In this post we will first check the configuration in details required for material master creation in S4 HANA. We will keep configuration minimum possible & use of SAP standard wherever possible.

1. Material Master related configuration

Below are the main configuration required to create material master

1.1 Material Type

Grouping of similar attribute materials . For example -Raw materials, Semi-finished products, or finished products.

Material type determines

• If the material is intended for a specific purpose such as a configurable material or process material.
• Material number is assigned internally or externally.
• The number range of the material number.
• Which screens appear and in what sequence
• Procurement of the material -manufactured in-house or procured externally, or both

We will use below SAP standard material type

• ERSA Spare Parts
• FERT Finished Product
• HALB Semifinished Product
• HAWA Trading Goods
• LEER Empties
• LEIH Returnable packaging
• ROH Raw materials
• VERP Packaging
• HAWA Trading Goods

Below is the configuration for let,s say example – Trading Goods (HAWA)

Transaction code – OMS2

Now click on “Quantity/value updating” & select “QTY Update” & ” Value Update” for your all material type in all your plants (Valuation Area)

So we have selected for our valuation areas PA10, PA20 & PP10

1.2 Define Number Ranges for Each Material Type

Here we define the type of number assignment and the number range intervals for material master records. When creating a material master record it is must to assign it a unique number. There are two ways of doing this

1.2.1 Internal number assignment

In this case, a number within the number range interval allowed is assigned by the SAP system. Currently, the maximum length allowed for an internal number is 18.

1.2.2 External number assignment

Here, the user assigns a number within the number range interval allowed. You can define the intervals for external number assignment numerically and alphanumerically. For integration purposes, SAP, currently, allows only the number range length of 18 characters.

Transaction Type ; MMNR

Now let,s create our first material

2. Create your First material in S4 HANA

Here we will create different materials to be used for our car business

2.1 Creation of “Trading Material” -Mat Type “HAWA”

HINT

On Step 9 “ML Active” checkbox should be already selected and greyed out. If this is not selected then stop here and check ML activation through the link given below.

How to activate Material Ledger in S4HANA in 5 Easy Steps

2.2 Creation of “Packaging Materials” -Mat Type “VERP”

As per definition provided by SAP- “Packaging materials are intended to enclose or hold together the materials that are to be packed. In other words, the material that is to be packed can be packed into or onto the packaging material. The packaging material can be a load carrier. The most important packaging materials include crates, boxes, containers, wire baskets, and pallets”

We will create two packaging material

• Packaging Material CARTONSTD -CARTON WITH SSCC GENERATION
• Packing Material PALLETSTD – PALLET WITH SSCC GENERATION

a) Packaging Material CARTONSTD -CARTON WITH SSCC GENERATION

TCode – MM01, Select Material type as “VERP” – Packaging Material

Packaging material type Standard Carton “SCAR” assigned to packaging material “CARTONSTD”

b) Packaging Material PALLETSTD – PALLET WITH SSCC GENERATION

T-Code – MM01, Select Material type as “VERP” – Packaging Material

Note : Please see the below post to see the packaging material type “SCAR” & “SPAL” configuration in detail

Unlock SAP Efficiency: Master Handling Units Now! – Create the Packaging Materials

3. Extension of Material to Other Plants

There are business cases where we need to extend the materials to other plants.

3.1 Extension to intra-company Plant – Business Case

In order to work with stock transfer/stock transport order , it is mandatory to extend the material in both the plants. This means the material should be available in both receiving & sending plants

We need to extend our materials to our other plants in order to be able to do Stock Transfers & STOs

System will throw an error while transferring the stock or creating the STO , if the material is not extended to receiving plant

3.2 Extension to intra-company Plant

As per our organization structure We have two plants PA10 & PA20 assigned to PA10 company code as shown in below picture

First we will extend our material to PA20 plant which is assigned to same company code (PA10) as PA10 plant

To extend the material Start MM01

• Enter material as “66”
• Enter “Copy from.. Material as “66”

Press Enter

System will copy Material type and industry sector from master record as shown in the below screenshot

Select all the views

press enter and system will present source & destination organization levels as shown in the below screenshot

Fill the details as shown in the below screenshot

Note : Sales Organization PA10 serves for both the plants PA10 & PA20.

Please click HERE for details of assignment of plant to sales organizations.

Press enter and system will automatically select extendable screens one by one.

You will be presented “Classification” screen.

Since we have not configuration yet so just come out from this screen by pressing the “Next Screen” button.

You will be presented the “Sales : sales org. 1” screen

Enter Delivering Plant “PA20-PPIC Boston Part”

Press enter and you will be presented “Sales : sales org. 2” screen

We are not changing anything on the above screen so just press enter and system will present “Sales : General/Plant” screen

We are not changing anything on the above screen so just press enter and system will present “Intl Trade : Export” screen

We are not changing anything on the above screen so just press enter and system will present “Sales text” screen

We are not changing anything on the above screen so click on “Purchasing” screen

We are not changing anything on the above screen so just press enter and system will present “Intl Trade : Import” screen.

We are not changing anything on the above screen so just press enter and system will present “Purchase order text” screen

We are not changing anything on the “Purchase order text” screen, so click on “MRP 1” screen

We are not changing anything on the above screen so just press enter and system will present “MRP 2” screen

We are not changing anything on the above screen so just press enter and system will present “MRP 3” screen

We are not changing anything on the above screen so just press enter and system will present “MRP 4” screen

• We are not changing anything on the above screen so just press enter and system will present “Advance Planning” screen .
• We are not changing anything on the “Advance Planning” screen, so just press enter and system will present “Forecasting” screen

Enter Forecast Model as “N-No forecast/external model”

We are not changing anything on the above screen so just press enter and system will present “Plant data / Stor. 1” screen

We are not changing anything on the above screen so just press enter and system will present “Plant data / Stor. 2” screen

We are not changing anything on the above screen, so just press enter and system will present “Quality Management” screen

We are not changing anything on the “Quality Management” screen, so just press enter and system will present “Accounting 1” screen

In the above screen Price is showing as 15.69 USD per price for this material in PA10 Plant
Let,s assume that this material costs 20 USD in PA20 plant due to cost of living difference , overheads etc.

After changing the price, press enter and system will present “Accounting 2” screen

We are not changing anything on the “Accounting 2” screen, so just press enter and system will ask to save.

Material is now extended to PA20 Plant.

3.3 Extension to inter-company Plant

We have two companies PA10 & PP10 with plant assignment shown as below

Now we have extend our material to the PP10 plant which is assigned to the different company code PP10.

To extend the material Start MM01

• Enter material as “66”
• Enter “Copy from.. Material as “66”

Press Enter

System will copy Material type and industry sector from master record as shown in the below screenshot

Enter source and destination organization structures

You will be presented the “Sales : sales org. 1” screen

Enter Delivering Plant “PP10- PPELC Fremont Pl”

Also Electrical plant is tax exempt so select Tax classification as “0-Exempt”

Press enter and you will be presented “Sales : sales org. 2” screen

We are not changing anything on the “Sales : sales org. 2” screen so just press enter and system will present “Sales : General/Plant” screen

Change loading group to “PP10-Manual Load”

In the above screen Price is showing as 15.69 USD per price for this material in PA10 Plant
Let,s assume that this material costs 20 USD in PP10 plant due to cost of living difference , overheads etc.

