Material Management without Material Masters is it possible?

[Former Member]

Current we manage/procure materials with and without Material Masters.  While we utilise a MM for items held within the Stores, the vast majority of materials purchased are through free text purchase orders, credit cards and catalogues without any sort of naming convention. Materials within our store are either linked to a contract or use of an info record and form the basis for our catalogue, MRP and PO processes. My concerns stem around all the materials without a master record. Creating a catalogue difficult to navigate, material categories/contracts difficult to scope, poor reporting and spend analysis, off contract spend and loss of buying power through purchasing de-centralisation.

Have you seen a pure external catalogue model work with SAP with/without any material master?

Any feedback or examples would be appreciated.

Regards

[former_member197616 · Accepted solution]

Hi,

When you use MM module in SAP , IM is the implied point which basically works on the principle of posting the stock values through the valuation class assigned , Unless a master record exists this will not happen . Entire IM works based upon this principle only . when you use sap you can not omit the master records . Pure usage of catalogs i feel can not work . when you use the text materials , it does means you are procuring the materials for consumption . Again the IM principles for posting will applies .Not sure how you manage the MRP for your text materials .However PO will work for the consumption procurement . ?

Regards,

[Former Member · Accepted solution]

In MM generally non stock, non valuable ( e.g. Stationaty etc.) procure without material master record . You can consider it as indirect procurement. Also Service Procurement will do. You can track them by material group.

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[jagdeepsingh83]

I hope my points are also helpful for you

1. Procurement with Material Master- It may or may not require account assignment. It depends on you material master or business want material when go to consumption or warehouse. When you procure material with material they can go to inventory or not to inventory.

This depends upon the material master settings. Even consumable material can tracked in inventory when you procure them against a account assignment object. Consumables materials can have material master (using UNBW material type). It is recommend to have material master for these consumable materials (even non stock) so that you address the concerns for spend analysis and have clear visibility in reporting.

2. Procurement without Material Master- There two types in this type procurement. It always required account assignment 

-Text based purchasing is normally done for stationery items but not all consumables. Many consumables some time need tracking in terms of reporting and spend analysis. You can use material type NLAG for these type material procurement.If you are loading contracts and info records to catalog  you may able to load it with material number.

- External Service Procurement- This procurement is used when hire some to do certain job for you such repair, maintenance, cleaning, consulting etc. For this Item category is D to be used along with account assignment category. This process requires creation of Service entry sheet to confirm the services are performed as request.

Non-valuated material (Material Type UNBW):

This type of material is managed on a quantity basis, but not on a value basis. This makes sense for materials of low value, stocks of which nevertheless have to be monitored (for example, operating manuals).

Non-stock material (NLAG) (Material Type NLAG):

Inventory management is not possible for these materials either on a quantity or value basis. For frequently required consumables, the use of this material type nevertheless enables you to store the information required to create

purchasing documents (such as texts and units of measure).

When a material is procured directly for consumption, no material master record is necessary. In connection with consumable materials, you can distinguish between the following cases:

• Consumable material without material master record

• Consumable material with material master record that is not subject to

inventory management (on either a quantity or value basis)

• Consumable material with material master record that is subject to inventory management on a quantity, but not a value, basis

[Former Member]

Dear Aron,

Everything is possible, but you have to understand the system which is not created by only one company, many efforts they have spent on SAP, across the globe all big company using SAP. Its not only support to any specific areas, rather supports Chemical, retail, OIL & GAS, Realty sector, HR management, Pharmaceutical company, etc. using SAP ERP. I suggest you, please elaborate your requirement expert already there will help you to understand your issue.

Regards

Sanjeet

[Former Member]

Thank you all for your responses. I am unsure what IM is sorry and would need clarification. I am a SAP novice sorry and I am trying to collate best practice for material procurement and/or better use of SAP functionality, for example PO automation. We use a vanilla package which we have adopted reasonably well and MRP is utilized for inventory items with MM only. I believe currently all GL's are linked to the material groups.

Most of the materials procured outside of inventory are not indirect procurement but materials procured for construction and maintenance of our Local Governments infrastructure and services. For example most stormwater pipe, water supply, facilities, park furniture, Fleet maintenance, chemicals, PPE and hardware etc. Stores inventory would account for a very small percentage, maybe 5-10% of total material value with proposed future models to reduce this further. We also now utilize asset management within SAP to maintain these assets. Our procurement office is proposing full use of external catalogues for all materials including Stores and based on my research of SAP users thus far this would not appear very common or efficient. I could of course be wrong. I guess my question was around how this could work and if there were any businesses out there actually do this sort of material procurement using SAP.

Current PO modification rates are very high. PR to PO processing is slow and we experience high invoice mismatch rates. Reporting on material spend is tedious and at best we get total value of a material group but little detail in actual materials purchased. This is causing large gaps in our material contracts. I was anticipating that the use of extensive MM for all materials would assist with some of these issues. 

Regards

Aaron