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Former Member

How to map business process requirement in SAP PP?

Dear All,

I need help and guidelines from all SAP PP experts, to map below business process requirement in SAP PP,


Title of the requirement: "Record of material received for Sale on Conversion Basis"

My Company (X) is in receipt of excisable material for the purpose of Job Work processing. There are three parties involved for the transaction.

Step 1:

On Receipt of Raw Material (for a job work) at X :

  • Consignor : A
  • Consignee : X
  • Payer/Buyer/Customer : B

Here,

  • Consignee (X) does the process on the Raw Material received and takes CENVAT credit.
  • Consignee (X) is not a payer party, so normal GR/IR clearing is not to do for vendor payment.
  • The said material is not to consider as normal purchase of material.
  • Consignor (A) will send material to X site directly on behalf of customer (B).
  • Only Job Work Stock Account and CENVAT (RG23II) Account to reflect in Accounting Records.

Step 2 :

Issue of Material for Processing

  • Job Work Stock will issue for processing the goods, and converted to Semi Finished/Finished level with applicable processing cost

Step 3 :

Dispatch /sale of Material

  • Consignee : A
  • Consignor : X
  • Buyer/Customer/Bill to : A

Here,

  • Consignor (X) is liable to issue an Excise Invoice to Consignee/Customer (A) with CENVAT payable on Base Value considering total of Original Material Cost + ‘Fixed’ Job Work Charges as per agreed terms of contract
  • The said material is not to consider as normal sales of material. Only Job work charges are to consider as Revenue. It should be invoiced to customer (A) with a separate commercial invoice for ‘Job Work Charges’
  • An Additional Debit note to be raised for differential Cenvat amount. (CENVAT Received vs. Paid)

Kindly guide to best map above requirement in SAP PP.

Thanks,

Naresh

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2 Answers

  • author's profile photo Former Member
    Former Member
    Posted on Jan 03, 2014 at 09:04 AM

    Dear All,

    I have to set the below business process in SAP PP,

    My company gets the raw material from customer then my company process this raw material by applying 3 to 5 operations and convert it into semi-finish or finish material. Now we want that only process cost should be considered for the order and raw material cost should not considered because it is provided by customer.

    The above business process is for doing the job work for the customer.

    From SAP PP perspective, what need to do in the existing system?

    Kindly guide if anybody has best suitable guideline to set this process in SAP PP.

    Thanks,

    Naresh

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  • Posted on Jan 02, 2014 at 11:06 AM

    Hi Naresh,

    Hope you can get good solution if you post it in SD forum😊.

    Regards,

    Krish.

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