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SAP Controlling Tip: Process versus Production Orders

JJordan400ResizedTip 50 from 100 Things You Should Know About Controlling with SAP (2nd Ed)

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Process orders provide you with extra functionality, such as phases and process instructions for process industries. 

If you use production orders, the system transfers a routing and a bill of material (BOM) into the master data of the order header. If you’re manufacturing on the basis of process orders, the system uses the master recipe and associated materials list. The difference occurs because process industries manufacture in phases, converting initial liquid batches into consumable batches, which are then bottled and packaged.

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Exchange Rate Updates With Parallel Valuation


Currency amounts from stock valuation, invoice verification, material cost estimates, and order settlement are translated into the other currencies in the respective areas and updated in SAP Material Ledger as shown below.

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Material Price Determination in SAP Material Ledger


Material price determination determines how the valuation of a material occurs after each business transaction for a material. If SAP Material Ledger is active, this field should be set in the material master with an appropriate combination of price control and material price determination. When SAP Material Ledger is active for a valuation area, additional fields become available in the Accounting 1 view. 

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SAP Templates Frequently Asked Questions

JulienBlogSAP templates are often perceved as overly complex. Let's dispel that myth and dive into some frequently asked template questions:

 FAQ 1: Do templates work for repetitive manufacturing?

Yes! For those not familiar with repetitive manufacturing, here's an example: One of our customers was bottling. They have millions of bottles running through and you don't really want to calculate the cost of each individual one, they are all the same, right? You can use the product cost selector and then there's a special template environment for the product cost collector. This is useful for the cost of setup or the cost of quality checks.

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FAQ 2: You don't need to input actual quantity with templates, as with KB31N statistical key figures?

Yes, that's correct. You don't have to. You could use either/or, and you have a different way of working between plan and actual. You could use whatever you want. You could use statistical key figures, for instance, number of FTEs is a very frequent one, or square footage, you could also use that, that's very useful. You could also use the logistics information system which is like a database like COPA, and you could collect information there and it's really up to you. You might want to still stick to some plan. 

Looking for more information on SAP templates? Watch this webcast Introduction to SAP Templates presented by Julien Delvat. Watch the recording to discover how to leverage your company’s standard SAP CO templates. You will:

-    Understand the limitations of traditional costing methods

-    Discover business processes

-    Perform driver-based planning for cost center/activity types and business processes

-    Allocate actual costs with operational KPIs

-    Benefit from best practices in CO template setup and maintenance


Julien Delvat is Sr Program Manager for Finance Transformation at Google. He has more than 10 years of SAP Controlling experience and started as a developer for CO maintenance and development at SAP Labs France. Julien is a frequent speaker at SAP conferences and is the Chair of the ASUG Managerial Accounting Special Interest Group. He lives in CA with his wife and two children.


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When Should I Use An SAP Internal Order?

139 3D Cover Internal Orders

Why would you use an internal order? Here a few examples:

    You're managing an event with several cost centers.

    You'll settle major repair costs to a production line cost center.

    You're responsible for a fleet of service vehicles with a cost center.

    You're managing a capital project with a budget.

    You need to measure revenue and cost for a non-standard event.

Each of the above examples require:

    An order with actual/plan cost, and a settlement rule or a periodic reposting cycle to cost centers.

    An order with actual/plan cost, and a settlement rule to a profitability segment.

    An order with statistical cost, and a real cost-center assignment.

    An order with an investment profile, budget, and availability control.

    An order with revenue, and perhaps a sales order line item assignment.

You can see the combinations and possibilities of internal orders are quite flexible.

To learn more about SAP internal orders and other SAP FICO topics please visit our new SAP FICO Learning Center, please click here

Marjorie Wright is an SAP expert, author, and speaker, and is the founder of Simply FI-CO, LLC, a boutique SAP training consulting company. She is an education consultant in SAP FICO and financial supply chain management. With more than 25 years of training and accounting experience across multiple industries, she has conducted training for more than 3,500 learners.


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What is an SAP Internal Order?

MarjorieWrightBlog250Internal orders are cost objects in SAP Controlling. They act as temporary cost collectors for short-term projects or events. They are not as structured or permanent as cost centers. There is no standard hierarchy for internal orders, however they can be grouped.

To learn more about SAP internal orders and other SAP FICO topics please visit our new SAP FICO Learning Center, please click here

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Tip for settling manufacturing variances to cost based CO-PA

Here's a tip for settling manufacturing variances to cost based CO-PA.

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SAP Tip – Customer Credit Limits Updates

When a customer exceeds their credit limit due to new orders that are greater than their limit, or due to unpaid balances, or combination of both, we have two main options, depending on our decision on each customer:

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SAP Mixed Costing

SAP mixed costing allows you to cost a material using multiple alternative methods, for example when you manufacture a material with different internal processes. You specify these through separate production versions, with different master recipes. When you execute a cost estimate the system calculates the cost for each production version then calculates an average unit cost using weighting factors. When you display a cost estimate with transaction CK13N, you display the total cost and details of each procurement alternative.

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SAP S/4HANA – Let’s Get Under the Covers Webinar Announcement (Controlling 2016 Plenary Preview)

Join Janet Salmon,Chief Product Owner for Management Accounting at SAP AG, Thursday, June 16, 2016 at at 1:00 PM EST/10:00 AM PST for a sneak peek of her Controlling 2016 plenary session SAP S/4HANA - Let's Get Under the Covers. 

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