Explaining Refurbishment of Spare Parts

Objectives

After completing this lesson, you will be able to:

  • Describe the process steps of Refurbishment

Prerequisites in Materials Management

Your company wants to refurbish spare parts. The project team determines that, in addition to the settings in Plant Maintenance (PM), specific settings in materials management (MM) are required to carry out this process. For this reason, you require the following knowledge:

  • An understanding of the prerequisites for refurbishment in the material master.
  • An understanding of valuation categories and valuation types.

In the material master record, a price is defined for a material for each valuation area (plant or company code). However, in some cases, you need several prices for the same material within one valuation area. This is known as split material valuation.

The prerequisite for valuing a material separately is that the material using the valuation category (for example, C for valuation by condition) must have an indicator to show that the material uses split valuation. The valuation category is part of the accounting data of the material.

Material intended for split valuation can be classified in the corresponding movement types (for example, new, refurbished, and defect). The movement type corresponds to a condition. Movement types and movement categories are maintained in Customizing in Materials Management.

The types of data for a valuation type are as follows:

  • Valuation data (including valuation price, total stock, and total stock value) is defined for each valuation type in the valuation area, and applies to all associated storage locations.
  • Stock data is managed as per storage location, like batch data. If material with split valuation is handled in batches, then a valuation type is assigned to each batch.

The stock quantity, stock value, and valuation price for all the valuation types are accumulated at the valuation area level. This accumulation results in the moving average price (MAP) for the material.

Condition-Based Material Valuation

If a material uses split valuation, this material is managed in various partial stocks. Each partial stock is valuated separately.

Each valuation-relevant operation, whether it is a goods receipt (GR), goods issue (GI), or inventory, is executed at the partial-stock level. While processing one of these operations, you must specify which partial stock is affected. This ensures that only the value of the partial stock in the operation can be changed. The other partial stocks remain unaffected.

The overall stock gets updated along with the partial stocks. The value of the overall stock is calculated from the sum of the stock values and the stock quantities of the individual partial stocks.

Refurbishing Spare Parts Internally

In a company, defective or worn-out spare parts in storage are to be refurbished. A material with a condition-based valuation is used for this. You also need to understand the effects of the refurbishment on the stock value. For this reason, you require the following knowledge:

  • An understanding of refurbishment processing.
  • An understanding of how to process a refurbishment order.
  • An understanding of how to describe and check the effects of a refurbishment on the stock value.

Refurbishment of Spare Parts: Process

Refurbishment is carried out for a material. Equipment is not usually refurbished. However, if required, you can add equipment to a refurbishment order by linking the equipment with a material. This linking can be done either automatically (for example, with a goods movement) or manually. The link is always created using the serialization method.

The following video provides an information about the refurbishment process.

Refurbishment Order

The goods issue (GI) of the material to be provided (from condition) is made as a planned material withdrawal using movement type 261 with reference to the order number.

The GR can be posted either by using the usual MM transactions or by using transaction IW8W in the Confirmation area of plant maintenance (PM).

If the valuation types (partial stocks) have a valuation with a standard price, the final change of the stock value of the whole material takes place at this time. For example, one C3 part with the standard price is removed from stock, while one C2 part with the standard price is added. This leads to a new floating average price (FLA) at the material level. The effective expenditure of the order is not taken into account for this constellation. It is posted to a price difference account for the order settlement.

How to Display an Internal Refurbishment Order

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