolerance limits

Step 10. Set Tolerance Limits for Invoice Block

Invoice block tolerance limits are set at company code level. You need to maintain tolerance keys BD (Form small differences automatically), DQ (Exceed amount: quantity variance), and PP (Price variance). Follow menu path SPRO > Display SAP Reference IMG > Material Management > Logistics Invoice Verification > Invoice Block > Set Tolerance Limits. Click the Set Tolerance Limits execute icon.

Select the required company code and tolerance key line and then click the details icon to go to the next screen (Figure 17). During invoice posting, the system checks the price variance between the invoice price and purchase order or goods receipts price. If the difference is within the specified upper limit, then the system posts the invoice document automatically by creating expense or income account from small differences.


Figure 17
Select the tolerance type and company code

In the screen shown in Figure 18, select the Check limit button and enter the required value. In my example, value 2.56 euros is the maximum tolerance price variance allowed in invoice posting from goods receipt or a purchase order price. Click the save icon.


Figure 18
Set the upper tolerance limit

Step 11. Define Movement Type Parameters

To post invoice and credit memo as separate documents in an evaluated receipt settlement, you need to set the document split indicator for movement types 102, 122, 996, and 997. To communicate goods receipt and return delivery details separately to the vendor, you need to have invoice and credit memo documents.

Follow menu path SPRO > Display SAP Reference IMG > Material Management > Logistics Invoice Verification > Automotive ERS > Define Movement Type Parameters. Click the Define Movement Type Parameters execute icon. In the screen that appears (Figure 19) click the New Entries button.


Figure 19
Change movement type parameters

In the next screen enter the required movement type and plant (Figure 20). Select the document split check box and then click the save icon.


Figure 20
Maintain movement type parameters

Step 12. Maintain Taxes for Purchasing

If the plant is located in a new country, then a tax indicator should be set for the materials. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Taxes > Set Tax Indicator for Material. Click the Set Tax Indicator for Material execute icon. Click the New Entries button (this screen is not shown). In the next screen (Figure 21) enter the destination country, material tax indicator, and description details and then click the save icon.


Figure 21
Define tax indicators for the material

If the plant is located in a new country, then a tax indicator should be set for the plant, too. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Taxes > Set Tax Indicator for Plant. Click the Set Tax Indicator for Plant execute icon. Click the New Entries button (this screen is not shown). In the next screen (Figure 22) enter the destination country, plant tax indicator, and description details and then click the save icon.


Figure 22
Define tax indicators for the plant

If the plant is located in new country, then tax indicator should be set for the account assignment. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Taxes > Set Tax Indicator for Account Assignment. Click the Set Tax Indicator for Account Assignment execute icon. Click the New Entries button (this screen is not shown).

In the next screen (Figure 23) enter the destination country, account assignment tax indicator, and description details and then click the save icon.


Figure 23
Define account assignment tax indicators

If the new plant is created by copying the existing plant, then the tax ID would also be copied to the new plant. To ensure that the right tax ID is assigned, follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Taxes > Assign Tax Indicator for Plants. Click the Assign Tax Indicator for Plants execute icon. In the screen that appears (Figure 24) enter the plant tax ID for the required plant and click the save icon.


Figure 24
Assign a tax indicator to the plant

If plant is located in new country, then tax indicator should be assigned for all the required account assignment categories. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Taxes > Assign Tax Indicator for Account Assignments. Click the Assign Tax Indicator for Account Assignments execute icon.

In the screen that appears (Figure 25) enter the tax indicator account assignment for the required account assignment and destination country combination and click the save icon.


Figure 25
Assign an account assignment tax indicator to an account assignment category

Step 13. Set Check for Duplicate Invoices

An invoice check is required to avoid duplicate invoices being posted against the same scheduling agreement or goods receipt. This check is maintained at the company code level. If the plant is created in new company code, then this setup is required. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Logistics Invoice Verification > Incoming Invoice > Set Check for Duplicate Invoices. Click the Set Check for Duplicate Invoices execute icon.

In the screen that appears (Figure 26) select a check box in the check company code (Check co. code ) column for your invoice, select the Check reference check box, and click the save icon. The Check reference validation is used to check the reference number during the duplicate invoice check.


Figure 26
Set up the invoice check

Step 14. Create Purchasing Groups

In this step, a buyer or group of buyers responsible for purchasing activities is created. Buyers are not assigned to any purchasing hierarchy such as a purchasing organization or company code level. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Creating Purchasing Groups. Click the Creating Purchasing Groups execute icon.

Click the New Entries button (this screen is not shown).

In the next screen (Figure 27) enter the purchasing group, description (purchase group name), fax number, and telephone number. Click the save icon. Later, a security team assigns one or more buyers to this purchase group.


Figure 27
Create a purchase group

Step 15. Foreign Trade Data in MM Documents

You set controls of incomplete foreign trade customs data to identify where customs-related data is missing in purchasing agreements. If the document has incomplete data, the system does not allow you to save the document. If the plant is located in a new country, then this activity is required. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Foreign Trade/Customs > Control Foreign Trade Data in MM and SD Documents > Foreign Trade Data in MM and SD Documents. Click the Foreign Trade Data in MM and SD Documents execute icon. Click the New Entries button. In the screen shown in Figure 28, enter the Country Key, Goods direction, and the Control and Consistency check details. Click the save icon.


Figure 28
Ensure custom data is complete

Step 16. Modes of Transport

Next, you define the type of transports allowed to transfer the goods across the border. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Foreign Trade/Customs > Transportation Data > Define Modes of Transport. Click the Define Modes of Transport execute icon. Click the New Entries button.

