SAP SCM - Master Data

In SAP Supply Chain, the master data contains production process models PPMs,
resources, material, and other objects that are required to create supply chain model.
Under production process, you have main objects − Bills of Material (BOM), material
master, routing and work center.
Master data contains the key properties of these objects like production order, material
type, planning requirements, goods issue and goods receipt.
The following types of master data exists under Production process model −

Bills of Material (BOM)

Bills of material master data is related to material requirement planning and provides the
list of components to produce the product.
To produce a product with different variants, you can create super Bills of Material that
has list of components to manufacture different variants of a product and selection of
component depends on details mentioned in planning order. You can create up to 99
Bills of Material.
Step 1 − For Bills of Material master, use T-Code: CS01 or go to Logistics →
Production → Master Data → Bills of Material → Bills of Material → Material BOM →
Create
Step 2 − Select the following details −

 Material Mas
 Plant
 BOM usage (usage 1 is production)

Material Master
Material master contains information related to different material types like finished
product, raw material. Material master can be used for identifying a product, purchase
material, goods issue or good receipt, MRP and production confirmation.
Step 1 − For Material master data, use T-code: MM01 or go to Logistics → Production
→ Master Data → Material Master → Material → Create (General) → Immediately
Step 2 − Enter Industry Sector and Material Type.

Work Center
Work center consists of master data related routing of products. It contains data related
to scheduling, capacity planning and production costing.
Step 1 − For work center, use T-code: CR01 or go to Logistics → Production → Master
Data → Work Centers → Work Center → Create.

Step 2 − Enter the following data −

 Enter Work center name.

 Enter Plant name where work center is located.
 Select Work Center Cat and click the tick mark.
Routing
Routing defines sequence of activities performed at work center. Routing plays an
important role in calculating production cost, machine time and labor time.
Step 1 − For Routing Master data, use T-Code: CA01 or go to Logistics → Production
→ Master Data → Routings → Routing → Standard Routing → Create.
Step 2 − Enter Material and Plant and click the Tick mark.
What is SAP routing?
In SAP system, we use routing to create one or more task list for production. The steps necessary
to produce a material are generally saved as operations and sub operations in a routing. The
routing is selected on order creation.

A routing is a description of which operations or list of activities has to be carried out during the
production and planning process.

It also tells what order or sequence the activities/operations needs to be carried out at work
centers or machines.

 There may be several alternative routings for a product. For example, product can be
manufactured on 2 manually operated machines (drilling and grinding) and
simultaneously manufactured on 1 automatic machine (which has both drilling and
grinding functions).In this case, Material has 2 alternative routings viz, automatic
machine and manual operated machine.

 Multiple materials can follow same routing group which means a group of materials can
have single routing.

 Routing is used in Production for scheduling and costing of operations for finished and
semi-finished materials.
  Routing’s are also used in standard cost calculation for finished Product by calculating
operational cost of finished product.
 Before creating the routing, it is mandatory that Work Centre should be available in the
system.

What is the forecasting process in SCM?

Supply chain forecasting refers to the process of predicting demand, supply or pricing for a
product — or a range of products — in a particular industry. For example, the algorithms behind
a forecasting model can look at data from suppliers and customers and forecast the price of a
product.

What is an independent requirement?

Independent requirements are created for the planning material to cover the requirements which
are expected for the materials assigned to the planning material. Thus, customer requirements for
these materials are consumed by the independent requirements of the planning material.

What is dependent requirement and independent requirement?

Basically, a dependent requirement is based on the demand for another item while an
independent requirement is not based on the demand for another item.

How do you create independent requirements in SAP?

Use T-code MD61 or go to Logistics → Production → Production Planning → Demand
Management → Planned Independent Requirements → Create. The single material for which
demand needs to be created.
Planned Independent requirements and Forecast
Planned Independent Requirements is a SAP technical term for forecasts. Customer Independent
requirements is a SAP technical term for sales orders. Based on requirement strategy CIRs can
consume PIRs at specific statuses of sales orders. PIRs and CIRs together thus form the demand
of independent nature. There are demands of dependent nature like Distribution Demand due to
Purchase Requirements at different location or dependent demands on the componets arising out
of a planned order at header level. All these together consititute Total Demand. Some
organizations could have their own definitions of Forecasts varying slightly. Eg they could call
CIRs and PIRs together to call forecasts. So you would need to interrogate the business to
exactly understand the semantic meaning of Forecasts that they refer to.

Material Reservation
Reservations are system documents that show a requirement for a certain amount of good for
production, cost center and any other need.

Reservations are important in planning/MRP as the system reserves needed quantities before
they are posted. If there weren’t reservations in the system, we might encounter a problem that
we need to use the goods for production order, but we cannot post the goods issue because a
sales order has taken the goods just few minutes ago. When we create the reservation, system
doesn’t allow any other document to reserve the goods for other purpose. This also depends on
the system settings for MRP. You might give reservations a privilege to always take the goods
off the stock, even if it is already reserved by the sales order or delivery (not quite good
solution). But you can also customize the system that sales orders don’t check the reservations
when performing availability check.

