1 ... Overview of Manufacturing Scenarios Supported by SAP ... 25
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1.1 ... Make-to-Stock Manufacturing (Discrete Manufacturing ... 26
• 1.1.1 ... Business Rationale for Using Make-to-Stock Manufacturing ... 26
• 1.1.2 ... High-Level Business Process ... 27
• 1.1.3 ... Implementation Considerations ... 28
• 1.1.4 ... Finance and Controlling Implications ... 29
1.2 ... Repetitive Manufacturing ... 29
• 1.2.1 ... Rationale for Using the Repetitive Manufacturing Model ... 30
• 1.2.2 ... High-Level Business Processes ... 31
• 1.2.3 ... Implementation Considerations ... 32
• 1.2.4 ... Finance and Controlling Implications ... 32
1.3 ... Make-to-Order Manufacturing ... 33
• 1.3.1 ... Rationale for Using the Make-to-Order Manufacturing Model ... 34
• 1.3.2 ... High-Level Business Processes ... 34
• 1.3.3 ... Implementation Considerations ... 36
• 1.3.4 ... Finance and Controlling Implications ... 36
1.4 ... Engineer-to-Order Manufacturing ... 36
• 1.4.1 ... Purpose ... 37
• 1.4.2 ... High-Level Business Processes ... 37
• 1.4.3 ... Implementation Considerations ... 38
• 1.4.4 ... Finance and Controlling Implications ... 38
1.5 ... Chapter Summary ... 39
2 ... Overview of Finance Activities in a Make-to-Stock Environment ... 41
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2.1 ... Overview of Finance Key Performance Indicators (KPIs) for Manufacturing ... 42
2.2 ... Plant Budgeting, Planning, and Forecasting ... 46
• 2.2.1 ... Production Plan Based on Sales Plan ... 47
• 2.2.2 ... Raw Material Cost Planning ... 48
• 2.2.3 ... Planning Activity-Dependent Costs ... 48
• 2.2.4 ... Planning Activity-Independent Costs ... 48
• 2.2.5 ... Plan Cost Allocations ... 49
• 2.2.6 ... Activity Price Calculation ... 49
• 2.2.7 ... Product Cost Planning ... 50
2.3 ... Total Cost of Goods Sold (COGS ... 50
• 2.3.1 ... Material Cost ... 51
• 2.3.2 ... Processing Cost ... 51
• 2.3.3 ... Variances ... 57
• 2.3.4 ... Other Reserves and Write-Offs ... 59
• 2.3.5 ... Inventory Revaluation ... 60
2.4 ... Other Manufacturing Scenarios ... 60
• 2.4.1 ... Subcontracting ... 60
• 2.4.2 ... External Processing ... 60
2.5 ... Chapter Summary ... 61
3 ... Master Data Requirements in Manufacturing Finance ... 63
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3.1 ... What Is Master Data ... 63
3.2 ... Benefits of Quality Master Data ... 64
3.3 ... Master Data Management (MDM ... 65
3.4 ... Master Data Governance ... 66
3.5 ... Master Data Elements in Manufacturing Finance ... 66
3.6 ... Material Master Data ... 67
• 3.6.1 ... Material Type ... 67
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• 3.6.2 ... Configuring Material Types ... 69
• 3.6.3 ... Basic Data View of the Material Master Record ... 71
• 3.6.4 ... Purchasing View of the Material Master Record ... 75
• 3.6.5 ... Material Requirements Planning Views of the Material Master Record ... 78
• 3.6.6 ... Accounting Views of the Material Master Record ... 88
• 3.6.7 ... Costing Views of the Material Master Record ... 95
• 3.6.8 ... Material Master Reporting ... 102
3.7 ... Bill of Materials (BOM ... 103
• 3.7.1 ... Bill of Materials Creation: Initial Screen ... 104
• 3.7.2 ... Bill of Materials Creation; Header Overview Screen ... 110
• 3.7.3 ... Bill of Materials Creation; General Item Overview Screen ... 111
• 3.7.4 ... Bill of Materials Creation – Item: All Data Screen, Basic Data Tab ... 114
• 3.7.5 ... Bill of Materials Creation – Item: All Data Screen, Status/Lng Text Tab ... 117
• 3.7.6 ... Bill of Materials Master Data Reporting ... 119
3.8 ... Work Center ... 120
• 3.8.1 ... Work Center: Initial Screen ... 120
• 3.8.2 ... Work Center: Basic Data Screen ... 122
• 3.8.3 ... Work Center: Default Values ... 125
• 3.8.4 ... Work Center: Costing Screen ... 127
• 3.8.5 ... Work Center Reports ... 130
3.9 ... Routing ... 130
• 3.9.1 ... Routing: Initial Screen ... 132
