Average Costing in Process Industry

One of the Client requires average Costing in his Process Industry But Oracle doesnt support Average Costing in Proces Industry in R12.1.3 but supports average Costing only in Discreet Manufacturing.Please help or guide some work around immediately so that the Client could be convinced to go for Standard Costing and than for closing stock valuation some work around could be done.
Thanks & Regards in advance
V K Sharma

Important Things Involved:
O10C --- Control Recepie Destination (Clubbing of recurring PICs)
O12C --- Process Instruction Category (PICs) -- Clubbing of Process Instruction Chars to be displayed
as per requirement on PI Sheet.
O13C --- Process Message Category --- After we have recorded the Enteries in PI sheet, If we need to update some ABAP/ Z table or We need to Trigger some program with those values then mapping for that is done here.
BOM:CS01
Resource:CRC1
Master Receipe:C201
Production Version:C223
PI Characteristics:Ct04/O25C
PP Process Flow:Cr01>Co53>co60/co55/co64/co67-->CO57
SOP:MC84>MC81>mc76>mc75>md63
Demand Management: MD61>MD02>MD04-->Cor1
MRP Run: MD02,MD04

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Costing process in average costing

Dear Experts
We are using average costing method for our organization, and manufacturing is MTO.
In this for every order we create new BOM, but when we run cost rollup it shows 'ZERO'. how to roll cost before doing manufacturing.
Please help
Thanks
Sandeep

Have you entered costs for the underlying components?
Have you defined routing?

Process flow in Process industry

Hi PP Gurus,
I want to have an idea about flow of process order in process industry with the details how the cost are captured per day if the process order continues for many days.
Pl guide me in the process
Thanks in advance
Shanmugam Balamurugan

Important Things Involved:
O10C --- Control Recepie Destination (Clubbing of recurring PICs)
O12C --- Process Instruction Category (PICs) -- Clubbing of Process Instruction Chars to be displayed
as per requirement on PI Sheet.
O13C --- Process Message Category --- After we have recorded the Enteries in PI sheet, If we need to update some ABAP/ Z table or We need to Trigger some program with those values then mapping for that is done here.
BOM:CS01
Resource:CRC1
Master Receipe:C201
Production Version:C223
PI Characteristics:Ct04/O25C
PP Process Flow:Cr01>Co53>co60/co55/co64/co67-->CO57
SOP:MC84>MC81>mc76>mc75>md63
Demand Management: MD61>MD02>MD04-->Cor1
MRP Run: MD02,MD04

Process Industry- How to map the Scenario?

Dear Gurus,
The is a Process Industry, Chemical Manufacturing Unit, which does the following sequence of Operation to get the Semi finished material.
1) Acid, TC, and Catalyst are 3 Raw materials
2) Acid, TC and catalyst after being put into reactors, they Undergo 2 Phases. Crude and Distillation
At crude phase, Crude is Produced. But they dont want to do confirmation of crude.
At Distillation stage, Main Fraction(MF), a semi-finsihed material is Produced
But at the distillation Phase, 2 more, Products are produced in conjugation to MF.
These 2 Products are Lower Fraction(LF) and Residue.
When these LF and Residue are produced, they again put into reactor and some qty of TC is added to achieve MF which again produces some portion of LF and Residue. And these cycle goes on.
They keep these process continuing.
In short: MF is derived in 2 ways
Acid+TC+ Catalyst=MF
LF+Residue+TC=MF
Please help me in mapping below Points comprehensively.( They want one Order Type for 2 phases.)
1) How BOM will be made of LF and residue if I treat them as Co-Product??? Or some other technique in SAP can map it?
2) What is the Step by step Costing configuration of Co-Products. I searched lot but unable to find the proper settlement rule of Co-Products.
Thanks
Shailesh Mishra