You can create a reservation for the material for a number of reasons. System can also create the
reservation if the MRP settings imply that kind of system behavior.
Mention what is the difference between stock transport order and stock transfer order?
• Stock transfer order: It is referred to the transfer of stock for the usage in the same company
• Stock transport order: It is referred to the change of title of stock in the name of the buyer

Large companies having many plants in different geographical locations commonly require stock
movement from one plant to another. For this purpose, SAP ERP has a special process with SAP
stock transport order (STO) that enables to move stock from one plant to another or between
different storage locations of plants.

For example, in one of my trading client, we used to import materials from abroad in big
containers and then those containers were unloaded into one big branch (plant) as it was cost
efficient to import materials in bulk to one location. Next, other smaller branches (plans) raised
SAP stock transport order (STO) to purchase stock from big branch for the quantity required.
The big branch dispatched the quantity against the STO on the mentioned delivery dates.

In the below screenshot, you can see a diagram illustrating the stock transfer process. STO is
raised by a receiving plant and sent to a supplying plant. The supplying plant then delivers the
material, which in the SAP system will be shown as stock in transit. When the receiving plant
receives the material, goods receipt takes place at the receiving plant. There is no invoicing, as
the stock is transferred between plant that are part of the same company.

How to Create SAP Stock Transport Order?

To create a stock transport order in SAP, please follow the steps described below. First, either
start the transaction ME21N or navigate to the following path in SAP menu: Logistics –
Materials Management – Purchasing – Purchase Order – Create – ME21N – Vendor/Supplying
Plant Known.

Stock transfer process uses the standard transaction ME21N for creating purchase orders (PO),
where we trigger STO process by selecting document type = Stock Transport Order as shown on
the screenshots below.

ME21

N – Create a Purchase Order Select Stock Transport Order as the

Document Type
Here you need to provide your supplying plant. As mentioned above, the supplying plant in our
example is the big branch which imported the stock and has stock available. You also have to
provide your purchase organization, purchase group and company code as show on the
screenshot below. Our tutorials about SAP MM organizational structure should be helpful in
learning more about purchasing organization and other MM organizational units.
 Ent
er Supplying Plant, Purchasing Organization, and Company Code in STO
In the item overview screen below, you need to provide the material that you would like to
procure from the supplying plant along with the plant number which is ordering this material,
quantity, storage location and delivery dates as shown below:

Ite
ms of Stock Transport Order
If you have any additional charges which needs to be added to the cost of the material, you
should provide the details in the conditions tab. For instance, it is possible to add freight charges
as shown below:

Pri
cing Conditions of Stock Transport Order
Now, your stock transport order is ready and to cross check for any errors in your STO, click
on button which will tell you if everything is correct in your document. If not, then a
red button will come up notifying you about error(s) in the document that needs to be fixed
before you can save the document. Once all issues are fixed, you click the button, which will
save the document. The SAP system will provide you with SAP generated document number as
shown below notifying that the document has been created.
 SAP Stock Transport Order has been
Created

Production Orders:

A production order defines which material is to be processed, at which location, and at what time
and how much quantity is required. It also defines which components and sequence of operations
are to be used and how the order costs are to be settled.

 Planned orders are results of running MRP. Shortages of materials that are set to internal
procurement will create planned orders, which can be converted into production orders.
Production orders are “hard copies”; they cannot be adjusted by an MRP run anymore.

 BOM and routing data of the materials are copied into the production order which
determines the list of components and operational data in the order.

 Planned Costs also gets updated in the production order via component price and routing
activity price.

 You can run an availability check on production orders which determines any missing
components in the order so that you can bring that missing component for the order
execution at shop floor.

 You can print the production order for shop floor which indicates the list of components
to be consumed and what kind of operations to be performed in sequence at the work
center.

 After you have physically produced the material, you can declare the production through
order confirmation which updates the activities cost such as machine running price, labor
price on the order.

 You can decide to automatically do the backflush (consumption) of components during

order confirmation according to the BOM. The consumption will reduce the inventory of
components and it is carried out with movement type 261 in SAP.
  You can also post goods receipt of the material automatically during order confirmation.
Goods receipt would increase the inventory of the material, and it is carried out with
movement type 101 in SAP.

 After Order Confirmation, all the cost such as the cost of components and activity cost
will be debited on the order, and once you post goods receipt, costs will be credited on
the order.

 Once, production order is fully confirmed and delivered, or business has decided not to
execute that order, then it needs to be technically closed which means order will no
longer be considered in MRP run and will be deleted from stock/requirement list. Order
reservation on components will also be deleted.

How to Create and release Production Order

Step 1) From SAP Easy access screen open transaction CO01

SAP MRP (Material Requirement Planning)

The SAP MRP (Material Requirement Planning) is used to procure or produce the required
material quantities on time for in-house purpose or for fulfilling customer demands. In
manufacturing, the function of MRP is to guarantee material availability on time. The main
objective is to plan the supply based on requirements and considering the current stock in hand
and meet the shortages.

