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Materials management terms

R
Renu Bhasin

This document defines key terms related to materials management in SAP. It provides the current terminology, SAP terminology, definition, relevant module, and examples for 19 terms. The terms cover concepts like ABC classification, framework orders, goods receipt, invoice verification, material groups, and vendor and purchasing organization master records.

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Materials Management Terms in SAP 1. ABC Classification 2. Framework Order 3. Goods Receipt 4. Invoice Verification 5. Material Group 6. Material Master Record 7. MRP 8. Outline Agreement 9. Plant 10. Purchasing Organization 11. Release Strategy 12. Replenishment 13. Replenishment Element 14. Stock Reservation 15. Scheduling Agreement 16. Stock Transfer 17. Storage Location 18. Vendor Master 19. Vendor Master Record
1 Current Terminology: Not Applicable SAP Terminology: ABC Classification SAP Definition: Web Item to classify objects (Customers, Products or Employees) based on a particular measure (Revenue or Profit) using certain classification rules. Three categories: Important, Less Important, and Relatively Important. Module(s): MM SAP Example(s): An inventory stock warehouse may choose to classify high volume items as A (Important) in order cycle count more often to insure consistent on hand availability. 2 Current Terminology: Blanket Order/Master Order/M-Order SAP Terminology: Framework Order SAP Definition: A purchasing document used to procure materials or external services. Instead of stipulating a delivery date, this type of purchase order has an extended validity period. A framework order covers multiple procurement transactions over a longer period. Module(s): MM 3 Current Terminology: Receiving SAP Terminology: Goods Receipt SAP Definition: A term from inventory management denoting a physical inward movement of goods or materials. Module(s): MM FRS Example(s): The receiving department posts the receipt of goods purchased into the FRS system (Campus) and the ESI system for the hospital for items purchased on a purchase order.
4 Current Terminology: Not Applicable SAP Terminology: Invoice Verification SAP Definition: The matching of documents created during the purchase order process, the goods receipt process, and the accounts payable process that is part of the internal controls system within an organization Module(s): MM SAP Example(s): Accounts payable upon receipt of an invoice from a vendor audits the document and finalizes the three way match process. FRS Example(s): Three way match, (PO, Goods Receipt, and Invoice) or two way match (purchase order and invoice) must occur prior to vendor payment. 5 Current Terminology: Not Applicable SAP Terminology: Material Group SAP Definition: A grouping of materials and services according to their characteristics. Module(s): MM SAP Example(s): Office Supplies FRS Example(s): Office Supplies 6 Current Terminology: N/A SAP Terminology: Material Master Record SAP Definition: A data record containing all the basic information required to manage a material. Module(s): MM FRS Example(s): Enterprise Systems Incorporated (ESI in Hospital)
7 Current Terminology: Not Applicable SAP Terminology: Material requirement Planning (MRP) SAP Definition: A term for procedures in requirements planning that take into account and plan every future requirement during the creation of order proposals such as independent requirements, and dependent requirements Module(s): MM FRS Example(s): Par level maintenance for hospital warehouse inventories. Dynamic order quantity (DOQ) in Hospital 8 Current Terminology: Contract Orders SAP Terminology: Outline Agreement SAP Definition: A longer-term arrangement between a purchasing organization and a vendor for the supply of materials or provision of services over a certain period based on predefined terms and conditions Module(s): MM FRS Example(s): Boise office supply contract 9 Current Terminology: Not Applicable SAP Terminology: Plant SAP Definition: In Logistics a plant is an organizational unit for dividing an enterprise according to production, procurement, maintenance, and materials planning. Module(s): MM
