SAP Vietnam: 2021

FICO - PP Intergration

Let's start with how to read a production order in sap.

BOM, Routing and costing sheet is going to be used in production cost calculation.

RA key: Result analysis key is used for WIP calculation and posting.

Variance key: variance key is used for analysis of production variance. Production variance is broken down in variance category for analysis purpose. Variance key defines the list of variance categories for analysis purpose.

As per above production order, we will be producing 5 quantity of finished product. Below is our cost projection, this cost expectation can also be referred as planned cost or target cost.

Above picture showing target cost for producing 5 quantity of finished good. But during actual production, raw materials consumed quantity might be different than planned quantity. Similarly, activities actual quantity might be different from planned quantity. Hence actual cost of production will be different from planned/ target cost of production.

Production order confirmation

As per production order, 5 quantities of finished goods are to be produced. I am assuming that production is going for couple of days. At the end of every day, production manager is supposed to update below information in sap:

What quantity of finished goods is produced?

Which raw material and in what quantity is consumed while producing the said quantity of finished good?

Which activity and how much is performed while producing the said quantity of finished good? Updating above information in production order is referred as production order confirmation. Once order confirmation is saved, sap calculates cost involved (by valuating raw materials consumed and activities performed as per actual costing variant).

Suppose, production manager confirms below:

- Finished goods produced 2 kg

- Ram materials consumed: Milk (3L), sugar (1kg), carrot (3kg), ghee (.4kg) and dry fruit (.4kg)

- Activity performed: Cutting (1 hour), heating (3 hours)

As a result of above confirmation, below accounting document gets posted.

Accounting document for Ram material consumption (GL account picked from OBYC configuration)

Below controlling document is created when activity is confirmed:

Below is the financial document posted when 2 kg of finished goods is confirmed/ produced.

Once above confirmation is performed in system, sap will calculate and update actual cost. Till now actual cost is incurred only for producing 2 quantities of finished good.

Now let's check the cost in production order.

For overhead calculation, we need to perform transaction KGI2 Overhead

Overhead cost is calculated as per costing sheet. Overhead cost should be added in cost of production. Below financial document gets posted

Cost element 1015 used for posting above document is maintained in costing sheet.

- Now suppose month end has come and this production order is still under production process and not yet completed. (Out of 5 ordered quantities, till now only 2 quantities is produced)

- At month end, balance sheet needs to be finalized. Balance sheet needs to report real position of the company’s assets and liabilities as on date. Hence how do we handle this production order which is still under process and not yet completed?

- Inventory which is produced is reported under balance sheet as inventory under current asset. In-process production order is reported under balance sheet as work in progress (WIP). Hence sap should have functionality to report WIP for production order which is not completed.

In SAP, WIP is handled in two steps

- Step 1: Calculation of WIP amount WIP Amount = total debit in production order – total credit in production order For WIP calculation, T code is KKAX When KKAX is executed, sap calculates debits and credits posted on production order and calculates WIP amount.

- Step 2: Posting accounting entry of WIP (T code is CO88)

For posting above accounting entry system needs accounts (WIP and Change in WIP) and amount (WIP amount). Hence we need to tell sap two things:

1. How WIP amount is calculated?

- Out of so many cost components (raw material, overhead, activity cost etc.), which cost is to be capitalized (considered for WIP calculation)?

- Out of cost (which is considered for WIP calculation), what portion is to be capitalized and what portion is not to be capitalized?

- We need to maintain GL account for WIP and GL account for change in WIP.

Maintaining above information in sap can be referred as configuration for WIP.

In our example WIP of production order should be (121.6) a shown below

Let’s execute KKAX for WIP amount calculation:

Now, let’s post accounting entry for WIP by executing CO88

Click on below link for detailed understanding of WIP configuration: http://techconcepthub.com/understanding-configuration-needed-for-wip-in-sap-with-example/

Now let’s suppose production continued in next month and has completed. Production manager confirms in sap that all 5 goods are produced and also confirms the quantity of ram material consumed along with activity hours consumed.

Hence production manager does production order confirmation for remaining 3 quantities in sap. Hence, for producing total 5 quantities of goods, below is the cost involved.

Same reflects in SAP as shown in below screenshot:

Overhead cost in production order is not revised automatically.

