SAM MM Processes


SAP MM or SAP Material Management is one of the modules of SAP(System Application & Products) which is solely responsible for the procurement activity and replenishment of the inventory so that the company do not fall short of raw material or stock. Stock is the basic requirement for any business which is involved in selling or manufacturing of goods.

There are 3 Basic activity of SAP MM Module:-
  1. What to Buy?
    1. Demand 
    2. Availability
  2. How Much to Buy? it should be optimum 
    1. Perishable 
    2. Money Blocking
    3. Transportation cost & Man Hrs are wasted
  3. From whom to buy the Material?
    1. Low Transportation cost
    2. Product quality
    3. lowest price

The process by which the above three activity is performed is known as Procure to Pay cycle, this cycle includes:-

  1. Material Requirement Planning (MRP) - This ensures the determination of correct material to be bought and the quantity to be bought as per the previous data record in the system or on the basis of FIX Reorder Point
  2. Source Determination  - This Provides the list of all available Sources or vendor for the particular Material
  3. Purchase Order Management - This is the phase where  a written information is sent to the vendor about the requirement of the material with required quantity and date of delivery 
  4. Goods Receipt - When vendor sends the good to the company premises, quality inspection is done and later on added to the stock or returned as per the inspection result.
  5. Invoice Verification - After Goods Receipt the vendor sends the invoice, Vendor may send a hard copy or through electronic means or through SAP , Invoice is verified against the goods receipt done and then invoice is posted for further payment (done by FI Modules)
Before we discuss all the above processes in Detail, Let us get familiar with some SAP MM Terminology
  • Article/Material Master     (MM01)
  • Vendor Master               (XK01)
  • Source List                 (ME01)
  • Purchase Info Record        (ME02)
  • Purchase Order              (ME21N)
    • Release                 (ME29N)
  • Outline Agreement
    • Contract Agreement      (ME31K)
    • Scheduling Agreement    (ME31L)
  • Request For Quotation       (ME41)
    • Quotation               (ME47)
  • Purchase Requisition        (ME51N)
    • Release PR              (ME54N)
  • Automatic PO                (ME59N)
  • Goods Receipt               (MIGO)
  • Invoice Verification        (MIRO)

Procure 2 Pay Cycle

Click the above links for detailed process.

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