Material Master Data

The key points to note about material master data are as follows
−

 This is the enterprise main source of material-specific data.

This data will include information on the materials that a
company can procure, produce, store, or sell.
 Since there are different departments in an enterprise and
each department works on some specific material, they will
enter different information regarding their material. So, each
user department has its own view of the material master
record. The data screens that are used to create material
master can be divided into two categories −
o Main Data − This will include basic data (base unit of
measure, weight), purchasing data (over tolerance and
under tolerance), accounting data (standard price,
moving price).
o Additional Data − This will include additional
information like short description about material,
currency etc.

Material master has four characteristics, which we will discuss one

by one in the following sections.

Material Types

Materials with some common attributes are grouped together and

they are assigned to a material type. It differentiates the
materials and allows organizations to manage different materials
in a systematic manner in accordance to a company’s
requirement. For example, raw material and finished products are
some of the material types. Material type can be created by
following the steps given below.

Path to create material type

IMG ⇒ Logistics General ⇒ Material Master ⇒ Basic Settings ⇒

Material Types ⇒ Define Attributes of Material Types

TCode: OMS2

Step 1 − On the Display IMG screen, select Define Attributes of

Material Types, by following the above path.
Step 2 − Click the New Entries button.
Step 3 − Fill in the required information such as name of material
type and description. Click on Save. A new material type will be
created.
Material Groups

Material group is a wider range of material type. Materials with

some common attributes are taken together and they are
assigned to a material group. For example: We have some
materials that are to be packaged, so the material type can be
electrical or food products, but we can group these material types
and put them in the packaged material group. Follow the steps
given below to create a Material Group.

Path to Create Material Group

IMG ⇒ Logistic General ⇒ Material Master ⇒ Settings for Key

Fields ⇒ Define Material Groups

TCode: OMSF
Step 1 − On the Display IMG screen, select Define Material
Groups, by following the above path.

Step 2 − Click the New Entries button.

Step 3 − Enter the name of the material group along with its
description. Click the Save button. A new material group will be
created.
Number Range

When we create a material master record, every material is

recognized by a unique number that is known as the material
number. We can assign a number to a material through two ways
−

 External number assignment − While creating a material,

you have to enter your own number (containing alphabets or
digits), and that should be unique.
 Internal number assignment − While creating a material,
you need not enter any number. The system automatically
generates a unique number to that material.

Define Number Range −

Internal number range can be defined by following the steps
given below −

Path to Create Number Range

IMG ⇒ Logistic General ⇒ Material Master ⇒ Basic Settings ⇒

Material Types ⇒ Define Number Range for Each material Type

TCode: MMNR

Step 1 − On the Display IMG screen, select Define Number

Range for Each Material Type, by following the above path.
Step 2 − Click the Intervals button.

Step 3 − We can define a number range here and EXT (external

tab, if it is checked, then an external number can be assigned in
that material). Click the Save button. Number Range is now
defined for the material.

Assignment of Number Range

After defining, we need to assign it to a material group. Follow the
steps given below to assign a number range.

Step 1 − On the same screen, select the Groups tab.

Step 2 − For a particular material group, we can assign a number

range here. Click on Save. The number range is now assigned to
the material group.
Material Master Creation

Material master contains information on all materials that a

company procures, produces, or sells. It contains central data that
is available at all the levels. Follow the steps given below to
create a material master −

Path to Create Material Master

Logistics ⇒ Materials Management ⇒ Material Master ⇒ Material

⇒ Create Material

TCode: MM01

Note − For any create transaction, we use 01, for edit 02, for
display 03 as suffix.

Step 1 − On the SAP Menu screen, click the create button by

following the above path.
Step 2 − Fill in all the required details such as material number
(if external number assignment), material type, industry sector,
etc.
Step 3 − Select the views you want to maintain for your material.
Step 4 − Enter the name of the plant and the storage location.
Step 5 − Enter the required information in your material views
such as unit of measure, currency, standard price, moving price,
etc. Click on Save. A new material will be created.
Vendor Master Data

The key points about vendor master are as follows −

 Vendor Master Data is the enterprise main source of vendor-

specific data. It includes information on vendors from which
a company can procure, or can sell.
 A vendor master record contains information such as
vendor's name, address, etc.
 Data in a vendor master record is divided into three
categories −
o General Data − General data is maintained at client
level and it is valid for all organizational levels.
o Accounting Data − Accounting data is maintained at
company level and it is valid for all plants belonging to
that company.
o Purchasing Data − Purchasing data is maintained at
purchasing organization level.

