International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395 -0056

Volume: 03 Issue: 12 | Dec -2016 www.irjet.net p-ISSN: 2395-0072

Material management by using SAP in real estate construction sector

Ganesh Ashok Patare1, Pravin Minde2
1PG Scholar, TSSM’S Padmabhooshan Vasantdada Patil Institute of Technology, Bavdhan, Pune.
2Asst. Professor, Department of Civil Engg. TSSM’S Padmabhooshan Vasantdada Patil Institute of Technology,
Bavdhan, Pune.

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Abstract – Material management play an important role  Planning,
in construction industry. As far as real estate sector is  Procurement,
consider construction material may constitute more than  Logistic
60% cost of the total project cost. Material management is a  Inventory.
scientific technique, concerned with planning, organizing
and control of flow of materials, from their initial purchase Material management (MM) module of SAP is the best
to destination. System Application and Product (SAP) can solution for material management in construction
help organization to reduce operating costs, generate more industry. By using SAP a 100 % data related to material
accurate forecasts of material, manage and maintain the management is centrally stored/saved on the server. SAP
inventories of material, accelerate procurement, and streamlines all the business functionalities and gives
enhance the delivery-storage-consumption of material at desired result in a single click. An SAP system can help to
right time. To implement an integrated system of materials improve the communication within an organization. SAP is
management, there must be a central database wherein user friendly i.e. information will be obtained as and when
anyone in the company can find out all information about required.
any material passing through the plant. SAP streamlines all
the business functionalities and gives desired result in one 1.1 Objectives of Material Management
click. An SAP system can help to improve the
communication within an organization. SAP is user friendly  Efficient material planning.
i.e. information will be obtained as and when required. By  Buying or purchasing.
using SAP (Materials Management-Module) for real estate  Procuring and receiving.
construction industry, the product can be ordered and  Storing and inventory control.
received within safety period. This Paper contains a detail  Supply and distribution of material.
study of Material Management module implemented by a  Quality assurance.
Kalpataru Ltd. A real estate company from pune.  Good supplier and customer relationship.
 Improved departmental efficiency.
Key Words: Material Management (MM), Construction
Material, SAP (System Application and Product) 1.2 Functions of Material Management

(A) Primary Functions

 Materials Requirements Planning.
1. INTRODUCTION  Purchasing.
Material management plays an important role in  Inventory Planning and Control.
construction real estate industry. Material a only single  Ascertaining and Maintaining the Flow and Supply
component constitute a major cost of project. Material of Materials.
may constitute more the 60% cost of the total project cost.  Quality Control of Materials.
The control of materials is a very important and vital  Departmental Efficiency.
subject for every company and should be handled
effectively for the successful completion of a project. (B) Secondary Functions.
 Standardization and Simplification.
Proper material management can also increase the overall
 Make and Buy Decisions.
profit of the company. Material management is a scientific
 Coding and Classification of Materials.
technique, concerned with planning, organizing and  Forecasting and Planning.
control of flow of materials, from their initial purchase to
destination. Material management contains mainly four
processes i.e.

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 International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395 -0056
Volume: 03 Issue: 12 | Dec -2016 www.irjet.net p-ISSN: 2395-0072

2. MATERIAL MANAGEMENT MODULE OF SAP 3)Plant:

Operational unit within a company code.
2.1 SAP - System Application & Products 4) Storage Location:
This level contains the data specific to a storage location.
(SAP) is basically designed to create a common centralized Stock levels are an example of the data maintained for
database for all the applications running in all the each storage location
departments in an organization. The kind of application 5) Purchasing Organization:
you can manage includes – An organizational unit responsible for procuring materials
 Logistics & Material Management or services for one or more plants and for negotiating
 Finances general conditions of purchase with vendors. The
 Reporting, HR etc purchasing organization assumes legal responsibility for
The original name for SAP was Systeme, Anwendungen, all external purchase transactions.
Produkte (In German). The system comprises of a number 6) Purchasing Group:
of fully integrated modules, which covers virtually every The purchasing organization is further subdivided into
aspect of the business management. It eliminates the purchasing groups (buyer groups), which are responsible
duplication and redundancy in data. Increases for day-to-day buying activities. A purchasing group can
productivity, efficiency and better management of also act for several purchasing organizations.
resources. Improves Customer Service through better
Customer Interaction. 2.4 SAP MM CYCLE
 Purchase Requisition (PR)
2.2 Features of SAP MM  Purchase Order (PO)
The features of a SAP MM system are as follows:-  Goods Receipt (GRN)
 SAP MM is one of the modules of SAP that deals  Store Stock
with material management and inventory  Material Issue Slips (GI)
management.
 Inventory Stock
 Material Management as a process ensures no
shortage of materials or any gaps in the supply
2.5 LIST OF TRANSACTION CODE REQUIRED
chain process of the organization. SAP MM speeds
up the procurement and material management FOR MM IN SAP
activities, making the business run smoothly with  ME51N – Create Purchase Requisition
complete time and cost efficiency.  ME5A – Purchase Requisition List Display
 It deals with managing the materials (products  ME23N - Display Purchase Order
and/or services) and resources of an organization  ME2N – Purchase order by PO no.
with the aim of accelerating productivity and  MIGO – Goods Movement.
reducing costs. At the same time, SAP MM is quite  MB1A – Goods Withdrawal
versatile to accommodate changes that are  MB25 – Reservation List
frequent in any business environment.  CJ20N – Project Builder
 It deals with the Procurement Process, Master  MB52 – List of Warehouse stock on Hand
Data (Material & Vendor Master), Account  ZMM_INV – Inventory Report
Determination & Valuation of Material, Inventory
Management, Invoice Verification, Material 2.6 MOVEMENT TYPES FOR MM
Requirement Planning, etc.
 103 – Gate Entry
2.3 SAP Structure in Materials Management
 105 – Goods Receipt
The Organizational Structure in MM is made up of
following Organizational Levels:  106 – Goods Receipt Reverse