MRP Process flow

 With MRP, inventory can be optimized via planning receipts according to the needs so
that surplus inventory could be avoided.
 Sales and distribution give concrete customer requirements from the market.
 In Demand Management, sales are planned in advance via a sales forecast. The sales
forecast is entered in demand management in the form of Planned Independent
Requirement (PIR), i.e., the requirement for the finished product.
 In order to cover these requirements, MRP does net requirement calculation and plans
procurement quantities and dates on which the material needs to be procured or produced.
 If a material is produced in-house, the system explodes the BOM and calculates the
dependent requirements, that is, the quantity of components required to produce the
finished product.
  If a material shortage exists, planned orders are created at every BOM level to fulfill the
requirements and purchase requisitions are generated for externally procured raw
materials. You can also create planned orders for externally procured materials which can
be converted to purchase requisition.
 MRP does lead time scheduling and calculates planned order dates based on routing
times. Basically, it does backward scheduling starting from requirement date minus (GR
processing times, in-house production time, float time before production ) and calculates
the duration of planned orders.
 Production orders or Purchase orders are created after conversion of planned orders and
purchase requisition respectively.
 MRP type “PD” in material master MRP 1 view is essential to run the MRP for the
materials. If, you don’t want to run MRP on the material then MRP type “ND” can be
maintained in the material master.

What is a safety stock?

ABC indicator: This is an indicator showing the importance of the material in terms of
stock availability. Most of the companies use several ABC values, but most common are:

A – The most important materials, they need to be available for sales in every moment
customer requests it.

B – Less important materials that are often supposed to be available but the lack of this
material can happen and is allowed.

C – Least important materials. There can also be few more categories.

N – New, material not yet tested on the market, so we don’t actually know if it’s going to
be A, B or C yet.

S – Material that is produced only on customer request.

D – Same as S with the difference that it has a certain quantity on stock just in case
someone needs it ASAP, in production planning it is called a material safety stock.

Lot size:

Defines the procedure used by the system in order to calculate the procurement or
production quantity of the material.

Other fields in this view MRP group: this setting is used to group materials with same
MRP control parameters which are, for example, the strategy group, the consumption
mode, etc. If this field is not maintained, the system will use material group from Basic
Data 1 when performing the MRP.

Plant-Specific Material Status: If set, this indicates the usability of material in special
functions, for example, material can be used for Testing or is going to be discontinued, so
the MRP doesn’t take it into account when it runs. This setting could restrict the use of
material in a particular function.

Reorder Point: indicates at which stock level MRP should create a new order (either
procurement or production order).

Planning cycle: cycle of planning, it is defined in customizing and assigned to a material,

it can represent a day on which the planning is performed.

Minimum and Maximum lot size, Fixed lot size: used to indicate the boundaries for lot
size, or a fixed quantity to be used.

Ordering costs: fixed cost per order in company code currency, used to calculate the
optimal lot size.

Rounding Profile and Unit of Measure Group: like the fields in sales views, these are
the same fields you can populate with rounding type to purchasing or production (if
applicable).

Rounding value: it is used in procurement for rounding the procurement quantity to a

value of multiple of the number entered here.

Storage Bin:

Definition:

The storage bin (sometimes referred to as a “slot”) is the smallest addressable unit in a
warehouse. It identifies the exact location in the warehouse where goods can be stored.

A storage bin can be further sub-divided into bin sections. Several different materials
(Quants) can be stored in one bin at the same time.
Storage bin can be created manually one by one or multiple storage bins can be created
automatically.

1. Manual Storage Bin Creation:

Transaction Code- LS0177N

Display Storage Bin: T Code –LS03N

2. Automatic Storage Bin Creation: This is a configuration step. System will ask for a
Transport Request after saving this transaction. This can be done through LS10
transaction code or by using below configuration Path

SPRO->IMG-> Logistics Execution-> Warehouse Management->Master Data->

Storage Bins-> Define Storage Bin Structure
After click on Define Storage Bin Structure, system will show below screen. Select the
required line contains Warehouse number, Storage type and section and template. Storage
bin structure, start value and end value will be given as per the requirement.

Now select the line and click on display icon as shown below

Then click on Create bins which is under Environment as shown below

Below screen will be appeared.
Then click on Create Online. System will prompt a message as shown below. Then click
on Yes to create bins

Below message will be observed at the bottom

After saving, transport request screen will be appeared. In few business cases, we get
access to LT10 transaction in Production to complete the storage bin creation directly in
Production as Storage Bin comes under master data. If you don’t use storage bin
structure, you can create LSMW for LS01N Transaction to create Storage Bins in bulk.
What is purchase requisition in SCM?
A purchase requisition is an internal document that authorizes the
Purchasing department to buy items or services. After a purchase
requisition is approved, it can be used to generate a purchase order.
Purchase orders are the external documents that the Purchasing
department submits to vendors.

What is a purchase requisition in SAP?

A purchase requisition is a request or instruction to Purchasing to procure a
certain quantity of a material or a service so that it is available at a certain
point in time.
How to Create a Purchase Requisition in SAP:
ME51N

Purchase requisition creation can be done in t-code ME51N (or the

older version ME51 – not recommended) and is a straight forward
process.

1. Execute ME51N transaction.

2. Purchase requisition document type: NB – standard.
3. Source determination: ON or OFF.
4. Header note.
5. Material: material number.
6. Quantity and UoM.
7. Storage location: in which the material is stored.
8. Vendor: automatically determined by using source determination
– field number 3.

9. Tracking number: covered in previous topics, a desired value

can be entered manually.
 10. Valuation price:copied from material master data if
maintained there, if not must be entered manually (if this field is
not set as optional).After entering the desired information in the
fields, we can save transaction data.