In order to recalculate overhead cost, we need to execute KGI2 again

If you are interested in knowing what document got posted as a result of executing KGI2, then below document is posted only in controlling. No accounting entry is posted in finance.

For this production order, production has completed. Like last month, this month also we need to perform WIP calculation. But since production for the order is already completed, hence there is no WIP or zero WIP.

In order to have zero WIP, already posted WIP has to be reversed.

Below screenshot after executing KKAX for WIP calculation:

WIP calculation is done. But we have not yet done WIP posting using CO88.

Earlier when CO88 was executed, WIP document was posted in finance. But now CO88 execution will result in

1. Reversal of earlier WIP document: Net WIP has to be zero hence earlier posted WIP has to be nullified by posting reversal.

2. Posting of production order variance: Earlier difference between debits and credits on the production order was treated as WIP. But now since production is completed hence this difference is treated as production variance. But before posting of production variance using CO88, we need to perform production variance calculation using KKS2.

Let us perform production order variance calculation (T code: KKS2)

Now let’s perform production order settlement using CO88

As a result of CO88:

- Earlier calculated WIP is reversed.

- Production variance is settled to material.

If profitability analysis is active then along with above financial document, variance is also taken to COPA for profitability analysis.

In this article, we tried to understand production order processing from finance point of you. How COPA works will be explained in different article.

Let’s summarize what we learned

Production order processing from finance point of view

Author: Linkin

Flexible Workflow in S4HANA

Steps for Activation of Flexible Workflow

Go to SPRO → IMG → Materials Management → Purchasing → Purchase Order → Release Procedure for

Purchase Orders → Activate Flexible Workflow for Purchase Orders

• Based on document type we can activate flexible workflow. Here we have selected document

type NB. For other document types we can have classic release strategy.

• Save the changes and TR will be generated.

Note: I am using copied version of NB document that is RNB

Logon to your Fiori launchpad and open Manage Workflows for Purchase orders App.

• Go to app finder search for app

Once the App opened select Add to create new workflow.

Give a name and description to workflow. Even you can specify validity period (Optional).

Now select Preconditions Tab and choose predefined conditions from drop down as per requirement.

• We can add one or more conditions and once these conditions met workflow will be triggered or

it will be release automatically.

• select + button to add new condition.

• Select Step Sequence and choose Add to maintain Person responsible for approval and

other conditions.

• From drop down select Release of Purchase Order.

• Here Assignment can be either by Role/ User. Now selecting User.

To make Used ID visible, responsible person should be created as Employee (PA30) and

synchronized with Business partner.

Now select person responsible from list available.

• As we already maintained conditions this step can be optional.

• Now Choose Add and then Save.

• Go to starting screen, select the saved Workflow and Activate it. Until it is Active state

workflow will not get triggered.

• If we have multiple workflows we can even define the Order.

• **Workflow once activated can only be deactivated/deleted, no way to Edit.

• We have successfully activated Flexible workflow for Purchase Order, now lets Test the

same.

2. Testing of Flexible Workflow and Approval Process:

Now let’s create a purchase order which satisfies the given conditions of workflow. we have selected

below two conditions;

1. Document Type: NB (Standard PO)

2. Total Net Amount of PO > 500 USD

• If Purchase order status is seen, it shows in Approval.

• Approval details can be seen at Header Level, Flexible workflow Tab.

• Now go to My Inbox App.

• We can see the Purchase order which satisfied given conditions is waiting for Approval.

• Here the responsible person can Approve, Reject and Forward the PO.

To forward the PO for approval, select the other user from list.

• While Approving you can give your comments and submit.

• We have Successfully Activated and Tested the Flexible Workflow for Purchase Orders.

• The Same procedure can also be used to Activate Flexible workflow for Purchase

requisition, Contracts, supplier Quotations and Scheduling Agreements.

Tip:

You have taken the steps to set up a flexible workflow in your system for documents such as purchase

orders, purchase requisitions, etc. However, the workflow still is not triggered and the documents

shows status such as “Workflow not started yet” and “In Approval. In such case, please refer below

SAP Note:

2568271 – Change of workflow system user and workflow system jobs with S/4HANA On-Premise

1709

Author: SAP Shale, India

Third Party Process & Individual PO

Ưe don't manufactures the product but we sell it to customer .if stock is not available .

In the third party order processing the business gets the orders from the customer and it passes to the third party

vendor who delivers the goods to the customer, and bills the business.

