This document discusses valuation and split valuation in SAP MM. It defines valuation as determining the current worth of a material in the system. Split valuation allows managing a material as separate partial stocks that can each be valued differently in the same valuation area (company or plant). Reasons for split valuation include different origins, grades, or procurement sources for a material. The document provides an example of setting up split valuation to value in-house and externally procured materials of the same item differently. It also discusses valuation areas, classes, and how to configure and use split valuation in transactions.

1. Valuation & Split valuation in MM
Q1.What is Valuation (for a material)?
Valuation is the process of determining the current worth of a material.
In procurement process while creating purchase orders material price is a mandatory
field and it is automatically determined. This happens because material valuation
is maintained in SAP system in material master. Material valuation represents
integration between MM & FI (Financial Accounting) modules since it updates the
general ledger accounts in financial accounting. The key points about material
valuation are as follows.
 Material valuation helps to determine the price of material and for which
general ledger account it needs to be posted in financial accounting.
 Material valuation can happen at company code level or plant level.
 Material can be valuated based on different types of procurement and this is
known as split valuation. Normally split valuation is used to valuate material
in same valuation area (company or plant) differently. Split valuation is
described in detail in below context.
Md. Shalehur Rahman Samy
Associate Consultant, SAP MM
IPE, Shahjalal University of Science & Technology.
Mobile : +8801725444492
Email : shalehur@gmail.com

2. Q2.What is split valuation?
Split valuation means managing a material as several partial stock. Each partial stock
is valuated separately in the same valuation area (company or plant). Some of the
examples where split valuation is required are as follows.
 Stock that is procured externally from vendor has a different valuation price
than the stock of in-house production.
 Stock obtained from one vendor is valuated at a different price than stock
obtained from another vendor.
 Same material having different batch may have different valuation prices.
Q3.Why do we require split valuation?
Split valuation is required for certain materials in order to valuate them separately.
Following can be the reasons for opting for split valuation:
 Different origins of the material.
 Different grades of the material.
 Different statutes of the material.
 Differentiation between In-house production and External production.
 Differentiation between deliveries.
Example:
Without split valuation, materials are valued at plant level. With split valuation,
the same material number at a plant can have different stock quantity and value for
different groupings (called valuation types).

3. Scenario:
Suppose, Averydenison Ltd manufactures packet in-house and also procures from an
external vendor.
The cost of manufacture of packet in-house (in plant 2006) is 200 BDT per PC. The
cost of procured packet (from vendor 1000012) is 240 BDT per PC.
Thus, the same product packet has different valuation due to different source of
procurement. Different valuation for the same material is only possible by using split
valuation functionality.
We will use valuation category B (Procurement type) and create two valuation type
under B. They are:
1. In-house proc
2. External proc
A material is activated by entering the valuation type in the accounting view of the
material master.
IMPORTANT: It is possible to change a valuation category if no stock and PO were
created. However, once a Valuation category is assigned -- it can not be un-assigned
(make blank again). So it is not something that get changed at will. It needs to be
decided on creation of material.
Q3. What is Valuation Area? How is it linked with Valuation Class?
What is the significance of Valuation Area?
Valuation areas are nothing but the level at which you want to valuate your materials.
SAP provides two levels of valuation Plant level and company code level.
For example:
Valuation at plant level: Suppose you have two plants one in Dhaka and one in
Chittagong, Then of course you would like to valuate the raw materials at plant level
as because you have got transportation cost and taxes etc to account for.
Valuation at company code level: Here you valuate all your material in same way.
In One client valuation areas can either be set to plant level or company code level.
Once you have made this setting this can’t be changed.

4. Valuation classes are linked to valuation class in Tcode OBYC. If your valuation
area is at plant level then in OBYC you will find a coloumn for Valuation modifier
you can provide your plant there.
For example:
Valuation Mod Valuation class Account
plant 1 3000 200130
Q4.What is valuation class?
Valuation class it is used in FI and MM integration. It determines the g/l accounts
to be posted automatically (Ex Raw materail or Finised goods).
In material master we specify valuation class:
- for valuation class, we assign g/l accounts based on nature of transaction,
- at the time of goods receipt/ issue, stores person enters movement type,
- our a/c's will be updated automatically based on account assignment to valuation
class which is specified in material master.
Steps to set it up
CONFIGURATION
1. Activate Valuation
2. Create Valuation Category
3. Create Valuation Types
4. Link Categories > Types
5. Link valid Valuation Categories to Plant
MASTER DATA
1. Activate Split valuation for a material
(Add Valuation Category in material master)
2. Create Accounting views for every valuation type

5. Using Split Valuation in transactions
1. Create Purchase Order
2. Goods Receipt / Goods Issue
3. Physical Inventory
4. Stock Overview
-------------DETAIL------------------
In this example we want to group material in the same plant based on AGE
(valuation category). We will have two "groups" (valuation types): OLD and
NEW.
Configuration
IMG: Material Management > Valuation > Split Valuation
1. Activate Valuation - tcode OMW0
Configure Split Valuation - tcode OMWC
2. Create Valuation Category
Select: Global Categories

6. The Ext Mandatory option will force users to enter a valuation type in purchase
orders.
Select: Create (to save)
3. Create Valuation Types
Select: Global Types > Create

7. Select: Create (to save)
The Purchase Orders attributes option indicate if PO's are allowed or not.
1 - Not allowed
2 - Allowed but with warning
3 - Allowed
The account category reference determines what GL valuation classes will be
allowed.
4. Link Categories > Types
Select: Global categories (from main config menu)
Select: Valuation Category
Select: Types > cat.
Activate valid valuation categories

8. 5. Link valid Valuation Categories to Plant
Select: Local Definitions (from main config menu)
Select: Plant to use
Select: Cats -> OU
Select: Valuation Categegory and press Activate

9. ACTIVATE MATERIAL MASTER
1. Activate Split valuation for a material
(Add Valuation Category in material master)
Material Master create - MM01
NOTE: It is only possble to change a material (valuation category) if no stock and
PO were created. So it is not something that get changed at will. It needs to be
decided on creation of material.
2. Create Accounting views for every valuation type - mm01

11. USING SPLIT VALUATION IN TRANSACTIONS:
1. Create Purchase Order - ME21N
2. Goods Receipt / Goods Issue - MIGO
4. Physical Inventory - example MI10

12. Note that the batch field is used!
5. Stock Overview - MMBE