One of the main logistic application modules is Materials Management (MM). The MM module is designed to provide information, tracking, controlling, and management on the materials moved in, within, and out of the organization and the valuation of those materials. The MM module does not focus only on materials; it supports externally procured services as well. MM contains components for consumption-based planning, inventory management, purchasing, invoice verification, external service management, and information systems.
Consumption-based planning deals with stock replenishment utilizing material requirements planning (MRP), determining lot-sizing procedures, and performing forecasting, potentially with formulas. The inventory management component houses the material and service master records, and controls and tracks all the goods movements, receipts, issues, return receipts, stock transfers, reservations, physical inventory, stock determination, and batch handling. In addition, inventory management contains the actual costing material ledger that supports multiple currencies and valuations of a material as well as calculating an actual price from production. The purchasing area of MM provides the ability to determine possible sources to supply materials/services, the actual
procurement of these materials/services, tracking the delivery from vendors, and monitoring the payments to those vendors. Within purchasing are the vendor master records, requisitions, requests for quotes, conditions and prices, purchase orders, and vendor confirmations among many other objects.
Invoice verification, as its name suggests, supports verification and material valuations such as Last In First Out (LIFO) and First In First Out (FIFO), revaluations for price changes, changes to the invoices for credits, taxes, cash discounts, checking the invoices, defining account impacts for invoices, canceling invoices, delivery costs, and determining invoice variances. The external services management component is provided to support the complete process of procuring external services from vendors, from bidding on invitations, to awarding the order, to acceptance of services. It is used to define the service specifications, enter the services performed, accept those services, and then verify the service invoice. The information systems within MM consist of vendor valuations, the purchasing information system, and inventory information.