• 3.9.2 ... Routing: Header Details Screen ... 133
• 3.9.3 ... Routing: Operation Overview ... 135
• 3.9.4 ... Routing: Operation Details ... 137
• 3.9.5 ... Routing: Component Allocation ... 138
• 3.9.6 ... Routing: Material Assignment Screen ... 139
• 3.9.7 ... Routing Reports ... 140
3.10 ... Cost Element Master Data ... 141
• 3.10.1 ... Create Cost Element: Initial Screen ... 142
• 3.10.2 ... Create Cost Element: Basic Screen ... 143
• 3.10.3 ... Create Cost Element: Indicator Screen ... 147
• 3.10.4 ... Create Cost Element: Default Account Assignment Screen ... 147
• 3.10.5 ... Cost Element Reporting ... 150
3.11 ... Cost Center Master Data ... 150
• 3.11.1 ... Create Cost Center: Initial Screen ... 152
• 3.11.2 ... Create Cost Center: Basic Screen ... 153
• 3.11.3 ... Create Cost Center: Indicators ... 157
• 3.11.4 ... Create Cost Center: Templates Screen ... 158
• 3.11.5 ... Create Cost Center: Address Screen ... 159
• 3.11.6 ... Cost Center Reporting ... 159
3.12 ... Activity Type Master Data ... 160
• 3.12.1 ... Create Activity Type: Initial Screen ... 161
• 3.12.2 ... Create Activity Type: Basic Screen ... 161
• 3.12.3 ... Activity Type Master Data Reporting ... 166
3.13 ... Statistical Key Figure Master Data ... 166
• 3.13.1 ... Create Statistical Key Figure: Initial Screen ... 166
• 3.13.2 ... Create Statistical Key Figure: Master Data Screen ... 167
• 3.13.3 ... Statistical Key Figure Master Data Reporting ... 168
3.14 ... Chapter Summary ... 168
4 ... Budgets and Standards ... 171
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4.1 ... Planning Steps in a Manufacturing Plant ... 171
4.2 ... Long-Term Planning Functionality ... 172
• 4.2.1 ... Purpose ... 172
• 4.2.2 ... Steps in the LTP Process ... 173
4.3 ... Cost Center Planning ... 194
• 4.3.1 ... Planning Version ... 195
• 4.3.2 ... Planner Layout ... 196
• 4.3.3 ... Planning Profile ... 196
• 4.3.4 ... Planning Tools ... 197
• 4.3.5 ... Sequence of Planning in Cost Center Accounting ... 200
• 4.3.6 ... Activity Type Planning ... 201
• 4.3.7 ... Planning Statistical Key Figure ... 202
• 4.3.8 ... Activity-Dependent Cost Planning ... 202
• 4.3.9 ... Activity-Independent Planning ... 203
• 4.3.10 ... Transfer Plan Depreciation from Asset Accounting ... 204
• 4.3.11 ... Plan Allocation ... 205
• 4.3.12 ... CO Allocation Using Tools such as Periodic Reporting, Distribution, and Assessment
... 206
• 4.3.13 ... Plan Cost Splitting ... 212
• 4.3.14 ... Plan Activity Price Calculation ... 215
• 4.3.15 ... Important Cost Center Planning Reports ... 215
4.4 ... Raw Materials and Component Cost Planning ... 216
• 4.4.1 ... Review of Raw Material Requirements from Long-Term Planning Exercise ... 217
• 4.4.2 ... Update of Raw Material Plan Price ... 217
• 4.4.3 ... Update Purchasing Info Record Price ... 219
• 4.4.4 ... Inbound Freight and Purchase Price Variance ... 221
• 4.4.5 ... Materials Management Automatic Account Assignment Determination ... 223
4.5 ... Product Cost Planning ... 230
• 4.5.1 ... Types of Costing Functions Supported by SAP and their Purposes ... 230
• 4.5.2 ... Types of Cost Estimates Supported by SAP and Their Purposes ... 234
4.6 ... Product Cost Planning Configuration ... 259
• 4.6.1 ... Overhead Surcharge Configuration ... 260
• 4.6.2 ... Origin Group ... 268
• 4.6.3 ... Cost Component Structure Configuration ... 269
• 4.6.4 ... Components of Costing Variants ... 273
• 4.6.5 ... Cross-Company Costing ... 283
• 4.6.6 ... Cost Component Split ... 283
• 4.6.7 ... Special Procurement Types ... 284
• 4.6.8 ... Mixed Costing ... 286
• 4.6.9 ... Enhancements and User Exits in Product Cost Planning ... 289
4.7 ... Chapter Summary ... 291
5 ... Actual Cost, Variances and Month-End-Related Activities ... 293
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5.1 ... Overview of Cost Object Controlling and Its Integration with Other Application Components ...