After changing the price, press enter and system will present “Accounting 2” screen

We are not changing anything on the “Accounting 2” screen, so just press enter and system will ask to save.

Material is now extended to PP10 Plant.

4. Creating the material for S4 HANA EWM

We have seen the material creation for the S4 or ECC part in the above sections of the post.

Now we will create the material to use in EWM. We will review the material creation for both S4 HANA embedded as well as decentralized EWM on S4 HANA options

We will first review the difference between creation of material in embedded & decentralized EWM

--> Please note that in order to be able to distribute the delivery to the EWM system, the material given in Purchase Order/Inbound Delivery should be created for a storage location which is connected to a EWM warehouse. Check the below posts for detail

--> Configure SAP S4 HANA Material Management Organization Structure in 5 Minutes-Create Storage Location

--> Configure SAP S4 HANA Logistics Execution Organization Structure in 5 Minutes-Assign Warehouse Number


--> Storage location in the Purchase Order & subsequent to Inbound delivery flows from the "Storage Location for EP" field of "MRP2" view of the material master. Please check the detail HERE

4.1 Material Creation Difference-Embedded Vs Decentralized EWM

Before understanding the difference, we need to understand that whenever we create the material, it is first created in SCM (i.e., APO stack)

We can display the material in “/SAPAPO/MAT1”. Here all fields are replicated from S4/EWM and get overwritten with update in S4/EWM

Now once material is present in SCM/APO, we can then extend (create) this material for our Warehouse. We use “/SCWM/MAT1” for this

--> Creating the material in SCM/APO is like creating the material globally in EWM instance (logically in case of Embedded EWM & Separate sever in case of decentralized EWM).

--> Second level is to create/extend this material in our Warehouse. It is mandatory to have the material in SCM/APO (step above) to be able to create material for our Warehouse.

4.1 Creating Material for Embedded S4 HANA EWM

As explained above we will first create the material in SCM/APO.

We will create material “Battery “

4.1.1 Material Creation in SCM/APO

We create the material first same as we create in S4/ECC normally.

This material creation is already explained in the step 2, so we have created this material offline.

In case of Embedded EWM, as soon as we create this material in S4/ECC through MM01, it is available in SCM/APO

Run /SAPAPO/MAT1.

Input material number & choose “Global Data” radio button.

4.1.2 Material Creation in Warehouse

Since we have already fulfilled the prerequisite of material creation in warehouse (Material is present now in SCM/APO as shown in section 4.1.1), We can now create this material in our warehouse.

Run /SCWM/MAT1

Please check the below post for configuration of “Party Entitled to Dispose”

How to Integrate SAP EWM Warehouse in 7 Easy Steps

Give the required data in “warehouse data” & “ST. Type Data” view

input “Put away Control indicator” & “Removal Control Indicator”

in “ST.Type Data”, input Storage type & storage section indicator

4.2 Creating Material for Decentralized EWM on S4 HANA.

To create the material in decentralized EWM, we use ALE/IDOC technique.

--> Since decentralized EWM is a separate server so there is a sender system (S4 HANA) and a receiver system (EWM) involved in Creation of a Material for Decentralized EWM on S4 HANA.

--> Please note that SAP ERP/S4 is always the sender system, and decentralized EWM. is always the receiver system.

4.2.1 Material Creation in SCM/APO

As explained material needs to be created first at global level in SCM/APO of the decentralized EWM server.

This is done through ALE/IDOC.

We will review here the full process of material creation.

Note: We will not explain the process of ALE set up as nothing special in it. It is just a general ALE set up which is used normally in SAP

4.2.1.1 Creating Reduced Message Types in ERP System

We will see the reduced message type MATMAS in detail in a separate post.

5. Creating the material for Specific Business Process

If there is a specific business process needs to be determined for a material (specially in outbound/inbound delivery), then this is decided through field “Gen. item cat. grp” on “Sales: sales org 2” view of the material.

5.1 General Purpose Material

For a normal business process. the value of this field is given as “NORM” as used in the above section of the post.

5.2 Specific Purpose Material

When there is a special business process to be used, the value of the field “Gen. item cat. grp” is different.

For example

--> Some Example of "Gen. item cat. grp" value for specific business process

       NLAG --> "Non-stock material"
       ERLA -->	Structure/Mat. Above
       ERLB --> Structure/Mat. Above
       LEER -->	Empties
       LEIH	--> Returnable Packaging
       VERP--> Packaging

5.2.1 “Gen. item cat. grp” for Spare Parts Specific Business Purpose

We have used general item category for our material 700007106 which is specifically created as spare part for spare part specific purpose.

We used “YSPR” for this field for the spare parts

--> The above field is used to To determine different line item category "YSPR" for the spare parts materials from the the standard line item category "YELN", we have to input different "item category" in the material master of spare parts materials. Please check the below link to see this in detail

Configure SAP S4 HANA Sales Documents in 10 Minutes-Item Category Determination in Special Process Inbound Delivery

5.2.2 “Gen. item cat. grp” for Third Party Sales

We use Item category Group as “BANS” for the third party sales process. The rest of the material creation process will same as HAWA as given HERE

5.2.3 “Gen. item cat. grp” for Third Party Individual PO

We use Item category Group as “BANC” for the third party sales process. The rest of the material creation process will same as HAWA

5.2.4 “Gen. item cat. grp” for Third Party Subcontracting

We use Item category Group as “BADS” for the third party sales process. The rest of the material creation process will same as HAWA

6. Creation of Finished Goods for Production Order (FERT)

Here we will create a finished good material to use in our production order

Step 1

Go to MM01 and enter below on the Create Material (initial screen)

• Material Code – “Internally Generated”
• Material Type -FERT
• Industry Sector – M Mechanical Engineering

Press Enter

Step 2

Select the views to be created (Presented from the material type config OMS2). Enter organization structure in which material is to be created

• Plant -PA10 (PPIC Chicago Plant)
• Sales Org -PA10 (IC Car Sales Organization)
• Distribution Channel – PA (Car Dealer

Press Enter

Step 3

On “Basic Data 1” view

• Enter Description – “Finished Car Model D“
• Enter BUOM – EA
• Enter Division – PC (Petrol Car)
• Enter Material Group – PA10 (IC Car Parts Light)
• Gross Weight – 2000 KG
• Net Weight – 1900 KG

Step 4

On Sales : Sales Org. 1 view

• Enter Delivering Plant -PA10
• Enter Tax Classification -1 (Taxable)

Step 5

On Sales : Sales Org. 2 view

• Enter General Item Category – NORM
• Enter Item Category Group – NORM
• Acct Assmt Grp Mat. – PA (Products)

Step 6

On Sales : General/Plant view

• Enter Availability Check -KP (No Check)
• Enter Batch Management -Selected
• Enter Batch management(Plant) – Selected
• Enter Transportation Group – PA10 (Normal Transport)
• Enter Loading Group -PA10 (Manual Load)

Step 7

On MRP 2 view

• Enter “Prod. Stor. location -PP1B (This will be the production supply SLOC from where material for production will be supplied)
• Enter “Storage loc. for EP” as -PP1A -Std. SLOC, (This will be defaulted in PO and flows to the subsequent Inbound Delivery).
  
