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FICO Integration with Logistics: Process Flows,
Accounting, and Valuation Simplified
Saugata Ghosh
PwC
1
In This Session
• In this session, you will enhance your understanding around:
 Various logistics scenarios
 Step-by-step process flows
 FICO integrations
 Accounting and Valuation
Simple Finance (Add-on for Business Suite on HANA) or S/4HANA Finance simplifies the
underlying table structure. However, the business process flows remain unchanged.
2
What We’ll Cover
• End-to-End Scenario Overview
• Key Process Flows with Accounting
• Preliminary and Periodic Valuation
• Wrap-Up
3
What We’ll Cover
• End-to-End Scenario Overview
• Key Process Flows with Accounting
• Preliminary and Periodic Valuation
• Wrap-Up
4
Make-to-Stock Scenario - Overview
Operation Confirmations
Purchase
Requisition
(Raw
Materials)
Prod.
Order
Overhead
Variance
Calculation
Prod.
Order
Settlement
Planned
Order
(Finished
Goods)
Goods
Receipt
(Raw
Material)
Invoice
Receipt
Outgoing
Payment
(Vendor)
Purchase
Order
Incoming
Payment
(Customer)
Issue
Raw
Material
External
Activity
Finished
Goods
Produced
Internal
Activity
Billing
Delivery
PGI
Planned
Ind.
Req.
Sales
Order
Period-End Process
Accounting Impact
• “Strategy Group” in Material Master determines the scenario
ProcureToPayProductionPlanningOrderToCash
5
Make-to-Order Scenario - Overview
Period-End Process
Accounting Impact
Operation Confirmations
Purchase
Requisition
(Raw
Material)
Prod.
Order
Overhead
Variance
Calculation
Prod.
Order
Settlement
Planned
Order
(Finished
Goods)
Goods
Receipt
(Raw
Material)
Invoice
Receipt
Outgoing
Payment
(Vendor)
Purchase
Order
Issue
Raw
Material
External
Activity
Finished
Goods
Produced
Internal
Activity
Incoming
Payment
(Customer)
Billing
Sales Order/
Customer
Requirement
Delivery
PGI
Sales
Order
Settlement
ProcureToPayProductionPlanningOrderToCash
• “Strategy Group” in Material Master determines the scenario
6
What We’ll Cover
• End-to-End Scenario Overview
• Key Process Flows with Accounting
• Preliminary and Periodic Valuation
• Wrap-Up
7
Key Business Processes
Procure to Pay
Procurement of Stock Item
(Inventory)
Procurement of Non-Stock
Item
Procurement of Services
Cross-Company Procurement Subcontracting
Stock Transfer
(Intra- and Inter-Company)
Production Make to Stock Make to Order
Order to Cash
Scenarios where
Sales Order is NOT Cost Object
Scenarios where
Sales Order is Cost Object
Cross-Company Sales
Third-Party Sales Free of Charge/Samples Consignment
8
Account Determinations - Quick Recap
LimitedPerceivedValueofFinancialPlanningSales and Use Tax Accounts
SAP-Provided Parameters
• Chart of Accounts
• Debit/Credit
• Transaction Keys for differentiation by Tax Types (e.g., MWS output tax)
• Tax Code (Linked with Country/Tax Procedure)
LimitedPerceivedValueofFinancialPlanning Material Accounts
SAP-Provided Parameters
• Chart of Accounts
• Debit/Credit
• Transaction Keys for differentiation by transactions
• Account Modifier for differentiation of the “offsetting entry for inventory
posting” based on Movement Types
• Valuation Class for differentiation by group of Materials
• Valuation Modifier for further differentiation by Plants
LimitedPerceivedValueofFinancialPlanning Revenue Accounts
Commonly Used Parameters
• Chart of Accounts
• Sales Organization
• Acct Assignment Group of Materials
• Acct Assignment Group of Customers
• Account Key linked with Pricing Conditions
• Sales Order as Cost Object vs. Sales Order not Cost Object
LimitedPerceivedValueofFinancialPlanning Finance Process Accounts
SAP-Provided Parameters
• Chart of Accounts
• Debit/Credit
• Transaction Keys for differentiation by transactions (e.g., Cash discounts
received, Cash discount allowed, Bank charges, etc.)
9
Procurement of Stock Item
Scenarios
• Procurement of inventory items
• Example: MAP, Purchase Order = $100, Freight = $10, Vendor sends invoice for $125, Early payment discount = $5
ProcureToPay
Purchase
Requisition
(Raw Material)
Goods
Receipt
Invoice
Receipt
Purchase
Order
Accounting Documents $
FI Dr. Inventory-RM (BSX)
Cr. GR/IR Clg. (WRX)
Cr. Freight Clg.(FR1)
110
100
10
CO NA
Accounting Documents $
FI Dr. GR/IR Clg. (WRX)
Dr. Freight Clg.(FR1)
Dr. Price Diff (PRD)
Cr. AP (Vendor)
100
10
15
125
CO Dr. Price Diff 125
Accounting Documents $
FI Dr. AP (Vendor)
Cr. Bank Clearing
Cr. Discount Received
125
120
5
CO Cr. Discount Received 5
• Key Decision: Whether to implement “GR-based IV” for ensuring 3-way Match as recommended for control
• For Goods Receipt, if Material is valued at Standard Price, the difference with PO Price goes to Price Difference
• For Invoice Receipt, if Material is valued at Moving Average Price, the difference between PO Price and Invoice is posted to Inventory to the
extent inventory is available in stock. Else, the difference is posted to Price Difference.
Outgoing
Payment
(Vendor)
10
Procurement of Non-Stock Item
Scenarios
• Procurement of direct charge material items like consumables, stationeries, etc.
• Example: Purchase Order = $100, Vendor sends invoice for $125, Early payment discount = $5
ProcureToPay
Purchase
Requisition
(Consumable)
Goods
Receipt
Invoice
Receipt
Outgoing
Payment
(Vendor)
Purchase
Order
• Account assignments for Purchase Orders. (K – Cost Center, F – Order, P – Project/WBS, C – Sales Order)
• Key Decision: What Account assignment meets your business requirements
• Key Decision: Whether to implement “GR-based IV” for ensuring 3-way Match as recommended for control
• For Invoice Receipt, the difference between PO Price and Invoice Price is posted to same Consumption account
Accounting Documents $
FI Dr. AP (Vendor)
Cr. Bank Clearing
Cr. Discount Received
125
120
5
CO Cr. Discount Received 5
Accounting Documents $
FI Dr. Consumption (From Purch.Order)
Cr. GR/IR Clg. (WRX)
100
100
CO Dr. Consumption (From Purch.Order) 100
Accounting Documents $
FI Dr. GR/IR Clg. (WRX)
Dr. Consumption
Cr. AP (Vendor)
100
25
125
CO Dr. Consumption 25
11
Procurement of Services
Scenarios
• Procurement of services like Professional fees, Audit Fees, etc.
