RE:[sap-log-mm] Customized orders question

Posted by Sap Land Wednesday 1 June 2011 13:07

Posted by Marwa_Amin
on Jun 1 at 4:06 PM

Thanks sir, can I have information about the changes that needed to be taken place in the goods receipt, inventory counting, MRP, and Production Order management. and I will be highly appreciating if you can provide me with a document for implementing this process.\\Thanks

---------------Original Message---------------
From: siegsand
Sent: Wednesday, June 01, 2011 3:47 PM
Subject: Customized orders question

For a situation with materials where you want to capture the actual cost
of the material you only have one choice and that is to use batch
management and separate valuation. Thus each batch of a material received
will have it's own unit cost. When this material is used in a process the
actual batch number used will be part of the ProdOrd. Then the actual
cost will be included in the MFG cost of the product. If more than one
batch of material is required, then the product cost will have a weighted
average based on the amount of each batch used.

The above requires additional business process overhead on goods receipt,
inventory counting, MRP, and Production Order management. Before
considering implementing batch management with separate valuation,
consider all the other business processes that would have to change and if
the extra effort will provide the necessary value to the business.

Another alternative to the above is to change the valuation of the copper
from Standard to Moving Average. This means that each receipt of the
material will be averaged into the inventory. Ex. Inventory Copper is 100
kg at $1.00/kg. Inventory value is $100 and each kg issued is valued at
$1.00. If 80 kg are received at $1.50 / kg, then inventory value is $100
+ (80 x $1.50) = $220 and each kg issued is $220/180 = $1.22. Even though
this is not as high as the last receipt at $1.50, it does accommodate a
rise (as well and a fall) in prices. This alternative would not require
the additional business process of using batch and separate valuation and
thus is a simpler solution to manage.

Siegfried (Sieg) F. Sanders
Managing Consultant
IBM Global Business Services

: www.ibm.com/gbs/assetmanagement

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