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MTO Scenarios & Determining Requirements Type


1. Technical view on tables and indicators

This document provides important indicators and tables within the make to order scenario. This document does not handle all characteristics of each indicator but the relevant ones in relation to this context.

1. 1 Indicators

Indicator

Indicator name

Characteristic

Meaning

Defined in

SOBKZ

Special Stock Indicator

E

Sales order stock

Account Assignment Category



blank

No special stock

Account Assignment Category

KZBWS

Valuation of Special Stock

M

Separate valuation with reference to sales document (table EBEW)

Requirements class



A

Valuation without reference to sales document (table MBEW)

Requirements class



blank

No stock valuation (unvaluated stock)

Requirements class

KZVBR

Consumption Posting

E

Update of costs and revenues on the sales order item (CO object)

Account Assignment Category



blank

No update of costs and revenues on the sales order item (no CO object)

Account Assignment Category

These indicators are combined with each other for the different make to order scenarios.

1.2 Common combination possibilities of these indicators

SOBKZ "E" + KZBWS "M" + KZVBR "blank" = valuated sales order stock with valuation in table EBEW without sales order Controlling

SOBKZ "E" + KZBWS "M" + KZVBR "E" = valuated sales order stock with valuation in EBEW with sales order Controlling

SOBKZ "E" + KZBWS "blank" + KZVBR "E" = unvaluated sales order stock with sales order Controlling

SOBKZ „E“ + KZBWS „blank“ + KZVBR „blank“ = unvaluated sales order stock without sales order Controlling -> NOT SUPPORTED BY SAP

1.3 Tables

table

content

EBEW

Contains the total sales order stock in case KZBWS = M

MBEW

Contains the total valuated stock of the anonymous warehouse and the valuated sales order stock in case KZBWS = A

VBAP

Contains information of the sales order item like SOBKZ, KZBWS, KZVBR

2. MTO scenarios

The following contains a brief summary of the Customizing settings to be made for each scenario.

2.1 Valuated Sales Order Stock Without Product Cost by Sales Order

In sales-order-related production, it is not always necessary to update costs and revenues on sales order items. However, you must use a valuated sales order stock if you don't collect costs and revenues on sales order items.

2.1.1 Valuated Sales Order Stocks: Separate Valuation of Sales Order Stocks

The quantities for sales order stocks are normally recorded separately from the values.
Make the following Customizing settings:

  1. Use a requirements class for which the Valuation indicator (technical designation: KZBWS) is set to M (separate valuation with reference to sales document/project). This ensures that the sales order stock is valuated.
  2. Use a requirements class for which the account assignment category is set to M (Ind. cust. w/o KD-CO) or an account assignment category for which you have made the following settings:
        • The Consumption posting field (technical designation: KZVBR) is blank. This means that no costs or revenues are updated to the sales order item (no CO object at the sales order item).
        • The Special stock field (technical designation: SOBKZ) is set to E (= orders on hand). This means that the material is carried in the sales order stock.
  3. It is not necessary to specify a settlement profile in the requirements class. If you enter one anyway, the system will ignore it.
  4. It is not necessary to specify a results analysis key in the requirements class. If you enter one anyway, the system will ignore it.
  5. If you want to use a sales order cost estimate to valuate the sales order stocks, enter a costing variant in the requirements class that is suitable for sales order costing. If you create a product cost estimate (a cost estimate for a BOM and routing), enter costing method 1 (product costing). In this scenario, you do not use unit costing as a rule.
  6. If you want to calculate the cost of goods manufactured and the cost of goods sold in sales order costing, specify a costing sheet that calculates the sales and administration costs on the basis of the cost of goods manufactured.
  7. The sales order cost estimate can only be used for valuation if it is marked. If you want to ensure that a marked sales order cost estimate is always available, set the Costing indicator to B (automatic costing and marking). In this case, a cost estimate will be generated and marked automatically when you create a sales order cost estimate. If you want to generate a cost estimate automatically when you create the sales order, but mark the cost estimate manually after checking it, enter A instead of B (= automatic costing). If you always want to create the cost estimate manually, enter nothing.
  8. If you want to valuate the sales order stocks individually but use the standard price from the material master record for valuation, set the indicator Without valuation strategy (note: in Release 4.0 this indicator is called Valuation strategy).

2.1.1.1. Assembly Processing

If you are using assembly type 2, you can only create a sales order cost estimate in release 4.5 or higher. For more information, read the Release Note on Release 4.5A (Controlling -> Product Cost Controlling -> Cost Object Controlling  -> Product Cost by Sales Order).

2.1.1.2. Transfer of Sales Order Cost Estimate into SD Condition Type

For more information, read the Release Note on Release 4.5A (Controlling -> Product Cost Controlling -> Cost Object Controlling  -> Product Cost by Sales Order).