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• 5.1.1 ... Cost Object Controlling Subcomponents ... 294
• 5.1.2 ... Benefits of Cost Object Controlling ... 295
• 5.1.3 ... Integration of Cost Object Controlling Components with Other Application Components
... 296
5.2 ... Steps in Cost Object Controlling ... 297
• 5.2.1 ... Preliminary Costing ... 298
• 5.2.2 ... Simultaneous Costing ... 299
• 5.2.3 ... Final Costing ... 299
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• 5.2.4 ... Process Allocation ... 299
• 5.2.5 ... Revaluation at Actual Prices ... 300
• 5.2.6 ... Overhead Surcharge Calculation ... 305
• 5.2.7 ... Work-in-Process (WIP ... 307
• 5.2.8 ... Variance ... 310
• 5.2.9 ... Settlement ... 323
5.3 ... Overview of the Production Process ... 326
• 5.3.1 ... The Production Process Using a Make-to-Stock Scenario ... 326
5.4 ... Master Data Elements in Cost Object Controlling ... 331
• 5.4.1 ... Production Orders ... 332
• 5.4.2 ... Production Order Creation: Initial Screen ... 332
• 5.4.3 ... Production Order Creation: Header Screen (General Tab ... 337
• 5.4.4 ... Production Order Creation: Header Screen (Goods Receipt Tab ... 338
• 5.4.5 ... Production Order Creation: Header Screen (Control Data Tab ... 338
• 5.4.6 ... Production Order Creation: Header Screen (Master Data Tab ... 341
• 5.4.7 ... Production Order: Statuses ... 342
• 5.4.8 ... Production Order: Settlement Rule ... 345
• 5.4.9 ... Production Order: Preliminary Cost Estimate ... 346
• 5.4.10 ... Production Order: Reporting ... 346
5.5 ... Selected Logistical Processes and Cost Objects ... 353
• 5.5.1 ... External Processing ... 353
• 5.5.2 ... Rework Order ... 355
• 5.5.3 ... Consignment ... 357
• 5.5.4 ... Subcontracting ... 359
5.6 ... Cost Object Controlling Configuration ... 362
• 5.6.1 ... Costing Variant for Manufacturing Orders and Cost Collectors ... 362
• 5.6.2 ... Valuation Variant ... 363
• 5.6.3 ... Cost-Accounting-Relevant Default Values for Order Types and Plant ... 364
• 5.6.4 ... User-Defined Error Management ... 365
• 5.6.5 ... WIP-Related Configuration ... 366
• 5.6.6 ... Variance–Calculation-Related Configuration ... 375
• 5.6.7 ... Order–Settlement-Related Configuration ... 378
5.7 ... Other Important Reports ... 382
• 5.7.1 ... Reports in the Purchasing Area ... 382
• 5.7.2 ... Reports in Inventory Management Area ... 387
5.8 ... Chapter Summary ... 396
6 ... Actual Costing/Material Ledger ... 397
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6.1 ... Multiple Currencies/Valuations ... 397
6.2 ... Actual Costing ... 398
6.3 ... Actual Costing/Material Ledger Activation Options ... 399
• 6.3.1 ... Activate Material Ledger ... 399
• 6.3.2 ... Assign Currency Types to Material Ledger Type ... 400
• 6.3.3 ... Assign Material Ledger Type to Valuation Area ... 403
• 6.3.4 ... Configure Dynamic Price Release ... 403
• 6.3.5 ... Define Movement Type Groups of Material Ledger ... 404
• 6.3.6 ... Assign Movement Type Groups for Material Ledger ... 405
• 6.3.7 ... Define Material Update Structure ... 405
• 6.3.8 ... Assign Material Update Structure to a Valuation Area ... 407
• 6.3.9 ... Material Master and Material Ledger ... 407
6.4 ... Product Cost Planning Using Multiple Valuation ... 409
• 6.4.1 ... Costing Variant Configuration for Group Valuation ... 410
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• 6.4.2 ... Future Price Maintenance in Multiple Valuations ... 412
• 6.4.3 ... Release Group Cost Estimate and Legal Cost Estimate ... 413
