BP Mining Solution Scope V1.600 En

SAP ECC 6.00

June 2007

English

SAP Best Practices for Mining V1.600

SAP AGDietmar-Hopp-Allee 1669190 WalldorfGermany

Solution Scope

SAP Best Practices SAP Best Practices Mining V1.600: Solution Scope

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Contents

SAP Best Practices for Mining V1.600: Solution Scope............................................6

1 Purpose...............................................................................................................6

Functional Scope – Supported Business Processes or Scenarios............................6

1.1 Scenario: X40 – Demand Supply Planning (Mine to Customer).................6

1.2 Scenario X50 – Capturing Coal Mining Production Data............................7

1.3 Scenario: X51 – Coal Blending...................................................................8

1.4 Scenario: X52 – Copper Mining and Crushing Production Processes........9

1.5 Scenario: X53 – Tracking Copper and Cathode Production and Quality. .10

1.6 Scenario: X55 – Cost Planning.................................................................11

1.7 Scenario: X56 – Actual Costing in Mining.................................................13

1.8 Scenario: X60 – Rail Bulk Transportation Execution.................................14

1.9 Scenario: X61 – Coal: Contract to Invoice Process for an FOB shipment 14

1.10 Scenario: X62 – COAL: Contract to Invoice Process for a DES shipment 15

1.11 Scenario: X63 – Concentrate: Quality Management in Contract to Invoice Processes.............................................................................................................17

1.12 Scenario: X64 – Cathode: Contract to Invoice Shipment Execution.........18

1.13 Scenario: X70 – Corrective Maintenance..................................................19

1.14 Scenario: X71 – Preventative Maintenance..............................................20

1.15 Scenario: X72 – Rotable Management.....................................................21

1.16 Scenario: X73 – Maintenance Cost Budgeting..........................................22

1.17 Scenario: X75 – Supply to Remote Location.............................................23

1.18 Scenario: X76 – Returns from Remote Location.......................................25

1.19 Scenario: X77 – Rentals Management......................................................26

1.20 Scenario: X78 – Timed Delivery to Remote Location................................27

1.21 Scenario: X80 – Occupational Health Management.................................28

1.22 Scenario: X81 – Industrial Hygiene and Safety.........................................29

2 Functional Scope – Building Blocks..................................................................32

2.1 Building Block: X02 –Organizational Structure..........................................32

2.2 Building Block: X03 – Master data............................................................32

2.3 Building Block: X10 – Financial Accounting and Costing..........................33



2.4 Building Block: X11 – Materials Management...........................................34

2.5 Building Block: X12 – Sales & Distribution................................................34

2.6 Building Block: X13 – Production Planning and Control............................35

2.7 Building Block: X14 – Bulk Transportation with Traders’s and Scheduler’s Workbench (TSW)................................................................................................35

2.8 Building Block: X15 – Plant Maintenance..................................................36

2.9 Building Block: X16 – Remote Logistics Management..............................37

2.10 Building Block: X17 – Quality Management (QM).....................................38

2.11 Building Block: X18 – Environment, Health & Safety................................38

2.12 Building Block: X19 – Demand and Supply Planning (APO).....................39

2.13 Building Block: X20 – Maintenance Cost Budgeting.................................40

3 Appendix - Contained Metal Management and Valuation.................................41

3.1 Introduction...............................................................................................41

3.2 Summary of Business Requirements for the Mining Industry...................42

3.3 SAP Treatment of Contained Metal Management.....................................43

3.4 Integration.................................................................................................47

3.5 Considerations for Batch-Specific UoM & Split Valuation.........................49



SAP Best Practices for Mining V1.600: Solution Scope

1 Purpose

This solution scope provides an overview of the processes and functions covered by SAP Best Practices Mining V1.600. It describes the functions and explains their business purposes.

Under Functional Scope – Supported Business Processes or Scenarios, you will find a scenario-based view of the functions. Under Functional Scope – Building Blocks, you will find a view arranged according to groups of functions bundled in Building Blocks.

The solution scope does not provide technical explanations of how to use the functions. For further information on this topic, see the business process procedure documents.

Functional Scope – Supported Business Processes or Scenarios

1.1 Scenario: X40 – Demand Supply Planning (Mine to Customer)

The purpose of this scenario is to demonstrate how the marketers create a demand forecast for their responsible regions & customers, taking existing long & short term contracts into account. In parallel, the mine production planner will plan the monthly (short term: daily) production targets. Required transportation orders from Mine to Port and blending orders based on the required blend will be created by a Supply Network heuristic. The mine scheduler will check the capacity and level it where required. All involved parties perform the Demand & Supply match, supported by a sophisticated alert framework in case of any mismatches and agree on necessary adjustments.

Process Flow

Supply Network Overview

Uploading customer sales contracts into BW

Customer demand planning, based on existing contracts and expected customer & regional spot sales

Run of Mine Production Planning (Push Planning)

Supply Network Planning, i.e. Port Replenishment pull planning (with the option to also push excess stock from the Mine to the Port)

Demand & Supply Matching incl. current and projected stock

Sales order entry and contract / forecast consumption



Key Points

State of the art user friendly Spreadsheet like Planning books for demand and supply network planning

Automated planning

Management by exception through sophisticated alert monitor

High level of integration to execution process Scenario:

1.2 Scenario X50 – Capturing Coal Mining Production Data

Various types of coal mining methods exist depending on the physical nature of the coal seams. Although the mining processes vary considerably, they all lead to the extraction of coal that needs crushing, conveying and washing before it can be shipped to the customers.

This scenario represents the processes at a surface mine and focuses on the steps within the SAP ERP system as oppose to those steps executed with the aid of mine technical systems used for the Mine Planning and Scheduling. Process Orders are created – these Orders contain or link to all production related data within SAP ERP. The scenario shows how data is captured, displayed changed and how a confirmation leads to receipt of the production into stock or the movement of materials from one process step to the other.

Mining Specialists systems take care of the Geological modeling, Reserve estimations, Mine Planning and Scheduling. The output of these systems feed into SAP for downstream production tracking and costing. In addition, the actual production activities (for reporting against the planned data mentioned before) are often captured into SAP through a PI sheet.

SAP takes care of the business processes related to the production like Maintenance and Materials required for the production as well as the production quantities itself.

Process Flow

The first step in SAP ERP is to create the process order. The process order will usually represent a specific time period, to allow accurate recording of actual production. In many cases, an external production planning system will be used to define and plan for the different requirements of mining from different areas. The external system will have created planned orders (a.k.a. production targets) that specify the quantity, date, production version and often the grade. Once the process order is created, dragline or blasting and hauling details can be recorded.

