Creating Material type means grouping together of materials with the same basic attributes such as raw materials, semi finished products, or finished products; in other word a material type is group of materials with similar attributes. The material type allows the management of different material in a uniform manner
Whenever you create a material master record, you must assign it to a material type. This requires you to first define the attributes of each material type.
Material types are used in the following neighbouring areas, where they are also configured in Customizing
  • Profit Centre Accounting
  • Product Cost Planning
  • Sales and Distribution ( availability check)
  • Valuation and Account Assignment ( valuation classes)
  • Production:
    • Bills of material
    • Routings

Consult with these areas if necessary

Why We have to Create Material Types ?

  • If we want to distinguish material type of origin and usage – like a finished product (produced goods ready for sale), semi finished product (used as a part of a finished product), trading goods (for resale), raw materials (used for production of semi finished and finished products) etc. 
  • If we want to create the material that stock are not required to maintain but only value have too maintain or vice versa
  • If we want to Crete the Items Which only Procure from externally 
  • If we want to Crete the Items Which only Procure from internally 
The Material type is the highest level of categorization of material masters. 
Material Types defined in configuration and below is a summary of main areas that material type influence: 
  • Number range of material master and if it is internal (system allocated) or external (user allocate number) 
  • Which fields in material are mandatory / read only / optional 
  • User departments (Views in material) 
  • Purchase Orders allowed 
  • Valid valuation classes 
  • Quantity and Value update (does it update stock qty and value) 
  • .... and many more
Material Type can be assigned during the creation of the material in t-code MM01 

In this Topic, You will Learn How to Create the Material types as per our requirement, In SAP 

STEP 1: Following is the path For to  DEFINE ATTRIBUTES OF MATERIAL TYPES 
  • Transaction code : SPRO

STEP 2: Click on execute button to DEFINE ATTRIBUTES OF MATERIAL TYPES (Following type Window will open)

Following are Standard SAP Material Types mosttly used in Material mas:

  • DIEN - Service
  • ERSA - Spare Parts
  • FERT - Finished Product
  • HALB - Semifinished Product
  • HAWA - Trading Goods
  • HERS - Manufacturer Part
  • KMAT - Configurable materials
  • LEIH - Returnable packaging
  • NLAG - Non-stock materials
  • PIPE - Pipeline materials
  • PROC - Process materials
  • ROH - Raw materials
  • UNBW - Nonvaluated materials 
  • VERP - Packaging
for more Information on Stranded Material types Click Here

STEP 3:  When we want to create the new Material type, Select the Existing standard Material type from which suitable & near close to your Material type and Click on Copy As Button, here we are selecting Material Type ROH –Raw Material 

STEP 4:  On Clicking Copy as button following type window will Open

STEP 5:Update the Following Data

1).MATERIAL TYPE : Give the 4 Digit Material Type Code, here we are following Z config Hence our Type Code is ZROH & give Appropriate Material type Description

  • Field Reference : When material master records are maintained, the field reference determines for each field selection group if the field selection group is set to Hide, Display, Required entry, or Optional entry.
  • SRef: Material Type:  in this field you Define Screen reference depending on the material type. it determines what screens are displayed depending on the material type when you maintain material master records. It also determines the order in which the screens appear.
  • Authorization group : If you want to maintain the authorization in creation of material records then you set the authorization group. If no authorization group is entered, no specific authorization check is carried out for materials of this material type
  • External no. assignment w/o check Indicator : If you have set the external number assignment in material numbering then, this indicator tells the system not to check the material number entered on the screen against the number range. In this case, the material number assigned must contain at least one letter, and not consist only of figures
  • X-plant matl status : The cross-plant material status restricts the usability of the material for all plants, that is, it defines whether a warning or error message is displayed if you include the material in a particular function
  • Item category group: here you have to set the Group of materials that the system uses to determine item category for the processing of sales documents.
  • With Qty Structure Indicator : If you set This indicator then it determines whether the material is costed using costing with or without a quantity structure
  • Initial Status Indicator : This indicator specifies that the initial status of a batch is "restricted".

3). Special Material Types
  • Material is Configurable : Indicator that determines whether the material is configurable. If this indicator is set, you can assign a variant class to the material, making it possible to use it as a configurable material.
  • Material F. process : If this indicator is set, you. Allows materials of this material type to be defined as materials for a process in which there may be co-products. But For a material of this kind, you can define a bill of material with co-products. However, the material is not adopted as an order item.
  • Pipeline Mandatory : If you set this indicator then you Makes pipeline handling mandatory for materials of this material type. But you neither external nor internal purchase orders are possible for pipeline materials. In addition, neither quantities nor values are updated for these materials.
  • Manufacturer Part : If you set this indicator then it allow you to distinguish between manufacturer part numbers in Purchasing, you can create a material master record for each manufacturer part number and assign it to your company's own material.

4). USER Departments
here you have to select department as per your business requirement , we have following option to select the

5).Internal /External Purchase Order1.       In this section you set material created by this material type is allowed to procure either internally or externally or both or with warning        

You have to select the values as per business requirements, possible entries are
·         Internal Purchase Order :
·         0- No Internal Purchase Orders allowed
·         1 – Internal Purchase orders allowed , but warning issued
·         2 – Internal Purchase orders allowed
·         External Purchase Order :
·         0 - No External Purchase Orders allowed
·         1 – External Purchase orders allowed , but warning issued
·         2 – External Purchase orders allowed

  • Class Type
  • Class
  • Price Control
Two types of Price Controlled given by SAP
1.       Moving Price – ‘V’
2.       Standard Price- ‘S’
Standard Price:
·         Valuation using a standard price has the following features:
·         All inventory postings are carried out at the standard price.
·         Variances are posted to price difference accounts
·         Variances are updated
·         Price changes can be monitored
If a material is assigned a standard price (S), the value of the material is always calculated at this price. If goods movements or invoice receipts contain a price that differs from the standard price, the differences are posted to a price difference account. The variance is not taken into account in valuation.
Moving Average Price:
Valuation using a moving average price results in the following:
        Goods receipts are posted at the goods receipt value.
        The price in the material master is adjusted to the delivered price.
        Price differences occur only in exceptional circumstances.
If a material is assigned a moving average price (MAP), the price is automatically adjusted in the material master record when price variances occur. If goods movements or invoice receipts are posted using a price that differs from the moving average price, the differences are posted to the stock account; as a result, the moving average price and the value of the stock change
  • Acct cat. Reference
o    The account category reference  is an artificial code which allows flexibility in linking material types with valuation classes.. Account category reference which is linked to a material typehis & then linked with a valuation class and the GL account is linked to the valuation class. So a material type can be linked to one or more valuation classes (and hence GL Accounts) and in turn, a valuation class can be linked to multiple material types 
  • Price Ctr mandatory
8).Quantity/ Value Updating

STEP 6:  Click on Save Button to store Configured data 

STEP 7:  Now Select Our above created Material type i.e  “ZROH “ and double click on “Quantity/ Value Updating” in right side Dialog Structure column 

Update the Following Data in from of your Set Valuation Area
  • Qty Updating
  • Value Updating
  • Pipe Mand
  • PipeAllowd

STEP 8:  Once again Click on Save Button to store Configured data


In next Chapter we will learn How to assign the number range to Material Types

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