10 Current Terminology: Purchasing Division SAP Terminology: Purchasing Organization SAP Definition: An organizational unit in Logistics, subdividing an enterprise according to the requirements of Purchasing. A purchasing organization procures materials and services, negotiates conditions of purchase with vendors, and is responsible for such transactions. Module(s): MM FRS Example(s): Purchasing Division (Campus and Hospital) 11 Current Terminology: Purchase authorization requirements and/or limits. SAP Terminology: Release Strategy SAP Definition: A plan defining the release codes with which a purchase requisition item, a complete purchase requisition, or a complete external purchasing document must be released (that is, approved) and the sequence in which release is to be effected using these codes. For example, you can establish a release strategy for all purchase requisitions with a value in excess of a certain figure Module(s): MM SAP Example(s): You can establish a release strategy for all purchase requisitions with a value in excess of a certain dollar amount. FRS Example(s): Large computer equipment needs extra approval by VPIS 12 Current Terminology: Par level management for hospital inventory stock locations. SAP Terminology: Replenishment SAP Definition: A Method of replenishing stock. Module(s): MM SAP Example(s): MRP, Reservations FRS Example(s): Outside (System) management of par inventory areas with daily inventory counts.
13 Current Terminology: Par level management for hospital inventory stock locations. SAP Terminology: Replenishment Element SAP Definition: The elements in the system that trigger material replenishment for production. Module(s): MM SAP Example(s): Planned orders, Purchase Orders FRS Example(s): Scheduled inventories for the assigned par inventory areas. 14 Current Terminology: Not Applicable SAP Terminology: Stock Reservation SAP Definition: The sum of all quantities of a material reserved for withdrawal from stock. Module(s): MM SAP Example(s): Allocating inventory for a specific task FRS Example(s): Batch (Nightly) inventory on hand downloads for defined inventory stock locations. 15 Current Terminology: N/A SAP Terminology: Scheduling Agreement SAP Definition: An outline agreement against which materials are procured at a series of predefined points in time over a certain period. Module(s): MM 16 Current Terminology: Not Applicable SAP Terminology: Stock Transfer SAP Definition: The removal of materials from storage at one location, and their placement in storage at another.
Module(s): MM FRS Example(s): Hospital refill process, a goods issue is required after each movement. 17 Current Terminology: Warehouse stock location SAP Terminology: Storage Location SAP Definition: One or more storage locations are assigned to a location of this type. Module(s): MM FRS Example(s): Hospital warehouse inventory stock locations. 18 Current Terminology: Vendor File SAP Terminology: Vendor Master SAP Definition: The collective term for all vendor master records. The vendor master contains the data of all vendors with which a company conducts business. Module(s): MM 19 Current Terminology: Vendor in Vendor File SAP Terminology: Vendor Master Record SAP Definition: A data record containing all the information necessary for any contact with a certain vendor, in particular for conducting business transactions. Module(s): MM SAP Example(s): House bank data FRS Example(s): Vendor address data bank in FRS.
Materials management terms

