WHITE PAPER
Managing different values with valuation types in SAP
By Mehdi Aissaoui
The concept of valuation type and split
valuation is native in MM module but
used across functionalities nested in
PM (Plant Maintenance), SD (Sales
& Distribution), WM (Warehouse
Management) and of course FI
(Finance). The main purpose of
Valuation Types is to enable managing
different values for the same material in
stock in SAP.
This functionality answers concerns
raised mainly by master data managers
(IS), stock managers and of course
cost controllers desperately looking
to reduce their stock value on their
Balance Sheet.
The main benefits of this functionality
from a business and IS prospective are
the ability to:
• Manage different values for the
same material in stock :
• Split valuation for new, used or
unserviceable products (waiting for
refurbishment)
• Reduces the number of potential
Plants required in SAP.
Valuation is at plant level; if valuation
type is not implemented users will most
likely have to create multiple plants to
handle multiple values for the same
material. This generates maintenance
as each new product needs to be
created in all the different SAP plants.
Allows a better traceability of the costs
by allocating the refurbishment cost to
stock.
Every year, controlling departments
can run reports to determine cost of
refurbishment of their materials. The
results of this analysis will be used
to evaluate the cost of refurbished
products and potentially represent
the standard price for stock valuation
purposes.
Allows a better visibility and availability
of high tech or expensive equipment
and therefore reduces the stock value.
The targets
Among targeted industries we can
identify two approaches:
Heavy Industries like Oil & Gas or
Automotive Industry use mainly
large, costly, equipments in their
manufacturing plants, these complex
equipments (functional locations in
SAP PM) cannot tolerate disruption
or shortage of spare parts during
maintenance process, therefore a large
variety of parts must be available 24/7.
This has consequences on the stock
Figure 1
value and master data maintenance.
Using Valuation Type can help in
maintaining the means of production
with a good visibility and traceability of
the spare parts in the SAP system.
Companies in the Aerospace Industry
face the same kind of challenge in a fast
moving costly product environment.
Let’s take the case of an Airline.
Aircraft on grounds (AOG) represents
a total loss for airlines, therefore these
companies usually require from aircraft
manufacturers or their own suppliers to
provide a stock of sensitive parts with
a low MTBF rate (Mean Time Before
Failure).
These spare parts must be available
in potentially different locations across
the world according to the routes or
main hub serviced by the airline.
Spare parts in Aerospace industry are
costly due to their complexity (design &
components) or the cost of the material
used to manufacture them.
Airlines in a constant need to
reduce their costs will consider used
spare parts after refurbishment and
certification. Therefore, within the same
period of time, it is possible to have new
and used spare parts located in the
same location and same Plant (in SAP
terms) these two equipments have two
different values in stock. The best way
to manage this is to activate the split
valuation through the valuation type.
Case study: Swap process in
Airlines Industry
The process described below is a part
of the Rotable process involving a swap
(Standard Exchange) of equipment that
belongs to an aircraft.
The broken-down equipment is
dismantled while the aircraft is on the
tarmac. Fortunately for the passengers,
the Airline has a stock of spare parts
serviceable on site. These parts can be
new or have been refurbished with a
valid Airworthiness Certificate.
The unserviceable equipment is sent
back for refurbishment (3) and will
be returned to the pool of Rotable
equipments ready to be used if another
aircraft faces the same issue. In this case
study, without split valuation activated,
the Airline would have to manage the
same product in two different plants or
in the worst case scenario, would have
to handle the same equipment under
two material codes in SAP with two
values (new, used). More maintenance,
less efficiency.
With Valuation Types and Split
Valuation, the same material has the
same code, two values in the same
SAP plant (Figure 1).
post the stock back.
Configure Split valuation:
You define here the valuation categories
and valuation types required by your
organisation.
Usage of Valuation in SAP
Master data creation:
Each material code has to be created
in SAP for for each of the valuation
types in the plant (accounting view).
The standard price has of course to
be specified for each of the valuation
types.
Stock management:
Each time a quantity is received
or issued from stock, the user has
to specify the valuation type of the
material being moved. The valuation
type will be displayed as a batch or can
be a characteristic of the batch number
(Figure 2).
Figure 2
stock, SAP will be able to show both
states and value of the material in the
standard reports (Figure 4).
Figure 4
Valuation Type is most convenient
for stock management. However
activation of the Split Valuation requires
implication of the controlling department
because of the obvious impacts on the
existing reporting.
It also means a change in the receiving
process, as the stock manager will
have to make sure that any incoming
material/equipment is entered in the
system with the proper valuation type.
About the author:
Mehdi Aissaoui is a Senior
Consultant whose key experience
is in the areas of SD – Sales and
Distribution; MRO – Maintenance,
Repair and Overhaul; SCM – Supply
Chain Management.
Mehdi has been involved in many full cycle projects
in the Aerospace industry.
Subsequently, when displaying the
stock overview, you’ll be able to
determine the quantity for each of the
valuation types. In our example we
have a quantity of 3 for NEW products
and a quantity of 1 REPAIRED (Figure
3).
Figure 3
Set-up valuation type in SAP
Activate Split valuation:
This is to activate the split valuation at
company level. By doing that you allow
the split valuation in you company, but
it doesn’t mean all your materials are
subject to split valuation, you can still
decide at material level if a specific
material has one or more values in your
inventory stock.
Note: In a live system, going back to
a non-split valuation requires to issue
all stocks, change the parameters and
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