The concept of SAP material management is in essence an enabler of efficient business processes with an organization. SAP ERP is especially significant for manufacturing companies and supply chains where there is a need to ensure seamless operations across various departments. This system enables an organization to store relevant information in a single database and thus integrate the operations for better outcomes, and SAP MM is an especially important part of this system. The SAP MM works in a very particular way to solve any problems that may arise within the material management exercise in a manufacturing or supply chain setting. The idea is to shorten the time between changes in demand and changes in supply, so that the company can continue to carry out effective and relevant production for optimum performance.
SAP Material Management Overview
First, SAP material management organizes all the activities that need to take place from the procurement stage all the way to planning, control and delivery as well as inventory confirmation and payment of the vendor among other things. This means that this software actually unifies all the logistics in the organization with respect to the manufacturing component of the activities. By organizing all the steps that a company needs to take in order to obtain the materials that they need for the manufacturing and delivery of the products, this system clarifies the operations thus making them more efficient and dependable. SAP material management generally works by enabling the company to monitor all of its operations therefore ensuring that everything happens within the right time frame, and when this is not possible, there will be measures to avoid wasting resources.
Another significant function here would be the structuring of the company’s operations. This system clearly maps out the relationship between the various departments within the company, thereby creating an opportunity for structured cooperation and effective teamwork. If you implement SAP MM in an organization that manufactures furniture, for example, you will be able to make the production team understand that the procurement team depends on their working speed to empty the warehouses and enable the purchase of new raw materials. The procurement team here will also get to realize that if they delay in procuring and receiving the materials, then the production team will not be able to meet their market deadlines.
SAP MM has a number of distinct features that depend on the specific needs of the company in question. All these features are considerably relevant to the functionality of the company and in most cases, you need to pick out features that you will be using within your company if the SAP MM is to be applicable for your specific needs. These features include:
- Procurement Process
- Master Data
- Account Determination & Valuation of Material
- Inventory Management
- Invoice Verification and
- Material Requirement Planning among others.
Companies that use internal procurement may not have the need for inventory management, although this is not always so. Consistently keeping an eye on the inventory is often a great opportunity to ensure that the accounts are in the right order. You may note that all these features of the SAP MM are about monitoring and managing the activities of the company with regards to the manufacturing plant. They thus include accounts, procurement and market distribution, among other thing.
The SAP MM organizational structure comprises of the Client, Company Code, Plant, Storage Location, Purchasing Organization and Purchasing Group. The client here is the highest level in the company, and it is this client that the company’s operations aim to satisfy. The client here has master data that can apply at any organizational level.
The company code is on the other hand the accounting unit of the firm, and it takes care of the manufacturing expenses of the plant that operates under it. As such, the company code can be a financially independent unit that is responsible for those under it. Some companies have more than one company code in order to cater to their various manufacturing plants.
The Plant is more or less the manufacturing entity that takes care of all the activities of the organization. This includes manufacturing the products, storing them, and getting them to the regional distributors depending on what kind of company it is. The plant here is mainly a part of the company code that manages it and thus, it is often financially dependent on the company code.
The storage location is on the other hand a level that contains information pertaining to a specific storage location for the plant. A single plant may have numerous storage locations and each location here stores its own information.
The purchasing organization level varies in terms of its location in the organizational hierarchy. It could be client level, company level or even plant level, with client level taking care of all the purchases within the organization, while the plant level only caters to the purchases within the plant.
The purchasing group is then a specific unit that deals with the daily purchasing activities of the organization. The purchasing organization often has a number of specific procurement activities that the specific purchasing group takes care of. These purchasing groups are thus particular in the procurement activities that they undertake.
SAP MM can be a complex system that helps to manage the various activities that a manufacturing organization must undertake. It however can also be an easy component of the management operations of a manufacturing company. The idea is to fully grasp the various features of the system and how they work, in order to create a seamless flow of activities from the very beginning of the manufacturing process to the very end when the Client is in possession of the products.
The logistics of manufacturing are often very complex and create problems when under separate management heads, but if there is some clear communication in the form of database sharing, the logistics become seamless and manageable. As a component of the larger ERP, SAP material management is very significant in matching market demand to market supply, thus allowing the company to maximize productivity.