  Please note that if we want this material to be handled in EWM, then we need to select a Storage location, connected with EWM warehouse in the field “Storage loc. for EP”.

Step 8

On Plant Data / Stor. 1 view

Enter Storage Condition as P1 (IM Managed stock) – Based on this we can configure different picking SLOC , based on if SLOC is IM managed, WM managed or EWM

Step 9

Accounting 1 View

• Enter Valuation Class as 7920 -Finished Products
• ML Active checkbox – should be already selected and greyed out. (If this is not selected then stop here and check ML activation through below given link to the corresponding post).
• Enter price control “V”/”S” and price as 50000 USD.

7. Creation of SFG for Production Order (HALB)

Here we will create a semi-finished good (Assembly) material to use in our production order

Step 1

Go to MM01 and enter below on the Create Material (initial screen)

• Material Code – “Internally Generated”
• Material Type -HALB
• Industry Sector – M Mechanical Engineering

Press Enter

Step 2

Select the views to be created (Presented from the material type config OMS2). Enter organization structure in which material is to be created

• Plant -PA10 (PPIC Chicago Plant)
• Sales Org -PA10 (IC Car Sales Organization)
• Distribution Channel – PA (Car Dealer

Press Enter

Step 3

On “Basic Data 1” view

• Enter Description – “Chassis Model D“
• Enter BUOM – EA
• Enter Division – PC (Petrol Car)
• Enter Material Group – PA10 (IC Car Parts Light)
• Gross Weight – 600 KG
• Net Weight – 550 KG

Step 4

On Sales : Sales Org. 1 view

• Enter Delivering Plant -PA10
• Enter Tax Classification -0 (Exempt)

Step 5

On Sales : Sales Org. 2 view

• Enter General Item Category – NORM
• Enter Item Category Group – NORM
• Acct Assmt Grp Mat. – PA (Products)

Step 6

On Sales : General/Plant view

• Enter Availability Check -KP (No Check)
• Enter Batch Management -Selected
• Enter Batch management(Plant) – Selected
• Enter Transportation Group – PA10 (Normal Transport)
• Enter Loading Group -PA10 (Manual Load)

Step 7

On MRP 2 view

• Enter “Prod. Stor. location -PP1B (This will be the production supply SLOC from where material for production will be supplied)
• Enter “Storage loc. for EP” as -PP1A -Std. SLOC, (This will be defaulted in PO and flows to the subsequent Inbound Delivery).
  
  Please note that if we want this material to be handled in EWM, then we need to select a Storage location, connected with EWM warehouse in the field “Storage loc. for EP”.

Step 8

On Plant Data / Stor. 1 view

Enter Storage Condition as P1 (IM Managed stock) – Based on this we can configure different picking SLOC , based on if SLOC is IM managed, WM managed or EWM

Step 9

Accounting 1 View

• Enter Valuation Class as 7900 -Semi finished products
• ML Active checkbox – should be already selected and greyed out. (If this is not selected then stop here and check ML activation through below given link to the corresponding post).
• Enter price control “V”/”S” and price as 9999 USD.

8. Creation of Raw Material for Production Order (ROH)

Here we will create a RAW material (Component) to use in our production order

Step 1

Go to MM01 and enter below on the Create Material (initial screen)

• Material Code – “Internally Generated”
• Material Type -ROH
• Industry Sector – M Mechanical Engineering

Press Enter

Step 2

Select the views to be created (Presented from the material type config OMS2). Enter organization structure in which material is to be created

• Plant -PA10 (PPIC Chicago Plant)
• Sales Org -PA10 (IC Car Sales Organization)
• Distribution Channel – PA (Car Dealer

Press Enter

Step 3

On “Basic Data 1” view

• Enter Description – “Tail Lights“
• Enter BUOM – KG
• Enter Division – PC (Petrol Car)
• Enter Material Group – PA10 (IC Car Parts Light)
• Gross Weight – 5 KG
• Net Weight – 4 KG

Step 4

On Sales : Sales Org. 1 view

• Enter Delivering Plant -PA10
• Enter Tax Classification -1 (Taxable)

Step 5

On Sales : Sales Org. 2 view

• Enter General Item Category – NORM
• Enter Item Category Group – NORM
• Acct Assmt Grp Mat. – PA (Products)

Step 6

On Sales : General/Plant view

• Enter Availability Check -KP (No Check)
• Enter Batch Management -Selected
• Enter Batch management(Plant) – Selected
• Enter Transportation Group – PA10 (Normal Transport)
• Enter Loading Group -PA10 (Manual Load)

Step 7

On MRP 2 view

• Enter “Prod. Stor. location -PP1B (This will be the production supply SLOC from where material for production will be supplied)
• Enter “Storage loc. for EP” as -PP1A -Std. SLOC, (This will be defaulted in PO and flows to the subsequent Inbound Delivery).
  
  Please note that if we want this material to be handled in EWM, then we need to select a Storage location, connected with EWM warehouse in the field “Storage loc. for EP”.

Step 8

On Plant Data / Stor. 1 view

Enter Storage Condition as P1 (IM Managed stock) – Based on this we can configure different picking SLOC , based on if SLOC is IM managed, WM managed or EWM

Step 9

Accounting 1 View

• Enter Valuation Class as 3000 -RAW Products
• ML Active checkbox – should be already selected and greyed out. (If this is not selected then stop here and check ML activation through below given link to the corresponding post).
• Enter price control “V”/”S” and price as 50 USD.

Note:

Please see below post to check how the FG, SFG & Raw Material created above are used in the BOM and subsequently in the production order

How to Configure Base PP Cycle in 5 Minutes

We have created the below FG, SFG & Raw materials

Assembly (Semi Finished)-Chassis Model D (Material 500000023)

1. Component-Tail Lights (Material-500000007)
2. Component-Boot Insulation (Material-500000008)

Assembly (Semi Finished)-Car Boot Model D (Material 500000021)

1. Assembly (Semi Finished)-Chassis Model D (Material-500000023)
2. Component-Rear Tires (Material no.-500000018)

Finished Product (Car model D, Material-500000027)

1. Component-Electric Wires (Material-500000019)
2. Assembly (Semi Finished)-Car Boot Model D (Material-500000021)
3. Component-Petrol (Material-500000026)
4. Component-Engine Assembled (Material-500000009)

Now we will activate QM view for the component Tail lights.