• Example: Purchase Order = $100, Vendor sends invoice for $125, Early payment discount = $5
ProcureToPay
• Key Decision: Use of Service master is optional but advantageous. As an alternate use “Text” in Purchase Order.
• Key Decision: Whether to implement “Service Entry Sheet” for ensuring 3-way Match as recommended control
• For Invoice Receipt, the difference between PO Price and Invoice Price is posted to same Expense account
Accounting Documents $
FI Dr. AP (Vendor)
Cr. Bank Clearing
Cr. Discount Received
125
120
5
CO Cr. Discount Received 5
Accounting Documents $
FI Dr. Expense (Acct Assn. in PO)
Cr. GR/IR Clg. (WRX)
100
100
CO Dr. Expense (Cost Object in PO) 100
Accounting Documents $
FI Dr. GR/IR Clg. (WRX)
Dr. Expense
Cr. AP (Vendor)
100
25
125
CO Dr./Cr. Expense 25
* Optional
Purchase
Requisition
(Services)
Service
Entry Sheet
Invoice
Receipt
Outgoing
Payment
(Vendor)
Purchase
Order
12
Procurement - Cross-Company Purchase
Scenarios
• Centralized procurement
• Inventory PO where “Receiving” Plant belongs to another Company
• Account assigned PO where assigned object (Asset/Cost Center/Order/Project/etc.) belongs to another Company
Example of Inventory PO:
Accounting Documents
FI Dr. Inventory (BSX)
Cr. GR/IR Clg. (WRX)
Accounting Documents
(Cross-Company Doc.)
FI Dr. GR/IR Clg. (WRX)
Cr. AP (I/C Vendor)
Procuring
Company
Purchase
Requisition
(Raw Material)
Invoice
Receipt
Outgoing
Payment
(Vendor)
Purchase
Order
Receiving
Company
Goods
Receipt
Accounting Documents
(Cross-Company Doc.)
FI Dr. AR (I/C Customer)
Cr. AP (Vendor)
Accounting Documents
FI Dr. AP (Vendor)
Cr. AP (I/C Vendor)
13
Subcontracting
Scenarios
• Purchase Order: Components sent to vendor, who performs manufacturing/assembling and sends back finished goods. Bill of
Material can be used in Purchase Order.
• Manufacturing Order with Subcontracting Activity: Operations being performed by subcontracting vendor
Example of Subcontracting Purchase Order:
• Moving Average Price of RM = $100, Standard Price of FG = $130, Subcontracting Charges = $25
ProcureToPay
Subcontracting
Purchase Order
Goods Receipt
Finished Goods
From Vendor (543)
Invoice Receipt
(For Charges)
Outgoing
Payment
(Vendor)
Goods Issue
RM/Components
To Vendor (541)
Accounting Documents $
FI Dr. Inventory-FG (BSX)
Cr. COGM-FG (BSV)
Dr. Consumption-RM (GBB-VBO)
Cr. Inventory-RM (BSX)
Dr. Subcont. Charges (FRL)
Cr. GR/IR Clearing (WRX)
130
130
100
100
25
25
CO Cr. COGM-FG
Dr. Consumption-RM
Dr. Subcont. Charges
130
100
25
Accounting Documents $
FI Dr. GR/IR Clg. (WRX)
Cr. AP (Vendor)
25
25
CO
Accounting Documents $
FI Dr. AP (Vendor)
Cr. Bank Clearing
25
25
CO
14
Stock Transfer - Intracompany
Example: Plant 1000 (MAP = $1250) transfers material ABC to Plant 2000 (Standard price = 1200)
Stock
Transfer
Transfer
Posting
(301)
Option 2: w/o STPO – 2-Step Process
Option 3: With STPO w/o Delivery
Option 4: With STPO with Delivery
Stock
Transfer
Goods
Issue
(351)
Goods
Receipt
(101)
Stock
Transfer
Purchase
Order
Stock
Transfer
Delivery/
PGI
(641)
Goods
Receipt
(101)
Stock
Transfer
Purchase
Order
Option 1: w/o STPO – 1-Step Process
Stock
Transfer
Transfer
Posting
(303)
Transfer
Posting
(305)
Accounting document $
FI Dr. Inventory (Receiving Plant)
Cr. Inventory (Sending Plant)
Dr. Price Difference*
1,200
1,250
50
* Only If receiving plant valuates with Std. Price
Same financial impact
Factors To Consider:
• Physical proximity of the Plants
• Legal and taxation requirements
• Need for control at the point of Issue as well as Receipts
• Segregation of Duties
• Automation
• Volume
15
Stock Transfer — Intercompany
Scenario: STPO with Delivery
Before Enhancement Pack 5
Receiver
Stock
Transfer
Purchase
Order
Sender
Delivery/P
GI (641)
Goods
Receipt
(101)
InterCo
Billing
(Type IV)
Invoice
Receipt
Accounting Documents
FI Dr. COGS
Cr. Inventory
Accounting Documents
FI Dr. AR (I/C Customer)
Cr. I/C Sales
Cr. Output Tax
Accounting Documents
FI Dr. Inventory
Cr. GR/IR Clg
Accounting Documents
FI Dr. GR/IR Clg
Dr. Input Tax
Cr. AP (I/C Vendor)
16
Stock Transfer — Intercompany (cont.)
Scenario: STPO with Delivery
Enhancement Pack 5 – New options with preconfigured Delivery Types for SIT
Sender Receiver
Sender’s
Stock
Sender’s
In-Transit Stock
Receiver’s
Stock1. STPO with Delivery
Type NCC2
2. STPO with Delivery
Type NCC3
3. STPO with Delivery
Type NCCR
Sender’s
Stock
Sender’s
In-Transit Stock
Receiver’s
Stock
Sender’s
Stock
Receiver’s
In-Transit Stock
Receiver’s
Stock
Receiver’s
In-Transit Stock
Outbound
Delivery
Transfer of Ownership
On Arrival at a Port
Proof of Delivery OR
Goods Receipt
17
Manufacturing Order
Example with Product Cost By Order
Debits: RM Cost $800, Internal Activity $1000, External Activity $200, Overhead $400
Credit: FG standard price $2500
Accounting Documents $
FI Dr. Ext. Labor (From PO)
Cr. GR/IR (WRX)
200
200
CO Dr. Ext. Labor (Prod.Order) 200
Production
Planning
Accounting Documents $
FI Dr. Consumption-RM (GBB-VBR)
Cr. Inventory-RM (BSX)
800
800
CO Dr. Consumption-RM (Prod.Order) 800
Accounting Documents $
FI
CO Dr. Labor (Prod.Order)
Cr. Labor (Home Cost Ctr.)
