Managing Master Data and Product Cost Calculation

Please have a look at the Scope Item Overview that Paul has prepared for you.

To see the selected scope items, select the business process steps.

Plants, Distribution Centers (DCs), vendors, and customers are basic logistics objects for supply chain planning.

Supply chain planning deals with materials, which are defined in the form of material masters. For the plants used for production, you must also create work centers, BOMs (Bill of Material) and routings in addition to the materials to support planning tasks.

As we have already heard, the product or material master is divided into different areas or departments. We will now talk about the planning and production and have a look at our newly finished product. This product has been created with the material type "finished product" and that includes data from production – work scheduling data and planning – MRP data. We want to show how the work scheduling data is relevant for production and the data relevant for pre-planning.

Paul prepared an overview for you. Please have a look at the interaction below, to learn about the data in the Product Master Record.

We will have a closer look at the MRP relevant data and the fields when we extend our newly created product master to be used in the Materials Requirements Planning in the next lesson.

BOMs are one necessary component for the Product Master Record.

Let’s move on to Work Centers, another component for the Product Master Record.

• Routings (Production Planning)
• Networks (Project System)
• Inspection plans (Quality Management)
• Maintenance routings (Enterprise Asset Management)

A work center is generally a specific geographical location in the plant. For example, a specific machine or department in a plant.

As we also need to define "who" is doing the work, we need to create work centers. A work center in SAP S/4HANA could be a person, a group of persons, a machine, a group of machines or the combination of both.

A work center is where an operation or an activity is carried out in a plant. It therefore specifies where production ultimately takes place.

Let’s discuss 2 Work Center topics in detail, capacities and costing.

The available capacity of the work center and the data needed to calculate the costing of work completed is stored in the work center. The default values define data that has to be transferred into the operation of the routing or are used as a reference.

The capacities that are available to a work center are explicitly specified in the work center. In this case, you may certainly use more than one capacity for each work center. For example, you can assign both machine capacity and labor capacity to a work center.

Work Centers contain the available working time. Moreover, formulas specify how long the capacities will be loaded by a certain operation.

Since the work center provides working time, it also generates internal costs for labor. To calculate the costs, the work center is assigned to a cost center. As we have heard in the Controlling section, a cost center provides different output. This output is named activity type. To differentiate labor processing time, machine time, and setup time related to different costing rates, we assign the different activity types to the work center in the costing tab.

Routing is the last component of the Product Master Record we will talk about.

Follow the interaction to see Paul’s explanation.

The results of a cost estimate created with quantity structure are identical to the results of a cost estimate created without quantity structure. The only difference is the origin of the information. The valuation principles explained in earlier units also apply here. The term quantity structure refers to the use of production master data, such as BOM and routing.

It is only the method by which you obtain the costing results that differs. Material costing with quantity structure can determine the product structure and production plans as entered in logistics and convert them to structures of the itemization and the cost component split.

The costing result, itemization, cost component report, and costed BOM are visible from a single screen. You can execute detailed reports directly from the cost estimate screen. Overall log contains the complete list of messages for all the materials costed. It contains display variants (which you can customize) that enable you to perform summarized analysis of the errors. Double-clicking on the material in the header of a cost estimate or in the status display displays the messages specific to the particular material.

The prototype of our new product has been successful, and production is to commence shortly. We need to calculate and set an accurate initial standard price. We must make all the settings required for valuation and use the correct quantity structure. For this reason, you require the following knowledge:

• An understanding of prices in material master
• An understanding of the procedure to update the standard price

Therefore, Paul and you need help from another colleague. Start the interaction to learn more.