Vendor master has three characteristics, which we will discuss

one by one in the following sections.
Vendor Account Group

Vendors are categorized according to their requirements. Some of

the vendors having similar characteristics are grouped together
and placed in one category. For example, all local vendors can be
placed under one account group. Create a Vendor Account group
by following the steps given below.

Path to create Vendor Account Group

IMG ⇒ Logistic General ⇒ Business Partner ⇒ Vendors ⇒ Control

⇒ Define Account group and field selection(vendor)

TCode: OBD3

Step 1 − On the Display IMG screen, select Define Account

Groups and Field Selection (Vendor), by following the above path.

Step 2 − Click the New Entries button.

Step 3 − Fill in all necessary details such as name of account
group, general data, and field status. Click the Save button. A new
Vendor Account Group will be created.
Number Range

When we create a vendor master record, every vendor is

recognized by a unique number known as the vendor number. As
in the case of material master, we have external as well as
internal number assignments for vendor master.

Define Number Range:

Number range can be defined by following the steps given below

−

Path to create Number Range

IMG ⇒ Logistic General ⇒ Business Partner ⇒ Vendors ⇒ Control

⇒ Define Number Range for Vendor master record
TCode: XDN1

Step 1 − On the Display IMG screen, select Define Number

Range for Vendor Master Record, by following the above path.

Step 2 − Click the Intervals button. It will create a number range

for the customer account.
Step 3 − Click the Insert button.

Step 4 − We can define a number range here and EXT (external

tab, if it is checked, then external number assignment can be
done in that vendor). Click on Save. A new Number Range will be
created.
Assignment of Number Range

After defining a number range, we need to assign it to a vendor

group. Follow the steps given below to assign the number range.

Step 1 − On the same screen as shown above, select the

Number Range tab.
Step 2 − For a particular vendor group, assign a number range
here. Click on Save. Number range is now assigned to the vendor
group.

Creation of Vendor Master

Vendor Master contains a list of vendors from where a company
can procure or sell goods. A Vendor Master can be created by
following the steps given below −

Path to create Vendor Master

SAP Menu ⇒ Logistics ⇒ Material Management ⇒ Purchasing ⇒

Master Data ⇒ Vendor ⇒ Central ⇒ Create

TCode: XK01

Step 1 − On the SAP Menu screen, select Create for Central

Vendor Data, by following the above path.
Step 2 − Fill in all the required details such as company code,
purchasing org, and vendor number (if external number
assignment).
Step 3 − Fill in all the details of vendor’s address such as street
name, postal code, country.
Step 4 − Fill in the necessary bank details of the vendor.
Step 5 − Fill in the necessary accounting information of the
vendor.
Step 6 − Fill in the terms of payment that are defined between
the company and the vendor. Click on Save. A new vendor master
will be created.
Purchase Info Record

SAP R/3 works on all real-time data that includes material master
and vendor master. Material and vendor master are separate data
records for keeping information of materials and vendors from
where material is procured. The combined information of material
and vendor altogether is kept in a record that we call as purchase
info record. The key points about purchase info record are as
follows −

 Purchasing info record stores information on material and

vendor, supplying that material. For example, a vendor’s
current price of a particular material is stored in info record.
 Purchase info record can be maintained at the plant level or
at the purchasing organization level.
 Info record can be maintained for four procurement types,
which are as follows −
o Standard − Standard info record has information on
standard orders (orders include details of vendor and
 material). This info record will include vendors price for
supplying the particular material.
o Subcontracting − Subcontracting info record has
information on subcontract orders. This info record will
include price for assembling the raw material that is
supplied by the ordering party.
o Pipeline − Pipeline info record has information on
material that is provided by vendor through pipes. For
Example: like water,electricity.
o Consignment − Consignment info record has
information on material that is kept at ordering party
premises. This info record contains vendors price that
is to be paid for withdrawing material from
consignment stock.

Creation of Purchase Info Record

Follow the steps given below to create a Purchase Info Record.