In this scenario, the PI (Process Instruction) sheet will be used to manually record production achievement. The PI sheet is a user friendly method of



allowing production operators to enter data in a customized fashion. In many cases, shop floor systems or data historians are used to collect the data at the shop floor level and the data aggregated for automatic posting into SAP.

In the first step of the process, ore is blasted and hauled to the crusher. Via the PI sheet, the quantities of consumables as well as resource operating hours are entered by the operator to be issued against the order. The shift operator in the Operators Control Room captures the production parameters like loads delivered, delivery times, truck number, fueling quantities, engine hours, etc using a Process Instruction sheet. The usage of other resources, such as excavators etc are also entered on the PI sheet, and appropriate documents posted to update the logistics, financial and plant maintenance information in the background.

The second process order represents the Crushing and Washing processes, where hauled ore is passed through a Crusher to reduce the coal lump size. Again a PI sheet is used to record the production data for a particular time period. In this case, a batch is also created for the process order, which allows quality characteristics (assays) to be recorded in the system. This batch represents the specific crushed ore quantity and quality for the time period specified by the process order.

In the PI sheet, the operator then selects the stockpile (or stockpiles) onto which that day’s production is transferred. A batch-to-batch movement is performed to move the daily batch quantity into the stockpile batch, and the batch characteristics of the stockpile batch are appropriately adjusted based on a weighted average calculation.

Key Points

Production Order for Load & Haul and Crushing process at the Mine

Production planning & execution for time bucket, e.g. shift, day, week

Detailed Production confirmation for individual trucks

Basis for KPI reporting on plan / actual comparison, from a logistics & cost perspective

Integration to PM measurement documents for trucks

User friendly data entry for production confirmation in PI Sheet

Process instructions are the basis for later re-use in automation of this Mine production confirmation from dispatch system via SAP xMIISD self billing procedure at supplier.

1.3 Scenario: X51 – Coal Blending

In this scenario coal from various mines and/or different local stockpiles are blended together to create a new batch to meet customer specifications. The same



process could also be used for blending other types of commodities. A process order is used as the mechanism to perform the blending. Although there are other shorter ways, this will allow the cost of blending to be determined (not demonstrated in the scenario).

The PI Sheet is set up in a way that it can be used for simluation & final planning of the blend that is handed over to the operators as well as for the confirmation of the blending operations to capture actuals in quantity and quality.

Process Flow

A process order is created for the blending operations

A PI (Process Instruction) sheet is used to manually record the blending activities. The PI sheet provides a user friendly interface that allows production operators to enter data in a customized manner. The same data could be updated automatically. Many companies use Process Control Systems (PCS) and SCADA (Supervisory Control And Data Acquisition) systems linked to weighbridges and similar equipment to collect data for mining operations. These are then summarized via middleware and interfaced to SAP ERP for automatic posting.

The quality characteristics (assays) of the stockpile are recorded using batch characteristics. For each stockpile that is to be blended the batch characteristics are retrieved and a weighted average calculation used to determine the quality of the resulting batch. The PI sheet allows different stockpiles and quantities to be evaluated until an appropriate blended batch is achieved. When the blend planner has finished determining the quantities of the different stockpiles to be blended they can save the PI sheet, print it out and give it to the operator to perform the blend.

When this process is confirmed as being completed, the PI sheet is electronically signed and the appropriate transactions are posted in the background. These include posting goods issue quantities from each source batch, posting a goods receipt quantity for the resulting batch and updating the batch characteristics to reflect the blended quality.

As per the last step in the process, the results of the blending process can be viewed to confirm postings.

Key Points

Process Order for Blending

Blend at loading onto Vessel, but also basis for other blending operations

Blending with simulation & planning to meet specifications

Stockpile management with qualities using batch characteristics

User friendly data entry for blending operations confirmation in PI Sheet



1.4 Scenario: X52 – Copper Mining and Crushing Production Processes

This scenario covers the mining and processing of copper ore. Two main operational processes are represented namely the process of mining coarse ore for crusher feed and the subsequent crushing to fine ore. The further production processes of concentrate and cathode are the subject of scenario x53.

A few invaluable scenarios can follow from the configuration of the first scenario, namely the use of standard costing approaches, metal valuation using batch characteristics

Some additional scenarios illustrate the costing, with a focus on product cost based on the metal content. This process is applicable at the end of month to set new values for the next month (period).

It shows technically the concept of split valuated materials with proportional units of measure in SAP and how to valuate material on an overall level as well as on their metal content. Example for the metal valuated in this example is the copper content in fine ore.

Process Flow

A process order is used to capture data for the Run of Mine (ROM) ore mining process. The Loading and Hauling processes steps are included in this order. It is shown that the creation of the order also creates a Process Instruction sheet based on the Production Recipe.

A PI (process instruction) sheet allows the operator to manually confirm details of the process including production quantities, truck hours and fuel consumption. The same data could be updated automatically but is not demonstrated in this scenario. The Confirmation of the Process Order will amongst others, automatically issue the product to stock and post measuring documents to the mining equipment history.

The coarse ore is delivered to a crusher to be crushed into fine ore. Again a process order is used to manage the crushing process and usually represents a specific time period (shift, daily, weekly, monthly).

It is assumed that the fine ore from the crushing process is assayed and the percentage copper updated as a batch characteristic on the batch representing the process order. Using the copper percentage the value of the stockpile based on copper content is shown to be calculated. This functionality could be used at any point in process and is shown here to demonstrate the use of batch characteristics for the calculation of stockpile cost based on metallurgical composition.

Again a PI sheet is used to manually record production achievement. The production batch of fine ore is immediately transferred to an existing



stockpile where the quality characteristics are updated based on a weighted average calculation.

Upon confirmation of the production order it is also shown that the raw material, in this instance Coarse Ore, is consumed in order to produce the Fine Ore.

Key Points

Production Order for copper Ore Load & Haul and Crushing process at on Open Cast Mine

Detailed Production confirmation for individual trucks

Basis for KPI reporting on plan / actual comparison, from a logistics & cost perspective

Integration to PM measurement documents for trucks

User friendly data entry for production confirmation in PI Sheet

Process instructions are the basis for later re-use in automation of this Mine production confirmation from dispatch system via SAP xMII

Valuation of material – on material level

Valuation of material – based on copper content via batch specific Units of Measure

1.5 Scenario: X53 – Tracking Copper and Cathode Production and Quality

This two step production scenario illustrates how a Process Order is used to capture the production quantity for a Concentrate and then for the subsequent production of Cathode from the Concentrate. After the production period (can be hour, shift, day, etc), the production is captured by what is called a Confirmation of the Process Order. Product assays are captured as well. It is shown that for production to take place the raw material has to be issued to the process, a process by which the raw material stockpile is reduced accordingly. The produced quantities are recorded into stock.

