MM (Materials Management) supports procuring goods, holding them as stock and issuing them where they are needed. In manufacturing it feeds production; in retail it is the buying function itself. Every industry uses some part of it.
The procurement process
| Stage | Document | Code | What happens |
|---|---|---|---|
| Requirement arises | Purchase requisition | ME51N | Request what is needed; MRP can generate it |
| Source selection | RFQ / quotation | ME41 / ME47 | Request and compare quotations |
| Ordering | Purchase order | ME21N | A formal order to the vendor |
| Receiving | Material document | MIGO | Stock rises; GR/IR is credited |
| Invoice verification | Invoice document | MIRO | Three-way match; payables are created |
| Payment | FI document | F110 | The payable is cleared |
Three-way match
The control at the heart of MM is the three-way match: the purchase order, the goods receipt and the invoice must agree before payment proceeds.
| Document | What it records | What it evidences |
|---|---|---|
| Purchase order | What was agreed โ item, price, quantity | The contract |
| Goods receipt | How much actually arrived | That delivery happened |
| Invoice | What is being billed | That the claim is reasonable |
Where quantity or value differs beyond tolerance, SAP blocks the invoice for payment. Paying for goods that never arrived, or paying the same invoice twice, is prevented structurally rather than by vigilance.
What GR/IR is for
Goods and invoices arrive at different times. Something delivered but not yet invoiced, or invoiced but not yet delivered, is an everyday occurrence.
At goods receipt
Dr Raw material inventory 100,000
Cr GR/IR clearing 100,000
At invoice verification
Dr GR/IR clearing 100,000
Cr Accounts payable 100,000When both have happened the GR/IR balance clears. A remaining balance means one side is outstanding, which is what makes it a standing item at period end.
The parts of MM
| Area | Scope |
|---|---|
| Purchasing | Requisitions, orders, agreements, vendor evaluation |
| Inventory Management | Receipts, issues, transfers, physical inventory |
| Invoice Verification | Receiving invoices and matching them |
| MRP | Generating procurement proposals from requirements |
| Valuation | Valuing stock and posting to accounting |
Connections to other modules
| Module | Interaction |
|---|---|
| FI | Goods receipt and invoice verification generate accounting documents |
| CO | Consumption charges cost centres and orders |
| PP | Component requirements from production orders become requisitions |
| SD | Sales reserve stock, and goods issue reduces it |
| QM | Received materials are routed to inspection |