9. Creation of QM view for QM-MM Interface

Since component Tail Lights (Material-500000007) is purchased from the vendor so we need to inspect it at the time of goods receipt

We need to assign inspection type “01” in material master QM view

Go to MM01 and enter material 500000007, select QM view and input plant PA10

As soon as we select the inspection type “01” in QM view of material master, the fields selected in the configuration will be activated by default

Please see the below post for detail

How to Configure & Test QM in Procurement-Define Default Values for Inspection Type

9.2 QM In Procurement Active Checkbox

If we set this indicator then “QM in procurement” is activated for all the plants pertaining to a client.

--> If we activate QM in procurement indicator in the material master record (Which is at the client level), we must also input "Quality Procurement Key" at the plant level for quality management in procurement.

9.2 QM Control Key

This key determines all the conditions which are valid for quality management in procurement.

To configure the QM procurement key , follow the below path

SPRO –> Quality Management –> QM in Logistics –> QM in Procurement –> Define Control Keys for QM in Procurement

We have configured the below key for our materials

The post 2 Minutes Guide to Create your First Material in S4 HANA appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

In the world of SAP S/4HANA, the Material Ledger (ML) is no longer a luxury or an optional sub-module—it is a mandatory requirement for material valuation. While the “mandatory” label often causes concern for logistics and finance teams, activating ML doesn’t have to be a technical nightmare. When executed correctly, the Material Ledger serves as the backbone for multi-currency functionality and real-time inventory valuation across different accounting standards (like IFRS or Local GAAP).

The following guide provides a strategic roadmap to move your valuation areas from a “Red” status to a “Green” productive state, ensuring your financial data is accurate and compliant.

5 Easy Steps to Material Ledger Activation

Step 1: Assign Currency Types to Material Ledger Type (T-Code: OMX2)

To record inventory values across legal, group, and profit center valuations, you must configure the currency types associated with your Material Ledger. This allows for multi-currency reporting and valuation views that are critical for global enterprises

--> We have to configure & activate Material Ledger as it is mandatory in SAP s4 HANA

--> We want to configure & activate material Ledger with minimum possible configuration

--> So we will activate our Material Ledger with only 1 currency "Company Code currency" to keep it simple

Please follow the below path for this configuration.

Senior Consultant’s Tip: For your initial S/4HANA activation, using Material Ledger Type “9000” with only “Company Code currency” (10) is a Best Practice for Lean Implementations. This setup minimizes complexity by generating only one view in the material master, which is often sufficient for mid-sized organizations or those not yet utilizing complex parallel valuation.

Select material ledger type “9000” and click on “Define individual characteristics”

Step 2: Assign Material Ledger Type to Valuation Area (T-Code: OMX3)

This step acts as the mapping phase, where you tell the SAP system which specific plants (valuation areas) will track material costs under the rules defined in Step 1.

In this configuration, assign Material Ledger type “9000” to your valuation areas (e.g., PA10, PA20, and PP10).

Important Warning: After this assignment, you will notice the valuation area status is Red. Do not be alarmed; this is the expected status. It will remain red until you complete the Production Start-up in Step 4.

Please follow the below path for this configuration.

and assign our chosen material ledger type “9000” to all our valuation areas (PA10, PA20 & PP10)

Step 3: Activate Valuation Areas for Material Ledger (T-Code: OMX1)

Transaction OMX1 is the “On Switch” for the Material Ledger in your plants. Beyond just turning it on, this is where you define how the system determines material prices.

You must choose between two Price Determination levels:

1. Transaction-Based (2): Materials are valued at either moving average price (V) or standard price (S). Moving average price is calculated only for informational purposes.

2. Single/Multi-level (3): This is the prerequisite for Actual Costing. It calculates a periodic unit price for closed periods. Single-level rolls variances into ending inventory, while Multi-level rolls variances from lower-level components (Raw Materials) up to higher-level products (Finished Goods).

Strategic Directive: For your initial S/4HANA activation, I recommend Option 2 (Transaction-Based) to maintain a streamlined logistics profile. However, if your finance team requires the elimination of manual month-end variance allocations and needs true Actual Costing, Option 3 is the standard choice.

Please follow the below path for this configuration.

Select “ML Act.” check box and Price determination level as option 2 “Transaction-Based Price Determination”

Note

The value of price determination flows from this config to the material master as shown in the below screenshot.

Step 4: Production Start-up of Material Ledger (T-Code: CKMSTART)

This is the final execution step. Running CKMSTART converts your valuation areas into a productive state, allowing SAP to begin recording actual costs, multi-currency values, and parallel accounting.

Once you execute this for a specific plant (such as PA10), the system will trigger the “Plant is now productive” indicator. It is only at this point that the status in transaction OMX3 will finally turn from Red to Green.

Lets first activate this for our PA10 valuation Area (Plant)

All green log informing PA10 is now productive with Material Ledger.

Valuation area PA20 & PP10 is made productive with ML through similar way

Step 5: Troubleshooting Common Activation Errors

Technical hurdles are common during ML activation. Here is how to resolve the most frequent errors encountered in the field:

Error 1 -Company Code is not set up for Material Management (M3152)

When we tried PP10 to make productive with ML, below error message is encountered

To resolve this error , We need to set-up Company code PP10 for Material Management through T-code OMSY

Now PP10 is initiated for MM periods from the current month .

Please note we need to open posting period starting of every month through MMPV. This step was already done for PA10 company code hence no error for Plants PA10 & PA20

Now re-try to make PP10 plant productive with ML

PP10 plant is Successfully productive now

Error 2 -Material Ledger Currencies were changed (C+039)

How to resolve error C+039 ‘Material ledger currencies were changed’

To resolve this error run the transaction code CKM9 and check Company Code/Controlling area currency as per screenshot given below

This currency should be aligned with the currency in SCC4

Note : For Example

Company Code Currency : USD

Currency in SCC4 : EUR

in this case in OKKP, select group currency 30 and currency as EUR

Please note that these currencies selection should not be changed after ML activation (CKMSTART). If changed then Error Material Ledger Currencies were changed (C+039) will come. if this happens then revert to the original currencies selection after deactivation of ML>

Error 3- ML Active checkbox is not selected in Material Master Accounting View.

• To resolve this first deactivate the ML through running report SAPRCKMJX in SE38
• Now go to OMS2, select your material type and click on “Quantity/value updating”
• Now select the “Quantity updating” & “value updating” check box for your valuation area (plant) & save.
• Now Set the Plant production for ML again through t-code CKMSTART
• Check in MM03- ML active checkbox should be now selected.
  

Error 4- ML currencies are not integrated in FI for valuation area (Error FML_CUST033)

To resolve the error we will follow 3-Part Remedial Sequence

Phase 1 (Controlling Area Setup): 

To resolve this error, Configure the controlling area as given below for our Co-Area PPIN and linked it to Company codes. Please note that currencies should be aligned for material ledger & Controlling area

Phase 2 (Component Activation)

In SPRO (Maintain Controlling Area), ensure “CCtr Std. Hierarchy” is created. Set all components to “Not Active” to maintain a lean logistics scenario.