Process Flow

Planned orders provide for setting production targets in mining. The Process Orders are created for the actual production against those set targets. This scenario begins by showing the latter step for the production of a concentrate from fine ore stockpiles. It is assumed that the fine ore is available.

The system proposes 2 movements. The first is a goods receipt (movement type 101) based on the yield quantity entered above (Note the batch number has been filled automatically from the process order).



The second is a proposed goods issue (backflush) of fine ore produced by an earlier crushing process. The quantity proposed is calculated based on the yield ratio from the bill of materials in the process order. This planned quantity can be changed by the operator if different quantities were used.

A batch number (representing the source stockpile) will be required for the fine ore. Batch determination can be used to identify the batch and allow the user to select the right quantities.

When the assays become available from the Laboratory the characteristics of the batch is updated for daily production reporting and yield calculations.

The steps are repeated for the subsequent production of Cathodes. This process consumes the Concentrate produced in the previous step as a raw material. Again material movements are required.

The Cathodes produced are flat sheets of copper that needs to be packed into bundles. These bundles are represented by Handling Units in SAP ERP. The scenario goes on to show the creation of these handling units, the packing (or issueing) of copper batches to these handling units. The results can be viewed to ascertain whether the packing process has been executed and captured correctly.

Key Points

Process Order for Coppper Concentrate and Copper Cathode production

Batch determination in process order for stockpile selection of coarse ore

Stockpile Management for Copper Concentrate

Handling Unit Management for Copper Cathodes

1.6 Scenario: X55 – Cost Planning

This scenario covers procedures that may be followed in the SAP ERP system when annual cost planning is carried out for an operating mine. The total costs in mining consist of the amortization of the capital costs of the equipment and mine establishment, and the operating cost itself. The following solution automates the cost planning process by taking into account tools from mySAP ERP Financials such as Flexible Planning functionality in order to determine the operational costs of a mine. When using Flexible Planning calculation methods an amount of direct and indirect cost is assigned to the assets of the mine to properly correlate to the activities consumed. Once realistic costs are visible, management can focus on making business processes more efficient.

Process Flow

A number of planning functions have been included in the scenario:

o Cost Element planning,



o Internal Activity planning

o Planning Statistical Key Figures

o Cost planning using a Template

o Overhead allocation using a Costing Sheet

o Overhead allocation using a Template

The planning process begins with the creation of the planning records that record the quantity of each of the major resources required to produce the volumes projected in the mine plan. The resources are represented as Cost Centers and ‘Activity Types’. The costs of operating the resources at these levels of activity are then planned.

The haul truck fleet is used as an example of the heavy mining equipment whose costs must be planned. With reference to the annual mine plan, the use to be made of the equipment is planned in the form of cost centre activity units. Other resources, such as the operating labour, are planned as activity consumption in the equipment cost centers. Relevant statistics that affect the operating costs of the equipment are then entered as planned Statistical Key Figures. With the use of formulae, the planned costs at the planned operating (activity) levels are developed from the statistics. When all the operating costs have been planned for the haul trucks, cost recovery rates (activity prices) that will fully recover all planned costs at the planned level of activity are calculated by the system

Although in real life the costs of all heavy equipment would be planned in this way, in this scenario the other equipment costs and resources are not planned in as much detail. So that complete production cost estimates can be created later, in this scenario activity levels and cost recovery rates are planned manually for the loaders, crushers, etc. and for labour, energy, etc.

The costs of running the support cost centers, independent of the level of activity, are then planned. These costs are to be allocated using one of the allocation methods available, finally to be included as allocated costs in the production orders.

In some cases the costs of a stage of production may be collected in a cost centre and allocated to production using a Costing Sheet or a Template with an appropriate base. For example the costs of drilling, blasting, and overburden removal may be collected in a cost centre and allocated to production on the basis of the ore extracted.

Once the standard activity prices (i.e. the charge out rate for the use of resources) and the overhead allocation rates are determined, by valuating the product recipe unit cost estimates can be created for each stage of production, for example to load and haul a tonne of mineral from the mine to



the crusher. For actual costing, production orders are created for the production of a given quantity of product, using the recipe to plan the quantities of resources required, for example the usage of haul trucks. The actual quantities and costs are then recorded in these orders, enabling analysis of the variances between the planned and actual costs to be carried out.

Key Points

Detailed cost center and cost element set-up for a Mine

Major Focus on Cost center & equipment cost planning

Activity based costing (ABC), incl. preconfigured templates & costing sheets

Detailed Cost planning for valuable assets, example: truck

Product cost planning

1.7 Scenario: X56 – Actual Costing in Mining

This scenario follows on X55 where the cost planning was done. In this scenario actual costs are posted to the mining cost centers. These posting vary from the one type of operating area to the next: as such, maintenance, energy and fuel consumption- etc. cost allocations are reviewed in this scenario. Overheads are then allocated using Actual Assessment Cycles towards the end of the accounting periods. This scenario illustrates how this can be done using SAP ERP.

Process Flow

Primary costs are posted on the relevant cost objects through FI GL postings, invoice receipts, goods movements, billing etc. Some of the examples shown are:

o Dispatching systems used in mining allow real-time monitoring and confirmation of the fuel consumption of mining equipment. In this scenario, the fuel costs will be entered as activity consumption.

o Cost tracking takes place on the maintenance work orders created for each item of equipment if the Plant Maintenance Module (PM) is being used. On a daily basis, consumption of resources (manpower, purchases (including 3rd party services), or materials issued from the warehouse) are recorded within each work order.In this scenario, the maintenance costs will be entered as activity consumption.

o Rather than by confirmation or timesheet, in this scenario the operative labor costs are entered as activity consumption against the equipment cost centers



o If the actual usage of operating supplies is recorded, the costs can be distributed directly to the specific item of equipment. In this example, the costs of tires have been planned for each truck directly on the cost center.

The overhead costs are assessed through to the production cost centers based on head count, Number of PCs, or m2 of floor space, according to the following value flow..

Actual primary costs are now posted, overhead costs allocated, and resource usage entered (using activity charges). With Cost Center reporting the actual costs can be compared to those planned.

This links back to scenario X52, where a Process Order is created to associate the cost to the actual production. Unit Cost of Production can be calculated (not shown) as it is a key metric in production reporting.

Key Points

Major Focus on Cost center & equipment cost actuals recording

Activity based costing (ABC), incl. preconfigured templates & costing sheets

Detailed Cost actuals for valuable assets, example: truck

KPI reporting on Plan vs. Actual comparison on single trucks within truck fleet

Basis for Production Unit cost calculation

1.8 Scenario: X60 – Rail Bulk Transportation Execution

In this scenario a Mining Company ships coal from the mine to the port by rail using a stock-transfer-order (STO). The planning of the transport takes place in TSW (Trader’s and Schedulers’ Workbench), where the nomination is created. Depending on the situation individual trains or several trains can be scheduled. Customized ticketing processes can be run; a simple ticket will be generated in the scenario. The scenario shows the visibility of the stock situation at mine and port.