1,000
1,000
Accounting Documents $
FI Dr. Inventory-FG (BSX)
Cr. COGM-FG (GBB-AUF)
2,500
2,500
CO Cr. COGM-FG (Prod.Order) 2,500
Planned
Order
(Finished
Goods)
Accounting Documents $
FI
CO Dr Overhead (Prod.Order)
Cr Overhead (Cost Center)
400
400
Accounting Documents $
FI Cr. Price Diff. (PRD)
Dr. COGM-FG
100
100
CO Cr. Price Diff. (Prof.Seg)
Dr. COGM-FG (Prod.Order)
100
100
Procure
ToPay
Purchase
Requisition
Purchase
Order
Period-End Processes
Goods
Receipt
Production/
Process
Order
Issue
Raw
Material
Internal
Activity
External
Activity
Finished
Goods
Produced
Overhead
Variance
Calculation
Production
Order
Settlement
Operation Confirmations
18
Order to Cash - Simple Sales Order
Scenarios
• Sale of Make To Stock Items
Example: Sale Price = $200, Tax = $20, Cost of Goods Sold = $150, Early Payment Discount = $5
OrderToCash
Sales Order Billing
Incoming
Payment
(Customer)
Delivery/PG
I
Accounting Documents $
FI Dr. COGS-FG (GBB-VAX)
Cr. Inventory-FG (BSX)
150
150
AB-COPA Dr. COGS-FG 150
CB-COPA
Accounting Documents $
FI Dr. AR (Customer)
Cr. Sales
Cr. Output Tax
220
200
20
AB-COPA Cr. Sales 200
CB-COPA Sales
COGS
200
150
Accounting Documents $
FI Dr. Bank Clearing
Dr. Discount
Cr. AR (Customer)
215
5
220
• Item Category in SO determines Requirement Type/Requirement Class which in turn determines whether SO is Cost Object
• Costing-based COPA: COGS and Revenue both flow at the time of Billing
• Account-based COPA: COGS flow with PGI and Revenue flows with Billing
• COGS – Not created as Cost Element. Differentiation based on Account Modifier VAX.
19
Order to Cash - Sales Order as Cost Object
Scenarios
• Sale of Make To Order Items
• To be used when business requirement is to track all order fulfillment related expenses and revenue.
Example: Sale Price = $200, Tax = $20, Cost of Goods Sold = $150
OrderToCash
• Item Category in SO determines Requirement Type/Requirement Class which in turn determines whether SO is Cost Object
• Costing-based COPA: COGS and Revenue both flow at the time of Sales Order Settlement
• Account-based COPA: COGS flow with PGI and Revenue flows with Billing (Same as SO as not Cost Object)
• COGS – Created as Cost Element so that COGS flows to Sales Order. Differentiation based on Account Modifier VAY.
Sales Order
Settlement
Accounting Documents $
FI Dr. COGS-FG (GBB-VAY)
Cr. Inventory-FG (BSX)
150
150
AB-COPA COGS 150
CB-COPA
Accounting Documents $
FI Dr. AR (Customer)
Cr. Sales
Cr. Output Tax
220
200
20
AB-COPA Sales 200
CB-COPA
Accounting Documents $
FI
AB-COPA
CB-COPA Sales
COGS
200
150
Delivery/PG
ISales Order Billing
Incoming
Payment
(Customer)
20
Order to Cash - Cross-Company Sales
Scenarios
• Drop-Ship: Order booked by one Company but Delivery Plant belongs to another Company
Selling
Company
Sales Order Customer
Billing (F2)
Outgoing
Payment
(I/C Vendor)
Delivering
Company
Delivery/
PGI
InterCo.
Billing (IV)
InterCo. AP
Invoice
Incoming
Payment (I/C
Customer)
* iDoc/ RD04
Accounting Documents
FI Dr. COGS (GBB-VAX)
Cr. Inventory-FG (BSX)
Accounting Documents
FI Dr. AR (I/C Customer)
Cr. I/C Sales
Cr. Output Tax
Dr. I/C COGS (optional)
Cr. COGS (optional)
Accounting Documents
FI Dr. AR (Customer)
Cr. Sales
Cr. Output Tax
Accounting Documents
FI Dr. COGS
Dr. Input Tax
Cr. AP (I/C Vendor)
Accounting Documents
FI Dr. AP (I/C Vendor)
Cr. Bank Clearing
Accounting Documents
FI Cr. AR (I/C Customer)
Dr. Bank Clearing
21
Order to Cash - Third-Party Sales
Scenarios
Direct delivery from vendor Plant
Procure
ToPay
Order
ToCash
Accounting Documents
FI Dr. AR (Customer)
Cr. Sales
Cr. Output Tax
Accounting Documents
FI Dr. COGS
Cr. GR/IR Clg.
Accounting Documents
FI Dr. GR/IR Clg.
Dr. Input Tax
Cr. AP (Vendor)
Accounting Documents
FI Dr. AP (Vendor)
Cr. Bank Clearing
Cr. Discount Received
Accounting Documents
FI Dr. Bank Clearing
Cr. AR (Customer
• Sales Order: Standard Item Category = TAS
• Purchase Requisition/Order: Account Assignment Category = 1 – Third Party, Item Category = S – Third Party
Sales Order
Purchase
Order (Acct
Assigned)
Invoice
Receipt
Purchase
Requisition
(Acct
Assigned)
Goods
Receipt (101)
Billing
Outgoing
Payment
(Vendor)
Incoming
Payment
(Customer)
22
Order to Cash - Free of Charge/Samples
Scenario-1: No Customer Billing (Separate Order Type/Item Category)
OrderToCash
Sales
Order
Delivery/
PGI
OrderToCash
Sales
Order BillingDelivery/
PGI
Accounting Documents $
FI Dr. COGS
Cr. Inventory-FG
150
150
Accounting Documents $
FI Dr. Sales Deduction
Cr. Sales
Cr. Output Tax
170
150
20
Scenario-2: Customer Billing with 100% Discount (Separate Item Category/Pricing Procedure)
Accounting Documents $
FI Dr. COGS
Cr. Inventory-FG
150
150
23
Consignment Sales (Books of Consignor)
Scenario: Consignor selling goods through Consignment Agent (Consignee customer)
Process Flow/Sales Order Types:
• Consignment Fill-Up: For moving unrestricted-use stock to Consignee’s stock (special stock “W”). Ownership remains with Consignor.
• Consignment Issue: When Consignee sells the consignment stock (special stock) to a third party. Relevant for Billing.
• Consignment Return: When Consignee receives return of goods from third party. Relevant for Credit Memo.
• Consignment Pick-Up: For returning goods from consignment Consignee’s stock (special stock “W”) to unrestricted-use stock
OrderToCash
1a.
Consignment
Fill-Up
Accounting Documents
FI Dr. COGS
Cr. Inventory
1b.
Delivery/ PGI
(631W)
2a.
Consignment
Issue
2b.
Delivery/PGI
(633W)
2c.
Billing
(Invoice)
4a.
Consignment
Pick-Up
4b.
Delivery/PGI
(632W)
3a.
Consignment
Returns
3b.
Delivery/PGI
(634W)
3c.