6.5 ... Transaction-Based Material Price Determination ... 414
6.6 ... Single-Level Material Price Determination ... 414
6.7 ... Multi-Level Material Price Determination ... 416
6.8 ... Actual Costing Configuration ... 417
• 6.8.1 ... Activate Actual Costing ... 417
• 6.8.2 ... Activate Actual Cost Component Split ... 418
• 6.8.3 ... MM Account Assignment Related Configuration ... 420
6.9 ... Periodic Actual Costing: Process Flow ... 421
6.10 ... Material Ledger/Actual Costing Reporting ... 427
• 6.10.1 ... Material Price Analysis Report ... 427
• 6.10.2 ... Material Prices and Inventory Values over Several Periods ... 428
• 6.10.3 ... Valuated Multi-Level Quantity Structure ... 429
• 6.10.4 ... Material Ledger Document ... 430
• 6.10.5 ... Value Flow Monitor ... 431
6.11 ... Production Startup ... 431
6.12 ... Chapter Summary ... 433
7 ... Overview of Make-to-Order Production Scenarios Supported by SAP ... 435
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7.1 ... Customer Order Management Process ... 435
• 7.1.1 ... Pre-Sales Activities ... 436
• 7.1.2 ... Sales Order Processing ... 436
• 7.1.3 ... Inventory Sourcing ... 437
• 7.1.4 ... Delivery ... 438
• 7.1.5 ... Billing ... 438
• 7.1.6 ... Payment ... 438
7.2 ... Make-to-Order Manufacturing Scenarios Supported by SAP ... 439
• 7.2.1 ... Make-to-Order Without Sales Order Controlling, Using Valuated Stock ... 440
• 7.2.2 ... Make-to-Order with Sales Order Controlling, Using Valuated Stock ... 441
• 7.2.3 ... Make-to-Order with Sales Order Controlling Without Valuated Stock ... 442
7.3 ... Chapter Summary ... 443
8 ... Business Transactions in Make-to-Order Production ... 445
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8.1 ... Business Transactions, Process Flow, and Value Flow Without Sales Order Controlling
Using Valuated Stock ... 445
• 8.1.1 ... Master Data Requirements ... 446
• 8.1.2 ... Creation of Sales Order ... 449
• 8.1.3 ... MRP Run and Creation of a Planned Production Order ... 451
• 8.1.4 ... Posting to Cost Centers ... 451
• 8.1.5 ... Raw Material Issue to Production Order ... 451
• 8.1.6 ... Allocation of Activities from Production Cost Center to Production Order ... 452
• 8.1.7 ... Receipt of Finished Goods into Inventory from the Production Order ... 452
• 8.1.8 ... Delivery of Finished Products to Customers ... 453
• 8.1.9 ... Invoice to Customers ... 453
• 8.1.10 ... Month-End Processing: Apply Overhead from Manufacturing Cost Centers to the
Production Order ... 454
• 8.1.11 ... Month-End Processing: Work-in-Process Calculation ... 455
• 8.1.12 ... Month-End Processing: Calculate Production Order Variances ... 455
• 8.1.13 ... Month-End Processing: Settlement of Production Orders ... 457
8.2 ... Business Transactions, Process Flow, and Value Flow with Sales Order Controlling Using
Valuated Stock ... 458
• 8.2.1 ... Master data requirements ... 460
8.2.2 ... Creation of Sales Order ... 462
8.2.3 ... MRP Run and Creation of Planned Production Order ... 465
8.2.4 ... Posting to Cost Centers ... 466
8.2.5 ... Raw Material Receipt ... 466
8.2.6 ... Allocation of Activities from Production Cost Center to the Production Order ... 466
8.2.7 ... Finished Goods Receipt into Inventory from the Production Order ... 466
8.2.8 ... Delivery of Finished Goods to Customer ... 468
8.2.9 ... Invoicing to Customer ... 468
8.2.10 ... Month-End Processing: Apply Overhead from Manufacturing Cost Centers to the
Production Order and Overhead from Sales and Marketing Cost Centers to the Sales Order ...