In the process of third party order is controlled via material types. Material types define whether a material is

produced only internally can be ordered only from third party vendors or from both possibilities.

Ex: Trading goods (HAWA) can only be ordered from third party vendors. Third party items can be created automatically by the system or standard items can be changed manually by the end user by changing item category during sales order processing.

Ex: MM01 Item category group Item category

BANS TAS

NORM TAS

If the Ship – to – party address changed in the sales order that changes passed on to the purchase requisition and purchase order that are already created. We can see the Ship – to – party address in purchase order in the attributes of the item category. When we save the sales order

that contains the third party item, then the system automatically creates purchase requisition in purchasing (we can see the purchase requisition number in VA02 of sales order in schedule lines).

During creation of the purchase requisition system automatically determine the vendor. Purchase order created from purchase requisition usually. During creation of purchase order system automatically copies the delivery orders from corresponding sales order. The number of the purchase order appears in the document flow of the sales order. All changes made in the purchase order automatically affects in the sales order. But the changes that we made in the sales order will not reflect in the purchase order.

configurations

1Maintain purchase organisation: - To create PO we require purchase organisation, which is in MM. SPRO enterprises structure definition MM maintain purchase organisation new entry

2 Assign purchase organisation to company code: -

SPRO enterprises structure assignment MM assign purchase organisation to company code

3Assign purchase organisation to plant: -

SPRO enterprises structure assignment MM assign purchase organisation to Plant

4. assign item categories

new entries

5 . customer crated ( xd01 or bp )

1 .mainatain general data , sales area data , company codes

genear data -name ,adress , postal code maintain

sales area data - sales area , customer pricing procedure maintain

company data- reconciliation data maintain

then after saved

4 MM01 create material (THIRD1) l view should be selected maintain BANS - item categoryes maintain purchasing view – purchasing group

[001] save it.

7 schedule line

Controls in CS (Schedule line category)

5. Order type “NB” – it will help to generate purchases requisition automatically in the background

while creating sales order in third party process.

6. Item category – purpose of item category in schedule line category :- like sales documents, MM documents

also require item category information while creating PR manually. User will assign item category manually but in third party process we are generating PR automatically in the background so we are passing item category information from schedule line category to PR.

7. Item category [5]: - item category [5] controls that even we do MIGO in third party with shipping notification system will treat it as dummy MIGO and stock will not be update.

8. Account assignment category [1]: - It controls that whether to generate inventory accounting document or not while doing MIGO and PGI (this field controls the cost should be assigned to any special cost object or

not).This also helps to pass on customer information from order to PR….

9. In copy control between order to invoice (OR – F2) TAS has billing quantity „F‟ and it will help to copy the quantity from MIRO to invoice while creating invoice to customer in third party process. If we want third party process with shipping notification then we maintain billing quantity “E” which helps

to copy the quantity from MIGO to invoice while creating invoice to customer in third party process.

Billing relevance „F‟ standard. F means order related billing status according to MIRO.

If we want 3rdparty with shipping notification then we maintain billing relevance as „G‟ and G means order related billing status according to MIGO. Billing relevance „F‟ controls that in 3rd party w/o shipping notification if MIRO is not created then system

will not allow to create invoice to customer.

then after cycles

va01 -me51n -me21n-miro -vf01

sales order -va01

sales order saved purchase requested created

me52n -purchase requested

then after -me21n po crated

miro check then after posted

va02- go then after crated vf01

Individual Purchase Order

Individual Purchase Order is like Third Party Sales but with a difference. ... IPO is similer but the difference is vendor will send the stock to the company instead of direclty sending to the customer. And the actual compnay will take the stock and do the delivery / shipping/ invoice to the customer. vendor is not sending the invoice immediately with delivering the goods to customer. Without vendor invoice we cannot raise invoice to our customer, so in this scenario we ask vendor to send shipping notification after delivering the goods to customer. When we receive the shipping notification then we do MIGO and basing on MIGO quantity we raise invoice to Customer.

The vendor ships/delivers the materials to the business and business in turn sends the goods to the customer. The

stock considers as a part of inventory and we manage them as a sales order stock.

Item Category Group Item Category

BANC TAB

NORM TAB

configurations

1Maintain purchase organisation: - To create PO we require purchase organisation, which is in MM. SPRO enterprises structure definition MM maintain purchase organisation new entry