SPRO –> Controlling –> General Controlling –> Organization –> Maintain Controlling Area

“CCtr Std.Hierarchy” is mandatory. Just give name as “PPIN” and save.

System will prompt for creation of “PPIN” “CCtr Std.Hierarchy”. Click on “yes”

Click on “Activate components/control indicators”

Since our focus is not on controlling right now so choose all components as not active to have minimum restrictions/work in our logistics scenarios.

We have already assigned our company codes “PA10” & “PA20” to our controlling area “PPIN”

Now run the CKMSTART again for our valuation area and Error FML_CUST033 -ML currencies are not integrated in FI for valuation area should not come.

if you are still getting this error then we need to configure the company code currency

Phase 3 (Ledger Integration)

Use transaction SB22 to check for the presence of your company code. If missing, navigate to FINSC_LEDGER, select Ledger “0L,” and ensure the company code settings are fully maintained.

Check the presence of your company code in transaction SB22

If your company code is not present then run T-code “FINSC_LEDGER”

Select line with ledger “0L” and click on “Company code Settings for the Ledger”

Insert your company codes

Now this error will be 100% resolved.

Error 5- Error C+380 with CKMSTART

The error message C+380 happens if the plant has an inconsistent entry in table T001W.

Cause: Inconsistency in plant/valuation area assignment.

Resolution: Use T-Code OX18 to delete the plant-to-company code assignment, save, and then re-assign the plant.

Expert FAQ: High-Value Technical Queries

Video Tutorial

To get the most value from this topic, we recommend reading this full blog post along with watching the embedded YouTube video below.

The post provides structured insights and practical examples, while the video offers a visual walkthrough to reinforce key concepts. Together, they deliver a complete learning experience for SAP professionals.

Conclusion

Transitioning your valuation areas from Red to Green is more than just a configuration checkbox—it is a significant milestone for inventory transparency and financial accuracy. By following these five steps, you ensure that your S/4HANA system is architected for multi-currency reporting and advanced valuation requirements.

Are you ready to move beyond basic activation? Now that your Material Ledger is active, you can leverage Actual Costing for deep profitability analysis. To eliminate manual entry errors and speed up your deployment, I highly recommend using the Configuration Accelerator Workbooks for Efficiency

Note

Check Post FI Organization Structure in 5 Minutes to familiarize yourself with S4 HANA FI Organization Structure

Check Post SD Organization Structure in 5 Minutes to familiarize yourself with S4 HANA SD Organization Structure

Check Post MM Organization Structure in 5 Minutes to familiarize yourself with S4 HANA MM Organization Structure

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The post Master SAP S/4HANA: 5 Essential Steps to Activate Material Ledger and Boost Financial Accuracy appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

In today’s competitive business environment, organizations need real-time cost transparency, accurate inventory valuation, and streamlined financial reporting to stay ahead. This is exactly where the SAP S/4HANA Material Ledger comes into play.

As a powerful tool for multi-currency valuation, profit analysis, and integrated accounting, it helps businesses gain deeper insights into their production and sales costs while ensuring compliance with global standards.

In this post, we’ll explore the key features, major benefits, and real-world business scenarios of SAP S/4HANA Material Ledger in simple, easy-to-understand language so that both finance professionals and business leaders can maximize its potential.

Note:

To get the most value from this topic, we recommend reading this full blog post and watching the embedded YouTube video below.

The post provides structured insights and practical examples, while the video offers a visual walkthrough to reinforce key concepts. Together, they deliver a complete learning experience for SAP professionals

1) Why Material Ledger Activation is mandatory in S4 HANA.

In today’s complex global business landscape, companies frequently operate across multiple countries—each governed by its own financial, tax, and legal regulations. As a result, organizations must manage parallel valuations, where the same material or inventory must be valued differently based on varying accounting principles, such as International Financial Reporting Standards (IFRS) and Local GAAP. For example, a business may use standard price valuation for IFRS while applying moving average valuation for local compliance—all for the same material.

Moreover, multi-currency valuation becomes equally essential when transactions occur in one currency, reports are generated in another, and statutory accounting is required in a third. A global enterprise might procure materials in USD, manage operations in EUR, and report in the local currency of its subsidiaries. This complexity requires a robust solution to handle real-time, accurate, and compliant multi-currency valuations.

Parallel Valuation, Multi-Currency, and Material Ledger Are Essential in today’s Global Business Operations.

The Material Ledger is the basis of actual costing. It enables material inventories to be valuated in multiple currencies and allows the use of different Valuation approaches.

Let’s understand this in simple terms.

2) How to Understand Material Ledger in SAP S/4HANA.

To understand the material ledger , we need to understand the Sub-Ledger, General Ledger (GL), Trial Balance & Balance sheet.

2.1) What is Sub-Ledger

To understand the material ledger, we need to first understand the Sub-Ledger.

--> In order to understand Sub-Ledger, we need to first Understand the Basics of SAP Financial Accounting: General Ledger, Trial Balance & Balance Sheet.

2.1.1) General Ledger (GL)

In simple terms, the General Ledger (GL) is the main financial record of a company. It keeps track of all money coming in and going out, recorded as debits and credits. This is the backbone of any company’s financial accounting system in SAP S/4HANA.

2.1.2) Trial Balance

To make sure everything adds up correctly, companies use something called a Trial Balance—which is just a report showing the closing balances of all General Ledger accounts on a specific date. If the totals match, it confirms that the books are accurate.

2.1.3) Balance Sheet

The Balance Sheet then uses this data to show the financial health of the business at that point in time—listing what the company owns (assets) and owes (liabilities).

2.2) Concept of Sub-Ledger

Once you understand these core financial concepts, the next step is to explore the Sub-Ledger, which sits just below the General Ledger.

Sub-ledgers track detailed transactions for specific areas like customers, vendors, or assets. These transactions are posted either directly or through automated journal entries from integrated modules like SAP FICO, MM, or SD.

Material Ledger/Actual Costing is a Sub-Ledger like AP, AR, Fixed Assets

3) Functionality of Material Ledger

Below are the main functionalities of material ledger.

• Inventory Valuation/revaluation
• Visibility of Price changes
• Updating Standard Cost with Actual Prices (optional)
• Periodic Unit price.

--> In simple terms, the Material Ledger in SAP S/4HANA is a tool that records all transactions related to materials—whether it's purchasing, receiving goods, price changes, or consumption during production. 

--> Material Ledger keeps track of how much materials cost and how they are used, while also supporting multiple currencies and different valuation methods (like standard price or actual cost).

3.1) Actual Costing

Actual costings means inventories are valued at Actual Cost based on the Actual Costing Runs.

Here inventories are valuated at actual cost means Materials are valued at Standard Price which is then adjusted to reflect the difference between the preliminary price and cost.

In Material Master accounting tab, the value of the field “Price determination” determines the actual costing.

Since our material is having price determination as 2 (Transaction based) as shown in the above screenshot, the price difference gets posted to FI and will not participate in inventory valuation at actual cost.

