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materials to change. The standard price is updated periodically — for example,
monthly or quarterly — to account for changes in the value of materials. Thus,
in our example above, if the fi rm’s policy is to update the standard price at the
end of each month, then it does not make any price changes when it purchases
the additional helmets. Instead, it updates the standard price at the end of the
month.

Purchasing Data
Another key component of the material master is the purchasing data or view.
The key data in the purchasing view are the purchasing group, the goods receipt
processing time, and the delivery tolerances. The purchasing group, which we
discussed earlier as one of the organizational elements in procurement, is
responsible for purchasing the materials.
When a company receives materials from a vendor, it requires a certain
amount of time to receive them and place them into storage. For instance, it
must unpack the boxes, count the materials, inspect their quality, and physi-
cally move them to the appropriate storage location. This is the goods receipt
processing time. An estimate of this time is included in the material master.
The ERP system utilizes this estimate in planning activities, for instance, to
determine when an order should be placed so that the materials are available
when they are needed.
It is not uncommon for the shipment from a vendor to include either
more or less material than the actual quantity ordered. When this occurs, the
receiving organization may or may not accept receipt, depending on its poli-
cies and its agreements with its vendors. The delivery tolerances in the mate-
rial master specify how much over delivery and under delivery the ordering
party will accept. If the quantity delivered is within these tolerances, then the
ordering party accepts delivery. If the quantity exceeds the tolerances, then it
refuses the shipment and returns it to the vendor.
Some of the data in the material master can vary for each relevant orga-
nizational level. In purchasing, the relevant organizational level is the plant. If
a company has multiple plants, then the material must be defi ned for all plants
in which it is stored. For example, the purchasing group and goods receipt
processing time can vary by plant.

Plant Data / Storage

Most materials that are purchased from a vendor or produced in-house ulti-
mately are received into inventory. For this step to occur, the plant data / stor-
age view must be included in the material master. The plant data/ storage view
includes data that are needed to properly store materials. Examples of these
data are:
• Environmental requirements such as temperature and humidity
• Special containers that are required for storage
• Shelf life; that is, how long a material can be stored before it
becomes obsolete or unusable (common in pharmaceutical and
food services industries)

• Instructions for special handling, for instance, if the material is
fragile or hazardous.

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