Sunday, 13 November 2016

Material Ledger - Some Understanding

Since my earlier article "Material Ledger - Component of Controlling", I have made some further observations which I thought would be useful to easing the understanding of "how" it fits in or can be compared to the more commonly used "MM Inventory Valuation" using "Product Costing".

Well, have fun. Hopefully, this means something to you.

Some Background
  • The Material Ledger is activated by Plant. Ideally, all materials within a plant are treated consistently across the board (Bottom Up). Once activated and used for a Plant/Material combination, this functionality cannot be deactivated easily without a great deal of effort.
  • In Finance, the periodic unit price value of MM Inventory is expressed across two GL Accounts, one displaying at standard price and one displaying the periodic unit price adjustment.
The Concept behind the Actual Costing Process
  1. Actual costing evaluates all goods movements within a period at the standard price (preliminary valuation). At the same time, all price and exchange rate differences for the material are collected in the material ledger.
  2. At the end of the period, using the "Actual Costing Run" an actual price is calculated for each material based on the actual costs of the period. This actual price is called the periodic unit price and can be used to revalue the inventory for the period to be closed. In addition, you can use this actual price as the standard price for the next period.
  3. Actual costing determines what portion of the variance is to be debited to the next-highest level using material consumption. The actual BOM enables variances to be rolled up over multiple production levels all the way to the finished product.
  4. The process of posting the effects of differences between the standard price and the periodic unit price is known as the "Closing Entries". This entails the posting of the revaluation of consumption as well as the inventory at every level of the process. Revaluation of consumption posts directly to the price difference accounts as additional variances. This is as opposed to the consuming PP orders requiring subsequent settlement.
  5. Additional accounts are used to post the effects of this parallel accounting methodology i.e. the standard MM posting processes, and therefore the assigned accounts, are NOT used. Essentially this means that table T030 will have been updated with additional account assignments per process.
  6. Using the "periodic unit price" (moving average) as the new 'Standard Price" is optional, as indicated above. Hence, to implement the choice, the applicable materials must be marked and released in the same way as for product costing.
  7. As a result, subject to inventory quantity an accounting posting will occur between the assigned MM control account and price difference accounts.
Originally posted: Jun 22,2012 12:17

Foot note:

Earlier this year (2016), I had the pleasure of experiencing the full greenfield implementation and execution of the Material Ledger from the ground up. This was speckled with a few unprecedented mishaps, resets and restarts, all of which went a long way to deepening my understanding.

There are definitely a number of definitive insights for those who can understand. As with all my projects, I created and retained detailed evidence in spreadsheet and word format from precipitation to outcome and aftermath; followed by debrief and other unexpected continuing surprises/outcomes.

I guess that I shall write about this, though circumspectly, in due course.

Saturday, 12 November 2016

Mind Over Matter - Excel at Small Things

Its been a while now, but around 6 years ago, I was asked to build a reporting platform in SAP, more specifically, in "Profitability Analysis".

The input provided was rather superficial in the form of an Excel document, a PowerPoint presentation, a Word document, a PDF document, and a few spoken words followed by a missive of "get it done".

So, I got it done. In SAP. Then, being duly diligent, to verify the initial data upload, keeping things simple but robustly comprehensive, I designed and built a tool in Excel essentially replicating the functionality built into SAP directly from the data.

Among other things, tables were looked up and pivot tables used. Not really powerful in design or function, but up to the job.

To get to the point, on presentation of the SAP solution plus the latter, the decision was to cancel the SAP development and use the Excel tool.

All they wanted was the reporting information in an easy to trace, manage and produce digital vehicle.

And, so ended the SAP development, though fully built, functional and ready to go.

I didn't mind as it didn't really matter how the business objective manifested itself, only that it did - in a rather Excel-lent sort of way.

With hindsight, knowing of the prospsective data volume should have immediately precipitated an Excel counterproposal.

Thursday, 8 October 2015

Art of Writing

Writing is an art form unto itself. The most beautiful websites can easily be diminished by unimaginative writing.

For example, the following sentence...
  • Xxxx is a leading specialist business that focuses on enabling organisations to fully exploit the benefits of enterprise mobility.
might be replaced by a more stylized flowing rendering as follows...
  • Xxxx is a leading business specializing in focussing on enabling organisations in fully exploiting advantages of enterprise mobility.

Wednesday, 7 October 2015

Due Diligence

In any experiment, good comprehensive due diligence, relative to the nature and scale of the endeavour; before, during and after; is highly recommended.

Of course, retrospect will ultimately determine the merits of an idea. After all, you don't know what you don't know until you know it. At the same time, you won't know until you have tried.

On the other hand, shooting oneself in the foot to confirm whether it hurts or not, is counterproductive not to mention counterintuitive.

Thursday, 17 September 2015

SAP - Creative Design

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Implementing an SAP business system is undoubtedly a creative endeavour... meaning that not everything needs to be implemented in its traditional role.

If another business purpose can be served, a little bit of creative licence is permissible.

However, when deviating from the usual standard SAP usage, there is a primary proviso or so.

Take the time to recognize and evaluate potential conflict and limiting factors in the medium and long term of significant deviations before committing to such a charted course.

Look ahead to see that you aren't building a future insurmountable roadblock.