SAP Material Codes

The SAP Material Code (8 digits) is the primary master data element of the SAP Logistics module. It is used to both describe and record statistical history of purchases made.  Material Groups (represented by a 4 digit code) are the hierarchical grouping of like materials.

The Material Group codes have been based on the AUSLANG naming and cataloguing convention. AUSLANG is an international cataloguing convention originally developed by NATO.

The Material Code, for each unique material, is generated by the SAP system.

At day one of going live with SAP  in Monash there was approximately 60 Material Groups and 400 materials established. These numbers are expected to increase with the eventual introduction of the stores module, the establishment on a greater number of supply agreements and on request from department to more specifically identify materials.

With the introduction of SAP to ensure that all requirements can be described adequately using this coding arrangement there will be one Material in each Material Group which has a its descriptive name equal to the more generic Material Group name. If a specific material cannot be found for the item required it is recommended the generic material is selected and then the text amended to the more precise description.

When creating a purchasing document a material can be searched by its 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. The Material Group text cannot be altered.  Both the Material Group description and the Material description will be printed on the Purchase Document.

About 50%-60% of materials are linked to a account code. This means the account code will be defaulted into the account assignment screen on selection of the material. Given a Cost Centre will also default from the user profile (when set-up) in some cases a user will only have to determine the fund.  In all cases of defaulting codes the user should confirm that the defaulted codes are correct.  It was determined that the remaining 40% to 50% of the material codes could not default an account as the account would depend on the nature of use of the material.

Why do we need these?:

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 Monash University's considerable purchasing power.

Our current 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 statistical 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.