SAP Materials Numbers:What, When and Why?

What:

The SAP Material Number (8 digits) is the primary master data element of the SAP MM module. It is used to both describe and record history of purchases made. Material Groups (represented by a 4 digit code) are the hierarchical grouping of like materials. The Material numbers, for each unique material, is generated by the SAP system.

Materials are linked to an account code, vendor, price, description and other information needed for the execution of a structured PO using this number.

When creating a purchasing document a material can be searched by its material number, descriptive name or selected from drill down from Material Group name (A wild card character/s can be used in each case). Once selected the Material short text can be amended to more precisely describe the item and unlimited long text is also available.

Use:

The material number uniquely identifies a material in the SAP System.As a rule, a material master record must exist for each material subject to inventory management within a firm. This record is stored under the material number.

Why do we need these?

A structured Purchase Order (PO) is the most efficient use of the SAP materials management system. A structured SAP PO is one in which a vendor is identified and an outline agreement is in place within SAP. The material number is the primary linking mechanism within SAP MM. It can reference multiple data sources within SAP and link them to the PO for reference, agreements, vendors, terms, BOM, etc. Setting up a material number is not a simple task, since it can link into a significant number of data sources. The links also must be maintained and the links updated as things change.
Use of materials allows us to get a better picture of what we are purchasing thus allowing strategic purchasing decisions to be taken to get leverage for better prices, terms and conditions from our suppliers by concentrating CP Chems’ s purchasing power. Without a material number, the systems allow us merely to report on who we are buying from (who we are paying), it provides no information about what we are buying. Each department will have access to purchasing reports to allow determination of spending patterns of their Purchasing Groups or against Suppliers and Material Groups and materials.
SAP provides the ability to link Supplier Master data to Material Master data through a mechanism SAP calls The Info Record. Literally this contains all the information and history about purchases from a supplier for a specified material. When set up it can be used to evaluate suppliers in terms of price and delivery as well as other defined criteria. It can also be used to hold preferred supply arrangements and can be used for automatic sourcing of requirements.

When:

An item should have a material number (and be set up in the system with all the associated data) if the answer is yes to any of the questions below.

Stocked? – is it an item that is kept on hand as per plant policy?
SAP Consignment? – is this item owned by a vendor (often kept at a vendor site) and paid for when used?
BOM? – is it an item or service associated with a piece of equipment, a PM activity or an area Bill of Material (BOM)?
Tracking Needed? – does the detailed purchase history have to be tracked for later analysis?
Critical spare? – is this an item that is critical to the operation?
Capital Spare? – is this a spare part kept in stock but purchased by a capital project.

If the answer to all of these questions is no, then the item should not be set up within SAP with a material number.

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