SAP Materials Management – Overview

SAP Materials Management (MM) supports the procurement and inventory functions occurring in day-to-day business operations such as purchasing, inventory management, reorder point processing, etc.

SAP MM (Material Management) one the biggest functional module in SAP ERP. This module mainly deals with the Procurement Process, Master Data (Material & Vendor Master), Inventory Management, Valuation of Material & Account Determination, Material Requirement Planning, Invoice Verification etc. This module is highly integrated with several modules in SAP.

Some of the SAP MM  Sub-Components are:

Consumption Based Planning: deals with stock replenishment utilizing material requirements planning (MRP), determining lot-sizing procedures, and performing forecasting, potentially with formulas.

Purchasing: The purchasing area of MM provides the ability to determine possible sources to supply materials/services, the actual procurement of these materials/services, tracking the delivery from vendors, and monitoring the payments to those vendors. Within purchasing are the vendor master records, requisitions, requests for quotes, conditions and prices, purchase orders, and vendor confirmations among many other objects.

Inventory Management: The inventory management component houses the material and service master records, and controls and tracks all the goods movements, receipts, issues, return receipts, stock transfers, reservations, physical inventory, stock determination, and batch handling. In addition, inventory management contains the actual costing material ledger that supports multiple currencies and valuations of a material as well as calculating an actual price from production.

SAP Materials Management (MM)

Invoice Verification: supports verification and material valuations such as Last In First Out (LIFO) and First In First Out (FIFO), revaluations for price changes, changes to the invoices for credits, taxes, cash discounts, checking the invoices, defining account impacts for invoices, canceling invoices, delivery costs, and determining invoice variances.

External Services Management: The external services management component is provided to support the complete process of procuring external services from vendors, from bidding on invitations, to awarding the order, to acceptance of services. It is used to define the service specifications, enter the services performed, accept those services, and then verify the service invoice. The information systems within MM consist of vendor valuations, the purchasing information system, and inventory information.

Also See: Material Management Terms in SAP