Billing
(Credit Memo)
Accounting Documents
FI Dr. Customer
Cr. Sales
Cr. Output Tax
Accounting Documents
FI Cr. COGS
Dr. Inventory
Accounting Documents
FI Cr. Customer
Dr. Sales
Dr. Output Tax
24
Consignment Purchase (Books of Consignee)
Scenarios: Consignee selling goods for Consignor
ProcureToPay
Scheduling
Agreement (Item
Category “K”)
Transfer to
Unrestricted Stock
MIGO_TR (411K)
Invoice Receipt
MRKO (Consignment
Settlement)
Outgoing Payment
(Vendor)
Goods Receipts
MIGO (101K)
Accounting Documents
FI Dr. Inventory (BSX)
Cr. Payable-Consignment (KON)
Dr./Cr. Gain/Loss*
* (Std. Price ~ Consignment Price)
Accounting Documents
FI Dr. Payable-Consignment
Cr. AP (Vendor)
Accounting Documents
FI Dr. AP (Vendor)
Cr. Bank Clearing
25
What We’ll Cover
• End-to-End Scenario Overview
• Key Process Flows with Accounting
• Preliminary and Periodic Valuation
• Wrap-Up
26
Preliminary (Real-Time) Valuation
• Price Control
 Price Control indicator in material master determines the valuation – MAP (V) or Standard Price (S)
• Moving Average Price (V)
 Represents weighted average price (= Total Value/Quantity)
 Price gets updated with each Goods Receipts
 Recommended for externally procured materials
• Standard Price (S)
 Price is determined and updated periodically, either manually or using Material Cost Estimate (Cost Roll-Up)
 Recommended for in-house-produced products
 Variant Configured materials should be valuated using Sales Order Cost Estimate, as there is no Material Cost
Estimate
 Must for Material Ledger/Actual Costing
• Split Valuation
 Can be used to valuate sub-stocks of same material in different ways
 Example – Externally procured vs. in-house-produced, duty-paid vs. duty-free, by quality, by batch
 Parent material is always maintained in MAP
27
Periodic Revaluation
• Material Cost Estimate (Cost Roll-Up)
 In-house-produced materials are valuated using Standard Price
 Standard Price is calculated based on master data like BOM, Routing, Costing Sheet
 Price gets updated in material master; Revaluation gain/loss posted in accounting
• Manual Price Change (MR21)
 For updating Price in material master periodically
 Commonly used for Materials with price control indicator “V”
 Can be used for “S” Materials if Standard Cost Estimate has not been released yet
 Revaluation difference (gain/loss) is posted in accounting
• Actual Costing with Material Ledger
 Preliminary valuation for all goods movements is performed with Standard Price and
Price Variances are maintained in Material Ledger
 At period-end, closing inventory is revaluated with determined “Actual Price” or periodic
unit price
 “Actual Price” can be used for statistical purposes as well without Accounting (optional)
• FIFO and LIFO
 Available for month-end inventory valuation adjustment reports
 Material is valuated in moving average price for daily purpose
Accounting Documents
FI Dr./Cr. Revaluation Diff. (UMB)
Cr./Dr. Inventory-FG (BSX)
Accounting Documents
FI Dr./Cr. Revaluation Diff. (UMB)
Cr./Dr. Inventory-RM (BSX)
Accounting Documents
FI Dr./Cr. Price Diff. (PRY)
Cr./Dr. Inventory (BSX)
28
Material Cost Estimate (Cost Roll-Up)
BOM Routing
Quantity Structure
• Prices for Materials
• Prices for Internal Activities
• Prices for External Activities
• Overhead from Costing Sheets
• Prices from Processes
Value Structure
CostingRun
Costing Data
• Costing Variant
• Costing Version
• Controlling Area
• Company Code
• Transfer Control
• Costing Date From
• Costing Date To
• Qty Structure Date
• Valuation Date
• Valuation Variant
• Costing Sheet
6. Releas
e1. Selection 2. Structure
Explosion 3. Costing 4. Analysis 5. Markin
g
Material ABC:
Total Stock: 1000 Pcs
Total Value: $800,000
Price: $800/Pc
Material ABC:
Total Stock: 1000 Pcs
Total Value: $880,000
Price: $880/Pc
Example:
New Cost Estimate suggests $880/Pc
Current price in Material master gets updated
Accounting Documents $
FI Cr. Revaluation Diff. (UMB)
Dr. Inventory
80,000
80,000
CO Cr. Revaluation Diff. 80,000
29
Work in Progress (WIP)
Scenario: WIP represents goods in production that have not yet been completed at the end of an accounting period
• Status of the manufacturing orders controls postings. PREL/ REL  Calculate, DLV/CNF/ TECO  Cancel
• Valuation is carried out based on net “Actual Cost” using the formula:
= ∑ (Debits on account of Material, Activity, Overhead, etc) – ∑ (Credits on account of settled cost, i.e., COGM)
 If the result is positive, it represents “Stock in Process” (FI entry is Dr. WIP Stock, Cr. WIP Offset)
 If the result is negative, it implies ‘”Reserve for Unrealized Cost” (FI entry is Dr. WIP Offset, Cr. WIP Stock)
• WIP Offset account should not be created as Cost Element
Material: XYZ
Material Cost 800
Activity Cost 1,200
Overhead 400
---------------------------------------------------
Total 2,400
Production Confirmed (1,000)
---------------------------------------------------
WIP 1,400
COGM – FG $1,000RM Consumption $800
Overhead $400
Activity Allocation $1,200
WIP $1400
Month-end
Manufacturing Order
Accounting Documents $
FI Dr. WIP (B/S)
Cr. WIP Offset (P&L)
1,400
1,400
CO NA
30
Physical Inventory Count and AdjustmentPhysicalCount
Post
Difference
(MI07, MI37)
Create PI
Documents
(MI01, MI31)
Execute Count
(Manual)
Enter Count
(MI04, MI34)
List Count
Differences
(MI20)
Recount
(MI11)
Print PI
Documents
(MI21)
Material ABC:
Total Stock: 1,000 Pcs
Total Value: $800,000
Price: $800/Pc
Sock count suggests 1,100 units
Material ABC:
Total Stock: 1,100 Pcs
Total Value: $880,000
Price: $800/Pc
Example:
Scenario: Physical inventory count is carried out at periodic intervals to ensure accuracy in financial books. This may also be
mandated by accounting or taxation rules to place an accurate value on the inventory.
Accounting Documents $
FI Cr. Physical Inv. Diff. (GBB-INV)
Dr. Inventory (BSX)
80,000
80,000
CO Cr. Physical Inv. Diff. (Cost Ctr.) 80,000
31
What We’ll Cover
• End-to-End Scenario Overview
• Key Process Flows with Accounting
• Preliminary and Periodic Valuation
• Wrap-Up
32
Where to Find More Information
• For further information on logistics scenarios and design integrations, please refer to:
 SAP Best Practices Baseline Package – Building Blocks
 https://help.sap.com/bp_bl604/BL_DE/html/Content_Library_BL_EN_DE.htm
• For learning SAP’s new HANA-enabled logistics and finance solutions, please refer to:
 http://discover.sap.com/S4HANA
 www.s4hana.com/
 S/4HANA 1511 Update: https://vimeo.com/146090331
 SAP Business Suite 4 SAP HANA in a Nutshell: https://open.sap.com/courses/s4h1
33
7 Key Points to Take Home
• Various logistics scenarios relevant for accounting.
