SAP MM: A Comprehensive Step-by-Step Process Guide

Sap Mm Step By Step Process

Implementing digital solutions for your procure-to-pay process enhances compliance and oversight in various areas such as vendors, contracts, regulations, buyers, and accounts payable.

Enterprises are driven by two fundamental business processes: buying and selling. These pivotal operations encompass the sale of products or services, both of which necessitate the acquisition of various materials and resources.

This integral procedure is commonly referred to as “Procure to Pay” or PTP. SAP, a prominent provider of Enterprise Resource Planning (ERP) solutions, has designed the SAP MM Module (Material Management) specifically to streamline and manage the procure to pay process. While the actual implementation of SAP implementation services may vary based on an enterprise’s unique business model and need, we will be delving into the standardized SAP procure to pay process.

Step 1: Identifying the Requirement

The Procurement team begins the process of collecting price quotes from different suppliers. SAP consulting services help manage these supplier relationships by keeping a list of approved vendors and their ability to provide specific materials within certain timeframes. The ME41 transaction code is used to create RFQ documents efficiently.

Step 4: Quotation Selection Process

After receiving quotes from various vendors, a thorough evaluation is carried out. This assessment considers factors like pricing, product quality, and other relevant parameters to make an informed choice.

Step 5: Agreement Creation Process in SAP MM

The creation of a Purchase Order (PO) marks a critical juncture in the procure to pay process, signifying its utmost importance. Serving as a cornerstone document, the PO is meticulously crafted using the Purchase Requisition (PR) as a point of reference. This facilitates the seamless transfer of essential data from the PR to the PO, streamlining the entire procedure. Emphasizing its significance, the Purchase Order stands as the ultimate document, vital for financial computations and analyses. Executed through the “ME21N” transaction code, the PO’s versatility caters to diverse procure to pay process scenarios.

A “Stock Transfer Order (STO)” replicates an internal Purchase Order, enabling procurement from an organization’s subsidiaries or plants. Finally, the “Service PO” facilitates service-based procure to pay process from vendors. Following the PO’s generation, suppliers acknowledge the order, a process integrated with procurement operations, and further streamlined by Enterprise Resource Planning (ERP) systems for remote order acknowledgment. The Purchase Order is undoubtedly a linchpin that bridges requisition and acquisition, playing a central role in effective supply chain management and accurate financial tracking.

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Step 7: Advanced Shipping Notification

In the procure to pay process, the Goods Receipt stage plays a very important role. As goods arrive at the warehouse, the receiving staff generates the Goods Receipt document. During this stage, a meticulous examination of the received material occurs, encompassing checks for quantity, quality, alignment with the Purchase Order (PO) number, and acknowledgment. In the event of any inconsistencies, vendors are promptly informed. The transaction code “MIGO” is employed to create Goods Receipts.

Step 9: Invoice Verification

Invoice verification, facilitated by the MIRO transaction in SAP MM, involves meticulously comparing vendor invoices with Purchase Orders (POs) and Goods Receipts (GRs) to ensure accuracy. The process is streamlined by automatic referencing of relevant data, reducing errors. Credit memos reflect vendor credits, debit memos address additional payments, and subsequent adjustments modify invoice totals.

Inaccuracies may result in the cancellation of invoices, which can be done by reversing the invoice document and making necessary adjustments to accounts payable. This helps ensure accurate financial accounting and promotes transparent interactions with vendors within SAP MM.

Step 10: Payment Process in SAP MM

The final step involves the settlement of payments to the vendor. However, before proceeding with payment, it is imperative that both Goods Receipt (GR) and invoice documents are present within the system. This ensures accuracy and accountability in financial transactions. The transaction code F110 within SAP is employed to initiate payments.


While individual companies may incorporate specific variations based on their operational nuances, the core process remains consistent across industries. SAP’s comprehensive suite of solutions aids in effectively managing each step, fostering efficiency and transparency. The integration of SAP with other ERP applications, often customized to suit specific business requirements, further enhances operational effectiveness. This article is primarily dedicated to presenting the standardized SAP PTP process, showcasing the robustness and versatility of SAP’s solutions.