Dear Rahul,
As I understand that Co-Products cannot be subjected to movt type 261 and same i have tested in system. So, concept of Co-Product is not applicable here either with Recursive BOM application.
The solution which we have found here is that Client will make one of BOM of Acid+TC+ Catalyst
which will give MF. The concept of Reverse Calculation will be applied. Daily product of LF and Residue will be extrapolated at the Month end. And the LF and residue Quantity will be tracked not from system. Only during month end, LF and Residue Physical Inventory will be taken and it will be treated as Raw materials So, in the Running Process Order 262 will be done of So-called LF and residue. Stock Up(+)
And same Qty of LF and residue will be subjected to 261(Stock Down-) in the next month New Order in form of Raw material.
So cycle of 261 and 262 of LF and residue in form of Raw materials will be Perpetual and settlement of orders will also be sacrosanct.
Best regards
Shailesh

Industry specific verticle for Process Industry

We have implemented MySAP ECC 6.00 in our company. Our company produces BOPP Film. We have implemented 6 modules FI,CO,PP,MM,SD and QM. In PP modules we stuck because of width. I want to ask whether there is any industry specific solution for Process Industry?
Sudhir

Hi Sandeep,
Thanks for your prompt reply.
I will explain you in detail.
Our Company was started in 1980 to manufacture Bi-axially Oriented Polypropylene Films (BOPP) for the first time in India. Since inception we have maintained market leadership in the Indian market and also Continues to be largest BOPP film exporter from the Country. .
In 1996 we have implemented AVALON erp. The implementor was TCS Hyderabad. Presently also it is running very fine but due to technical cnstraints, we decided to switch over to SAP.
We are in process of implemening MySAP ECC6.00. Implementor is WIPRO. As our company is a Continious process industry we expect to implent the PPPI module.
As far as our process is concerned first stage to produce a JUMBO roll. The width may be 1000 mm. Further these Jumbo rolls are slitted as per requirement from customer. Here the width part plays a major roll. The requirement from customer is in any width right from 64 mm to 500 MM. Let us say our product code is xyz with various width. Our main requirement is widthwise stock and widthwise costing. We do not want to incorporate the width in itemcode. How can this problem will be solved?
Waiting for a feseable solution.
Thanks Sudhir

Average Costs of the Finished Products

Hi,
We are using the process order concept and we are calculating the costs of each FG seperately and our finished products are different kind of sizes and types.
And the requirement here is that if we want to calculate the average cost of the two FG how we can do this ?
For Example
Product 1 is manufactured and the arrived cost is $ 30
Porduct 2 is manufactured and the arrived cost is $ 10
And if we use the ratios of 60 and 40 and we determine the avergae cost of (3060%+1040%)/100= $ 22
And we adjust this $ 22 with Product cost of A and Product B.

What is FG?

Pricing in Process industry

Dear All,
In our scenario for Job work in textile processing industry we need to maintain the price (PR00). This price normally maintained is Rs.7.25/mtr and Rs.60/kg, therefore conversion relation is (1mtr = 120 g), hence the average weight required is 120g.
There are two scenarios for example:-
Normally if the average weight is 120 g then the customer is charged by 7.25 / mtr. If the average weight changes then,
1.     Now if the dispatch material is 1mtr =140 g the billing will be on Kg basis which is approx
                Rs.8.40 / Mtr.
2.     Now if the dispatch material is 1mtr = 110 g the billing will be 7.25 /mtr.
How to MAP this in SAP pricing.
RamananPV

Dear PV,
         Create Master dta for the three materials like this.
1.Material 1Average weight 120g
2.Material 2 1mtr=140g
3.Material 3 1mtr=110g
Take sales unit as mtr (M)
Maitain the price for the above materials based on the Unit meter (M) inthe transaction VK11 with the key combination Materail.
According to that if you enter Material 1 in the sales order as 100 mtrs it will pick up the price relating to that from the condition record which is belongs to the Material 1
I hope it will help you
Regards,
Murali.