• Step-by-step process flows for Procure to Pay (P2P), Manufacturing and Order to Cash (OTC)
• Enhanced understanding around FICO accounting integrations.
• Account determination setups are critical for correct Accounting.
• Preliminary and Periodic valuation methods for accurate Amounts.
• Learn about design and configuration options.
34
Your Turn!
How to contact me:
Saugata Ghosh, Director, PwC
Saugata.Ghosh@pwc.com
Please remember to complete your session evaluation
35
SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other
countries. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP SE.
Disclaimer
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
© 2016 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to
the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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FIN2016_Ghosh_Ficointegrationwithlogistics

  • 1. Produced by Wellesley Information Services, LLC, publisher of SAPinsider. © 2016 Wellesley Information Services. All rights reserved. FICO Integration with Logistics: Process Flows, Accounting, and Valuation Simplified Saugata Ghosh PwC
  • 2. 1 In This Session • In this session, you will enhance your understanding around:  Various logistics scenarios  Step-by-step process flows  FICO integrations  Accounting and Valuation Simple Finance (Add-on for Business Suite on HANA) or S/4HANA Finance simplifies the underlying table structure. However, the business process flows remain unchanged.
  • 3. 2 What We’ll Cover • End-to-End Scenario Overview • Key Process Flows with Accounting • Preliminary and Periodic Valuation • Wrap-Up
  • 4. 3 What We’ll Cover • End-to-End Scenario Overview • Key Process Flows with Accounting • Preliminary and Periodic Valuation • Wrap-Up
  • 5. 4 Make-to-Stock Scenario - Overview Operation Confirmations Purchase Requisition (Raw Materials) Prod. Order Overhead Variance Calculation Prod. Order Settlement Planned Order (Finished Goods) Goods Receipt (Raw Material) Invoice Receipt Outgoing Payment (Vendor) Purchase Order Incoming Payment (Customer) Issue Raw Material External Activity Finished Goods Produced Internal Activity Billing Delivery PGI Planned Ind. Req. Sales Order Period-End Process Accounting Impact • “Strategy Group” in Material Master determines the scenario ProcureToPayProductionPlanningOrderToCash
  • 6. 5 Make-to-Order Scenario - Overview Period-End Process Accounting Impact Operation Confirmations Purchase Requisition (Raw Material) Prod. Order Overhead Variance Calculation Prod. Order Settlement Planned Order (Finished Goods) Goods Receipt (Raw Material) Invoice Receipt Outgoing Payment (Vendor) Purchase Order Issue Raw Material External Activity Finished Goods Produced Internal Activity Incoming Payment (Customer) Billing Sales Order/ Customer Requirement Delivery PGI Sales Order Settlement ProcureToPayProductionPlanningOrderToCash • “Strategy Group” in Material Master determines the scenario
  • 7. 6 What We’ll Cover • End-to-End Scenario Overview • Key Process Flows with Accounting • Preliminary and Periodic Valuation • Wrap-Up
  • 8. 7 Key Business Processes Procure to Pay Procurement of Stock Item (Inventory) Procurement of Non-Stock Item Procurement of Services Cross-Company Procurement Subcontracting Stock Transfer (Intra- and Inter-Company) Production Make to Stock Make to Order Order to Cash Scenarios where Sales Order is NOT Cost Object Scenarios where Sales Order is Cost Object Cross-Company Sales Third-Party Sales Free of Charge/Samples Consignment
  • 9. 8 Account Determinations - Quick Recap LimitedPerceivedValueofFinancialPlanningSales and Use Tax Accounts SAP-Provided Parameters • Chart of Accounts • Debit/Credit • Transaction Keys for differentiation by Tax Types (e.g., MWS output tax) • Tax Code (Linked with Country/Tax Procedure) LimitedPerceivedValueofFinancialPlanning Material Accounts SAP-Provided Parameters • Chart of Accounts • Debit/Credit • Transaction Keys for differentiation by transactions • Account Modifier for differentiation of the “offsetting entry for inventory posting” based on Movement Types • Valuation Class for differentiation by group of Materials • Valuation Modifier for further differentiation by Plants LimitedPerceivedValueofFinancialPlanning Revenue Accounts Commonly Used Parameters • Chart of Accounts • Sales Organization • Acct Assignment Group of Materials • Acct Assignment Group of Customers • Account Key linked with Pricing Conditions • Sales Order as Cost Object vs. Sales Order not Cost Object LimitedPerceivedValueofFinancialPlanning Finance Process Accounts SAP-Provided Parameters • Chart of Accounts • Debit/Credit • Transaction Keys for differentiation by transactions (e.g., Cash discounts received, Cash discount allowed, Bank charges, etc.)
  • 10. 9 Procurement of Stock Item Scenarios • Procurement of inventory items • Example: MAP, Purchase Order = $100, Freight = $10, Vendor sends invoice for $125, Early payment discount = $5 ProcureToPay Purchase Requisition (Raw Material) Goods Receipt Invoice Receipt Purchase Order Accounting Documents $ FI Dr. Inventory-RM (BSX) Cr. GR/IR Clg. (WRX) Cr. Freight Clg.(FR1) 110 100 10 CO NA Accounting Documents $ FI Dr. GR/IR Clg. (WRX) Dr. Freight Clg.(FR1) Dr. Price Diff (PRD) Cr. AP (Vendor) 100 10 15 125 CO Dr. Price Diff 125 Accounting Documents $ FI Dr. AP (Vendor) Cr. Bank Clearing Cr. Discount Received 125 120 5 CO Cr. Discount Received 5 • Key Decision: Whether to implement “GR-based IV” for ensuring 3-way Match as recommended for control • For Goods Receipt, if Material is valued at Standard Price, the difference with PO Price goes to Price Difference • For Invoice Receipt, if Material is valued at Moving Average Price, the difference between PO Price and Invoice is posted to Inventory to the extent inventory is available in stock. Else, the difference is posted to Price Difference. Outgoing Payment (Vendor)
  • 11. 10 Procurement of Non-Stock Item Scenarios • Procurement of direct charge material items like consumables, stationeries, etc. • Example: Purchase Order = $100, Vendor sends invoice for $125, Early payment discount = $5 ProcureToPay Purchase Requisition (Consumable) Goods Receipt Invoice Receipt Outgoing Payment (Vendor) Purchase Order • Account assignments for Purchase Orders. (K – Cost Center, F – Order, P – Project/WBS, C – Sales Order) • Key Decision: What Account assignment meets your business requirements • Key Decision: Whether to implement “GR-based IV” for ensuring 3-way Match as recommended for control • For Invoice Receipt, the difference between PO Price and Invoice Price is posted to same Consumption account Accounting Documents $ FI Dr. AP (Vendor) Cr. Bank Clearing Cr. Discount Received 125 120 5 CO Cr. Discount Received 5 Accounting Documents $ FI Dr. Consumption (From Purch.Order) Cr. GR/IR Clg. (WRX) 100 100 CO Dr. Consumption (From Purch.Order) 100 Accounting Documents $ FI Dr. GR/IR Clg. (WRX) Dr. Consumption Cr. AP (Vendor) 100 25 125 CO Dr. Consumption 25
