SAP MM based Materials Management has an important role in most organizations due to the high investments in inventory. The proper management of the material will give the results of reduced investment. SAP MM has a deep integration with SAP PP for manufacturing organizations. In this article, we describe the major areas of SAP MM integration with SAP PP.
Key Points of SAP MM and SAP PP integration are:
- Bill of Materials (BOM)
- Material Requirement Planning for External Procurement (MRP)
- Stocks Determination
At Apprisia, we are providing SAP MM and SAP PP expertise for our manufacturing customers that need the close integration between production and inventory management.
Bill of Materials (BOM)
Bill of Material is the list of materials to produce a unit of the finished goods. Once we define the BOM for the Header material (such as the finished good), we can get the exact requirement for the quantity of inventory. Here, the correctness of BOM is very important. Additionally, we can estimate the cost of the header material for pricing/procurement/profitability purposes.
Actual cost of Header Material = Cost of Inventory + Production Cost (Machine cost + Labor Cost)
Material Requirement Planning (MRP)
Once we maintain the MRP views (MRP I, MRP II, MRP III) in Material Master, we can generate the automatic reservation and Purchase Requisition after running the MRP. MRP depends upon the lead time, safety stock, reorder point, procurement type, special procurement, lot sizing and delivery time for materials. We can run the MRP as a background job for automatic creation of PR and Reservations. MRP is applicable for both in-house as well as external material procurement.
Stock determination enables you to implement various strategies to withdraw materials for goods issues and stock transfers based on the material requirements entered. The system determines how and when the material should be withdrawn, and from which storage locations and stocks.
Based on the stock determination strategy, the system makes decisions on material withdrawal depending on the material, plant and the business process.
By PB Reddy (on behalf of SAP Consulting Team)
SAP :: Streamlined
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