How to create a Purchase Order

Purchase orders are created by using standard
transaction ME21N (or ME21 – the old instance of the transaction).

Step 1)

1. Enter transaction code ME21N.

2. Enter vendor.
3. Enter material number that needs to be procured.
4. Enter the quantity and unit of measure (optional – system uses
UoM from purchase info record).
5. Press ENTER to confirm the data entered.
Purchase order item is now populated with information from
purchase info record and material master, in combination with
the vendor master data. This can be seen on the next few
screens.

Delivery date and net price are populated from information supplied in
master data.

In below screenshot , Blocks 1 and 2 were populated from purchase

info record, while 3 was populated from vendor master.

Default texts populated via purchase info record master data.

1. Info record PO text – text populated from info record master.

2. Info record note – populated from info record master.
 3. Text in this field is the same as in our info recod.

Step 2)

1. You can see that purchase order contains several tabs at header
level.On the “Status” tab, you can find some information about
the status of the purchase order.
2. In this block, you can find general status (Active) as well as
purchase order confirmation (Not Yet Sent), Delivery status and
Invoice status.
3. This is information about quantities and value, ordered qty and
value, delivered qty and value, still to deliver qty and value,
Invoiced qty and value, and finally downpayment information.

Other tabs contain information about Organizational Data, Import,

Additional Data, Partners, Communication, Address, Texts,
Conditions, Delivery/Invoice information.

Step 3)

Delivery/Invoice tab holds data about payment terms and trading

terms. You can insert payment terms here (like =D06 – payment 30
days after delivery), trading terms (in two incoterms fields – for
example EXW Wien).
Step 4)

Organizational data holds the information on the purchasing

organization, purchasing group and company code. You could choose
another purchaseing group if you needed to.

Other tabs

 In Conditions tab, you can find data about prices and conditions
on header level.
 Texts tab is used to maintain header level texts.
 Address tab holds the vendor address data.
 In the Additional Data tab, you can find Collective number and
VAT registration number of the vendor.

At the item level purchase order contains additional information

on items

 On the delivery schedule tab, we can enter the desired delivery

schedule and quantities that are to be delivered at a certain date.
  Material data tab contains information about vendor material
number, batch, vendor batch, EAN code etc. Some of the data is
populated from purchase info record.
 On the delivery tab, you can set delivery tolerance percentages
(over and under delivery), set delivery status, delivery remainder
settings and other information.
 Invoice tab holds information on invoice related data and a field
“Tax” that should be filled if applicable (in our case the tax code
is V1 for both items).
 Conditions tab is used to specify conditions on item level.
 Delivery address – our company address, it can be changed if
we want the material delivered elsewhere.

 Confirmation tab holds data specific for the item confirmation

control and rejection indicator.

When all the data is double-checked for mistakes and entered

accurately we can save the purchase order.
Cash Sales
Implementation Considerations
Cash sales is an order type for when the customer orders, picks up and pays for the goods
immediately. The delivery is processed as soon as the order has been entered. A cash invoice can
be printed immediately from the order and billing is related to the order. Receivables do not
occur for the customer as they do for rush or standard orders, because the invoice amount is
posted directly to a cash account.

Process Flow
In the standard system, sales document type BV is saved for cash sales with immediate delivery
type BV.

When the sales employee creates a cash sale, the system automatically proposes the current date
as the date for delivery and billing. Once the order has been posted, a delivery with type BV is
created immediately in the background and the system prints a document that is used as an
invoice for the customer.

The invoice papers are controlled with output type RD03, contained in the output determination
procedure for order type BV.

If the customer has already received the goods, this delivery should not be relevant for picking. If
the customer is to pick the goods up from a warehouse, the delivery should be relevant for
picking. If the goods are to be sent, this can be processed by maintaining the delivery in the usual
way.

The system automatically creates a resource-related billing index which updates the billing due
list. Billing document BV is created as the system processes the billing due list, but an invoice is
not printed.

Creating a Cash Sale

1. In the initial screen, choose Logistics Sales and distribution Sales .
 2. Choose Order Create .
3. Enter the order type for cash sales (BV in the standard system) and, if necessary, the
organizational data.
4. The values for sales organization, distribution channel and the division are usually
proposed from user-defined parameters. Entries for the sales office and the sales group
are optional.
5. Choose Enter .
6. Enter the following data:
7. – Customer number of the sold-to party

– Material numbers

– Order quantities for the materials

8. Choose Enter .
9. If the system carries out an availability check and finds that there is insufficient stock for
an order item to be delivered on the requested date, it displays a screen on which you can
choose between several delivery proposals. Normally, in a cash sale, you only sell the
quantity you can deliver on the spot.
10. Save your document.

The system automatically processes the delivery in the background and prints out a cash sale
invoice. The amount of the sale is processed later in an order-related billing transaction. The
amount is posted to financial accounting, using the order number as reference. Because this is
a cash sale, no invoice is produced during the billing run.

Rush Order
Implementation Considerations
In a rush order transaction, the customer picks up the goods or you deliver the goods on the same
day as the order is placed. In the standard system, when you save this sales document type, a
delivery is automatically created and billing is related to the delivery.

