Manufacturing Finance with SAP ERP Financials

Subbu Ramakrishnan is SAP Finance Manager at Sandoz Pharmaceuticals in Princeton, NJ. He has 13 years of experience with SAP, and 10 years of experience as a controller, finance manager, and auditor. He has implemented SAP in more than 60 manufacturing plants and 25 distribution centers, and has extensive experience in functional application, configuration, and integration of the Financial Accounting and Controlling components. He has trained many SAP end-users and consultants.

1 ... Overview of Manufacturing Scenarios Supported by SAP ... 25 ... 1.1 ... Make-to-Stock Manufacturing (Discrete Manufacturing ... 26 ... 1.2 ... Repetitive Manufacturing ... 29 ... 1.3 ... Make-to-Order Manufacturing ... 33 ... 1.4 ... Engineer-to-Order Manufacturing ... 36 ... 1.5 ... Chapter Summary ... 39 2 ... Overview of Finance Activities in a Make-to-Stock Environment ... 41 ... 2.1 ... Overview of Finance Key Performance Indicators (KPIs) for Manufacturing ... 42 ... 2.2 ... Plant Budgeting, Planning, and Forecasting ... 46 ... 2.3 ... Total Cost of Goods Sold (COGS ... 50 ... 2.4 ... Other Manufacturing Scenarios ... 60 ... 2.5 ... Chapter Summary ... 61 3 ... Master Data Requirements in Manufacturing Finance ... 63 ... 3.1 ... What Is Master Data ... 63 ... 3.2 ... Benefits of Quality Master Data ... 64 ... 3.3 ... Master Data Management (MDM ... 65 ... 3.4 ... Master Data Governance ... 66 ... 3.5 ... Master Data Elements in Manufacturing Finance ... 66 ... 3.6 ... Material Master Data ... 67 ... 3.7 ... Bill of Materials (BOM ... 103 ... 3.8 ... Work Center ... 120 ... 3.9 ... Routing ... 130 ... 3.10 ... Cost Element Master Data ... 141 ... 3.11 ... Cost Center Master Data ... 150 ... 3.12 ... Activity Type Master Data ... 160 ... 3.13 ... Statistical Key Figure Master Data ... 166 ... 3.14 ... Chapter Summary ... 168 4 ... Budgets and Standards ... 171 ... 4.1 ... Planning Steps in a Manufacturing Plant ... 171 ... 4.2 ... Long-Term Planning Functionality ... 172 ... 4.3 ... Cost Center Planning ... 194 ... 4.4 ... Raw Materials and Component Cost Planning ... 216 ... 4.5 ... Product Cost Planning ... 230 ... 4.6 ... Product Cost Planning Configuration ... 259 ... 4.7 ... Chapter Summary ... 291 5 ... Actual Cost, Variances and Month-End-Related Activities ... 293 ... 5.1 ... Overview of Cost Object Controlling and Its Integration with Other Application Components ... 294 ... 5.2 ... Steps in Cost Object Controlling ... 297 ... 5.3 ... Overview of the Production Process ... 326 ... 5.4 ... Master Data Elements in Cost Object Controlling ... 331 ... 5.5 ... Selected Logistical Processes and Cost Objects ... 353 ... 5.6 ... Cost Object Controlling Configuration ... 362 ... 5.7 ... Other Important Reports ... 382 ... 5.8 ... Chapter Summary ... 396 6 ... Actual Costing/Material Ledger ... 397 ... 6.1 ... Multiple Currencies/Valuations ... 397 ... 6.2 ... Actual Costing ... 398 ... 6.3 ... Actual Costing/Material Ledger Activation Options ... 399 ... 6.4 ... Product Cost Planning Using Multiple Valuation ... 409 ... 6.5 ... Transaction-Based Material Price Determination ... 414 ... 6.6 ... Single-Level Material Price Determination ... 414 ... 6.7 ... Multi-Level Material Price Determination ... 416 ... 6.8 ... Actual Costing Configuration ... 417 ... 6.9 ... Periodic Actual Costing: Process Flow ... 421 ... 6.10 ... Material Ledger/Actual Costing Reporting ... 427 ... 6.11 ... Production Startup ... 431 ... 6.12 ... Chapter Summary ... 433 7 ... Overview of Make-to-Order Production Scenarios Supported by SAP ... 435 ... 7.1 ... Customer Order Management Process ... 435 ... 7.2 ... Make-to-Order Manufacturing Scenarios Supported by SAP ... 439 ... 7.3 ... Chapter Summary ... 443 8 ... Business Transactions in Make-to-Order Production ... 445 ... 8.1 ... Business Transactions, Process Flow, and Value Flow Without Sales Order Controlling Using Valuated Stock ... 445 ... 8.2 ... Business Transactions, Process Flow, and Value Flow with Sales Order Controlling Using Valuated Stock ... 458 ... 8.3 ... Business Transactions, Process Flow, and Value Flow in Make-to-Order Production with Sales Order Controlling Using Non-Valuated Stock ... 474 ... 8.4 ... Other Business Transactions in Make-to-Order Manufacturing ... 478 ... 8.5 ... Important Reports in Make-to-Order Manufacturing ... 480 ... 8.6 ... Chapter Summary ... 486 9 ... Make-to-Order--Related SAP Configuration ... 487 ... 9.1 ... Control Parameters and Default Values that Influence Sales-Order-Related Production ... 487 ... 9.2 ... Basic Settings for Product Cost by Sales Order ... 501 ... 9.3 ... Configuration Relating to Preliminary Costing and Order BOM Costing ... 506 ... 9.4 ... Configuration Relating to Unit Costing for Sales Order Items ... 517 ... 9.5 ... Configuration Relating to Period-End Closing in Sales Order Controlling ... 518 ... 9.6 ... Chapter Summary ... 539 10 ... Introduction to SAP Financial Performance Management ... 541 ... 10.1 ... What Is SAP Financial Performance Management? ... 542 ... 10.2 ... Components of Financial Performance Management ... 543 ... 10.3 ... Chapter Summary ... 547 A ... nnual Planning, Costing, and Closing ... 551 ... A.1 ... Annual Planning and Costing Checklist ... 551 ... A.2 ... Month-End Closing Activity Checklist ... 565 ... A.3 ... Year-End Closing Activity Checklist ... 572