Item Category in SAP MM

 Item Category in SAP  Purchasing

The item category determines whether the material defined in a purchase order item:

• Requires a material number
• Requires an account assignment
• Is to be managed as a stock item
• Requires a goods receipt (GR) and/or an invoice receipt (IR)

In addition to the above it is also used for differentiating the different types of procurement processes and the types of stocks including special stocks available into the Standard SAP.

 In standard SAP different Item categories are available for different procurement types and each Item category has different characteristics: Some of the important Item Categories along with their characteristics are highlighted below:

  Standard

• Items of the category Standard are goods that are to be procured externally. In this case, both goods and invoice receipts are possible.

Consignment

• Consignment is items procured on a consignment basis.
• Material number is necessary
• Account assignments cannot be made for material ordered on consignment.
• Goods Receipt is necessary
• Invoice receipt not necessary
• Consignment stocks are managed separately and are not valuated

Subcontracting

• Subcontracting - assemblies ordered from a subcontractor (subcontractor requires items from you to produce such an assembly) are entered as "material to be provided" items.
• GR possible, IR necessary

 Stock Transfer

• Stock transfer items occur in connection with stock transport ordering.
• Stock transport orders are a mechanism for the transfer of stock from one plant to another (that is, transfers involving transport over a longer distance).
• Material Number is necessary
• GR necessary, No invoice receipt

 Third-Party

• Third-party - orders placed with vendors as part of a triangular business deal, latter to supply goods/ a service for a third party ( a customers).
• The goods recipient is in this case is customer.
• "Third-party" can be specified in the item category field of a requisition or purchase order.
• Account assignment is necessary
• GR and IR can take place

 Limit

• Account assignment is necessary,
• Goods Receipt is not necessary
• Invoice Receipt is necessary
• Document Type FO is necessary

• Instead of a specific delivery date, we can specify a validity period for the order.
• Limit items occur in connection with blanket purchase orders (which hence may also be referred to as "PO s with limits or "limit orders").
• Blanket PO s can be used to procure a variety of materials or services up to a certain predefined maximum value (the value limit) from a vendor.
• The nature of the materials or services in question is generally such that the cost of and administrative effort involved in processing individual purchase orders is regarded as disproportionately high in relation to their value (e.g. purchase of office supplies and minor services required during the course of the year).