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Inventory costing for Fuel in a Refinery

Nov 22, 2017 at 11:56 PM | 150 Views

Hi All,
I'm currently working on an engagement for a large Downstream client based in Australia. The client has one refinery which cover 1/3 of his Finished products. The other 2/3rd are purchased via import commodity trading and local buy / sell with other big players.
My question is related to the inventory costing for Fuel. The client has SAP but he is currently managing his fuel inventory valuation in excel to reflect the inventory $ value at market price and not historical purchase / production cost price.
Does anyone of you has experience on fuel inventory valuation using historical price and replaced cost ( using monthly average market price). is there a way to get this automated in the system and not using excel spreadsheet to perform all these calculations?
For the refinery, my client does not use SAP product costing manufacturing process. This is also calculated outside the system using excel and then monthly average price is calculated for each finished product and updated manually in the system to reflect the inventory valuation.
Any inputs / examples from other downstream clients will be very helpful for us.

Thank you!

MM Inventory Management
Oil and Gas
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1 Answer

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    KK Lam
    Nov 23, 2017 at 11:17 AM

    HI Anas,

    My recommendation is to use split valuation (in-house and external PO) and enable sap manufacturing process for refinery.

    You can refer to link below for the split valuation example.

    https://blogs.sap.com/2013/05/25/split-valuation-activation-its-material-master-creation/

    Thanks

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    • KK Lam
      Nov 24, 2017 at 01:05 AM

      Hi Jurgen,

      I did few projects for palm oil refinery. We have the same scenarios where company will have external purchase and in house produce. We use split valuation to resolve this. Regarding the next question from Anas, inventory valuation using historical price and replaced cost ( using monthly average market price). He can maintain the market price at costing view 2 and run CK40N to update the inventory at average market value or adjust it via MR22. For this part, Anas needs to work with CO consultant.

      Thanks.