Process Flow
In the standard system, sales document type SO is saved for rush orders with immediate delivery
type LF. Once the goods have been removed from storage, the goods are picked, and goods issue
is posted.

Once the billing documents are created (for example, in collective processing), invoice papers
are printed and sent to the customer.
Once the customer has received the goods and is satisfied with them, the transaction is
considered to be complete. We recommend that you post goods issue in the background using a
program designed specifically for this purpose. You can then bill the transaction.

Note

The cash sale can only be billed if the order quantity is the same as the goods issue quantity. If
this is not the case, you need to adjust the cash sale document so that the delivered
quantity and the quantity to be billed match.

You use an order-related collective billing process to bill the cash sale, but an invoice is not
printed. The sales order number is used as the reference for the accounting document, created in
Financial Accounting.

Dealing with Problems and Complaints

If the transaction does not run smoothly, manual intervention is necessary. For example, if the
required quantity of goods is not found in the warehouse, you need to adjust the delivery
quantity. Equally, if the customer is not prepared to pay the agreed price, because, for example,
the goods are scratched, you can change the price in the cash sale document.

Note

In extreme cases, you can delete the entire transaction, starting with the delivery.

If the delivery is damaged before it is picked up but after it is paid for and there is no
replacement stock, you can initiate a subsequent delivery.

If you make changes to the cash sale, you can issue a new cash sale invoice using the repeat
printout function.
How to create Free of Charge Delivery
Free of charge delivery process creates a non-billed sales order .E.g.
If some product is shipped for free sample to customer, free of charge
delivery is carried out. This document is not relevant for billing
because the customer is not billed for the free of charge delivery.

Step 1)

1. Enter T-code VA01 in command field.

2. Enter Order type FD(Delivery Free of Charge).
3. Enter Sales area data in Organizational block.
4. Click on Create with References.
Step 2)

1. Enter Sales order no. for references.

2. Click on Copy button.

Step 3)

1. Enter Sold-To party / Ship-To Party.

2. Enter Order Reason.
Step 4)

Click on Save button.

How to Create Planned Independent
Requirement (PIR)
Step 1. TCode- MD61

1. Enter single material or Reqmts plan (for multiple materials) for

which demand needs to be created.

2. Enter MRP area and Plant Code “INA2”.

3. Enter version as “00”, which is active version and requirements

would be considered in MRP run.

4. Enter the Planning horizon dates for which demand needs to be

created.

5. Enter planning period as month M.

After filling in all the fields, click or press Enter to go to the next
screen.

Step 2) In this Screen we are going to enter the requirement quantity

in monthly buckets,

1. Version “00” and Active check box flagged would come as

default which means it is an active requirement and would be
considered in MRP run.

2. Enter the requirement quantity in monthly buckets

Click to save after filling all data, the system will show message
.

 If you want to delete the demand of one material, click of the

row and click the delete button .
https://educationleaves.com/material-
requirement-planning-mrp/

MRP Planning Parameters

AD

MRP parameters are required for MRP run in terms of considering the
requirements (PIR) in planning horizon, scheduling parameters and
about the usage of BOM and routing data.

1. Processing Key

1. Net change (NETCH): In this run, the system considers those

materials in the planning run from their last MRP run which have
undergone some changes pertaining to receipts and issues or
any stock changes.
2. Net Change in Planning Horizon (NETPL): In this run, the system
considers those materials in the planning run from their last MRP
run which have undergone some changes pertaining to receipts
and issues or any stock changes. It considers the requirements
in a pre-defined planning horizon, unlike NETCH key which
considers the total futuristic requirements.
3. Regenerative Planning (NEUPL): It plans all the materials for the
MRP Run irrespective of the changes they undergo. This plan is
not so widely used. It takes a long time to obtain the final result.

2. Planning Mode

1. Adapt planning data: It only processes the changed data.

2. Re explodes BOM and Routing: Read BOM and routing data
again for the existing orders.
3. Delete and recreate planning data: It completely deletes the
planning data (all receipts) and creates again.
AD

3. Scheduling

1. Basic Scheduling: MRP calculates only basic dates for the

orders and in house production time for the material master is
used.
2. Lead Time Scheduling: The production dates are determined by
the lead time scheduling for planned orders. The routings are
read to schedule and calculate the capacity requirements on
work centers.

How to run MRP for all Products

Step 1) From SAP easy access screen, open transaction MD01, we
will run MRP at Plant level.

1. Enter your manufacturing Plant for which you want to take MRP
run.

2. Enter Processing key as “NETCH” ( Net change in total horizon)

3. Input “1” in Create Purchase req. Which means for externally

procured materials, MRP will generate purchase requisitions
instead of planned orders.

4. Enter “3” for schedule lines which means MRP will generate
schedule lines for raw materials having scheduling agreement.

5. Enter “1” in MRP List and system will create MRP list similar to
stock /requirement list for later analysis of previous MRP run.

6. Enter Planning mode “3” as we will delete and recreate all

planning data for all materials.

7. Enter Scheduling indicator “2” which means MRP will do lead

time scheduling and consider routing times to calculate planned
order dates.
After filling in all the fields, click to go to the next screen.

Press enter to ignore this message.