Process Flow

A Stock Transport Request (STR) represents a requirement for a product to be transported. The STR is then converted into a Stock Transport Order (STO) to initiate and record the transfer from the mine into the port.

A nomination follows after doing 3 Way Pegging (3WP): This transaction allows the scheduler to link demand items, supply items and transportation



items together to nominate a voyage. The scenario shows a 3WP with a fixed rail service provider on the route as a default for the transport system.

The Stock Projection Worksheet (SPW) illustrates the impact of the demand on the projected stock levels.

The rail service provider is notified and scheduled nominations adjusted according to the provider’s schedule. A schedule is agreed and confirmed.

The scenario covers the generation of a loading and discharge ticket for the transfer of the product from the mine to the port. The ticketing transaction in TSW and its associated document processing functionality can be used to generate all of the subsequent SAP documents for a confirmed TSW movement. .

Finally the Stock Projection Worksheet (SPW) shows the final stock levels.

Key Points

Internal Distribution of Bulk product (e.g Mine to Port)

Scheduling Bulk Transportation with TSW

Bi-directional Nomination Communication with Rail Service Provider

Stock Projection at Mine & Port

Actualizing movements with TSW tickets

1.9 Scenario: X61 – Coal: Contract to Invoice Process for an FOB shipment

This scenario aims to show the complete integrated process for executing a Free-On-Board sale process. The integration of traditionally fragmented physical distribution incl bulk transportation, contractual and invoicing processes simplifies the process considerably.

Process Flow

In this scenario, the long term contract terms and conditions are captured in the system. This includes all financial details relevant for pricing, including calculation rules for prices based on metal exchange quotations. Shipping details are also captured. The total contracted quantity for the contract period is shown to be broken down into monthly shipment quotas.

Closer to the shipment dates, call-off quantities and delivery dates are created. The bulk shipments are scheduled, taking into account the above details as well as the stock and supply situation



Trader and Schedulers Workbench (TSW) is shown for planning the bulk shipments: deliveries of stock to the port and projecting the effect of loading the ship on their inventory at the port are both illustrated.

An in transit batch is created to track quality during the sale and to allow for potential diversions of bulk shipments to alternative destinations and customers

After the loaded quantities and actual dates are known, TSW ticketing is used to generate the deliveries and goods issues that record the delivery of the product to the customer.

Tracking document flow history is a critical component in sales administration. The scenario shows how this audit trail is kept for the administrator.

A provisional invoice will be created based on the agreed contract terms and issued to the customer. This invoice is based on the provisional calculation rules defined for the contract (as quotations required for the calculation of the final rules may not yet be available) and the first assays.

After adjusting the quality, e.g. based on a customer or umpire analysis, the final invoice is generated and sent to the customer.

Key Points

Contract order entry with quantity schedules, commercial pricing details, requested qualities

Scheduling Bulk Transportation with TSW 3WP and Nomination

Stock Projection at Port to check available stock

Actualizing load quantity at Port with TSW ticket, creating load batch to capture quality

Provisional Invoice, Customer quality adjustments, Bonus & Penalties, Differential Invoice.

1.10 Scenario: X62 – COAL: Contract to Invoice Process for a DES shipment

This scenario is similar to the X61 process with the main difference around the type of contract. Unlike FOB contracts, the exporter is responsible for both the cost and risk of the sea voyage. The scenario shows the additional freight contracts. The complete integrated process for executing a Delivered Ex Ship sale process is shown. The integration of traditionally fragmented physical distribution, sales and freight contracting and invoicing processes simplifies the process considerably.



Process Flow

In this scenario, the long term sales contract terms and conditions are captured in the system. This includes all financial details relevant for pricing, including calculation rules for prices based on metal exchange quotations. Shipping details are also captured. The total contracted quantity for the contract period is shown to be broken down into monthly shipment quotas.




After the loaded quantities and actual dates are known, TSW ticketing is used to generate the deliveries and goods issues that record the delivery of the product to the customer. One of the tickets is the Load Ticket as it largely determines the freight and insurance costs.

The bulk product on the vessel is shown to be discharged at the discharge port with a discharge ticket. It is Similar to the Load Ticket creation, but this time it is for the sales order. This usually represents a different quantity since bulk mass measurements are an inexact science. The system automatically adjusts the gains / loss posting.

Tracking document flow history is a critical component in sales administration. The scenario shows how this audit trail is kept for the administrator.


After adjusting the quality, e.g. based on a customer or umpire analysis, the final invoice is generated and sent to the customer. Unlike common practice where customers are sent a Credit for Provisional Invoice amounts paid with a new and full, final invoice only an adjustment invoice is sent. All changes in exchange rates, mass and assays, etc are considered and the outstanding amount is invoiced to bring the final payment to a Final Invoice amount.



Freight costing documents are created and, with the final mass and assays entered, the freight costs are calculated and shown to be posted to the General Ledger.

The scenario also shows how a standing purchase order for Freight Costs are created

Key Points

Similar to X61, in addition:

Management of bulk stock in transit

Gains / Loss postings

Freight Costing, incl. Purchasing and settlement of costs for harbor agents, insurer, carrier

1.11 Scenario: X63 – Concentrate: Quality Management in Contract to Invoice Processes

This scenario aims to show the complete integrated process for executing a Free-On-Board sale process for a copper concentrate product.

Within the above business process emphasis is given to the following two areas: firstly the management of assay results and how SAP addresses the particular impact those results have on the pricing of concentrates. Of course, the configuration of the Quality Management processes is a pre-requisite to making this process hang together. Secondly the more detailed handling of commodity pricing to allow for metal exchange based pricing, as well as bonus & penalty pricing for copper as well as other contained metals like gold, silver etc.

Function List

In this scenario, the long term contract terms and conditions are captured in the system. This includes all financial details relevant for pricing, including calculation rules for prices based on metal exchange quotations. Shipping details are also captured. The total contracted quantity for the contract period is shown to be broken down into monthly shipment quotas. Particular attention is paid to creating the pricing conditions that will, based on the actual assay result impact the formula whereby metal content, treatment and refining charges, royalties and penalties, etc. be calculated.






After the loaded quantities and actual dates are known, TSW ticketing is used to generate the deliveries and goods issues that record the delivery of the product to the customer.

Shown here in this scenario is the SAP Quality Management function, integrated into the standard SAP sales flow. It is demonstrated how users can plan and record assay results for samples taken during ship loading, not only for historical purposes, but also as a basis for provisional invoice creation.