1) Client:  541 – Material Transferred to Contractors Stock

Represents a grouping or combination of legal,
organizational, business and or administrative units with a  542 – Material Reverse From Contractors Stock
common purpose.
2) Company Code:  281 – Goods Withdrawal (Consumption)
Company Code represents an independent accounting unit
within a client. Each company code has its own balance  282 – Consumption Reverse
sheet and its own profit and loss statement.
 301 – Stock Transfer from Plant to Plant

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 International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395 -0056
Volume: 03 Issue: 12 | Dec -2016 www.irjet.net p-ISSN: 2395-0072

3 - DETAIL WORKING OF SAP  Log Off

 SAP Login Screen It is a good practice to log off from the SAP system when
Log on to the SAP server. The SAP login screen will prompt you finish your work. There are several ways to log off
you for the User ID and the Password. Provide a valid user from the system, but it can be done using the following
ID and password and press enter. The user id and instructions as shown in the screenshot below:
password are provided by the system administrator. The
login screen appears as follows:

Figure 3 Log Off Screen

Figure 1 SAP Login Page
 PURCHASE REQUISITION (PR)
 SAP Home Screen Procurement in every organization starts with gathering
After Entering User Id & Password Home page as above requirements. Once requirements are gathered, we need
gets open. Required Transactions are saved in the list of to inform the purchasing organization. A Purchase
favorites. On the same window Icons as mentioned below Requisition is a document that contains a list of
are shown, requirements. The key points to note about a purchase
requisition are as follows:
 Window to enter T- Code  A purchase requisition is a request that is made to
 Save, Back, Exit, Stop, Find, Help the purchasing organization to procure a certain
 Page Up & Down list of materials.
 New Window  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:
(i) Standard: Getting finished material from vendor.
(ii) Subcontracting: Providing raw material to vendor
and getting finished material.
(iii) Consignment: Procuring material that is kept in
company’s premises and paying to vendor for
that.
(iv) Stock transfer: Getting material from within the
organization.
(v) External service: Getting services like
maintenance from a third-party vendor.
Figure 2 SAP HOME PAGE

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 International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395 -0056
Volume: 03 Issue: 12 | Dec -2016 www.irjet.net p-ISSN: 2395-0072

 GATE ENTRY
After Issuing the PO, Suppliers is arranging to deliver the
material. When the material reaches on Gate, a security
Guard makes the entry of same in the Inward Register &
gives the Gate Entry No. on Delivery Challan.
Transaction Code used for Posting GRN is MIGO.
Movement type used for Posting Gate Entry is 103.

Figure 4 Purchase Requisition (PR)

PR is raised in system by execution team as per the

requirement of material. Following fields are required to
be entered while raising PR.

 Material Code
 Required Quantity Figure 6 Gate Entry
 Plant No for which material is required
 Requisihner Name.  GOODS RECEIPT NUMBER (GRN)
 Class of material. Goods receipt is the phase where the material is received
by the ordering party and its condition and quality are
 PURCHASE ORDER (PO) verified. Depending upon the movement type, stock is
When the PR gets released at all levels, the same is posted in inventory with the help of goods receipt. Goods
displayed to Purchase Department. Then the PO of receipt will show the increase in warehouse stock. When
required material is prepared & when it gets released at the material is delivered on site, referring the Delivery
all level then the PO is honored to the respective supplier. Challan & PO, GRN of the Material is posted in the System.
Transaction Code used for Posting GRN is MIGO.
Movement type used for Posting GRN is 105.

Figure 5 Purchase Order (PO)

Figure 7 Goods Receipt Number (GRN)

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 MATERIAL ISSUED TO AND REVERSED

FROM CONTRACTOR
After Posting GRN in system, the material is issued to
contractor & the same is transferred to Contractors Stock.
After issuing material to contractor the responsibility of
material belongs to contractor. Before Posting Final
consumption material mentioned in Issue slip given by
Engineer In charge is reversed & taken back from
contractors stock to Kalpataru Stock.

Transaction Code Used for Posting Consumption is MIGO.

Movement type used for issuing and reversing material –

541-542 Figure 9 Material Issue Slip

 MATERIAL WITHDRAWAL (Consumption)

After receiving material issue slip from Engineer In charge,
the consumption of material is posted in system by store
in charge.
Transaction code used for posting Consumption is MIGO.
Movement type used for the material withdrawal
(Consumption) - 281

Figure 8 Material Issued to Contractor

 MATERIAL ISSUE SLIP

Issue slip of consumed material against respective
activity is prepared & submitted by Engineer In
charge of respective building to store in charge.
Following details are mentioned on issue slip
 Issue slip No – i:e 281
 Project Code
 Network No.
 Plant No.
 Vendor Code Figure 10 Material Withdrawal (Consumption)
 Activity No.
4– ADVANTAGES AND DISADVANTAGES OF
 Activity Description
MATERIAL MANAGEMENT BY SAP
 Material No.
 Material Description  Advantages of material management by
 Quantity of Required Material
SAP
 Unit
 Reservation No.  Can easily find out exact consumption of materials

 Can easily get stock of materials and locations of

materials

 Accuracy increases

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 International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395 -0056
Volume: 03 Issue: 12 | Dec -2016 www.irjet.net p-ISSN: 2395-0072

 By only one click, one can easily get all details  REFERENCES
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5 - CONCLUSION
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 Paper work reduced due to system
Implementation.
 Tracking of Order was easy.
 It reduces manual errors and it is easy to
communicate.
 Reduces Manpower required in stores.
 Inventory record was easily available.

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