The system asks you nicely to re-check your input parameter because
the MRP run is going to reschedule and overwrite all existing data. Are
you sure??? If so, press enter.
Are you really, really sure that you want to continue??? If so, then
again press enter.

Step 2) System will take some time to calculate the material

requirement.

1. After the calculation is done, a report will appear. Here, it is

possible to see how many materials were planned and on what
parameters were given during the run.

MRP Run for single material

Step 1) In Transaction MD02, we will run MRP for a single material.
1. Input the material code for which you want to run MRP.

2. Enter your manufacturing Plant code for which you want to take
MRP run.

3. Enter Processing key as “NETCH” ( Net change in total horizon)

4. Input “1” in Create Purchase req which means for externally

procured materials, MRP will generate purchase requisitions
instead of planned orders.

5. Enter “3” for schedule lines which means MRP will generate
schedule lines for raw materials having scheduling agreement.

6. Enter “1” in MRP List and system will create MRP list similar to
stock /requirement list for later analysis of previous MRP run.

7. Enter Planning mode “3” as we will delete and recreate all

planning data for all materials.

8. Enter Scheduling indicator “2” which means MRP will do lead

time scheduling and consider routing times to calculate planned
order dates.
After filling in all the fields, click to go to the next screen.

The system asks you nicely to re-check your input parameter because
the MRP run is going to reschedule and overwrite all existing data. Are
you sure??? If so, press enter.

Are you 100% sure that you really want to continue??? If so, then
again press enter.

Step 2) System will take some time to calculate the material

requirement.
 1. After the calculation is done, a report will appear. Here, you can
see how many materials were planned.

Note : As there are 22 materials available in the plant, so only these

22 materials were planned.

Master Production schedule (MPS) run

Step 1) In Transaction MD43, we will run MPS for a single material.

1. Input the material for which you want to run MPS. Here we have
taken ID “13967476”.

2. Enter your manufacturing Plant “INA2” for which you want to take
MPS run.

3. Enter Processing key as “NETCH” ( Net change in total horizon)

4. Input “1” in Create Purchase req. Which means for externally

procured materials, MPS will generate purchase requisitions
instead of planned orders.
 5. Enter “3” for schedule lines which means MPS will generate
schedule lines for raw materials having scheduling agreement.

6. Enter “1” in MRP List and system will create MRP list similar to
stock /requirement list for later analysis of previous MPS run.

7. Enter Planning mode “3” as we will delete and recreate all

planning data for all materials.

8. Enter Scheduling indicator “2” which means MRP will do lead

time scheduling and consider routing times to calculate planned
order dates.

Click to next screen after filling all the fields, the system will show
message , click again, if everything is O.K.

Step 2) In this step, we are going to generate the interactive planning

data by which simultaneously you can see the planning results.
 1. Press “Planning” button which will generate planned orders for
the shortage quantity.

2. Check the planned orders generated.

MRP evaluation – Stock/Requirement List

In this list, you will see the requirements, current stock and planned
receipts, i.e., orders for the material.

Step 1) From SAP easy access screen, open transaction MD04

1. Enter material for which stock/requirement list needs to be

displayed.
2. Enter Plant Code.
Step 2) After entering information in all the fields, click to go to the
next screen, and Stock/requirement list displayed.

1. Display stock/requirements list of the material is generated,

where you can see

 BOM for material D13967476 was exploded and

 Purchase requisition of 50 (fixed lot size 50 maintained in
material master code A01232589) was generated against the net
requirement of – 41.606.

Troubleshooting

 There might be the case wherein material master record does

not exist. For this, you need to create the material master for the
material before running MPS/MRP.
 Ensure BOM and routing data is in place before running MRP to
generate procurement proposals based on requirements at all
BOM levels otherwise, Planned orders would be generated
without BOM and hence would create issues in further
consumption process.
Production Order in SAP
A production order defines which material is to be processed, at which
location, and at what time and how much quantity is required. It also
defines which components and sequence of operations are to be used
and how the order costs are to be settled.

How to Create and release Production Order

Production Order creation is required to produce the material and
consume the components which are used, and it also specifies the
sequence of operations to be performed at the work center.

The release of order signifies that the order is ready to be executed at

the shop floor. You can do an automatic release of order also during
creation mode by using relevant production scheduling profile in the
material master with auto release indicator set.

Step 1) From SAP Easy access screen open transaction CO01

1. Enter the material code for which production order needs to be

created.

2. Enter Plant Code.

After filling in all the fields, click or press Enter to go to the next
screen.

Step 2) In this Screen

1. Input the order quantity.

2. Select the option”current date” in scheduling sub-screen.

After filling the entire fields press click to confirm, the system will
then copy BOM and Routing data in the order.

Step 3) In the same screen,

1. Click to release the order. The following message will appear

in the bottom left corner: .

2. Click to check material availability. The system will show

the message regarding the availability of components.
Note: You can also decide not to release the order if there are missing
parts found in availability checks.

Click button to save, the following message will show in the bottom
left corner: .

How to Create Production Order by converting

Planned Order
Planned orders are the result of MRP run and should be converted to
production order for further execution process.

You cannot directly declare production using planned orders and,

therefore, it needs to be converted to Production Order.

Once, planned order is converted to production order, planned order

gets deleted from the system and is no longer available to be
considered in MRP (Material Requirement Planning).