  • 12. 11 Procurement of Services Scenarios • Procurement of services like Professional fees, Audit Fees, etc. • Example: Purchase Order = $100, Vendor sends invoice for $125, Early payment discount = $5 ProcureToPay • Key Decision: Use of Service master is optional but advantageous. As an alternate use “Text” in Purchase Order. • Key Decision: Whether to implement “Service Entry Sheet” for ensuring 3-way Match as recommended control • For Invoice Receipt, the difference between PO Price and Invoice Price is posted to same Expense account Accounting Documents $ FI Dr. AP (Vendor) Cr. Bank Clearing Cr. Discount Received 125 120 5 CO Cr. Discount Received 5 Accounting Documents $ FI Dr. Expense (Acct Assn. in PO) Cr. GR/IR Clg. (WRX) 100 100 CO Dr. Expense (Cost Object in PO) 100 Accounting Documents $ FI Dr. GR/IR Clg. (WRX) Dr. Expense Cr. AP (Vendor) 100 25 125 CO Dr./Cr. Expense 25 * Optional Purchase Requisition (Services) Service Entry Sheet Invoice Receipt Outgoing Payment (Vendor) Purchase Order
  • 13. 12 Procurement - Cross-Company Purchase Scenarios • Centralized procurement • Inventory PO where “Receiving” Plant belongs to another Company • Account assigned PO where assigned object (Asset/Cost Center/Order/Project/etc.) belongs to another Company Example of Inventory PO: Accounting Documents FI Dr. Inventory (BSX) Cr. GR/IR Clg. (WRX) Accounting Documents (Cross-Company Doc.) FI Dr. GR/IR Clg. (WRX) Cr. AP (I/C Vendor) Procuring Company Purchase Requisition (Raw Material) Invoice Receipt Outgoing Payment (Vendor) Purchase Order Receiving Company Goods Receipt Accounting Documents (Cross-Company Doc.) FI Dr. AR (I/C Customer) Cr. AP (Vendor) Accounting Documents FI Dr. AP (Vendor) Cr. AP (I/C Vendor)
  • 14. 13 Subcontracting Scenarios • Purchase Order: Components sent to vendor, who performs manufacturing/assembling and sends back finished goods. Bill of Material can be used in Purchase Order. • Manufacturing Order with Subcontracting Activity: Operations being performed by subcontracting vendor Example of Subcontracting Purchase Order: • Moving Average Price of RM = $100, Standard Price of FG = $130, Subcontracting Charges = $25 ProcureToPay Subcontracting Purchase Order Goods Receipt Finished Goods From Vendor (543) Invoice Receipt (For Charges) Outgoing Payment (Vendor) Goods Issue RM/Components To Vendor (541) Accounting Documents $ FI Dr. Inventory-FG (BSX) Cr. COGM-FG (BSV) Dr. Consumption-RM (GBB-VBO) Cr. Inventory-RM (BSX) Dr. Subcont. Charges (FRL) Cr. GR/IR Clearing (WRX) 130 130 100 100 25 25 CO Cr. COGM-FG Dr. Consumption-RM Dr. Subcont. Charges 130 100 25 Accounting Documents $ FI Dr. GR/IR Clg. (WRX) Cr. AP (Vendor) 25 25 CO Accounting Documents $ FI Dr. AP (Vendor) Cr. Bank Clearing 25 25 CO
  • 15. 14 Stock Transfer - Intracompany Example: Plant 1000 (MAP = $1250) transfers material ABC to Plant 2000 (Standard price = 1200) Stock Transfer Transfer Posting (301) Option 2: w/o STPO – 2-Step Process Option 3: With STPO w/o Delivery Option 4: With STPO with Delivery Stock Transfer Goods Issue (351) Goods Receipt (101) Stock Transfer Purchase Order Stock Transfer Delivery/ PGI (641) Goods Receipt (101) Stock Transfer Purchase Order Option 1: w/o STPO – 1-Step Process Stock Transfer Transfer Posting (303) Transfer Posting (305) Accounting document $ FI Dr. Inventory (Receiving Plant) Cr. Inventory (Sending Plant) Dr. Price Difference* 1,200 1,250 50 * Only If receiving plant valuates with Std. Price Same financial impact Factors To Consider: • Physical proximity of the Plants • Legal and taxation requirements • Need for control at the point of Issue as well as Receipts • Segregation of Duties • Automation • Volume
  • 16. 15 Stock Transfer — Intercompany Scenario: STPO with Delivery Before Enhancement Pack 5 Receiver Stock Transfer Purchase Order Sender Delivery/P GI (641) Goods Receipt (101) InterCo Billing (Type IV) Invoice Receipt Accounting Documents FI Dr. COGS Cr. Inventory Accounting Documents FI Dr. AR (I/C Customer) Cr. I/C Sales Cr. Output Tax Accounting Documents FI Dr. Inventory Cr. GR/IR Clg Accounting Documents FI Dr. GR/IR Clg Dr. Input Tax Cr. AP (I/C Vendor)
  • 17. 16 Stock Transfer — Intercompany (cont.) Scenario: STPO with Delivery Enhancement Pack 5 – New options with preconfigured Delivery Types for SIT Sender Receiver Sender’s Stock Sender’s In-Transit Stock Receiver’s Stock1. STPO with Delivery Type NCC2 2. STPO with Delivery Type NCC3 3. STPO with Delivery Type NCCR Sender’s Stock Sender’s In-Transit Stock Receiver’s Stock Sender’s Stock Receiver’s In-Transit Stock Receiver’s Stock Receiver’s In-Transit Stock Outbound Delivery Transfer of Ownership On Arrival at a Port Proof of Delivery OR Goods Receipt
  • 18. 17 Manufacturing Order Example with Product Cost By Order Debits: RM Cost $800, Internal Activity $1000, External Activity $200, Overhead $400 Credit: FG standard price $2500 Accounting Documents $ FI Dr. Ext. Labor (From PO) Cr. GR/IR (WRX) 200 200 CO Dr. Ext. Labor (Prod.Order) 200 Production Planning Accounting Documents $ FI Dr. Consumption-RM (GBB-VBR) Cr. Inventory-RM (BSX) 800 800 CO Dr. Consumption-RM (Prod.Order) 800 Accounting Documents $ FI CO Dr. Labor (Prod.Order) Cr. Labor (Home Cost Ctr.) 1,000 1,000 Accounting Documents $ FI Dr. Inventory-FG (BSX) Cr. COGM-FG (GBB-AUF) 2,500 2,500 CO Cr. COGM-FG (Prod.Order) 2,500 Planned Order (Finished Goods) Accounting Documents $ FI CO Dr Overhead (Prod.Order) Cr Overhead (Cost Center) 400 400 Accounting Documents $ FI Cr. Price Diff. (PRD) Dr. COGM-FG 100 100 CO Cr. Price Diff. (Prof.Seg) Dr. COGM-FG (Prod.Order) 100 100 Procure ToPay Purchase Requisition Purchase Order Period-End Processes Goods Receipt Production/ Process Order Issue Raw Material Internal Activity External Activity Finished Goods Produced Overhead Variance Calculation Production Order Settlement Operation Confirmations
  • 19. 18 Order to Cash - Simple Sales Order Scenarios • Sale of Make To Stock Items Example: Sale Price = $200, Tax = $20, Cost of Goods Sold = $150, Early Payment Discount = $5 OrderToCash Sales Order Billing Incoming Payment (Customer) Delivery/PG I Accounting Documents $ FI Dr. COGS-FG (GBB-VAX) Cr. Inventory-FG (BSX) 150 150 AB-COPA Dr. COGS-FG 150 CB-COPA Accounting Documents $ FI Dr. AR (Customer) Cr. Sales Cr. Output Tax 220 200 20 AB-COPA Cr. Sales 200 CB-COPA Sales COGS 200 150 Accounting Documents $ FI Dr. Bank Clearing Dr. Discount Cr. AR (Customer) 215 5 220 • Item Category in SO determines Requirement Type/Requirement Class which in turn determines whether SO is Cost Object • Costing-based COPA: COGS and Revenue both flow at the time of Billing • Account-based COPA: COGS flow with PGI and Revenue flows with Billing • COGS – Not created as Cost Element. Differentiation based on Account Modifier VAX.