--> Looking at the material as shown in the above screenshot, for our car business Material Ledger is active but actual costing is inactive 

3.2) Multiple Currencies & Valuations

The Material Ledger is a powerful functionality in SAP S/4HANA that enables parallel valuation of inventory in multiple currencies and accounting principles.

--> Material Ledger allows businesses to record, manage, and report material movements and inventory values across different valuation views (legal, group, and profit center)

--> Material Ledger supports up to three currencies for each material document.

For example : In the below screenshot a material is shown to have price in three currencies

If a transaction is posted in CNY, we can see the FI document in all the three currencies.

In the below picture, it is shown how Material Ledger makes possible multiple currencies along with multiple valuations.

With Material Ledger, organizations gain real-time visibility into inventory costs, currency fluctuations, and financial impacts—ensuring transparent and compliant financial reporting across all jurisdictions.

In the below section, we present real-world business scenarios that illustrate the practical relevance of the three valuation views available in the SAP S/4HANA material master.

These views—legal, group, and profit center—enable organizations to assess material values from different financial perspectives. The Material Ledger supports up to three currencies per material document to ensure accurate valuation across multiple reporting requirements, such as local statutory compliance, group-level consolidation, and internal profitability analysis.

This multi-currency capability helps businesses maintain financial transparency and consistency across global operations

4) Real Business Scenarios

Imagine we have a multinational business which operates in Canada, Singapore & USA. This business has a company & Plant each in Singapore & America and Headquarters in Canada.

• This business sends semifinished materials from Singapore company to USA company on an intercompany price which include a small profit margin for SG company. USA company does further operation and sells the finish materials to the customers in USA.

4.1) Business Scenario 1 – Legal Valuation

This scenario involves legal reporting. Company A sells to company B in selling price of 120 Singapore Dollar with Company A cost of 100 Singapore Dollar. It means Company A profit is 20 Singapore Dollar.  So business wish – while doing legal reporting in each country, system should automatically prepare the report as per the local country rules & regulation and as per the local currency. In the above example – while reporting this transaction in the USA legal reporting, system should report inventory cost in USA company as equivalent of 120 Singapore Dollar converting into US Dollar.

Statutory reporting in local currency. Required for tax and legal
compliance.

4.2) Business Scenario 2 – Group Valuation

When semi-finished goods are sent from SG to US the transaction is booked in Singapore company in the currency Singapore Dollar and simultaneously the inventory received in the US plant (including profit margin of SG company in currency SINGAPORE DOLLAR) should be converted from the Singapore Dollar to the US DOLLAR and then booked in the currency US DOLLAR.

This business has below wish

• Group valuation should be prepared automatically as per rules & regulations. For example -While doing the group valuation, the internal profit margin of 20 Singapore Dollar should be eliminated. This is to ensure that the group’s consolidated financials reflect only external profits.
• Since group headquarters is in Canada, so while doing group reporting, company is using currency CANADIAN DOLLAR. So, it is a natural wish that all the transactions happening in the different countries/between the different countries, should be converted to CANADIAN DOLLAR on a predefined mutually agreed currency conversion base.

Consolidated reporting across company codes. Eliminates internal
profits to ensures that the group’s consolidated financials reflect only external profits

4.3) Business Scenario 3 – Profit Center Valuation

This scenario involves profit centre accountings in the respective company. Company A sells to company B at a negotiated selling price of 110 Singapore Dollar with Company A cost of 100 Singapore Dollar. It means Company A Manufacturing Profit Centre books profit of 10 Singapore Dollar.

Similarly, Company “B” Sales profit center books profit of Sales Price (in US DOLLAR) to customer minus US DOLLAR equivalent of 110 SINGAPORE DOLLAR.

Internal transfer pricing and profitability analysis between business
units.

Material Ledger makes it possible with simultaneously posting of all the transactions into different currencies relevant for each valuation.

Now that you have a solid understanding of SAP S/4HANA Material Ledger—its key features, benefits, and practical business scenarios—it’s time to move forward with activation. In the next post, we will guide you through the minimal configuration required to enable Material Ledger in your S/4HANA system. Refer to the post below for a clear, step-by-step activation process in just five easy stages, along with common errors and their root causes to help you avoid potential pitfalls.

How to activate Material Ledger in S4HANA in 5 Easy Steps

The post SAP S/4HANA Material Ledger: Features, Benefits, and Real Business Scenarios appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

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The post Handling Unplanned Delivery Costs in SAP: A Configuration Guide with Scenarios appeared first on SAP Materials, Documents, Tutorials.

Efficient stock movement is critical for seamless supply chain operations, and Stock Transport Orders (STO) in SAP play a key role in ensuring smooth intercompany and plant-to-plant transfers. This makes Mastering Stock Transport Orders (STO) in SAP along with it’s Process, Configuration & Best Practices are even more desired.

Whether we are managing internal stock transfers, intercompany logistics, or cross-plant replenishment, a well-configured STO process can reduce costs, improve inventory visibility, and streamline procurement workflows.

In this post, we will explore mastering end-to-end Stock Transport Orders (STO) in SAP S/4HANA and SAP ECC., it’s Process, key Configuration steps & Best Practices.

1. Stock Transfer in SAP

As we have already described in the below post there are two types of stock transfer in SAP.

• Stock Transfer with MIGO (Without STO, Delivery & Billing)
• Stock Transfer With Stock Transport Order, Purchase Order (STO/PO)

Please see the below post to check the “Stock Transfer with MIGO (Without STO, Delivery & Billing)”

STO in SAP: The Best Guide with All Scenarios Explained

Here in the post , we will see the below part in detail

2. Stock Transfer With Stock Transport Order/Purchase Order (STO/PO)

Stock Transport Orders (STO) in SAP play a crucial role in inventory management, procurement, and intercompany logistics. Whether you’re transferring stock between plants, company codes, or warehouses, understanding the different types of STO orders is essential for optimizing supply chain efficiency and cost control.

There are total 3 types of the Stock Transfer With Stock Transport Order, Purchase Order (STO/PO)

• Stock Transfer with STO but without Delivery & Billing
• Stock Transfer with STO & Delivery but Without Billing
• Stock Transfer with STO, Delivery & Billing

We will look into all the three method of stock transfer with STO/PO one by one in detail

2.1 Stock Transfer with STO but without Delivery & Billing

This type of STO is used when transferring stock between two plants within the same company code. It ensures better inventory tracking and valuation compared to a standard transfer posting.

Below is the pictorial representation of this type of STO

2.1.1 Key Features

To simplify the process for internal stock transfers, businesses may choose to use STO without delivery and billing,

–> STO is a specialized purchase order used for stock movement between two plants, allowing the receiving plant to place an order for stock from the supplying plant.

–> STO enables smooth inventory management and tracks the movement of stock.

–> STO without delivery is used when there is no need to track the logistical steps involved in physically shipping the goods.
 
–> STO without delivery reduces the administrative workload associated with generating and managing delivery documentation.

–> Stock’s value between the plants is accounted via internal material valuation rather than through external invoicing or billing.

