cross company actual costing

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Cross Company Logistics and

Actual Costing

Dr. Ralf HumbertDevelopment Architect Material LedgerSAP


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SAP 2007 / Page 2 SAP 2008 / Page 2

Disclaimer

This presentation outlines our general product direction and should not berelied on in making a purchase decision. This presentation is not subject toyour license agreement or any other agreement with SAP. SAP has noobligation to pursue any course of business outlined in this presentation or todevelop or release any functionality mentioned in this presentation. Thispresentation and SAP's strategy and possible future developments are

subject to change and may be changed by SAP at any time for any reasonwithout notice. This document is provided without a warranty of any kind,either express or implied, including but not limited to, the implied warrantiesof merchantability, fitness for a particular purpose, or non-infringement. SAPassumes no responsibility for errors or omissions in this document, except if

such damages were caused by SAP intentionally or grossly negligent.


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SAP 2007 / Page 3

Introducing a Valuated Stock in Transit


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SAP 2007 / Page 4

Issue 1:

Intercompany Stock Transfers within the Group

Company A Company B

Shipping

Dec. 16th, 100.000

Goods Receipt

Feb. 5th, 100.000 (+ Transf. Profit)

During the Transport Stock disappears from the Books!

Group StockDec. 15th 2.000.000Dec 16th 1.900.000 !!!Feb 5th 2.000.000 (+Transfer Profit)

Stock at Company ADec 15th 1.000.000Dec 16th 900.000

Stock at Company BDec 15th 1.000.000Feb 5th 1.100.000 (+TP)


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SAP 2007 / Page 5

Usage of valuated Stock-In-Transit


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SAP 2007 / Page 6

Goods MovementsProcess variants using stock in transit

Sender Company Code Receiver Company Code

Senders

Free Stock

In plant In transit In plantIn transit

BillingDocument

PurchaseOrder

ReceiverssFree Stock1

Senders

Free StockReceiverssFree Stock

Senders

SIT2

Senders


Senders

SIT3Receiverss

SIT

Senders


Receivers

SIT4

681

681

685 / 107T

683 / 107 T

109

109

645 / 101

685 / 101

VL02N VLPOD MIGOCorresponding t-codes to movement types:


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Goods MovementsReturns

Sender Company Code Receiver Company Code

Senders

Free Stock

In plant In transit In plantIn transit

PurchaseOrder

ReceiverssFree Stockr1

Senders


Senders

SITr2

Senders


Senders

SITr3Receiverss

SIT

Senders


Senders

SIT

ReceiverssSITr4

BillingDocument


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Solution PropertiesValuated Stock in Transit

The Solution will have the following properties:

Stock in Transit (SIT) will be valuated

SIT valuation will be stable and separated from the free stock

SIT stocks postings can be on separate G/L accounts

New Movement types for transfers between free stock and SIT and between SITs

Ownership transfer may be triggered by proof of delivery

Returns out of SIT will be posted with the original material value

Usage of SIT configured by STO order line item type, material, supplier

Solution will support:

Handling Units

Batches

Sales order Assignments

Actual costing

Parallel valuation, e.g. group valuation with transfer prices

Profit center accounting


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Basics of Actual Costing


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Issue 2

Cross-Company Actual Costing

2

GroupCompany

1Company

2

CostsRaw Mat. 20Energy 25

Labour 15Production 40



Sales process

Actual costing provides no visibility intocost structure after inter-company sales The enhanced Solution shall keep thecost transparency through inter-company sales and add freightcosts and intercompany profits tothe costs from the selling companycode from a group point of view

A solution to issue 1 is precondition tosolve issue 2 in standard


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Parallel CurrenciesValuation with Historic

Exchange Rates

Reasons for Usage of Material Ledger

Parallel ValuationTransfer prices

Group Legal Profit Center

Transparencyof Value Chain

Actual CostingMulti-level

Periodic Material Prices

MaterialLedger

Inventory Valuation


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Actual Costing

Material Movements

Purchasing

Invoices

Production order settlements

Debits/Credit

Goods Issue to Production

Activities to Production

Goods receipt from Production

Stock Transfers

Sales

Building the Quantity Structure

Collection of Values into price

determination scheme

Quantity Value ValueVariances

Price

BeginningInventory

Receipts

CumulativeInventory

Beginning Inventory + Receipts

Consumption

Ending Inventory Cumulative Inventory - Consumption


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External Procurement

Multilevel Price Determination

Production

Production

D

D

D

D

D

Roll-upprice differencesDfrom raw materials to

finished materials

External Procurement

D


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External Procurement External Procurement

Production

Production

Actual Cost Component Split

D

D

D DD

Material

Process

Overhead

Labor

DD

Profitability

Analysis

Material

Process

Overhead

Labor


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Actual Values in Profitability AnalysisContribution Margin Accounting Cost of Sales Split into Cost Components Plan/Actual Variance Analysis

Profitability Analysis based on Actual Costs

Plan Actual Var. % Var. Abs.

