Product Costing & Material Master Data

ImageThe material master record contains all information needed for managing a material. This data is structured by views. The views correspond to the individual areas within the company in which the material is used.

Product Costing are relevant to the views of the Material Master defined in SAP:

  • assignment of material to a plant
  • Costing view
  • Accounting view

For the Costing View for Raw Materials , in the material master, the Quantity Structure should not be selected and Variance Key indicator.  For Semi Finished and Finished Products, there are also things to consider in the Material Master:

  • Base unit of measure, unit of measure in which stocks are recorded
  • “With Quantity Structure” indicator ,determines whether the material is generally costed using product costing or not.
  • “Material Origin” indicator,determines whether the material number is updated in the cost element itemization
  • Alternative BOM , determines which BOM alternative is used as basis for product costing with quantity structure
  • Group counter,determines which routing within the routing group is used in product costing
  • Special Procurement Type for costing, Used to indicate that the material is “sub-contracted;” if left blank, the special procurement type in the MRP view will apply.
  • ImageCosting Lot Size , indicates the quantity used as basis for costing; used to manipulate the SAP limitation on decimal places (maximum of 2).
  • Variance Key, indicates the control parameters for calculating variances.
  • Profit Center, indicates to which profit center the inventory valuation or material usage cost  be posted.
  • Co-Product Indicator, indicates if the material can also be used as a co-product in a joint production BOM.
  • Joint Production, contains the dialog box that allows the indication of the source-structure that determines how the order costs are distributed to co-products

For Accounting View of the Material Master, the following data should be also taken into consideration :

  • Material price based on the price control
  • Valuation class to determine what cost element/inventory account be assigned to material cost/inventory
  • the Currency and Price unit of the cost estimate


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Planning Strategies

Image Production must be planned either completely or partially especially for finished products with a lot of variants so that as many variants as possible can be delivered at the shortest notice possible. However, we must be careful  not to tie up unnecessary capital in current assets.

In SAP-PP, we can do different demand management so that various planning targets can be persued :

  • Planning at finished product or without assembly
  • Planning using Planning Bills of Material
  • Planning at assembly
It is important that planning is effective and effortlessly  as possible by the planner. Moreover, it is also important that planning is integrated in sales order processing. This means that planning must be checked with the independent requirements as soon as the sales order arrives. This ensures that the parts required for the sales order are either in production or are already in the warehouse.

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Production Strategies

ImageWe can do SAP-PP with the following Strategies:

  •   Make-to-stock production for mass production,
  •    Make-to-order production or make-to-order production
  •   as well as Production by lot size.
Depending on the production type, various production strategies are necessary. For each production process, you can determine optimum planning strategies. These strategies can be freely chosen and can be combined with each other. You can define the appropriate strategies per material and plant.

Processes in Production Planning and Control

ImageProcesses in production planning and production control comprise the following main areas:

  • Sales and operations planning for determining the quantities to be produced.
  • Material requirements planning   to calculate net requirements and component
    requirements, taking into account scrap and lot sizes.
  • Capacity requirements planning for detailed production planning, taking
    into account available capacities.
  • Production control to control and record the production process (create
    production documents, record confirmations)

ImageIn my case, I am more immersed in Production Control .