Multiple sets of assay results are recorded for a quantity of shipped product, these results are compared, and a final assay for the shipment is recorded and automatically passed to the batch for final invoice pricing.

At product discharge time, more samples are taken and split with samples sent to different laboratories (supplier, customer, and independent) for analysis. These results are then recorded back in the SAP System and results are compared with the final results and are recorded and updated against the batch ready for the final invoice to be produced.

This scenario includes functions for assay management and inventory management through the update of the physical product with assay results and the generation of customer invoices. In this scenario, is demonstrated how customer invoices can be based on the most up-to-date assay results, and subsequently, how to issue preliminary, and final invoices.


A delivery confirmation is created to finalize the shipment execution process.

After adjusting the quality, e.g. based on a customer or umpire analysis, the final invoice is generated and sent to the customer.

Key Points

Contract order entry with quantity schedules, commercial pricing details, requested qualtities

Commodity Pricing based on metal exchange quotations for multiple metals

Bonus & penalty calculation rules for quality deviations



Scheduling Bulk Transportation with TSW 3WP and Nomination

Stock Projection at Port to check available stock

Actualizing load quantity at Port with TSW ticket, creating load batch to capture quality

Quality Management, load & discharge assay, seller & buyer assay, umpire assay,

Provisional Invoice on load assay, Bonus & Penalties based on final agreed assay within Differential Invoice

1.12 Scenario: X64 – Cathode: Contract to Invoice Shipment Execution

The example mining company sells copper cathodes on freight liner vessels on a CIF basis. The scenario shows how the business processes for sales orders creation, product picking and allocation as well as shipment scheduling, carrier selection and invoicing are all aligned within the system.

Process Flow

In this scenario, a Spot Sale contract with its terms and conditions are captured in the system. This includes all financial details relevant for pricing, including calculation rules for prices based on metal exchange quotations. Also shown is information about the freight carrier, the vessel, the route, planned dates like ETA and ETD, and potentially the container space offered on this voyage.

A freight liner offer incl. routes and stages, dates etc. are created

The copper cathodes produced are transported from the Refinery to the port via stock transport order.

The cathode bundles are created to be shown as Handling Units in the system when product stock becomes available at the refinery for shipment to the customer.

The spot sales order is scheduled on the best available freight offer (with regards to routes, dates, etc.) and a shipment of the product created in Trader and Scheduler’s Workbench (TSW)

TSW is shown to be used to anticipate when the vessel will be in the port and to project the effect of loading the vessel on their inventory at the port.

A delivery for the customer spot sales order is created out of the nomination using 3 Way Pegging.

The cathode bundles (shown as batches and Handling units) need to be picked before vessel loading. Batches suitable for the specifications as laid down in the contract are selected.



After batch determination the actual picking is performed based on system-generated picking papers.

After picking has been done, this information is entered in the delivery note. The quantity in the delivery is automatically adjusted to the quantity in the Handling Units.

After the loaded quantities and actual dates are known, TSW ticketing is used to finalize the nomination line item that records the delivery of the product to the customer.

A provisional invoice will be created based on the agreed contract terms and issued to the customer. This invoice is based on the provisional calculation rules defined for the contract.

After adjusting the out-turn weight and quality, e.g. based on a customer or umpire analysis, the final invoice is generated and sent to the customer.

Key Points

Spot Sales contract order entry

Freight Liner offer creation in TSW

Transportation Scheduling & assignment of demand to freight liner offers in TSW 3WP

Batch determination based on FiFO and required Qualities for Picking

Handling Unit management for Cathode bundles & Containers for shipping

Actualizing of shipment with TSW tickets & Invoicing customer

1.13 Scenario: X70 – Corrective Maintenance

The purpose of this scenario is to demonstrate the process of corrective maintenance. The corrective maintenance scenario contains the fundamental steps to be followed whenever maintenance is performed. It is the most fundamental process containing most of the process steps required to execute the other maintenance scenarios. Both the “preventive maintenance” and rotable management scenarios link into the corrective maintenance scenario and incorporate many of its process steps. The “maintenance cost budgeting” scenario relies on the history created by the corrective maintenance scenario when predicting budget requirements not derived from the preventive maintenance scenario.

Process Flow

The first step is to create a maintenance notification. A SAP user logs a notification to request maintenance to repair defective equipment. Creation of the notification via the technical structure ensures that the notification is created against the correct technical object.



The maintenance order now needs to be created. A planner creates, plans, and schedules a maintenance work order.

An authorised person reviews the cost and safety before approving

It is necessary to check the labour schedule and verify there is sufficient labour capacity on the date which the job is scheduled to be executed or not. The job is then scheduled on the date when the labour capacity is available.

The materials management process is integrated and issues stocked spares and procures non-stock items

An artisan performs the maintenance work after having received the work order, and captures the feedback

Key Points

Indicates the points where the preventive maintenance notifications and work orders enter the process

Links to the materials management processes

Integrates to costing

1.14 Scenario: X71 – Preventative Maintenance

Preventive maintenance work is performed by mining companies to ensure optimial operation of equipment & avoid costly unplanned equipment failure or shutdown. This work may be done for legal/ regulatory reasons, or due to environmental protection requirements. This type of maintenance may also be done to comply with manufacturer recommendations, or may be executed to ensure continued product quality.

The purpose of the preventative maintenance scenario is to demonstrate three preventive maintenance processes. It describes how to create and schedule a maintenance plan based on elapsed time and/or on usage and how to generate a planned cost report. It further describes how maintenance is trigged based on the condition of a unit.

Maintenance based on elapsed time: Since time does not provide the optimal schedule for maintaining equipment that requires maintenance due to operational wear, it is usually used to schedule inspection activities and periodic testing (e.g. pressure vessel tests)

Maintenance based on the usage of plant and equipment is a common and important maintenance strategy to enable the optimization of the maintenance frequencies. Maintenance requirements are generated from equipment usage information, i.e. engine hours



Condition based maintenance is the third method used to drive the creation of preventive maintenance work. Requests for maintenance are generated from condition readings entered into SAP

Process Flow

The first step is to check the maintenance strategy as all plans should be aligned with the overall maintenance strategy for the organization, plant or equipment.

The next step is to check the maintenance generic task list

Check the structure of the functional locations

Create the maintenance plan

Approval (Plan & cost) and the actual scheduling of the maintenance plan. This will trigger the plan for the first time

Display Plan Maintenance Cost, view the cost of the maintenance plan

Monitoring the deadline for Maintenance Plans

Display the measuring point for usage based maintenance

Work Order Generation for Usage- based Plan

Display the equipment for condition based maintenance

Create the measurement documents

Key Points

Generating a cost report for time- and usage based preventive maintenance is shown

Integration to the corrective maintenance process is shown

Time- and usage based preventive maintenance plans are key inputs to the maintenance cost budgeting process

1.15 Scenario: X72 – Rotable Management

Rotable management is performed by mining companies to replace/exchange equipment and plant components after a particular amount of wear or use.