Step 1) From SAP Easy access screen open transaction MD16

1. Select radio button “MRP controller” from the list, which is a

group of materials.

2. Press right mark sign on top or press enter from your keyboard.
The system will show the screen as below.

Step 2) In this screen, we will fetch the planned orders based on MRP
controller and selection dates.

1. Enter plant code.

2. Enter MRP controller

3. Enter end selection date till all planned orders will be extracted.

Click right mark sign from the bottom or enter from the keyboard to
move to the next screen.
Step 3)In this screen,

1. Select the grid for which you want to convert the planned orders

2. Press “convert to production order” button for the conversion.

Production orders will be created after conversion of planned orders.

How to Change production Order

You might require to change production order incase if your business
wants to change some planning quantity or if BOM/Routing has been
changed after the order has already been created.

Step 1) From SAP Easy access screen open transaction CO02

1. Enter production order number which you want to modify.

In the same window you can see “Display Overview” button is
selected, it is selected by default.

After filling in all the fields, click to go to the next screen.

Step 2) In this screen, the order will be modified.

1. Change the Order quantity to 9000 or whatever your requirement

is as shown below.
After finishing all modifications, click button to save the order. The
system will show a message like Order number saved 6600000887
at the lower left corner.

How to confirm production order

Step 1) From SAP Easy access screen open transaction CO15, three
activities occur at the same time with confirmation.

1. Generate confirmation document

2. Consume raw materials or semi-finished goods
3. Good receipt of finished goods or semi-finished goods

1. Enter Production order number

AD

After filling in all the fields, click to go to the next screen

Step 2) In this screen, we will enter the actual yield quantity to be

confirmed.

1. Enter the yield quantity which is the produced quantity you want
to declare

2. Press Goods Movement button at the top to check the automatic

goods movement happening along with confirmation
Step 3) In this screen, you will see the goods receipt of parent
material and goods issue of components.

If the control key of the last operation in the order specifies automatic
goods receipt, the system automatically posts the produced material
to unrestricted stock.

Automatic goods receipt can also be activated by the production

scheduling profile in the material masterwork scheduling view.

If you confirm an order with components that have the Backflushing

indicator set in the material master MRP1 view, the system
automatically posts a goods issue (GI) for these components.

1. Auto Goods receipt (GR), production of material carried out

using movement type 101.

2. Auto Goods issue (GI), consumption of components carried out

using movement type 261.

Click button to save.

The system will show a message like

at the lower left corner, to hint how
many goods movement are posted successfully or failure.
NOTE: Failed goods movements due to a deficit of stock for
consumption are reprocessed manually.

Troubleshooting

 BOM and Routing must exist before creation of production order

else it will not be copied into the production order and can cause
issues in planned costs updation and consumption of
components during confirmation process thereby impacting the
inventory of the components.

 Production order must be released before doing order

confirmation as the released status of the order allows
confirmation to happen.

 If you receive any Accounting error during goods movement in

the confirmation process, then ensure the right valuation class is
set in the material master Accounting view or contact Finance
team.

 Ensure that standard cost for the material is updated to avoid

any costing related errors such as activity price missing etc.
during production order confirmation.

 If some goods movement gets failed during confirmation process

due to the stock deficit, then you should process them separately
once components are brought to stock.

SAP SCM - Goods Issue

Goods issue is done when raw material is consumed to produce material as per
Production order. When goods are issued, system decreases the inventory of
components at the storage location in Production Planning system.
Movement type 261 is used for goods issue.
Step 1 − To perform goods issue, use T-code: MB1A or go to Logistics → Production →
Production Control → Goods Movement → Goods Issue
Step 2 − Enter Movement type 261 for goods issue. Enter Plant and Storage location.
Step 3 − If you want to print, select the check box. Click the Order To button at the top
as shown below.

Step 4 − Enter the following details −

 Enter the Order number and click Adopt Details.

 Enter the input materials in the Material column
 Required quantities for each material in the Quantity column.
 Unit of measure KG in UnE column.
 Enter the respective storage location in the column SLoc.
Step 5 − Enter the Adapt button. You will see the following details. Click Save.

You will get a confirmation that the document has been posted.
Information “Document 56754500001 posted.
 SAP SCM - Integration
To transfer master and transaction data from ERP system to SCM system, you need to
define an integration model. An integration model specify which data objects from ERP
system is to be transferred from total objects available.
You can create the integration model for master data like- BOM, routing, campaign
management details, uplift quantity. Integration is also required to move data from SAP
SCM system to ERM modules- like CRM to move sales quantity data, etc.
You can perform integration between SAP Customer Relationship Management and
SAP Supply Chain Management SAP SCM to perform the following activities −

 If you want to move the baseline sales quantity from SAP SCM to SAP CRM.
 To transfer the uplift quantity from CRM module to Supply Chain Management.
You can use trade promotions or campaigns to include in Demand Planning and Supply
Network Planning SNP in SAP SCM.
In SAP SCM, to create an integration model, you need to choose the object like-
Material masters on create Integration Model selection screen. Then you have to
mention the selection criteria that further restrict the object types you have already
selected.
When you select object Material Masters, select MRP controller to define the filter
objects. Filter objects are used to select which data objects are transferred to a
specified SCM system.