Path to create Info Record

Logistics ⇒ Material Management ⇒ Purchasing ⇒ Master Data ⇒

Info Record ⇒ Create

TCode: ME11

Step 1 − On the SAP Menu screen, select the Create icon, by

following the above path.
Step 2 − Enter the vendor number. In the info category, select
standard or subcontracting, or pipeline or consignment, according
to the requirement.
Step 3 − Fill in the required details such as material group,
1st/2nd/3rd reminder, vendor material number, personal details,
order unit, origin data, and sort term.
Step 4 − Provide the info record note that can be called as info
record description. Click on Save. A new info record will be
created.
Source Determination/List

The combined information of material and vendor is kept in a

record that is known as purchase info record. But a particular
material can be ordered from different vendors in different time
intervals. This information can be maintained in a list that is
called as the source list. The key points to note about a source list
are as follows −

 Source list includes a list of possible sources of supply for a

material over a given framework of time.
 Source list specifies the time period of ordering a particular
material from a given vendor.
 Source list can be copied from one plant to another plant.

Source list can be created by the following two ways −

 Automatically
 Manually

Automatic Creation of Source List

Source list can be automatically created by changing a few
settings in the material master. Automatic source list can be
created by following the steps given below.

Step 1 − Go to MM02 (Edit mode of material master for which

you want to create source list automatically). Select all the views.
Step 2 − Inside purchasing view, check the box for source list.
Click on Save. Source list will be created automatically for the
material.
Manual Creation of Source List
Source list can be created manually by following the steps given
below −

Path to Maintain Source list

Logistics ⇒ Material Management ⇒ Purchasing ⇒ Master Data ⇒

Source List ⇒ Maintain

TCode: ME01

Step 1 − On the SAP Menu screen, click Maintain by following the

above path.
Step 2 − Enter the material number for which you want to
maintain the source list and respective plant details.

Step 3 − Fill in all the necessary details such as valid periods,

name of vendor, purchasing organization, etc. Click on the Save
icon. Source list for the material is now maintained.

Procurement Cycle
Every organization acquires material or services to complete its
business needs. The process of buying materials and obtaining
services from vendors or dealers is called procurement. The steps
required to procure material forms the procurement cycle. Every
organization performs some common sequential steps to procure
material in the right quantity at the right price. The important
steps in a procurement cycle are as follows −

 Determination of Requirement
 Creating Purchase Order
 Posting Goods Receipt
 Posting Invoice

Determination of Requirement
This is the first step in a procurement cycle. It is the logical
subdivision, where it is determined what material or services are
required by the company, and which supplier can fulfill the
requirement. A list of requirements is made and then it is
approved by a senior authority within the organization. After
approval, a formal list is made that is known as the purchase
order with one more level of approval which is sent to the vendor.

Creating Purchase Order

Purchase order is the formal and final confirmation of the
requirements that is sent to the vendor to supply material or
services. A purchase order includes important information such as
name of the material with its corresponding plant, details of
purchasing organization with its company code, name of vendor,
and date of delivery. A purchase order can be created by
following the steps given below −

Path to Create Purchase Order

Logistics ⇒ Materials Management ⇒ Purchasing ⇒ Purchase

Order ⇒ Create ⇒ Vendor/ Supplying Plant Known

TCode: ME21N

Step 1 − On the SAP Menu screen, select Create

Vendor/Supplying Plant Known by following the above path.
Step 2 − Fill in all the necessary details such as name of the
vendor, purchasing organization, purchasing group, company
code, and details of the material, for example, material number,
price, currency, and plant.
Step 3 − Fill in all the necessary details under Item, by selecting
the tabs as shown in the following screenshot −

 Invoice/Delivery Tab (Provide the tax code, Payment terms

and conditions, and incoterms)
 Assignment Tab (Provide a valid G/L code, business area,
and WBS element)

Click on Save. A new Purchase Order will be created.

Posting Goods Receipt
After processing the purchase order, the vendor delivers the
material to the ordering party and this process is called Goods
Receipt. It is the phase where the material is received by the
ordering party and its condition and quality are verified. Once the
material is verified against the predefined quality, a goods receipt
is posted. Goods receipt can be posted by following the steps
given below.

Path to Post Goods Receipt

Logistics ⇒ Materials Management ⇒ Inventory management ⇒

Goods movement ⇒ Goods movement

TCode: MIGO

Step 1 − On the SAP Menu screen, select Goods movement

(MIGO) by following the above path.
Step 2 − Fill in all the necessary details such as movement type
(101 for goods receipt), name of the material, quantity received,
details of storage location and the plant where the material will
be placed. Click on Save. Goods Receipt is now posted for the
material.
Posting Invoice
Invoice is received from the vendor after goods receipt, and then
the invoice is verified by the ordering party. This is the phase
where the vendor (seller) is paid from the company and
reconciliation of the invoice and PO is accomplished. An invoice
can be posted by following the steps given below −

