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Raw Material Wastage in Production

Nov 06, 2017 at 06:35 AM

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Hi Experts,

My client have required to handle Raw material wastage in Production. They have one finished product (A) & one Raw Material (B). Raw material (B) is a child material for Finished Product (A) in Bills of material. 100 PC Raw material (B) is required for 150 PC Finished Product (A) production. But there is 2% wastage of Raw Material (B) for Finished Product (A) production. It's means 102 PC Raw material (B) consumed for 150 PC Finished Product (A) Production.

How to maintain the same in Production? They run MRP & Product Costing.

Please suggest me. It is very very urgent requirement.

Thanks & Regards,

Biplab Malakar

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1 Answer

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Former Member Nov 06, 2017 at 06:40 AM
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Hello

Please maintain 2 % of component(B) scrap in either material master or BOM depends upon your process.If you maintain in material master (MRP 4 view) where ever the component B is used 2 % will be planned additionally.If you maintain in BOM Item level,It will be planned additionally when BOM header product is planned.

Regards,

Velmurugan S

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Hi,

But how to identify the quantity & value of wastage separately. I have already done this process but only quantity & cost is increasing of Raw material (B). How to identify how much quantity & cost is wastage of Raw material (B) for production of Finished Product (A).

Please suggest me. It is very very urgent.

Regards,

Biplab Malakar

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Former Member

Hello

How you are recording the Scrap quantity during confirmation? If it is as a By-product ,we can get the quantity and value from standard report.Else we need custom one.

Regards

Velmurugan S

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Hi,

First I have maintained component scrap percentage for Raw Material(B) 2% in Bills of Material of Finished Product (A). 100 PC Raw material (B) is required for 150 PC Finished Product (A) production. But there is 2% wastage of Raw Material (B) for Finished Product (A) production. It's means 102 PC Raw material (B) consumed for 150 PC Finished Product (A) Production. Raw Material Price is Rs.10 per PC.

1) Create a Production Order for Finished Product (A) of 300 PC

2) Raw Material (B) has consumed of 204 PC with wastage(2%)

3) Cost of Raw Material (B) is coming Rs. 2040.

My client want 200 PC Raw material (B) should be consumed & 4 PC should be wastage in that production order also cost for Raw Material (B) should be Rs. 2000 & wastage Rs. 40 in that Production Order.

How it is possible? Please Suggest. It is very very urgent requirement.

Regards,

Biplab Malakar

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Hi,

I am waiting for your reply. It is very very urgent.

Regards,

Biplab Malakar

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Former Member

Hello

As Best practice also as per your process all 204 of raw material must be consumed and wastage will be drawn as by-product(Movement type 531).Because after wastage cost of the wastage is not same as rawmaterial cost.

Raw material cost = 204 PC * 10 = 2040

By-Product cost = 4 PC or KG * By-Product price

Pre-requisite:

Add this by-product in BOM with negative sign.

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Hi,

My scenario is as below:

Material

Finished Product - A

Raw Material - B

BOM

Header

Finished Product - A

Base Qty - 150 Pc

Item

Raw Material - B

Qty - 100 Pc

Component Scrap - 2%.

Production Order

Header

Finished Product - A

Qty - 300 Pc

Component Overview

Raw Material - B

Qty - 204 Pc

Confirmation

Finished Product A - 300 Pc received by Movement Type 101

Raw Material B - 204 Pc Issue by Movement Type 261.

Rate

Raw Material B - Rs.10 Per Pc

Costing Analysis

Production Cost

Finished Product A - Rs.2040

Raw Material Cost

Raw Material B - Rs.2040.

But Client required the scenario as below:

Production Order

Header

Finished Product - A

Qty - 300 Pc

Component Overview

Raw Material - B

Qty - 200 Pc

Wastage

Raw Material - B

Qty - 4 Pc

Confirmation

Finished Product A - 300 Pc received by Movement Type 101

Raw Material B - 200 Pc Issue by Movement Type 261.

Wastage

Raw Material B - 4 Pc Issue by Movement Type 261

Rate

Raw Material B - Rs.10 Per Pc

Costing Analysis

Production Cost

Finished Product A - Rs.2040

Raw Material Cost

Raw Material B - Rs.2000.

Wastage

Raw Material B - Rs.40.

Please Suggest how to develop above scenario in SAP.

It is very very urgent.

Regards,

Biplab Malakar


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Former Member

Hello

You mention that client is recording wastage as:

Wastage

Raw Material B - 4 Pc Issue by Movement Type 261

Do you means you are consuming(GI) 4 PCs of raw materials separately? Wastage is something come out from the production process how this will be Inventoried? .You are consuming additionally 4 PCs of raw material which become wastage or scrap.This wastage cost will be not same as raw material cost.

Your BOM structure must be :

FG Base quanity (150 PCs)

---- Rawmaterial 100 PCs with 2% comp. scrap

---- Wastage (- 2 PC) (or equivalent;ent weight) (Negative sign)

Regards,

Velmurugan S

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Hi,

Ok let me check.

Regards,

Biplab Malakar

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