Each time a damaged rotable or repairable piece of equipment needs to be processed one of the five processes must be selected. Each sub-scenario or process is a complete process managing the repair, replacement and/or scrapping of the damaged equipment. The five rotable management sub-scenarios or processes are the following:

Equipment exchange process



Internal refurbishment/repair process

External refurbishment/repair process

Replacement process

Scrapping process

Process Flow

Rotable Management Process Selection: Selecting the appropriate rotable management sub-scenario to exchange, refurbish, replace or scrap the damaged equipment.

Equipment Exchange: New equipment is swapped for the damaged equipment it replaces.

o Damaged equipment is scrapped and given to the vendor who supplied the new equipment.

o New equipment replacing the damaged equipment is procured at an agreed price or the cost to repair the damaged equipment.

Internal Repair/Refurbishment: Damaged equipment is refurbished internally, typically by the workshop.

o The repair is managed as a normal maintenance job – similar to the corrective maintenance scenario.

External Repair/Refurbishment: The refurbishment of the damaged equipment is outsourced to a vendor.

o The repair is managed as a normal maintenance job where a vendor is responsible for the performance of the work – similar to the corrective maintenance scenario where a service is procured.

Replacement: The damaged equipment is beyond repair and must be replaced to maintain stock levels and the required item availability.

o The damaged equipment is scrapped.

o Replace the damaged equipment by procuring new equipment.

Scrapping: The damaged equipment is beyond repair but replacement is not required typically due to sufficient stock level.

o The damaged equipment is scrapped.

Key Points

The rotable management scenario has been extended to include all the processes that are typically followed to refurbish damaged equipment

Rotables are not viewed/defined as assets

Rotable inventory is fully valued



The corrective or preventive maintenance scenario initiates the rotable management scenario when a damaged rotable is replaced

1.16 Scenario: X73 – Maintenance Cost Budgeting

The maintenance cost budgeting scenario enables mine management to prepare zero based as well as history based budgets. As a best practice, the focus should be on preparing zero based budgets deriving the budget proposal from the preventive maintenance plans and the task lists of expected corrective maintenance. The aim should further be to limit the portion of the budget proposal derived from historical actual maintenance costs and only use historical costs to provide for truly unforeseen maintenance expenses. The maintenance cost budgeting process demonstrates how:

o Inputs to the maintenance budget proposal are derived from maintenance plans (preventive maintenance).

o Inputs to the maintenance budget proposal are derived from the task lists of expected corrective maintenance.

o Inputs to the maintenance budget proposal are derived from historical/actual maintenance costs.

Process Flow

A budget planner will typically create zero-based budget, then submit to the maintenance manager for approval, the following process flow focuses on the planner role:

The planner accesses MCB and chooses the version, cost centre and budget year.

The Budget Planner completes each scenario (any sequence) as required to build the budget

The simulated costs are copied to the budget proposal column

The proposed budget should only be adjusted indirectly by adjusting preventive maintenance frequencies and/or the content (labour, services & materials requirement plans) in the maintenance plan. It is critical to understand the impact on plant and equipment reliability, and subsequently on production if the budget is increased or decreased.

The amounts are now distributed to the relevant period based on the maintenance plan call date

Key Points

Maintenance is now truly able to compile a zero based budget



Budget changes are made by changing the inputs – changing the preventive maintenance plans and or the expected corrective maintenance

Budget input obtained from preventive maintenance plans Budget input obtained from expected corrective maintenance (task lists)

Budget inputs are obtained from history

1.17 Scenario: X75 – Supply to Remote Location

The supply to remote location scenario demonstrates how SAP Remote Logistics Management (RLM) enables your remote mine sites to remain fully operational while supplying parts and materials on a ‘right-on-time’ basis. SAP RLM is used to configure and determine the series of documents created for a specific material request from within a Plant Maintenance (PM) order, such as a transport requisition or a purchase requisition. When the remote mine sites requests materials, the SAP documents created depend on the company’s customized stocking strategy. SAP RLM also supports and enhances the standard SAP Goods Receipt process by providing the information and documents necessary to support efficient goods receipt process at a mining distribution center as well as a shipment receipt at the remote mine site.SAP RLM Material Tracking is a detailed report that tracks the status of material requests from initiation to final fulfillment.

Process Flow

A maintenance engineer at a remote mine creates a plant maintenance order requesting five different materials

The maintenance engineer checks that the PM order has generated the expected results. Core Materials Management (MM) transactions are used to validate the creation of documents from the PM order. This transaction shows all supply and demand documents for the specified material, he then checks that there are MM reservations or requisitions generated. Check that there is a stock transport requisition (PurRqs) pointing to the supply distribution centre BPM6 and an order reservation as a demand document for this plant. Check for the existence of a direct purchase requisition and an order reservation. This document is a Purchase Requisition, so there is no delivering plant.

Next the maintenance engineer runs the RLM Material Tracking report from PM Order

A user needs to carry Material Requirements Planning (MRP) at the remote installation and at the supply distribution centre. Core MRP is a vital part of the creation of the supply chain, complemented later by the RLM Conversion program.

The user runs the stock requirements list again



To run the RLM Supply Conversion Program. This program converts stock transport requisitions to stock transport orders and purchase requisitions, according to the supply process determined for the material. For stock transport requisitions relating to materials stocked at the distribution centre, the program should convert this into a stock conversion log to check the results of the conversion run stock transport order and purchase requisition.

Alternatively the conversion log can be used to check the results of the conversion run

Next, a user converts outstanding purchase requisitions to purchase orders. This is a core SAP process, which is necessary for creating documents used in subsequent scenarios. The user creates one PO with five items, combining all materials.

A user then performs a goods receipt for purchase orders generated in step Converting Purchase Requisitions.

A user then checks content of deliveries created by goods receipt

Run RLM tracking report

To create a shipping manifest, the user must start with the Voyage. The voyage represents the next round trip for a particular vehicle. The loading areas represent the temporary workplace for containers, before they are loaded on a truck.

In order to create a truck shipment to the remote mining facility BPM1. The truck shipment, when complete, represents the contents of a vehicle to the remote site.

Create a RLM container, Mining companies want to represent certain containers with a master file entry to help input, provide additional validations, and support tracking and reporting capability. There are various ways to create container masters. In this scenario, you want to use the SAP RLM container master to represent a physical container.

Assign the RLM container to a loading area, so that it is available for packing

Packing received items The purpose of this activity is to pack the received items into a container by using the goods receipt created in step Performing Goods Receipt.