–> Uses a purchase order (PO) document type UB.

--> Stock Transfer with STO but without Delivery & Billing can not be executed in 1-step i.e.2-steps only.

--> If any of the supplier plant or customer plant belongs to the different company code then STO process becomes intercompany STO process.

--> If supplier plant & customer plant belongs to the same company code then STO process becomes intra-company STO process.

--> This process uses movement type 351

2.1.2 Advantage of Using STO Without Delivery & Billing

A manufacturing company transfers raw materials from Plant A (Production Plant) to Plant B (Distribution Center) under the same company code.

Below are the main Advantage of Using STO Without Delivery & Billing

• Efficiency in Stock Movements: By skipping the delivery and billing steps, stock transfers are more quickly, especially for frequent internal movements.
• Simplified Documentation: Reducing extensive documentation such as billing and delivery notes helps in streamlining internal operations and save time.
• Cost Reduction: Delivery and billing elimination in intra-company transfers reduces administrative and logistical costs.
• Ideal for Intra-company Movements: STO Without Delivery & Billing is best suited for the organizations that frequently move stock between plants without needing to generate financial documents between company codes.

2.1.3 Business Scenarios of STO without Delivery & Billing

Below are the main business Scenarios of the STO without Delivery & Billing

• Plant-to-Plant Transfers: Stock movement for production needs or inventory balancing can be done using STO without delivery or billing.
• Distribution Center Replenishment: Companies with multiple storage locations can use Stock Transfer with STO but without Delivery & Billing to replenish stock without the need for complex documentation

2.1.4 Configuration & Testing of STO without Delivery & Billing

Please see the below post for the details of configuration & testing of STO without Delivery & Billing

SAP Stock Transport Order Without Delivery: Process, Configuration & Guide

2.2 Stock Transport Order with Delivery (STO with SD Delivery Process)

This STO type is used when stock transfers require a delivery document generated via SAP SD (Sales & Distribution Module). This is common when warehouse teams handle goods movement through outbound deliveries.

This setup is particularly useful for intra-company transfers where financial transactions are not required

Please see the below picture to see the pictorial representation of this stock transfer method

2.2.1 Key Features of Stock Transport Order with Delivery but Without Billing

• STO with delivery uses delivery document to track the logistics of stock movement.
• The delivery is essential to monitor goods physically leaving one plant and being received by another.
• Since this process is usually used in intra-company STO process, billing is not required to allow for smoother internal movements of stock without generating invoices or financial documents.
• In the case of “Stock Transfer with STO & Delivery but Without Billing”, the cost and inventory valuation are adjusted internally, without the need for billing documentation.
• “Stock Transfer with STO & Delivery but Without Billing” can include shipping cost determination

2.2.2 Business Scenario for Stock Transport Order with Delivery but Without Billing

Below are the main Business Scenarios for Stock Transport Order with Delivery but Without Billing

• Internal Plant-to-Plant Transfers: The scenario of regularly move stock between plants within the same company code like Distribution Center, production center etc. , STO with delivery but no billing simplifies this move.
• Replenishing Inventory Between Storage Locations: Stock movements is easily managed without billing complexity with delivery tracking for the distribution centers or warehouses under the same legal entity.

2.2.3 Advantage of Stock Transport Order with Delivery but Without Billing

Below are the main advantage of using STO & Delivery Without Billing

• Efficiency in Intra-company Stock Movements: Stock Transfer using STO & Delivery Without Billing Eliminates the billing step which reduces complexity and speeds up the stock transfer.
• Simplified Documentation: In this process business can focus on tracking deliveries and managing inventory as there is no need to generate financial documents.
• Cost Control: Elimination of billing process saves administrative and financial costs.
• Enhanced Inventory Tracking: This process uses delivery. Delivery documents allows to maintain a clear record of stock movements without the need for complex financial reconciliation.

2.2.4 Configuration & Testing of STO with Delivery but Without Billing

Please see the below post for the details of configuration & testing of STO without Delivery & Billing

SAP Stock Transport Order with Delivery: Setup, Execution & Key Insights

2.2.5 Special Scenario

We have configured a Special Scenario for Stock Transfer with STO/PO – STO with delivery – Configuring 1-step & 2-step between the same plants

Please see the details of this scenario in the below post

Maximize SAP Efficiency: Configure 1-Step STO with Delivery Alongside 2-Step STO Between the Same Plants

2.3 Inter-Company STO with Delivery & Billing

Intercompany STO is used when transferring stock between plants in different company codes. It requires a more complex process as it involves intercompany billing and affects financial accounting entries.

Please see below the pictorial representation of this method of stock transfer

2.3.1 Key Features

• Uses a purchase order (PO) document type NB
• Requires billing document
• Includes intercompany invoice posting
• Can involve profit center accounting

2.3.2 Business Scenario

A company transfers finished goods from Plant X (Company Code 1000) to Plant Y (Company Code 2000), where Company Code 1000 issues an invoice to Company Code 2000 for the stock transfer.

2.3.3 Configuration & testing of Intercompany Stock Transport Order (Inter-Company STO)

Please see the below post for the details of configuration & testing of SAP Intercompany STO Process with Delivery & Billing

How to Configure SAP Intercompany STO Process with Delivery & Billing

Image by upklyak on Freepik

The post Mastering SAP Stock Transport Orders (STO) appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

Stock transfer in SAP play a crucial role in effective inventory management by enabling the seamless movement of goods between storage locations, plants, or even company codes.

Whether we are transferring stock within the same plant, across different plants, or between different organizational units, SAP stock transfer solutions like 1-step and 2-step transfers, offers flexible and robust solutions to manage these transactions efficiently.

1. Stock Transfer in SAP: All Scenarios at a Glance

SAP provides multiple stock transfer methods, including one-step and two-step transfers, stock transport orders (STO), and intercompany transfers, each catering to specific business needs.

Understanding these processes helps businesses optimize supply chain operations, reduce costs, and ensure compliance.

Stock transfer in SAP can be classified into two types from a broader prospective. These can be further divided into several other types.

Please see below this in pictorial form

1.1 Stock Transfer with MIGO (Without STO, Delivery & Billing)

This is the simplest form of stock transfer in SAP.

In this scenario, no stock transfer order or purchase order is created.

Stock transfer is directly initiated in MIGO without any predecessor document like STO or PO.

This stock transfer process can be further bifurcated into two

• Stock Transfer between plants of same company code
• Stock Transfer between plants of Different company codes

Both the above two types can be executed in 1-step or 2-step process.

We will look into these in detail in the later section

Please see below these types of stock transfer in pictorial form.

These types of stock transfers offer a more simplified method, primarily suited for intra-company movements or specific organizational needs

--> This stock transfer method optimize the logistics processes and eliminate some administrative overheads.

--> This method of stock transfer refers to directly moving materials between storage locations or plants without creating a purchase order or transport order. 

--> This is often beneficial in cases of internal transfers where financial and logistical documentation requirements are minimal.