Revenues: 100,000 US$

Sales Quantity: 1,000 pc

50,000 45,000 5,000 10 %Raw Materials4,000 5,000 -1,000 - 25 %Labor variable4,000 4,500 - 500 - 13 %Machine variable

10,000 7,000 3,000 30 %Logistic Processes

5,000 5,500 - 500 - 10 %Material Overheads6,00027,000 33,000 22 %Contribution Margin I

10,000 10,000 0 0 %Labor fix7,000 7,000 0 0 %Machine fix

10,000 16,000 6,000 60 %Contribution Margin II


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Product Cost Controlling Through a Period

Cost Planning Production Actual Costing ProfitabilityAnalysis

Evaluating masterdata

Bill of materials

Routing

Planned prices

Planned activities

Planned yield

Recording logisticalinformation forcontrolling:

Consumptions

Yield & scrap

Purchasing & supplierinvoices

Activities & timerecording

Recalculating thevalue flow using

Actual quantitystructure

Actual activity

recording Multi-level value flow

Actual raw materialprices

Reporting Costs andContribution Margins

Production costs

Sales Revenues

Dimensions

Regions

Channels

Customers


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Screenshotsperiodic costs


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Valuated Quantity Structure


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Profitability Analysis


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Enhancement for Cross-Company ActualCosting


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Typical Sales Process in a Global Group

Plant GroupMarketing

RegionalSalesOrg

Customer

Several group internal sales processesbefore a product reaches a customer

CostsRaw Mat.EnergyLabourProductionMaintenanceFreightMarketingDutiesIntercompany profit

Sales Costs


Sales Costs


Sales Costs

RevenuesCostsRaw Mat.EnergyLabourProductionMaintenanceFreightMarketingDuties

Intercompany profitSales CostsProfit

In SAP standard an internal sales process cuts the value flow foractal costs. Costs will only be transparent for the last step in

the chain. Costs from previous steps will appear as rawmaterial costs only


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Sales Processwith enhanced Cross-Company Actual Costing

Plant GroupMarketing

RegionalSalesOrg

Customer

2 group internal sales processesbefore a product reaches a customer


Sales Costs

CostsRaw Mat.EnergyLabourProductionMaintenanceFreightMarketingDutiesIntercompany profit Plant

Sales Costs

RevenuesCostsEnergyLabourProductionMaintenanceFreightMarketingDutiesIntercompany profit PlantSales CostsIntercompany profit Marketing

Profit

With the enhancement the profitability will make cost and profitcontributions from the whole chain transparent.

Actual costs of the month in mine, marketing and sales will be

compared with actual revenues

CostsRaw Mat.EnergyLabourProductionMaintenanceFreightMarketingDutiesIntercompany profit Plant

Sales CostsIntercompany profit Marketing


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Issue 2

Cross-Company Actual Costing

GroupCompany

1Company

2





Sales process

Actual costing provides no visibility intocost structure after inter-company sales The enhanced Solution shall keep thecost transparency through inter-company sales and add freightcosts and intercompany profits tothe costs from the selling companycode from a group point of view

A solution to issue 1 is precondition tosolve issue 2 in standard


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SAP solution multiple steps

Production

legal group

Total cost 1000 1000

Materials 500 500

Labor 400 400

Overhead 100 100

Freight

Sold to

Shipper

Trader

legal group


Materials 1100 500

Labor 0 400

Overhead 0 100

Freight 100 100

Invoice1100,-

Freightinvoice100,-

Regional sales

legal group


Materials 1000 500

Labor 0 400

Overhead 0 100

Freight 50 150

Sold to

Invoice1300,-

Freightinvoice50,-


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Properties of the Solution

Cross-Company actual Costing

The Solution will have the following properties:

- Cross-Company Sales Process is a multi-level process. Actual costs will be transmitted atfollowing events

- Goods receipt

- Invoice receipt

- Period end closing

- As part of the cost component split intercompany profits will be shown at receiver bycomparison of invoiced price with actual cost at sender

- Configuration to define cost components as inter-company profits

- Legal valuation will include intercompany profits, group valuation will exclude these

- Freight costs and other delivery costs will be added to actual costs

- Mixed scenarios of (internal) procurement, own production and further process steps will be

supported


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cross company actual costing

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