SAP provides numerous Software Solutions for managing Business Operations such as ERP, CRM, PRM, etc One of the principal modules of its ERP System is SAP MM(Material Management) which deals with core activities in managing the materials used in business workflows.
In this article, we will learn about the SAP Material Management Module and its process flow, so that you can gain a clear understanding of why SAP MM Training is important for your journey as an SAP Professional.
What is SAP MM?
SAP MM is an ERP module responsible for managing the materials for the business process, from procurement to inventory management. It deals with core logistics functions such as Sales and Distribution, Production Planning, Plant Maintenance, Project Systems, and Warehouse Management of materials used in the business processes.
What is SAP MM Process Flow?
The SAP MM Process Flow deals with the entire life-cycle that the material of service must follow from the instance it enters the system to the moment it is delivered to the intended party. The MM Process Flow includes all the phases during a complete transaction in Material Management.
Advantages of SAP MM Process Flow
It makes the Material Management Structured:
ERP Professionals can manage the Materials using the well-ordered and structured approach defined in the SAP MM Process Flow.
It makes the Business Process Transparent :
SAP MM Module verifies all the quotations, requisitions, and orders at all stages which inculates the transparency in the Material Management.
It enhances the Vendor Relationship Management:
The systematic activities across various phases such as Request for Quotation, Selection, or Rejection of Citations help to efficiently manage the relationship with the Vendors.
It enables industry compliance:
The SAP MM Module ensures that the workflow of Material Management is compliant with all kinds of industry regulations and compliance.
It Reduces errors:
SAM MM Process Flow reduces the possible errors through the streamlined activities in different phases.
It helps organizations in cost-saving:
SAP MM Process flow helps in the prudent selection of vendors by comparing the quotes based on quality, price, and delivery schedules. Thus, the Quotations with the optimum cost can be easily identified to save cost in the business process.
Thus, due to the advantages of Process Flow, SAP MM Training becomes essential for your organizations to manage the Materials used in business.
Phases of SAP MM Process Flow
SAP MM Process Flow includes various phases, each with a unique set of activities for Material Management. The various phases of the MM Module comprise a combination of automated operations and verifications done by the SAP MM Professionals. The various phases of SAP MM Process Flow are:
Determination of Material Requirements
This phase includes activities to determine the requirement of materials either through concerned departments or through planning and control. ERP Professionals perform the Material planning which can be either MRP(Material Requirement Planning) or CBP (Consumption Based Planning). They also define the stock levels of materials in the master records.
In this phase, Enterprise Software Experts define where the business intends to source its products for production or service delivery. This can be done using existing orders or long-term purchase agreements. This fastens the process of generating requests for quotation (RFQs) which are to be sent to vendors
Vendor Selection and Comparison of Quotation
This phase deals with the selection and rejection of Quotations based on different criteria and business requirements for Material Management. The ERP specialists simulate price scenarios to accurately choose the best prices according to tailored input data.
They analyze factors such as quality, reliability, vendor reputation, and adherence to delivery schedules, they select the appropriate vendor so that Purchase Orders can be initiated.
Purchase Order Processing
Once the vendor is selected, the MM Module automatically generates Purchase Orders(PO) by using the information from requisition and quotation and sends these to the suppliers in real-time. This document outlines the services to be delivered, their quantities, prices, and delivery schedules.
Purchase Order Tracking and Follow-ups
This is an important phase in the procurement of the materials for the business. The System specialists define the reminder periods to automatically monitor the Purchase orders that have been sent to suppliers. This phase of the process flow offers an update on the status of all purchase requisitions, quotations, and purchase orders.
Goods Receipt and Inventory Management
When the supplier delivers goods according to the purchase orders, the SAP MM Module creates the Goods receipt which is confirmed according to the number of the purchase order These goods can be monitored through parameters in the system defined by the ERP System Specialists.
This phase of the SAP MM Module ensures that Goods requested by a purchase order should match the invoice generated to avoid deviations in quantities and payment. This information on invoices is checked in the system and delivered to the assigned personnel for verification before the payment of the invoice and closing of the transaction.
SAP MM Process Flow defines the entire life cycle of the Materials used in the Business. It encapsulates all the activities from the sourcing of materials to the inventory management. To utilize this Process Flow of Material Management, SAP MM Training is of paramount importance for organizations that use SAP ERP Systems for their business operations.