  • 20. 19 Order to Cash - Sales Order as Cost Object Scenarios • Sale of Make To Order Items • To be used when business requirement is to track all order fulfillment related expenses and revenue. Example: Sale Price = $200, Tax = $20, Cost of Goods Sold = $150 OrderToCash • Item Category in SO determines Requirement Type/Requirement Class which in turn determines whether SO is Cost Object • Costing-based COPA: COGS and Revenue both flow at the time of Sales Order Settlement • Account-based COPA: COGS flow with PGI and Revenue flows with Billing (Same as SO as not Cost Object) • COGS – Created as Cost Element so that COGS flows to Sales Order. Differentiation based on Account Modifier VAY. Sales Order Settlement Accounting Documents $ FI Dr. COGS-FG (GBB-VAY) Cr. Inventory-FG (BSX) 150 150 AB-COPA COGS 150 CB-COPA Accounting Documents $ FI Dr. AR (Customer) Cr. Sales Cr. Output Tax 220 200 20 AB-COPA Sales 200 CB-COPA Accounting Documents $ FI AB-COPA CB-COPA Sales COGS 200 150 Delivery/PG ISales Order Billing Incoming Payment (Customer)
  • 21. 20 Order to Cash - Cross-Company Sales Scenarios • Drop-Ship: Order booked by one Company but Delivery Plant belongs to another Company Selling Company Sales Order Customer Billing (F2) Outgoing Payment (I/C Vendor) Delivering Company Delivery/ PGI InterCo. Billing (IV) InterCo. AP Invoice Incoming Payment (I/C Customer) * iDoc/ RD04 Accounting Documents FI Dr. COGS (GBB-VAX) Cr. Inventory-FG (BSX) Accounting Documents FI Dr. AR (I/C Customer) Cr. I/C Sales Cr. Output Tax Dr. I/C COGS (optional) Cr. COGS (optional) Accounting Documents FI Dr. AR (Customer) Cr. Sales Cr. Output Tax Accounting Documents FI Dr. COGS Dr. Input Tax Cr. AP (I/C Vendor) Accounting Documents FI Dr. AP (I/C Vendor) Cr. Bank Clearing Accounting Documents FI Cr. AR (I/C Customer) Dr. Bank Clearing
  • 22. 21 Order to Cash - Third-Party Sales Scenarios Direct delivery from vendor Plant Procure ToPay Order ToCash Accounting Documents FI Dr. AR (Customer) Cr. Sales Cr. Output Tax Accounting Documents FI Dr. COGS Cr. GR/IR Clg. Accounting Documents FI Dr. GR/IR Clg. Dr. Input Tax Cr. AP (Vendor) Accounting Documents FI Dr. AP (Vendor) Cr. Bank Clearing Cr. Discount Received Accounting Documents FI Dr. Bank Clearing Cr. AR (Customer • Sales Order: Standard Item Category = TAS • Purchase Requisition/Order: Account Assignment Category = 1 – Third Party, Item Category = S – Third Party Sales Order Purchase Order (Acct Assigned) Invoice Receipt Purchase Requisition (Acct Assigned) Goods Receipt (101) Billing Outgoing Payment (Vendor) Incoming Payment (Customer)
  • 23. 22 Order to Cash - Free of Charge/Samples Scenario-1: No Customer Billing (Separate Order Type/Item Category) OrderToCash Sales Order Delivery/ PGI OrderToCash Sales Order BillingDelivery/ PGI Accounting Documents $ FI Dr. COGS Cr. Inventory-FG 150 150 Accounting Documents $ FI Dr. Sales Deduction Cr. Sales Cr. Output Tax 170 150 20 Scenario-2: Customer Billing with 100% Discount (Separate Item Category/Pricing Procedure) Accounting Documents $ FI Dr. COGS Cr. Inventory-FG 150 150
  • 24. 23 Consignment Sales (Books of Consignor) Scenario: Consignor selling goods through Consignment Agent (Consignee customer) Process Flow/Sales Order Types: • Consignment Fill-Up: For moving unrestricted-use stock to Consignee’s stock (special stock “W”). Ownership remains with Consignor. • Consignment Issue: When Consignee sells the consignment stock (special stock) to a third party. Relevant for Billing. • Consignment Return: When Consignee receives return of goods from third party. Relevant for Credit Memo. • Consignment Pick-Up: For returning goods from consignment Consignee’s stock (special stock “W”) to unrestricted-use stock OrderToCash 1a. Consignment Fill-Up Accounting Documents FI Dr. COGS Cr. Inventory 1b. Delivery/ PGI (631W) 2a. Consignment Issue 2b. Delivery/PGI (633W) 2c. Billing (Invoice) 4a. Consignment Pick-Up 4b. Delivery/PGI (632W) 3a. Consignment Returns 3b. Delivery/PGI (634W) 3c. Billing (Credit Memo) Accounting Documents FI Dr. Customer Cr. Sales Cr. Output Tax Accounting Documents FI Cr. COGS Dr. Inventory Accounting Documents FI Cr. Customer Dr. Sales Dr. Output Tax
  • 25. 24 Consignment Purchase (Books of Consignee) Scenarios: Consignee selling goods for Consignor ProcureToPay Scheduling Agreement (Item Category “K”) Transfer to Unrestricted Stock MIGO_TR (411K) Invoice Receipt MRKO (Consignment Settlement) Outgoing Payment (Vendor) Goods Receipts MIGO (101K) Accounting Documents FI Dr. Inventory (BSX) Cr. Payable-Consignment (KON) Dr./Cr. Gain/Loss* * (Std. Price ~ Consignment Price) Accounting Documents FI Dr. Payable-Consignment Cr. AP (Vendor) Accounting Documents FI Dr. AP (Vendor) Cr. Bank Clearing
  • 26. 25 What We’ll Cover • End-to-End Scenario Overview • Key Process Flows with Accounting • Preliminary and Periodic Valuation • Wrap-Up
  • 27. 26 Preliminary (Real-Time) Valuation • Price Control  Price Control indicator in material master determines the valuation – MAP (V) or Standard Price (S) • Moving Average Price (V)  Represents weighted average price (= Total Value/Quantity)  Price gets updated with each Goods Receipts  Recommended for externally procured materials • Standard Price (S)  Price is determined and updated periodically, either manually or using Material Cost Estimate (Cost Roll-Up)  Recommended for in-house-produced products  Variant Configured materials should be valuated using Sales Order Cost Estimate, as there is no Material Cost Estimate  Must for Material Ledger/Actual Costing • Split Valuation  Can be used to valuate sub-stocks of same material in different ways  Example – Externally procured vs. in-house-produced, duty-paid vs. duty-free, by quality, by batch  Parent material is always maintained in MAP