Path to Post Invoice

Logistics ⇒ Materials Management ⇒ Logistic Invoice verification

⇒ Document Entry ⇒ Enter Invoice

TCode: MIRO

Step 1 − On the SAP Menu screen, select Enter Invoice by

following the above path.
Step 2 − Fill in all the necessary details such as invoice posting
date, amount that is paid to the vendor along with the quantity
for which the amount is paid. Click on Save. Invoice is now posted
for the goods receipt.
Purchase Requisition
Procurement in every organization starts with gathering
requirements. Once requirements are gathered, we need to
inform the purchasing organization. A Purchase Requisition is a
document that contains a list of requirements. The key points to
note about a purchase requisition are as follows −

 A purchase requisition is a request that is made to the

purchasing organization to procure a certain list of materials.
 It is an internal document and remains within the
organization.
 Purchase requisition needs approval from the purchasing
organization.
 If a purchase requisition has already been approved, then it
can be modified only to a limited extent.
 Purchase requisition can be created for the following
procurement types −
o Standard − Getting finished material from vendor.
o Subcontracting − Providing raw material to vendor
and getting finished material.
o Consignment − Procuring material that is kept in
company’s premises and paying to vendor for that.
o Stock transfer − Getting material from within the
organization.
o External service − Getting services like maintenance
from third party vendor.

Create Purchase Requisition

A Purchase Requisition can be created by following the steps
given below −

Path to Create Purchase requisition

Logistics ⇒ Materials Management ⇒ Purchasing ⇒ Purchasing

Requisition ⇒ Create

TCode: ME51N

Step 1 − On the SAP Menu screen, select the Create execute icon
by following the above path.
Step 2 − Fill in all the required details such as name of the
material, quantity, delivery date, material group, and plant. Click
on Save. A new Purchase Requisition will be created.
After creating a purchase requisition, we need to send our
requirements to the vendor. It is done through a document that is
known as the purchase order. A purchase order can be directly
created from a purchase requisition.

Creating Purchase Order from Purchase

Requisition
Follow the steps given below to create a purchase order from a
purchase requisition. −

TCode: ME21N

Step 1 − Enter TCode to go to the purchase order home screen.

Select Purchase Requisition as shown in the following screenshot.

TCode: ME21N
Step 2 − Provide the purchase requisition number for which you
want to create a purchase order. Then select the execute icon.
Step 3 − Drag the standard reference Purchase Requisition to
the cart next to the NB Standard PO.
Step 4 − Verify the details of the purchase order and do the
necessary changes as per requirement. Click on Save. You now
have a purchase order from the selected purchase requisition.
Request for Quotation

Vendor selection is an important process in the procurement

cycle. Once requirements are gathered, we start looking for
possible suppliers who can fulfill the requirements at the best
possible price. So, a request is made to the vendors to submit
their quotations indicating the price of the material along with
their terms and conditions. This request is known as the request
for quotation (RFQ). Listed below are the key points to note about
a request for quotation −

 Request for quotation is a form of invitation that is sent to

the vendors to submit a quotation indicating their pricing
and terms and conditions.
 It contains details about goods or services, quantity, date of
delivery, and date of bid on which it is to be submitted.
 Quotation is a reply by a vendor in response to a request for
quotation.

An RFQ can be created by the following two ways −

 Manually
 Automatically from Purchase Requisition

Manual Creation of RFQ

An RFQ can be created manually by following the steps given
below −

Path to Create RFQ

Logistics ⇒ Materials Management ⇒ Purchasing ⇒

RFQ/Quotation ⇒ Request for Quotation ⇒ Create

TCode: ME41

Step 1 − On the SAP Menu screen, select the Create execute icon
by following the above path.
Step 2 − Fill in all the required details such as type of RFQ (if
standard, then AN), language, date of RFQ, purchasing
organization, and group.
Step 3 − Provide the name of the material, quantity of material,
material group, and quotation deadline date.
Step 4 − Provide the quantity and delivery date for the material.
Step 5 − Provide the vendor address (street number, city,
country, pin code) to which you are addressing the RFQ. Click on
Save. A new Request for Quotation will be created.
Automatic Creation of RFQ from Purchase
Requisition
RFQ can also be created with reference to purchase requisition by
following the steps given below −

Step 1 − On the home screen of RFQ, select Reference to PReq

tab.
Step 2 − Enter the requisition number for which you want to
create an RFQ. Click on Save. A new Request for Quotation will be
created with reference to Purchase Requisition.