Product definition

[Former Member]

Hi All

I had a unique problem which is explained as follows

I produce an FG till last stage and on the last poit is bifurcated into 3 grades as per the end result (Its a Process Indusrty). Now these grades are identified by the sales with Packing adopted and there is substantial rate diiferent between the Packing Material used. Now I given a suggestion to identify these FG's (under Same Material Code) by storage Locations say A , B & C and this will help in stock determination as well as ease the Production Planning. I dont want to create different Material for Different Grades as this will increase my BOM data Base .

But Finance wants to capture the cost element of packing in Bill Of Material or Product Cost . Can you suggest me any methodolgy to do the same . Remember its the final stage which decides the distribution of Product into grades A , B C eg if we get an output say 1000units 900 will be A grade 75 B Grade and 25 C Grade , but this is not in fixed propotion ....

Thanks in advance.

Regards

Manoj

[Former Member]

Hi

You can define all the three packing materials in one BOM and while doing backflushing put Zero for rest two materials.

Hope this is clear. The cost is only captured in product costing once the backflushing is done.

Krishna

[Former Member]

Hi Manoj

I have the gone through the same scenario .The actual output product is Differet then the planned product .

Here you use the concept of Co-product and cost settlement rule . Define the output as the co-produt in CO02 ( Order BOM Change ) as line item and there it will you to cost settlement rule and add cost variation into that based on pacakging cost

difference .

Planneing of the material can be triggered by ROL Level only as at the start of process you are not defing the Alterantive packaging as the part of Bill of material .

Regards

Sushil

[tanuj_parikh]

Hi,

Try with Alternate Item Group in BOM wherein you use Strategy = 1 with some approximate fix qty for Packing Materials usage. After confirmation where actual qty is posted, variance of cost can be captured at the period end. Take your CO consultant help for this.

Regards,

Tanuj Parikh

[Former Member]

Hi Tanuj

Can U throw some more light into this that how to execute this functionality as I had never worked on Alternate Item Concept.

I defined BOM with two Items A & B on same BOM No say 0010 and defined an item Group with 1 . Following are the data fed against each item

Item A

AltItemGroup 1

Priority 1

Strategy 1 Manual maintenance/by usage pr

Usage prob. 90

Item B

AltItemGroup 1

Priority 2

Strategy 1 Manual maintenance/by usage pr

Usage prob. 10

Now in The Cost Roll up of the BOM the Cost is appearing as per the Rate 90% and 10% as defined . But while Creating the order Only Item A is appearing with requirement qty @ 90% as defined in BOM but balance requirement of 10% is neither coming for A nor for B . Why its happening like this ? Did I miss something ?

Also Pls confirm how the items will be consumed against the Order in this scenario ..

Regards

Manoj

[tanuj_parikh]

Hi Manoj,

You have to define BOM with materials that are likely to be used with same Alternate Item group, that you have already done.

For same Alternate Item Group, you have to use same strategy, that you have already done with 1.

While creating order, attach valid Routing and valid BOM to it and see the components. It should show both the components wih qty as per usage probability evenif enough material stock is not available.

System will show both the items with required usage probabilty in confirmation screen evenif required qty is not in stock and allow to change the qty. Whatever components will be issued/consumed with qty that will be taken into account for Inventory posting/stock updation as well as actual costing.

Regards,

Tanuj Parikh

[Former Member]

Hi Tanuj

Yeah my problem get resolved . The error was coming as after changing the BOM with inclusion of an alternate item , the item get copied to recipe but no operation was assigned to it . I did it and as a result it starts showing in the Production order and the confirmation .

Thanks and Regards

Manoj

[Former Member]

Hi Manoj,

As per your requrement, you want to capture the cost of the packing material but you dont want to include this in BOM.

for this you consult your SD consultant he can add the cost of the packing material in the sale order.

Maintain re-order point planning or safety stock for the packing material then automatically system creates PR if stock of the packing material falls below the level during MRP run.

we done same in our last project

Regards

Jagadeesh K

[Former Member]

Hi Jagadeesh

I habe suggested the same thing to capture the consumption of Packing Material thru Sales and its ok also . But as there is a comparitive difference between Pacakaing cost , My question is how to put this factor in Product Cost .....

Regards

Manoj

[former_member196398]

Manoj,

I would suggest you to explore the concept of split valuation for your purpose. You can have 3 different valuation type denoting your product grades.

Regards,

Prasobh

[Former Member]

If you want to avoid material and BOM creation ( Alternatives ) then product costing wont work . You can have 3 cost centers for A,B and C grades and post consumption of packaging material and develop report which adds Base FG cost to different packaging for your FI dept

Neal

[Former Member]

Hi

Since you are different packing material use backflushing these packing materials and there by u can use it in product costing

Krishna

[Former Member]

Dear

How Backflushing derives the product cost . As By backflushing I understand that the component to be backflushed needs to be defined in BOM which again means that I had to define different BOMs(Production Version) for different kind of packing . I am trying to avoid this scenario as I have already many variables as defined below

Basic Product Mix - 40

Size Variability - 5

Design-color Variablity - 5

Packing due to Grade Variability -3

Out of these the above three variability has to be considered as this is a common requirement for production to define the SFG's (WIPs) & execution of MRP and Sales to monitor the FG Stocks as per variability Factor.

They also require the Grade & packing information for which I was considering the Storage Location parameter means different Grade Material packed in different packing will be stored in different warehouses. Now in 1 BOM I cannt define all 3 packing material (as per my knowledge) and I dont want to add this variability as it is increasing my BOM database 3 times.

I decided to book the consumption of packing Material thru Sales and it was acceptable also. But Now my Finance had a requirement that how will we come to the Product Cost for all three grades for the same material. Is there any method to capture this requirement or simply make me understand that how I will be capturing it thru backflushing ......

Regards

Manoj