  • 28. 27 Periodic Revaluation • Material Cost Estimate (Cost Roll-Up)  In-house-produced materials are valuated using Standard Price  Standard Price is calculated based on master data like BOM, Routing, Costing Sheet  Price gets updated in material master; Revaluation gain/loss posted in accounting • Manual Price Change (MR21)  For updating Price in material master periodically  Commonly used for Materials with price control indicator “V”  Can be used for “S” Materials if Standard Cost Estimate has not been released yet  Revaluation difference (gain/loss) is posted in accounting • Actual Costing with Material Ledger  Preliminary valuation for all goods movements is performed with Standard Price and Price Variances are maintained in Material Ledger  At period-end, closing inventory is revaluated with determined “Actual Price” or periodic unit price  “Actual Price” can be used for statistical purposes as well without Accounting (optional) • FIFO and LIFO  Available for month-end inventory valuation adjustment reports  Material is valuated in moving average price for daily purpose Accounting Documents FI Dr./Cr. Revaluation Diff. (UMB) Cr./Dr. Inventory-FG (BSX) Accounting Documents FI Dr./Cr. Revaluation Diff. (UMB) Cr./Dr. Inventory-RM (BSX) Accounting Documents FI Dr./Cr. Price Diff. (PRY) Cr./Dr. Inventory (BSX)
  • 29. 28 Material Cost Estimate (Cost Roll-Up) BOM Routing Quantity Structure • Prices for Materials • Prices for Internal Activities • Prices for External Activities • Overhead from Costing Sheets • Prices from Processes Value Structure CostingRun Costing Data • Costing Variant • Costing Version • Controlling Area • Company Code • Transfer Control • Costing Date From • Costing Date To • Qty Structure Date • Valuation Date • Valuation Variant • Costing Sheet 6. Releas e1. Selection 2. Structure Explosion 3. Costing 4. Analysis 5. Markin g Material ABC: Total Stock: 1000 Pcs Total Value: $800,000 Price: $800/Pc Material ABC: Total Stock: 1000 Pcs Total Value: $880,000 Price: $880/Pc Example: New Cost Estimate suggests $880/Pc Current price in Material master gets updated Accounting Documents $ FI Cr. Revaluation Diff. (UMB) Dr. Inventory 80,000 80,000 CO Cr. Revaluation Diff. 80,000
  • 30. 29 Work in Progress (WIP) Scenario: WIP represents goods in production that have not yet been completed at the end of an accounting period • Status of the manufacturing orders controls postings. PREL/ REL  Calculate, DLV/CNF/ TECO  Cancel • Valuation is carried out based on net “Actual Cost” using the formula: = ∑ (Debits on account of Material, Activity, Overhead, etc) – ∑ (Credits on account of settled cost, i.e., COGM)  If the result is positive, it represents “Stock in Process” (FI entry is Dr. WIP Stock, Cr. WIP Offset)  If the result is negative, it implies ‘”Reserve for Unrealized Cost” (FI entry is Dr. WIP Offset, Cr. WIP Stock) • WIP Offset account should not be created as Cost Element Material: XYZ Material Cost 800 Activity Cost 1,200 Overhead 400 --------------------------------------------------- Total 2,400 Production Confirmed (1,000) --------------------------------------------------- WIP 1,400 COGM – FG $1,000RM Consumption $800 Overhead $400 Activity Allocation $1,200 WIP $1400 Month-end Manufacturing Order Accounting Documents $ FI Dr. WIP (B/S) Cr. WIP Offset (P&L) 1,400 1,400 CO NA
  • 31. 30 Physical Inventory Count and AdjustmentPhysicalCount Post Difference (MI07, MI37) Create PI Documents (MI01, MI31) Execute Count (Manual) Enter Count (MI04, MI34) List Count Differences (MI20) Recount (MI11) Print PI Documents (MI21) Material ABC: Total Stock: 1,000 Pcs Total Value: $800,000 Price: $800/Pc Sock count suggests 1,100 units Material ABC: Total Stock: 1,100 Pcs Total Value: $880,000 Price: $800/Pc Example: Scenario: Physical inventory count is carried out at periodic intervals to ensure accuracy in financial books. This may also be mandated by accounting or taxation rules to place an accurate value on the inventory. Accounting Documents $ FI Cr. Physical Inv. Diff. (GBB-INV) Dr. Inventory (BSX) 80,000 80,000 CO Cr. Physical Inv. Diff. (Cost Ctr.) 80,000
  • 32. 31 What We’ll Cover • End-to-End Scenario Overview • Key Process Flows with Accounting • Preliminary and Periodic Valuation • Wrap-Up
  • 33. 32 Where to Find More Information • For further information on logistics scenarios and design integrations, please refer to:  SAP Best Practices Baseline Package – Building Blocks  https://help.sap.com/bp_bl604/BL_DE/html/Content_Library_BL_EN_DE.htm • For learning SAP’s new HANA-enabled logistics and finance solutions, please refer to:  http://discover.sap.com/S4HANA  www.s4hana.com/  S/4HANA 1511 Update: https://vimeo.com/146090331  SAP Business Suite 4 SAP HANA in a Nutshell: https://open.sap.com/courses/s4h1
  • 34. 33 7 Key Points to Take Home • Various logistics scenarios relevant for accounting. • Step-by-step process flows for Procure to Pay (P2P), Manufacturing and Order to Cash (OTC) • Enhanced understanding around FICO accounting integrations. • Account determination setups are critical for correct Accounting. • Preliminary and Periodic valuation methods for accurate Amounts. • Learn about design and configuration options.
  • 35. 34 Your Turn! How to contact me: Saugata Ghosh, Director, PwC Saugata.Ghosh@pwc.com Please remember to complete your session evaluation
  • 36. 35 SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP SE. Disclaimer This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. © 2016 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.