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Materials management terms

  • 1. Materials Management Terms in SAP 1. ABC Classification 2. Framework Order 3. Goods Receipt 4. Invoice Verification 5. Material Group 6. Material Master Record 7. MRP 8. Outline Agreement 9. Plant 10. Purchasing Organization 11. Release Strategy 12. Replenishment 13. Replenishment Element 14. Stock Reservation 15. Scheduling Agreement 16. Stock Transfer 17. Storage Location 18. Vendor Master 19. Vendor Master Record
  • 2. 1 Current Terminology: Not Applicable SAP Terminology: ABC Classification SAP Definition: Web Item to classify objects (Customers, Products or Employees) based on a particular measure (Revenue or Profit) using certain classification rules. Three categories: Important, Less Important, and Relatively Important. Module(s): MM SAP Example(s): An inventory stock warehouse may choose to classify high volume items as A (Important) in order cycle count more often to insure consistent on hand availability. 2 Current Terminology: Blanket Order/Master Order/M-Order SAP Terminology: Framework Order SAP Definition: A purchasing document used to procure materials or external services. Instead of stipulating a delivery date, this type of purchase order has an extended validity period. A framework order covers multiple procurement transactions over a longer period. Module(s): MM 3 Current Terminology: Receiving SAP Terminology: Goods Receipt SAP Definition: A term from inventory management denoting a physical inward movement of goods or materials. Module(s): MM FRS Example(s): The receiving department posts the receipt of goods purchased into the FRS system (Campus) and the ESI system for the hospital for items purchased on a purchase order.
  • 3. 4 Current Terminology: Not Applicable SAP Terminology: Invoice Verification SAP Definition: The matching of documents created during the purchase order process, the goods receipt process, and the accounts payable process that is part of the internal controls system within an organization Module(s): MM SAP Example(s): Accounts payable upon receipt of an invoice from a vendor audits the document and finalizes the three way match process. FRS Example(s): Three way match, (PO, Goods Receipt, and Invoice) or two way match (purchase order and invoice) must occur prior to vendor payment. 5 Current Terminology: Not Applicable SAP Terminology: Material Group SAP Definition: A grouping of materials and services according to their characteristics. Module(s): MM SAP Example(s): Office Supplies FRS Example(s): Office Supplies 6 Current Terminology: N/A SAP Terminology: Material Master Record SAP Definition: A data record containing all the basic information required to manage a material. Module(s): MM FRS Example(s): Enterprise Systems Incorporated (ESI in Hospital)
  • 4. 7 Current Terminology: Not Applicable SAP Terminology: Material requirement Planning (MRP) SAP Definition: A term for procedures in requirements planning that take into account and plan every future requirement during the creation of order proposals such as independent requirements, and dependent requirements Module(s): MM FRS Example(s): Par level maintenance for hospital warehouse inventories. Dynamic order quantity (DOQ) in Hospital 8 Current Terminology: Contract Orders SAP Terminology: Outline Agreement SAP Definition: A longer-term arrangement between a purchasing organization and a vendor for the supply of materials or provision of services over a certain period based on predefined terms and conditions Module(s): MM FRS Example(s): Boise office supply contract 9 Current Terminology: Not Applicable SAP Terminology: Plant SAP Definition: In Logistics a plant is an organizational unit for dividing an enterprise according to production, procurement, maintenance, and materials planning. Module(s): MM
  • 5. 10 Current Terminology: Purchasing Division SAP Terminology: Purchasing Organization SAP Definition: An organizational unit in Logistics, subdividing an enterprise according to the requirements of Purchasing. A purchasing organization procures materials and services, negotiates conditions of purchase with vendors, and is responsible for such transactions. Module(s): MM FRS Example(s): Purchasing Division (Campus and Hospital) 11 Current Terminology: Purchase authorization requirements and/or limits. SAP Terminology: Release Strategy SAP Definition: A plan defining the release codes with which a purchase requisition item, a complete purchase requisition, or a complete external purchasing document must be released (that is, approved) and the sequence in which release is to be effected using these codes. For example, you can establish a release strategy for all purchase requisitions with a value in excess of a certain figure Module(s): MM SAP Example(s): You can establish a release strategy for all purchase requisitions with a value in excess of a certain dollar amount. FRS Example(s): Large computer equipment needs extra approval by VPIS 12 Current Terminology: Par level management for hospital inventory stock locations. SAP Terminology: Replenishment SAP Definition: A Method of replenishing stock. Module(s): MM SAP Example(s): MRP, Reservations FRS Example(s): Outside (System) management of par inventory areas with daily inventory counts.
  • 6. 13 Current Terminology: Par level management for hospital inventory stock locations. SAP Terminology: Replenishment Element SAP Definition: The elements in the system that trigger material replenishment for production. Module(s): MM SAP Example(s): Planned orders, Purchase Orders FRS Example(s): Scheduled inventories for the assigned par inventory areas. 14 Current Terminology: Not Applicable SAP Terminology: Stock Reservation SAP Definition: The sum of all quantities of a material reserved for withdrawal from stock. Module(s): MM SAP Example(s): Allocating inventory for a specific task FRS Example(s): Batch (Nightly) inventory on hand downloads for defined inventory stock locations. 15 Current Terminology: N/A SAP Terminology: Scheduling Agreement SAP Definition: An outline agreement against which materials are procured at a series of predefined points in time over a certain period. Module(s): MM 16 Current Terminology: Not Applicable SAP Terminology: Stock Transfer SAP Definition: The removal of materials from storage at one location, and their placement in storage at another.
  • 7. Module(s): MM FRS Example(s): Hospital refill process, a goods issue is required after each movement. 17 Current Terminology: Warehouse stock location SAP Terminology: Storage Location SAP Definition: One or more storage locations are assigned to a location of this type. Module(s): MM FRS Example(s): Hospital warehouse inventory stock locations. 18 Current Terminology: Vendor File SAP Terminology: Vendor Master SAP Definition: The collective term for all vendor master records. The vendor master contains the data of all vendors with which a company conducts business. Module(s): MM 19 Current Terminology: Vendor in Vendor File SAP Terminology: Vendor Master Record SAP Definition: A data record containing all the information necessary for any contact with a certain vendor, in particular for conducting business transactions. Module(s): MM SAP Example(s): House bank data FRS Example(s): Vendor address data bank in FRS.