2.1.2. Valuation of Sales Order Stocks in Material Master Record

Some companies want to carry the sales order stock quantities separately, but valuate them together. Make the following Customizing settings:

  1. Use a requirements class for which the Valuation indicator (valuation without reference to sales order document) is set to A. This ensures that the value of the sales order stocks is updated to the material master. The valuation price in the material master record is used for valuation.
  2. Use a requirements class for which the account assignment category is M (Ind. cust. w/o KD-CO) or an account assignment category in which no entry was made in the Consumption posting field and the Special stock field is set to E.
  3. Do not specify a parameter for a sales order cost estimate. A sales order cost estimate is not usually appropriate in this scenario.
  4. Do not specify a settlement rule or a results analysis key.

2.2. Valuated Sales Order Stock With Product Cost by Sales Order

  1. Use a requirements class for which the Valuation indicator (technical designation: KZBWS) is set to M (separate valuation with reference to sales document/project). This ensures that the sales order stock is valuated.
  2. Use a requirements class for which the account assignment category is set to E (Ind. cust. w/o KD-CO) or a account assignment category for which you have made the following settings:
        • The Consumption posting field (technical designation: KZVBR) is set to E (accounting via sales order). This means that costs and revenues are updated to the sales order item (CO object at the sales order item).
        • The Special stock field (technical designation: SOBKZ) is set to E (= orders on hand). This means that the material is carried in the sales order stock.
  3. Enter a settlement profile in the requirements class.
  4. If you want to perform results analysis for the sales order item, enter a results analysis key in the requirements class.
  5. If you want to use a sales order cost estimate to valuate the sales order stocks, enter a costing variant in the requirements class that is suitable for sales order costing. If you create a product cost estimate (a cost estimate for a BOM and routing), enter costing method 1 (product costing).
  6. If  you want to calculate the cost of goods manufactured and the cost of goods sold in sales order costing, specify a costing sheet that calculates the sales and administration costs on the basis of the cost of goods manufactured.
  7. The sales order cost estimate can only be used for valuation if it is marked. Proceed as described under 2.1.1.

2.3. Non-valuated Sales Order Stock with Product Cost by Sales Order

  1. Use a requirements class for which the Valuation indicator is blank (no stock valuation). This ensures that the sales order stock is unvaluated.
  2. Use a requirements class for which the account assignment category is set to E (Ind. cust. w/o KD-CO) or a account assignment category for which you have made the following settings:
        • The Consumption posting field is set to E (accounting via sales order). This means that costs and revenues are updated to the sales order item (CO object at the sales order item).
        • The Special stock field is set to E (= orders on hand). This means that the material is carried in the sales order stock.
  3. Enter a settlement profile in the requirements class.
  4. If you want to perform results analysis for the sales order item, enter a results analysis key in the requirements class.
  5. For more information, refer to the R/3 Library (Product Cost by Sales Order document).


3. Determining the Requirements Type

3.1 The Significance of the Requirements Type

The requirements type is very important in make-to-order production. It refers to a requirements class, which contains settings for functions relevant to requirements and other functions in Logistics, as well as for the costing and other functions in Accounting. (Some settings in the requirements class are overridden by the schedule line. For more information, see Customizing for schedule line categories.)

The account assignment category defined in the requirements class contains two indicators that are important for Cost Object Controlling: the special stock indicator and the consumption indicator.

The special stock indicator defines whether processing of sales order or project stock is required for the sales order item. The following settings are relevant for make-to-order production:

Blank: No special stock

E: Sales order stock

Q: Project stock

You can use the consumption indicator to determine whether a CO object with costs and revenues is to be created for the sales order item, or whether the account assignment is to be made to a WBS element.

Use the Valuation setting in the requirements class to determine whether the requirements class is to be used for recording valuated defined special stock. If you enter the setting so that the special stock is to be recorded as valuated, then you can open a special valuation segment for this ("M": separate valuation with reference to the SD document or project) or the valuation segment from the make-to-stock inventory can be used ("A": Valuation with no reference to the SD document).

By the same token, the following applies:

  • If a CO object is recorded for the sales order item then results analysis is required, which calculates the WIP and the cost of sales for the incurred costs.
  • It is not possible to make a project assignment (consumption indicator = P) for valuated sales order stock.
  • Processing without a CO object for sales order stock is only possible using the valuated special stock.
  • If a requirements type has not been entered in the sales order item, or if the requirements type does not contain an account assignment category, then costs and revenues are not updated in Cost Object Controlling. Instead, these are posted directly to Profitability Analysis when the billing document is created.
  • In the requirements class, you can only enter account assignment categories for which the
    Consumption indicator = E (Sales order) or
    Consumption indicator = P (Project) or
    Special stock indicator = E (Sales order stock).