In the screen shown in Figure 29, enter a country key (a two-character ISO code such as DE for Germany), a mode of transport border (an identifier such as 1, 2, 3, 4), and a description (sea, rail, road or air). Click the save icon. If multiple modes of transports are available for a country, enter all the possible modes of transports by creating each line for each mode of transport and then save your data.


Figure 29
Create a mode of transport

Step 17. Default Values for Foreign Trade Header Data

Based on the goods direction either import or export, default transport values for foreign trade header data should be defined. If the plant is located in a new country, then this setup is required. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Foreign Trade/Customs > Transportation Data > Default Values For Foreign Trade Header Data. Click the Default Values For Foreign Trade Header Data execute icon. Click the New Entries button.

In the screen shown in Figure 30, enter the required goods direction, geography, and transport and customs offices details from the options in the drop-down menu. Click the save icon.


Figure 30
Maintain foreign trade header data

Step 18. Define Business Transaction Types and Default Values

You need to configure the business transaction type for purchasing documents. Business transaction type refers to a customs term that defines the type of business (for example, Purchase/Sale). This transaction type should automatically be determined by purchasing document category, purchasing document type, Item category & Import country key. If the plant is located in a new country, then this setup is required. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Purchasing > Foreign Trade/Customs > Basic Data for Foreign Trade > Define Business Transaction Types And Default Value. Click the Define Business Transaction Types And Default Value execute icon. In the screen shown in Figure 31 select Define Default Business Transaction Type (MM) and then click the Choose button.


Figure 31
Choose a material management business transaction type

In the next screen click the New Entries button (Figure 32).


Figure 32
Click the New Entries button

In the screen shown in Figure 33, enter the required purchasing document category, detailed info key, default details from the available options, and click the save icon. In Figure 33, L and LPA refer to scheduling agreement, DE refers to Germany, and 11 refers to a Purchase/Sale business transaction.


Figure 33
Assign the business transaction type to purchasing imports

Step 19. Assign Material Update Structure to a Valuation Area

To update the material ledger during the goods receipts and invoice receipts process in different categories, a valuation area needs to be assigned to the material update structure. If the plant is created by copying from an existing plant, the material update structure also would have been copied. The material ledger update is required to calculate actual costing of the material.

Follow menu path SPRO > Display SAP Reference IMG > Controlling > Product Cost Controlling > Actual Costing/Material Ledger > Material Update > Assign Material Update Structure to a Valuation Area. Click the Assign Material Update Structure to a Valuation Area execute icon. The screen shown in Figure 34 displays the existing material update structure assignment to a plant. Click the New Entries button to assign material update structure to a required plant.


Figure 34
Change the material update structure to a valuation area

In the screen shown in Figure 35, assign the required valuation area to material update structure and then click the save icon.


Figure 35
Assign a material update structure to a valuation area

Step 20. Maintain Default Values for Tax Codes in Logistics Invoice Verification

For incoming invoices, the domestic tax code can be configured at company code level. If the plant is created in an existing company code, then this setup is not required. If the tax code is configured, the system defaults the tax code when entering incoming invoices from within the country. Follow menu path SPRO > Display SAP Reference IMG > Material Management > Logistics Invoice Verification > Incoming Invoice > Maintain Default Values for Tax codes. Click the Maintain Default Values for Tax codes execute icon. Click the New Entries button. In the screen shown in Figure 36, enter the company code and domestic tax code details and click the save icon.


Figure 36
Enter a company code and a domestic tax code for an incoming invoice

Step 21. Maintain Company Codes for MM

The material master control record should be at the company code level to create a new master record for the current period. If the plant is created in an existing company code, then this setup is not required. Follow menu path SPRO > Display SAP Reference IMG > Logistics - General > Material Master > Basic Settings > Maintain Company Codes for Material Management. Click the Maintain Company Codes for Material Management execute icon.

In the screen shown in Figure 37, enter the current year and month as the starting period for the required company code and select the Allow posting to previous period check box for back period posting. Click the save icon.


Figure 37
Enter the current period

Step 22. Activate Valuation Areas for Material Ledger

To valuate materials using the material ledger, the material ledger should be active for the required valuation area. If the plant is created in an existing company code, then this setup is not required. Follow menu path SPRO > Display SAP Reference IMG > Controlling > Multiple Valuation Approaches/Transfer Prices > Basic Settings > Check Material Ledge Settings > Activate Valuation Areas for Material Ledger. Click the Activate Valuation Areas for Material Ledger execute icon. Select Activate Material Ledger and click the Choose button.

In the next screen (Figure 38), select the check boxes under the material ledger activation (ML Act.) and price determination binding in valuation area (Price Det. Binding in Val Area) columns. Enter the enter price determination value and then click the save icon. Price determination can be either transaction based (a value of 2) or single/multilevel. In a transaction-based price determination, the moving average price is calculated, and the material is valuated in the standard price. Price determination binding in valuation area determines whether the default value for price determination is binding all the materials in the valuation area when the materials are created.


Figure 38
Activate a valuation area for the material ledger

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M.S. Baraneedharan

M.S. Baraneedharan has more than 13 years of professional experience, including more than eight years of SAP consulting experience in materials management (MM), Supplier Relationship Management (SRM), Warehouse Management, and sales and distribution (SD). He has been an SAP consultant at Infosys since July 2008. Currently, he is the SAP MM lead in a transfer price setup automation project to reflect the market price changes and any material economics-related price changes to the appropriate material groups for a leading automotive Fortune 500 client. He has worked in an SAP implementation project for one of the largest energy companies and SAP global roll-out projects for the largest chip manufacturing company. He holds a business technology degree from the premier technical university from India.



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