468
• 8.2.11 ... Month-End Processing: Results Analysis Calculation ... 470
• 8.2.12 ... Month-End Processing: Variance Calculation ... 472
• 8.2.13 ... Month-End Processing: Settlement ... 473
8.3 ... Business Transactions, Process Flow, and Value Flow in Make-to-Order Production with
Sales Order Controlling Using Non-Valuated Stock ... 474
• 8.3.1 ... Finished Goods Received into Inventory from the Production Order ... 475
• 8.3.2 ... Delivery of Product to the Customer ... 475
• 8.3.3 ... Invoice the Customer ... 475
• 8.3.4 ... Month-End Processing: Apply Overhead from Manufacturing Cost Centers to the
Production Order and Overhead from Sales and Marketing Cost Centers to the Sales Order ...
475
• 8.3.5 ... Month-End Processing: Results Analysis Calculation ... 476
• 8.3.6 ... Month-End Processing: Settlement of Production Orders ... 477
• 8.3.7 ... Month-End Processing: Settlement of Sales Orders ... 478
8.4 ... Other Business Transactions in Make-to-Order Manufacturing ... 478
• 8.4.1 ... Mass Costing of Sales Documents ... 478
• 8.4.2 ... Carry Forward of Open Sales Order Commitments ... 479
8.5 ... Important Reports in Make-to-Order Manufacturing ... 480
• 8.5.1 ... Sales Order Selection ... 480
• 8.5.2 ... Display Sales Order Item to be Costed ... 481
• 8.5.3 ... Sales Order Summarized Analysis ... 482
8.6 ... Chapter Summary ... 486
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9 ... Make-to-Order–Related SAP Configuration ... 487
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9.1 ... Control Parameters and Default Values that Influence Sales-Order-Related Production ...
487
• 9.1.1 ... Check Account Assignment Categories ... 488
• 9.1.2 ... Check Requirements Classes ... 489
• 9.1.3 ... Check Requirement Types ... 494
• 9.1.4 ... Check Control of Requirements Type Determination ... 495
• 9.1.5 ... Selection of Requirement Type through MRP Group ... 497
• 9.1.6 ... Selection of Requirement Type through Sales Document Item Category ... 499
9.2 ... Basic Settings for Product Cost by Sales Order ... 501
• 9.2.1 ... Define Origin Groups ... 501
• 9.2.2 ... Overheads ... 502
9.3 ... Configuration Relating to Preliminary Costing and Order BOM Costing ... 506
• 9.3.1 ... Define Cost Components ... 506
• 9.3.2 ... Define Costing Variant for Preliminary Costing and Order BOM Costing ... 509
9.4 ... Configuration Relating to Unit Costing for Sales Order Items ... 517
• 9.4.1 ... Define Costing Variant for Unit Costing ... 517
9.5 ... Configuration Relating to Period-End Closing in Sales Order Controlling ... 518
• 9.5.1 ... Results Analysis ... 519
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• 9.5.2 ... Settlement ... 535
9.6 ... Chapter Summary ... 539
10 ... Introduction to SAP Financial Performance Management ... 541
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10.1 ... What Is SAP Financial Performance Management? ... 542
10.2 ... Components of Financial Performance Management ... 543
• 10.2.1 ... Strategy Management ... 544
• 10.2.2 ... Business Planning ... 544
• 10.2.3 ... Financial Consolidation ... 545
• 10.2.4 ... Financial Information Management ... 545
• 10.2.5 ... Profitability and Cost Management ... 546
• 10.2.6 ... Spend Analytics ... 547
10.3 ... Chapter Summary ... 547
A ... nnual Planning, Costing, and Closing ... 551
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A.1 ... Annual Planning and Costing Checklist ... 551
A.2 ... Month-End Closing Activity Checklist ... 565
A.3 ... Year-End Closing Activity Checklist ... 572