3.2 Determining the Requirements Type

There are two different ways of determining the requirements type
a)       Based on the material or
b)       Business process.
If you base this on materials, for example, you specify that a material is always recorded in the valuated sales order stock. However, there can be business processes that require a different type of processing.

Example One:
When a sales order is created, a sales order costing is to be made for a material. You can make the corresponding setting in the requirements class in the costing field.
However, for the same material, no sales order costing is to be automatically created when returns are created.
You would thus need two different requirements classes. This, in turn, means that the system needs to find different requirements types when SD documents (returns or sales orders) are created.

Example Two: Logistical Make-to-Stock Production with CO Make-to-Order Production
A product or trading good is processed using the make-to-stock inventory. This means that production is not related to a sales order. Normally a CO object is not created for this material, so a requirements class is used that does not contain an account assignment category.
However, if the stock item is a spare part recorded in a sales order that otherwise only has make-to-order production, then it makes sense to create a CO object for this item, on which costs and revenues can be recorded.
In Cost Object Controlling, it is then possible to analyze the costs and revenues of the whole sales order, including, for example, surcharge calculation. This needs a requirements class whose special stock indicator is not filled, and the consumption indicator is set to "E". (This is account assignment category "B" in the standard system.)

3.2.1 How do I enter the settings so that the requirements type is determined based on material or business process?

For each item category and the MRP type from the material master (optional), you decide whether the system uses the material master (determination based on the material) to determine the requirements type, or whether it uses the item category and MRP type (determination based on the business process).

You can make the appropriate settings in Customizing for Product Cost by Sales Order under "Control Determination of Requirements Type" (transaction OVZI). If the requirements type is to be determined based on the material, enter a zero in the Source field, or leave it blank. If you want to base the determination on the business process, enter a "1" or "2" in the Source field.

3.2.1.1 How is the requirements type determined based on the business process?

If you enter a "1" or "2" in the Source field (transaction OVZI), then enter the requirements type that belongs to the item category and MRP type (optional). To find the item category, see section 2.3.

3.2.1.2 How is the requirements type determined based on the material?

If the Source field is empty or contains a zero (transaction OVZI), then the system checks, when you create the sales order, whether a strategy group has been entered in the MRP 3 view in the material master. If the strategy group has been entered, then the strategy that it contains (transaction OPPT) refers to the requirements type (transaction OPPS).

If there is no strategy group in the material master, then the system checks whether a MRP group has been entered in MRP 1 view in the material master. The strategy group is assigned to the MRP group (transaction OPPU) and the strategy that the strategy group contains is used to find the requirements type. If no MRP group has been entered, the system checks whether a strategy group can be found searching in Customizing (transaction OPPU) for an entry with an MRP group that has the same name as the material type (this also holds if the there is no MRP view in the material master).

If this method is unsuccessful, then the system assumes that a special rule was defined, meaning that the requirements type is to be determined by using the combination of the item category and the MRP type. You would make this type of special setting in Customizing for Product Cost by Sales Order, under "Control of Requirements Type Determination" (transaction OVZI), even if you have entered a zero in the Source field there, or left it blank. If no requirements type has been defined for the combination of item category and MRP type, then the system searches for an entry with the item category and a blank MRP type.

If you selected "2" for the Source field, then the system checks whether the requirements type is also present as a possible strategy in material-based Customizing. This means that the system does not only take into account the requirements type defined by using the main strategy, it also interprets all of the strategies defined for the strategy group. If this is the case, then the requirements type is accepted. Even if the system is not able to find a requirements type using the material-based Customizing, the requirements type found by using the business process is retained. If this latter requirements type is not present in the material-based Customizing as a possible requirements type, but a requirements type (material-based) has been defined, then this is transferred to the sales order item. If the Source field contains a "1", this check is not carried out, and the requirements type defined in the business process Customizing is directly transferred.

3.2.2 Which requirements types can be used in the sales order item?

In the sales order item, you can enter manually the requirements types that are defined in material-based and business process-based Customizing. The setting of the Source field in business process-based Customizing is not relevant to this. The F4 help provides you with the list of requirements types that are possible.

3.2.3 How is the item category determined?

The item category is found by using the combination of item category group and SD document type (Customizing transaction VOV4). The item category groups are entered in the material type and thus transferred as default values to the material master record. From Release 4.5, you can also define a general item category group in addition to the item category group from the sales view. This is designed for situations in which a sales view is not to be created for the material, or where it is not possible to read the sales view because the sales area is not known in the application.

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