Pick materials from distribution centre stock for dispatch to the remote facility

Assume the materials have actually been picked and confirm this in the system

Run the SAP RLM packing transaction

Many companies ship materials for third party companies. The shipments could consist of complete containers or individual items to be packed into containers (or even unpacked materials).



Transfer loading area containers to a truck shipment and then complete that shipment

Post goods issue for the shipment

The goods have arrived at the remote mining facility BPM1, perform shipment receipt at the remote location

Shipment receipt has been done at remote mine. Check that certain data is automatically populated, as it is important in subsequent tasks.

Display the container master

Display document flow for the received deliveries

Display the truck shipment

Re-run the SAP RLM tracking report for the original plant maintenance (PM) order that was created in step Creating a Purchase Order, and transport requisitions for the mine stock material. All the shipping activity should update the report

Run the tracking report for the remote stock materials. Material requirements planning (MRP) collects requests for the same material from several locations and groups them into one transport or purchase requisition. As a result, you cannot uniquely identify one special receiver of a partial shipment at the distribution centre or the remote location. With a transport requisition, the receiver is uniquely identified and a document flow can be created.

Key Points

SAP RLM provides a solution that seamlessly integrates mine-specific logistics with all other logistics processes

Includes steps for supply of materials with different stocking strategies

Comprehensive scenario including all steps required to supply materials from request initiation to final fulfillment

All material requests are initiated from PM orders

Possible integration with maintenance scenarios X70-CORRECTIVE MAINTENANCE; X71-PREVENTIVE MAINTENANCE and X72-ROTABLES MANAGEMENT with few adjustments in MRP views of the corresponding material masters

1.18 Scenario: X76 – Returns from Remote Location

The purpose of this scenario is to show SAP Remote Logistics Management (RLM) Returns, from initiation of individual returns through their completion. The return request document is created for different types of return. The return shipment of these items, and processing at the distribution centre before and after the return of the vehicle is shown. Staff at base will perform the relevant follow-on transactions



against the return request. When you return materials from a remote installation to the base, the method for completing the return is different from that used in the outbound process. One reason for this is that you cannot control the whole process by using any of the usual requesting documents, particularly since many of the items returned are not represented on the system with material master.

You can return materials to the base for various reasons, including the following:

o return for repair

o return for scrap

o waste return

o return to base stock

o return to supplier

o return of empty or third-party containers

Process Flow

The first step is to create a returns document at a remote mining facility. The user needs to return two materials to the distribution centre, comprising the following: stocked material to be returned for scrapping; non-stock item (a valve) to be returned to the supplier.

The vendor has delivered two wrong valves with the outbound truck shipment. They need to be sent back, so you want to create material returns items for return to the vendor.

Creating Returns Item for Scrap

The remote mine must create transport orders (where applicable) and deliveries to use on the return shipment. These documents will also be referenced on the returns document. Create the return delivery from remote mine BPM1 for all material items.

Complete a return shipment and issue the deliveries back to the base

In order to assign deliveries to loading areas and a truck shipment if the user has not completed X75_SUPPLY_TO_REMOTE_LOCATION, then a new RLM container must be created and assigned to the LA-BPM1 loading area

Complete the picking and goods issue

Perform shipment receipt of the returned materials at the distribution centre

Process subsequent documents with reference to the returns documents. A worklist of returns documents enables onshore personnel to review those documents that require action.

Key Points

Just one document for initiating and monitoring multiple returns



Use of recommended actions to control the return process and automatically create required subsequent documents

1.19 Scenario: X77 – Rentals Management

Preventive

Remote Logistics Management (RLM) allows you to control the dispatch of rented materials and equipment to remote sites in just the same way as you do for purchased or stock materials and equipment.

It is also possible to track rented items on their return journey from your plant to the supplier.

Process Flow

In the first step an external service request is initiated at the Mine site from within a PM order. The mobilization data from the service request enables you to use RLM functions (such as cross-docking and packing) necessary to control the dispatch of the rented material (in the same way as for purchased or stock materials and equipment).

The user creates a purchase order with reference to the service requisition, created in the previous step. RLM adds non-value items to a service purchase order, which the system uses to receive rented equipment at the distribution centre and trigger RLM cross-docking functionality, to manage dispatch of the rented items to the remote mining facility.

Perform the goods receipt of rented equipment at distribution center and send it to the remote mine location. A delivery without reference, based on the goods receipt items, is created to facilitate the transfer of the rented material from the distribution centre to the remote mine location

Create a truck shipment to the remote mining facility BPM1. The truck shipment, when complete, represents the contents of a vehicle to the remote site.

Mining companies want to represent certain containers with a master file entry to help input, provide additional validations, and support tracking and reporting capability. There are various ways to create container masters. The SAP RLM container master is used to represent a physical container.

Transfer the container to a truck shipment

Packing deliveries into a container

Receive the outbound shipment, containing the rented material, at the remote location

The work involving the rented equipment has been completed and it needs to be returned

Create a Service Level Entry Sheet



Create a return shipment

Transfer the container to a truck shipment

Create a return delivery

Perform shipment receipt when the rental item arrives at the distribution centre

Check change of Mobilization Status

Key Points

Rental item goes through the standard RLM procedures for purchase order creation, goods receipt and logistics

RLM supports the returns of rented materials to the distribution center and automatic status update (demobilized)

Rental item request initiated via the standard external service in the PM order

1.20 Scenario: X78 – Timed Delivery to Remote Location

Remote Logistics Management (RLM) supports temporary holding of materials at a distribution centre, before they are called off to a remote location.

When materials are requested at a remote mine, the hold indicator enables you to hold the materials at the distribution centre. These materials could be purchased from a supplier, in which case SAP RLM provides system functions at goods receipt to indicate that these materials should not be shipped immediately. Alternatively, the material may already be in distribution centre stock, in which case the corresponding delivery and pick-list functions will also indicate the same holding requirement. When the materials are released against the initial requesting document, then all necessary parties are informed of the release and the deliveries are released for shipping.

This procedure of holding materials at a distribution centre is often adopted due to stocking space restrictions at remote mining locations.

Process Flow

In the first step a plant maintenance (PM) orderis created, requesting two materials to be held at the distribution centre until call-off

Run the RLM Material Tracking report from PM Order

Run the RLM Supply Conversion. This program converts stock transport requisitions to stock transport orders and purchase requisitions, according to the supply process determined for the material

Run the Material Requirements Planning (MRP) at the distribution centre

Run the stock requirements list



Convert outstanding purchase requisitions to purchase orders (POs). This is a core SAP process, which is necessary for creating documents used in subsequent scenarios. This will create a single PO item.

