Title: SAP MM Real-Time Project Book for Consultants: ABC Electronics

Ltd

Table of Contents

1. Introduction to ABC Electronics Ltd

2. Project Scope and SAP MM Overview
3. Organizational Structure for ABC Electronics Ltd
4. SAP MM Configuration Overview
o Material Master Data
o Vendor Master Data
o Purchasing Configuration
o Inventory Management Configuration
5. Procurement Process Design
6. Data Migration Strategy
7. Testing Phase (Unit, Integration, UAT)
8. Go-Live and Post-Go-Live Support
9. Reporting in SAP MM
10. Conclusion: Key Takeaways for SAP MM Consultants

1. Introduction to ABC Electronics Ltd

• Industry: Consumer Electronics

• Headquarters: USA
• Revenue: $3 billion annually
• Employees: 12,000
• Product Lines: Mobile phones, Laptops, Accessories
• Key Suppliers: Global suppliers of electronic components
• Distribution Centers: USA, Germany, China

Business Challenges:

1. Inefficient supplier management with high lead times.

2. Complex procurement processes leading to overstocking and stockouts.
3. Lack of real-time inventory tracking.

Objective:

To implement SAP MM to optimize procurement, vendor management, and inventory control

while reducing lead times and enhancing transparency.

2. Project Scope and SAP MM Overview

The project will focus on implementing the following SAP MM components:

• Material Master: Centralized repository for all material-related data.

• Vendor Master: Managing relationships with suppliers.
• Purchasing: Automating the procurement cycle.
• Inventory Management: Efficient tracking of material movements.
• Invoice Verification: Ensuring that invoices match purchase orders and goods
receipts.

Modules integrated with SAP FI/CO and SAP SD for complete procurement-to-pay
functionality.

3. Organizational Structure for ABC Electronics Ltd

1. Company Codes:
o ABC_US (USA operations)
o ABC_DE (Germany operations)
o ABC_CN (China operations)
2. Plant Codes:
o Plant 1000: USA Plant
o Plant 2000: Germany Plant
o Plant 3000: China Plant
3. Storage Locations:
o SLOC_US1: USA Storage Location for finished goods
o SLOC_DE1: Germany Storage Location for raw materials
o SLOC_CN1: China Storage Location for components
4. Purchasing Organization:
o PUR_US: USA Purchasing Organization
o PUR_DE: Germany Purchasing Organization
o PUR_CN: China Purchasing Organization
5. Purchasing Groups:
o PG_Electronics: For raw materials and components
o PG_Services: For external services

4. SAP MM Configuration Overview

Material Master Data Configuration

The Material Master holds information on all materials ABC Electronics purchases,
manufactures, and sells. Material types include:

1. Material Types:
o ROH (Raw Materials): Electronic components like resistors, chips, and
motherboards.
o HALB (Semi-Finished Products): Assembled circuit boards.
o FERT (Finished Products): Mobile phones, laptops.
 o HIBE (Operating Supplies): Office supplies and consumables.

Material Master Data Example:

Material Material Base Valuation

Material Price
Code Type Unit Class
Resistors (100 Ohm) MAT_1001 ROH PC 3000 $0.05
Circuit Board Assembly MAT_2001 HALB EA 3100 $10.00
Mobile Phone (Model
MAT_3001 FERT EA 3200 $150.00
A200)

Vendor Master Data Configuration

Vendor Master Data is key to managing supplier relationships in SAP MM. The data includes
payment terms, tax information, and contact details for each supplier.

Vendor Data Example:

Vendor Name Vendor Code Country Payment Terms Lead Time Rating
Intel Corp. V001 USA Net 30 15 days 5 stars
Samsung V002 South Korea Net 45 30 days 4 stars
Foxconn V003 China Net 60 25 days 5 stars

Purchasing Configuration

1. Purchase Order Types:

o NB: Standard Purchase Orders
o FO: Framework Orders (for long-term agreements)
o UB: Stock Transfer Orders (for internal transfers between plants)
2. Pricing Procedure:
o A custom pricing procedure to handle bulk discounts, taxes, and freight
charges.
3. Source Determination:
o Set up automatic source determination based on material, vendor, and past
purchase history.
4. Release Strategy:
o Configured for purchase orders above $50,000, requiring multi-level approvals
from department heads and finance.

Inventory Management Configuration

1. Movement Types:
o 101: Goods receipt for a purchase order
o 201: Goods issue for cost center consumption
 o 311: Stock transfer between storage locations
2. Batch Management: Implemented to track specific batches for materials with expiry
dates (e.g., semiconductor chips).
3. Stock Types:
o Unrestricted Stock: Materials available for use.
o Blocked Stock: Defective materials under inspection.

5. Procurement Process Design

End-to-End Procurement Process

1. Step 1: Purchase Requisition

o Create a purchase requisition for Resistors from Intel Corp. (Vendor Code:
V001) for 10,000 pieces.
2. Step 2: Purchase Order (PO)
o Convert the requisition into a purchase order with the following details:

PO Number Vendor Material Quantity Price Delivery Date

4500000010 Intel Corp. Resistors (100 Ohm) 10,000 $0.05 2024-10-15

3. Step 3: Goods Receipt

o Record the goods receipt upon delivery. The stock is updated, and an
inspection lot is created for quality checks.
4. Step 4: Invoice Verification
o Match the vendor invoice with the PO and goods receipt. Ensure the invoice is
correct before posting.
5. Step 5: Payment
o Payment to Intel Corp. according to payment terms (Net 30).

6. Data Migration Strategy

1. Legacy System Data Extraction: Extract all relevant vendor, material, and stock
data from the legacy system.
2. Data Cleansing: Ensure the data is accurate and complete before migration.
3. Migration Tools: Use LSMW (Legacy System Migration Workbench) for master
and transactional data migration.

Key Data to Migrate:

• Vendor Master: 500+ suppliers with payment terms and lead times.
• Material Master: 1,000+ raw materials, semi-finished goods, and finished products.
• Open Purchase Orders: Outstanding purchase orders for ongoing deliveries.
7. Testing Phase

Unit Testing:

• Test each SAP MM module, including Purchase Requisition, PO creation, Goods

Receipt, and Invoice Verification.

Integration Testing:

• Test the Procure-to-Pay (P2P) cycle integrated with SAP FI and SAP SD.

User Acceptance Testing (UAT):

• Ensure end-users simulate real-time procurement processes, such as vendor selection,

PO creation, and stock updates.

8. Go-Live and Post-Go-Live Support

Go-Live Plan:

• Migrate final open orders, material balances, and vendor data.

• Train users on SAP MM functionalities, focusing on procurement processes and
inventory management.

Post-Go-Live Support:

• Provide Hypercare Support for 30 days to resolve any issues arising post-go-live,
such as incorrect PO postings or inventory discrepancies.

9. Reporting in SAP MM

1. Stock Overview (Transaction code: MMBE): View real-time stock levels at different
storage locations.
2. Vendor Performance (Transaction code: ME2L): Analyze vendor performance
based on delivery times and quality.
3. Purchase Order Reports (Transaction code: ME2N): Track open purchase orders
and delivery schedules.
4. Consumption Reports: Monitor material consumption trends over time.

10. Conclusion: Key Takeaways for SAP MM Consultants

• Best Practices for effective material management and procurement process design.
• Lessons learned during the SAP MM implementation at ABC Electronics,
emphasizing the importance of master data accuracy and efficient vendor
management.