1.1.1 Advantages of Stock Transfer with MIGO

Below are the advantages of Stock Transfer with MIGO i.e. without STO, Delivery & Billing

a) Cost Efficiency:

Stock Transfer without STO, Delivery & Billing eliminates administrative costs associated with creating and managing transport orders and deliveries.

b) Speed

Stock Transfer without STO, Delivery & Billing accelerates the stock movement process by avoiding complex & long order creation steps.

c) Simplified Process

Stock Transfer without STO, Delivery & Billing is Ideal for companies with frequent internal stock movement. It reduces paperwork and processing time.

1.1.2 Business Scenarios of Stock Transfer with MIGO

Below are the possible business scenarios of Stock Transfer with MIGO i.e. without STO, Delivery & Billing

a) Internal Stock Rebalancing

Stock Transfer without STO, Delivery & Billing comes handy, When warehouses or plants need to balance inventory across locations.

b) Emergency Stock Transfer

Stock Transfer without STO, Delivery & Billing caters well where Immediate stock movement required for production needs without the need for extensive documentation.

c) Supply Chain Improvement

Since this process optimize stock transfers without using stock transport orders, businesses can streamline operations, reduce overhead costs, and improve supply chain responsiveness.

Before looking into execution of stock transfer we will check what is inter-company stock transfer & intra-company Stock Transfer

1.1.3 Inter-Company & Intra-Company Stock Transfer

A large company having plants in different locations needs to move the material between it’s plants. For example We have two plants on our car business PA10 & PA20.

Plant PA10 produces engines and plant PA20 assembles the car using the engines produced in plant PA10. So to transfer the engines from the plant PA10 to PA20 we will use STO (Stock Transport Order) in SAP

--> Now in the above example if plants PA10 & PA20 belongs to same company code (No need of having separate legal accounts etc.) then it will be an example of intracompany STO.

--> If Plant PA10 & PA20 belongs to different company code (to have separate legal accounts etc.) then it will be an example of intercompany STO.

For our car business we have two companies and three plants as shown in the below picture

• The STO between plants PA10 & PA20 (Both belongs to Company Code PA10) will be a intra-company STO).
• The STO between plants PA10/PA20 (Both belongs to Company Code PA10) & PP10 (Belongs to company code PP10) will be a intercompany STO).

1.1.4 Execution of Stock Transfer with MIGO

There are further 4 scenarios related to the Stock Transfer without STO, Delivery & Billing

• One Step Stock Transfer Between Plants of same Company Code
• Two Step Stock Transfer Between Plants of same Company Code
• One Step Stock Transfer Between Plants of different Company Code
• Two Step Stock Transfer Between Plants of Different Company Codes

a) One Step Stock Transfer Between Plants of same Company Code

In One Step Stock Transfer Between Plants stock is issued from the issuing plant & received in receiving plant in 1 step.

This process uses movement type 301

Start MIGO and choose transaction as “A08 – Transfer Posting” & movement type as “301”

input source plant as “PA10” & destination plant as “PA20”. Both these plants belongs to the same company code.

Check & post. Material document & FI documents are posted.

Note: Please check the below posts to see the configuration of organization structure i.e. company codes, plants etc.

Configure SAP Finance Organization Structure in 5 Minutes

Configure SAP S4 HANA Material Management Organization Structure in 5 Minutes

b) Two Step Stock Transfer Between Plants of same Company Code

In two Step Stock Transfer Between Plants stock is issued from the issuing plant & received in receiving plant in 2 steps.

As the name suggests , this stock transfer is executed in the two steps.

First step removes the stock from the sending plant and post the material into transit.

The second steps place the stock in the receiving plant stock.

We will see the details of both these steps one by one

b1) First Step- Removal of the Stock from the Sending plant

This process uses movement type 303 (Transfer posting plant to plant – remove from storage).

Start MIGO and choose transaction as “A08 – Transfer Posting” & movement type as “303”

check and post. Material document number 4900000218 is posted.

b2) Second Step- Receipt of the stock into the Receiving Plant

This process uses movement type 305 (Transfer posting plant to plant – place in storage).

Start MIGO and choose transaction as “A10 – Place in Storage” again material document “4900000218” created in first step.

--> In the second Step of Receipt of the stock into the Receiving Plant, no accounting document is posted.

c) One Step Stock Transfer Between Plants of different Company Code

Here stock is transferred In One Step between sending plant & receiving plant which belongs to the different company codes.

This process uses movement type 301 same as One Step Stock Transfer Between Plants of same Company Code

Start MIGO and choose transaction as “A08 – Transfer Posting” & movement type as “301”

input source plant as “PA10” & destination plant as “PP10”. Both these plants belongs to the different company codes.

System is throwing clearing accounts error

Check & post. Material document & FI documents are posted.

to maintain the clearing account start OBYA

Now maintain the clearing account as below

• Debit -116014100 (PPIN-Clearing Account for Asset Acquisition)
• Credit- 770030000 (PPIN-Clearing Account Asset Disposals)

Transaction is posted successfully. Material document & FI document is created

FI document posted in the sending company code

FI document posted in the Receiving company code

d) Two Step Stock Transfer Between Plants of Different Company Codes

In two Step Stock Transfer Between Plants of different company codes, stock is issued from the issuing plant & received in receiving plant in two step.

As the name suggests , this stock transfer is executed in the two steps.

First step removes the stock from the sending plant from the first company code and post the material into transit.

The second steps place the stock in the receiving plant stock of another company code.

We will see the details of both these steps.

d1) First Step- Removal of the Stock from the Sending plant

This process uses movement type 303 (Transfer posting plant to plant – remove from storage).

Start MIGO and choose transaction as “A08 – Transfer Posting” & movement type as “303”

check and post. Material document number 4900000218 is posted.

--> Accounting entries for the two step stock transfer will be exactly same as one step stock transfer.

d2) Second Step- Receipt of the stock into the Receiving Plant

This process uses movement type 305 (Transfer posting plant to plant – place in storage).

Start MIGO and choose transaction as “A10 – Place in Storage” against the material document generated in the first step.

--> No accounting document is posted in the second Step of the receipt of the stock into the Receiving Plant, 

1.2 Stock Transfer With Stock Transport Order/Purchase Order (STO/PO)

Here stock transfer process starts with a document i.e. stock transport order, which is a kind of purchase order.

There are several types of Stock Transfer With Stock Transport Order/Purchase Order (STO/PO)

All types of Stock Transfer With Stock Transport Order/Purchase Order (STO/PO) is given below in pictorial form

Please continue with the below post for all the step by step details of Stock Transfer With Stock Transport Order/Purchase Order (STO/PO).

Mastering Stock Transport Orders (STO)

The post Stock Transfer in SAP: The Best Guide with All Scenarios Explained appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

This document provides a step-by-step guide on how to create and delete Service Entry Sheets (SES) within the SAP system, specifically using transaction ML81N. A Service Entry Sheet is a crucial document in SAP Materials Management (MM) – Service Procurement, serving as a formal record of accepted services rendered by a service provider against a ...

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