Difference Between Production Industry & Process Industry

Hi Freinds,
              Hi have a query. What is the major difference between Production Industry & Process Industry?
I will give you a following example. Please carefully read it.
               Take a example of TATA Motors. We all know it produces automobiles. So we will consider it as a Production Industry. But at the same time it uses the Paint to paint the vehicles is produced by it only. So can we call it as a Process Industry? If yes please explain it.
                I will award deserving points accordingly for every reply.
Thanks & Regards
Saeed Arif

production:- conversion / processing the raw materials to finished products.
differen type of industry:
job type of industry:- this is of mainly MAKE TO ORDER TYPE , suiting the particular customer requirments , after getting the order only you start doing the production
eg:- Turbine mfg by BHEL, Aircrafts and ship buildings etc.
so here your planning and costs change one order.
Repetative mfg or Batch tpe production: here the products wll be made in batches as lots eg 2000no or 5000nos qty as batches ,
here the planning and costing etc will differ from one batches to another.
eg: Automobile , apperal industry. this can be produced by strategies MAKE TO STOCK or by MAKE TO ORDER,
PROCESS INDUSTRY OR CONTINOUS TYPE OF PRODUCTIONS:
in this type of industry the Process remains same (constant) and procucts may with slight variation in composition, in this type of industy almost every thing is mechanised . this type of indstry will have LINE LAY OUT/PRODUCT LAYOUT
ie at one entry all the materials go in one line and processed and at the end of the line you will be getting finished products. the complete line will be controlled by automated sensors by using sopostigated sensors. the only problem here is that in LINE if one macine /station is have break down the complete production will comes to halt as one machine/station output is going to be input for oher staion/machine.
eg: cement, paints , food and beverages etc.
you can seggregate indstry type by materials or by the type of layout(ie mfg line)
so now coming to your doubt : TATA - AUTOMOBILES following hybrid type of laty out ie mfg of automobiles is functional layout , where there is flexibilty of planning , from paint sections on wards it follows line layout ..
so you have to call it is as product industry , intern which have line layout for cetain operations , which pertains to process industry...

Cost rollup process

Hi,
I need detail cost rollup process and how it functions in SAP.

Dear Sinha,
1.At any point you can find out what is the standard cost of a product along with the split up of the component's cost,activity
cost and the over head cost.
2.This cost calculkation helps us to control or helps us to take some decision of modifying the BOM or routing for reducing the
manufacturing cost or adjusting or to check the values.
3.This cost becomes the base or the planned cost for checking the variance caluclation and settlement.
Also before taking a cost rollup Check this,
1.Check whether BOM exist for all the Inhouse manufactured products and the sub-contracted products.
2.Check whether routing exists for all the inhouse manufactured products.
3.Check whether a sub-contracting purchase info record exists for all the sub-contracted products(ME11 will be used for
creating PIR - Purchase Info Record).
4.Check whether the rates are properly assigned for activity type and cost center combination (KP27 can be used for checking
this).
5.Use CK40N for taking the cost rollup.
6.Use CK11N only for the products for which you want to select a particular BOM or production version or routing for costing
purpose and later on Mark and release the cost using CK24.
7.Check what's the first priority given to the valuation variant for costing the raw materials say like planned price or else moving
average price using the T Code OKKN and OKK4.
8.After taking the cost rollup these costs gets stamped in the material master and henceforth all the stock will be valuated using
this price.
9.At any point you will be able to tell the product cost of a product which is only a planned and it can be more or less once after
completing the production and then the variances can be calculated and settled.
10.Ensure the user has got the full authorization for taking the costing run to save,mark,release.
Check and revert back.
Regards
Mangalraj.S

Average cost source

Hi all,
I want to change the cost of an Item to a fixed cost while in organization default costing method is Average.
Can any one tell me the tables affected when the average costing is done.
Looking for your positive response..