SAP SCM - Integration Models

To transfer master and transaction data from ERP system to SCM system, you need to
define an integration model. When you create an integration model, system
automatically generates a new version of this model.
You can distinguish between versions of an integration model using their date and time
of creation, and by filter objects that they contain. You can create as many versions of
an integration model as you want however only one version is active at a time.
Step 1 − To generate a new version you can use Transaction code: CFM1 and save the
variant of the model. It is also possible to create run time variant of an active integration
model.
Step 2 − In the next window, you have to enter the following details −

 Logical System
 APO Application
 Material Dependent Objects

Step 3 − When you do not select a restriction, it prompts that a very long run time is
expected if you select an execute.
Step 4 − Click the Save button and you will be prompted to enter a variant. You have to
enter the following details −

 Variant Name
 Description
 Screen Assignment
You also have an option to copy screen assignment.

Step 5 − To save the variant of this model, click the save button at the top.

Activation and Deactivation of Integration Model

When you activate an integration model, the online transfer data is released. The
integration models to be activated is compared with the integration models that are
already active.
This allows you to transfer the differences i.e. it only transfers the data for filter objects
that are not contained in an active integration model.
In SAP system, you can create multiple integration models but only one model is
activated for each model. You can activate and deactivate several integration models
simultaneously.
You should Integration models must remain active to enable online transfer.
Step 1 − To activate area, use T-Code: CIF in SAP R/3.

You can also navigate to Logistics → Central Functions → Supply Chain Planning
Interface → Core Interface Advanced Planner and Optimizer → Integration Model →
Activate

It will display activate/deactivate Integration model screen. Select the model from the list
of available models. You can use the following entry fields to select the integration
model to be activated −

 Model
 Logical system
  APO application

To activate/deactivate model, click the tick mark as shown below −

When you deactivate an integration model, it does not mean that all the objects that are
transferred will be deleted in SCM system
Some of the possible Interview Questions:

1. What do you understand by Supply Chain Management process?

2. What are the different stake holders in Supply chain process?
3. As per functionality what are the different components under SAP SCM process?
4. Explain demand planning and management process you have handled as part of Supply Chain?
5. What is PIR Planned Independent Requirement?
6. What is MTS and MTO Planning strategy under Supply Chain?
7. What is the use of MRP run or planning run?
8. What are the different types of MRP run?
9. What is Bill Of material master data and what information it contains?
10. What is the use of super BOM?
11. What is planned order creation? Can you convert a planned order to production order, how?
12. How do you evaluate MRP run in SCM system?
13. Is it possible to create a Planned Order manually, how?
14. What is Material Requirement Planning MRP list?
15. What are the steps performed when you convert a planned order to Production Order?
16. What is BOM usage type for Production?
17. What are common Supply Chain master data types?
18. What is the use of Routing master data in Supply Chain Management process?
19. Is it possible to create multiple versions under a model in SCM?
 1. What do you understand by Supply Chain Management process?
SAP Supply Chain Management is one of the key module in SAP ERP and controls Production
Planning, business forecasting and demand planning, and helps the organization to manage
their supply chain process in a dynamic environment.

2. What are the different stake holders in Supply chain process?

SAP SCM process helps suppliers, customers, manufacturer, business partners and retailers to
connect with each other to manage supply chain process effectively and efficiently.

3. As per functionality what are the different components under SAP SCM process?
Forecasting
To perform demand planning and forecasting, you can link to Customer Relationship
Management CRM to get data related to customer campaigns, etc.
Supply Network Planning SNP
To view organization as a network of locations and to check stock projections and stock keeping
criteria. Calculations in SNP drive dependent requirements down to supplying locations
production and receiving stores.
Production Planning and Detailed Scheduling
This is to check the dependent requirements from locations within the supply network, passed
down from SNP. This is linked with Material Requirement Planning MRP in Production Planning,
which determines the inbound material required to complete a production order.

4. Explain demand planning and management process you have handled as part of Supply
Chain?
5. What is PIR Planned Independent Requirement?

6. What is MTS and MTO Planning strategy under Supply Chain?

7. What is the use of MRP run or planning run?

MRP run or planning run is an engine which is used to fill demand and supply gap. Issues
& Receipts are called MRP Elements. Issues include PIRs, Dependent Requirements,
Order Reservations, Sales Orders, Issuing Stock Transfer Orders, etc. and receipts
include Production Orders, Purchase Requisitions, Purchase Orders, Open Production
Orders, Receiving Stock Transfer Order, Schedule lines, etc.
8. What are the different types of MRP run?

9. What is Bill Of material master data and what information it contains?

10. What is the use of super BOM?

11. What is planned order creation? Can you convert a planned order to production order,
how?
12. How do you evaluate MRP run in SCM system?

13. Is it possible to create a Planned Order manually, how?

14. What is Material Requirement Planning MRP list?

15. What are the steps performed when you convert a planned order to Production Order?

16. What is BOM usage type for Production?

1 (one)

17. What are common Supply Chain master data types?

a. BOM
b. Work Center
c. Material Master
d. Routing

18. What is the use of Routing master data in Supply Chain Management process?

19. Is it possible to create multiple versions under a model in SCM?

YES