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The process flow of MM in SAP: A brief overview

1. Master Data Creation: Set up and maintain essential master data such as material master records, vendor master records, and purchasing info records.

2. Purchase Requisition: Create purchase requisitions to initiate the procurement process based on internal requirements.

3. Request for Quotation (RFQ): Send RFQs to potential vendors to gather competitive bids and negotiate terms.

4. Purchase Order (PO) Creation: Generate POs with detailed information about requested items or services from selected vendors.

5. Goods Receipt (GR): Receive ordered goods into inventory by performing GR transactions against respective POs.

6. Invoice Verification: Verify invoices received from vendors against corresponding POs and GR entries before making payments.

7. Inventory Management: Monitor stock levels, perform physical inventory counts periodically, and manage stock movements within different storage locations.

8. Consumption-Based Planning: Utilize various planning methods like reorder point planning or forecast-based planning to ensure timely availability of materials based on consumption patterns.

9. Vendor Evaluation: Assess vendor performance through predefined criteria like delivery reliability or quality standards adherence using evaluation systems provided by SAP MM module.

10.Inventory Valuation & Reporting: Calculate inventory values using valuation methods like moving average price or standard price; generate reports for analyzing material usage trends and financial aspects related to inventory management.

By following these step-by-step processes in SAP MM module effectively, companies can streamline their material management operations while ensuring transparency and efficiency throughout the supply chain.

The procurement process in SAP MM: An overview

In the SAP MM (Materials Management) module, the process of procuring and supplying goods within a company involves various steps. One important aspect is when one plant orders goods internally from another plant, which is known as the receiving plant or issuing plant. To facilitate this internal transfer of goods, a special type of purchase order called a stock transport order is used.

A stock transport order allows for the seamless request and monitoring of goods transfers between plants within an organization. This type of purchase order ensures that all necessary information related to the transfer, such as quantity, delivery date, and shipping details, are properly documented and tracked in the system. By using stock transport orders in SAP MM, companies can efficiently manage their internal procurement processes while maintaining accurate inventory records.

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P.S: The use of stock transport orders streamlines the movement of goods between plants within an organization by providing a standardized process for requesting and tracking transfers. This helps ensure smooth operations and enables better control over inventory management in SAP MM.

The process of SAP material management explained

SAP MM is a module used for procurement and inventory management in businesses. It consists of two crucial master data components, namely material and vendor. In the context of implementing SAP MM, there are several levels that can be defined:

1. Client

2. Company Code

3. Plant

4. Storage Location

5. Purchase Organization

What does the MM process entail?

SAP Materials Management (MM) is a module in SAP that assists businesses in managing their supply chain process. It encompasses various activities, such as planning, controlling, and executing procurement tasks. With SAP MM, companies can efficiently handle all aspects of procurement, from determining the quantity of materials needed to verifying invoices.

The first step in the SAP MM process is consumption-based planning. This involves analyzing historical data and current demand to determine the required quantity of materials for production or sales. By accurately forecasting material requirements, companies can avoid stockouts or excess inventory.

Once the material requirements are determined, the next step is purchasing requisition creation. This involves creating a document that specifies which materials need to be procured and in what quantities. The purchasing department then reviews these requisitions and proceeds with sourcing suppliers or negotiating contracts.

After finalizing agreements with suppliers, purchase orders are created to formalize the procurement transaction. These purchase orders contain details such as delivery dates, payment terms, and pricing information. They serve as legally binding documents between the company and its suppliers.

Upon receiving goods from suppliers, companies perform goods receipt transactions within SAP MM system. This confirms that the ordered items have been received physically into inventory or at designated locations within warehouses.

Finally comes invoice verification where incoming supplier invoices are matched against corresponding purchase orders and goods receipts records within SAP MM system for accuracy checks before making payments.

1) Consumption-based planning helps determine material requirements.

2) Purchasing requisition creation initiates sourcing activities.

3) Purchase order creation formalizes procurement transactions.

4) Goods receipt confirms physical receipt of ordered items.

5) Invoice verification ensures accurate billing before making payments