Hi all,
There is only one way I have found that to update the average cost every time the the costing process updates to new cost. I have used a trigger in MTL_MATERIAL_TRANSACTIONS table after update of NEW_COST when the INVENTORY_ITEM_ID=1111 and TRANSACTION_TYPE_ID=44 and submitted a job that inserts a row for average cost update with costed flag=N. After the costing process is done, next time when I issue this item to discrete manufacturing job it takes that updated cost.
Thanks and Regards
Sandy

Equity resale on average cost basis

In the Resale of Shares , we can select the individual deals and then resell the shares from that deal. System will calculate the Realized Gain / loss based on the individual buy and sell deal.
If we buy the same shares at different dates and at different prices, can we resale part of it and whether the system can calculate on weighted average basis of all the deal purchase instead of the individual deal ?
regards,
Charan

Hi
There are two alternative methods for initializing item average cost.
1) Use Average Cost Update to enter the item cost in total or by cost elements. This can be done manually through the form or programmatically using a custom script.
2) Use Miscellaneous Receipt transaction to enter the item quantity and its unit cost. This way you are initializing the on hand and the average cost as well. If the on hand should be zero, you may use pair of transactions. First a miscellaneous receipt transaction for quantity 1 and the proper unit price, and the second a Michele Issue transaction for the same quantity. You could load the mischievous transactions into inventory interface table.
After loading the migration transactions and on regular basis you should run the cost manager process for each inventory organization. That could be scheduled to run every few minutes, as routine.
Dina

How to change average cost of an item?

We have a scenario where the average cost of the goods has gone completely off of what we think it should be for a few items. Many reasons. But question is how do we change average cost assigned to these items without adding to the inventory?

Hi,
You can change the average cost of an item by performing an average cost update.
The inventory quantity remains unaffected, but depending on whether you are increasing or decreasing the unit cost, the inventory value will get affected to that extent.
Inventory > Costs > Average Cost Update - query the concerned item and update the cost as required.
Thanks,
DS

Price Variance Report - Average Costing

Hi Friends,
We have our costing method as average costed. The Client wants to have a report wherin the PO's item price, item's list price (this will be fixed for a period) and the variance should come. The PO price of items varies dynamically (it may vary for same item from one PO to oter).
We have average costing, where PPV is zero. How to go about it,,do we have any report!!! Or I need to opt for a report development with Item, Iitem's list price, PO's unit price of item, variance, etc. as columns...seeking your valuable support/inputs. Thanks.
With Best Regards,
Nirabh Nayan

Hi Nirabh,
we dont have PPV column in PO seeded reports, we should develop the report as per our requirement.
check this link for more info.
http://docs.oracle.com/cd/A60725_05/html/comnls/us/po/puthpu05.htm
Thanks
-Arif.

Std Costing and Actual costing at process Order

Hello Friends,
Followings are the client requirements, Please give me your ideas :-
1 . Costing variant is same for all three - costing run, process order (plan and actual), means there is no prices variance on process order level. ( material at std price, Activity plan price, overhead fix%)
2. Alongwith this above client also need to capture actual result (material at MAP, activity at monthly actual price, overhead fix %)
In this case there is price and usage variance can see.
Now as I think that both scenarios are not possible on process order level. According to me we can do by a customize actual costing cockpit.
Need your openion that do we have any option thru standard funcations of sap to get this requirement. If you need any other explanation , please do let me know.
Thanks
Ravi

Thanks friends. I have done.

Use of QM in Process Industry

Hi,
QM Expert ,I am from automobile sector, I want to know the detail requrement of SAP QM in process industry,as per my knowedge only shelf life scenario is different other than all processes of QM ,please give the detail Scenario of relating QM in process industry in detail
Regards
Aditya

hi
QM in process industry can have a significant difference from Normal Automobile or Production system.
It can be
1.Batch manegment can form significant part of Process Industry.
2.Recurring inspection is also huge part of Process Industry
3.Inspection points along with sample drawing procedure in Inspection planning can be used in process industry.
4.Shelf life material as you mensioned is significant.-->stability study
5.Instead of Production orders Process order are used in Process industry.
These are more or less can be observed in any process industry.
Also Refer link
www.sdm-c.com/files/Barcelona_Mazliach_SAP_QM.ppt
Regards
Sujit S Gujar

Average Costing in Process Industry

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