Create a PO for base stock material NSST-001

Perform goods receipt for your Purchase Orders

Pick materials from base stock for dispatch to the remote facility. This transaction will convert the transport order into a delivery

Assume the materials have actually been picked and confirm this in the system

Display the document flow to check the block indicator on the delivery documents

Assign deliveries to a shipment

Mining companies want to represent certain containers with a master file entry to help input, provide additional validations, and support tracking and reporting capability. There are various ways to create container masters. Here we use the SAP RLM container master to represent a physical container.

Assign the RLM container to the holding area, so that it is available for packing

Assign the deliveries to the container

Release the materials for shipment

Ensure the block indicator is reset on the delivery documents

Transfer the container from the holding area to the loading area

Key Points

RLM allows you to hold material after goods receipt at the distribution center

Once a mine site user releases the hold request flag, the materials will be released for shipment.

All material requests are initiated from PM orders

1.21 Scenario: X80 – Occupational Health Management

Mining companies have to follow a “zero-harm-to-the-workforce” approach, which must be realized through regular examination and testing of employees to ascertain and maintain their health. These examinations are carried out by professional medical personnel, on all those who will be exposed to risks in the working environment. The reporting of statistical injury and occupational illness information is made possible by capturing the information in the injury/illness log.



The purpose of Risk Management is to detect risks in a variety of situations and work areas, in order to assess, analyze, and mitigate the risks. Incident/Accident Management is used to report, record and investigate Incidents or Accidents. It is fully integrated with the building block “Injury/Illness Management” specified under the Occupational Health scenario. The measurement management component supports the planning, execution, and managing of industrial hygiene measurements and samples that are performed in work areas at the mine.

Process Flow

The first step is to create an ad hoc maintenance request in the system

Create an Incident/accident log. The purpose of these actions is to record all initial information in the system, as well as to appoint an Investigation Team responsible for the Investigation.

Transfer the details from Injury / Illness Log

Determine the root-cause and contributing causes that lead to this Incident, and to define relevant corrective and preventive actions

Assign the safety measures to cause

Create plant notification (integration with safety measures).

Creating Risk Assessments in the Exposure Profile

Analyze risk prior to evaluation by recording applicable information. If monitoring is required, it can be conducted in Measurement Management and the Amounts can be transferred to the applicable Risk Assessment

Assign value after check, after all measures have the status completed, the risk can be rated again by assigning a value after check

Creating measurement. Measurement projects are planned based on legal or company specific requirements. Measurement Projects are created (scheduled) with all additional information such as agents, measurement methods and devices. Measurements are generated in order to complete planning.

Conduct and record measurement data in the system. Measurements are conducted and the results are recorded in the system. The system automatically compares measured values to reference values stored in the specification database, and highlights over-exposures

Key Points

Master Data building up to pre-configured protocols, specific protocols can be added.

Example of a Questionnaire.



Demonstrating protocol proposal ability for age analysis and upload of test results data for e.g. laboratory blood test results.

Ability to link documents to Medical services, persons and examinations

1.22 Scenario: X81 – Industrial Hygiene and Safety

In today’s competitive mining environment where production demand is high and efficiency is a necessity, the health and safety of the employees and the protection of the environment cannot be compromised. The complexity of the demands of compliance that are placed on Industrial Hygiene and Safety globally, can best be met with the use of specially tailored software that is integrated into company processes. This scenario focuses on three components or building blocks of Industrial Hygiene and Safety – Risk Management, Incident/Accident Management and Measurement Management.

Process Flow

Create an external person within EH&S, independent from Personnel Administration

Create applicants with this transaction if HR does not maintain applicant data in Human Capital Management Process

IMPORTANT: Use internal number assignment to create an external person

Assign the health center to this external person.

View applicant data using the HCM process

Match up LTA ratings, this must be performed to ensure that all data is transferred and matched up for the protocol proposal list to be correct.

Run proposal list, which will consist of people in the age bracket that was maintained for specific protocols and for the respective Exposure Group and task related protocols.

Open Medical Service, the planned medical test(s) for a specific protocol (based on e.g. Silica exposure or specific tasks, like drilling) will automatically be assigned to a medical service. The frequency of the protocol will automatically determine the next due date for a medical visit to the clinic.

Manually assign other protocols, this is done for unscheduled (unplanned) surveillance for example pre-employment, exit medicals and ad-hoc testing such as drug and alcohol testing

Create medical service for this person, Employee, applicant or external person is selected for medical service. Here all personal data is displayed in order to open a medical service for this person

Confirm appointment telephonically



Schedule medical service and print invitation & questionnaire, Medical practice calendar is new functionality that is available in ERP2005 ECC6, Here absence data is displayed if this is maintained by HR. Questionnaire or invitation can be printed from this screen.

Enter questionnaire responses, the answers of the patient is entered into the system and saved for the medical service.

Evaluate completed questionnaire, the Assignment category = Health Surveillance Protocol

Assign additional protocol due to Questionnaire results, Due to the evaluation of the completed questionnaire, additional protocols may be identified by the Health Professional that has to be included in the medical service.

Run overview of medical service for list of services for specific period, Use filter settings to select period for medical services to be displayed. Use EHSSERV30 - Display Daily Lists transaction to display medical services that needs to be conducted on a daily basis

Perform Medical Service, Complete Case History tab, Complete Examinations tab, Complete Diagnosis tab, Complete Consultation tab if applicable, Complete Medical Measures tab if applicable

Import Medical Data, Import blood test results, lung function results or Audiogram results into the medical service

Link documents to the medical service e.g. X-ray, Documents can be linked to the medical service.

If the person is declared fit for work, a medical certificate is issued, this is mandatory for pre-employment and exit medicals. Format of certificate Customizable to a country’s legislative requirements

Refer to specialist, If a person is not fit for work, the patient may have to be referred to a specialist. Choose follow-up action “Refer to Specialist” and add Specialist detail in Comments section. Specialist must be created as External Specialist in the system.

Issue list of restrictions, If a person is not fit for normal duty select applicable restrictions, List of restrictions can be printed

Close medical service, When all applicable information has been maintained, close the medical service, Note that ALL relevant data must be in the system before closing the medical service

Create Injury/Illness log because of process trigger

Select Injury type, this is the classification of the injury, Legislative requirements for reporting of certain classifications will different for every country.



Enter time date of aid given to injured person

The entered plant when saving this injury/illness log will determine which work area is shown when F4 is used for the first time (plant field in the search criteria for work area is defaulted to saved plant in header information)

Set relevant injury indicators if applicable

Enter Persons affected and persons involved. This information will be carried over to the incident/accident log if transfer is executed, after the log is saved, tab pages will appear in which further information is entered. After the save action the header information cannot be changed (e.g. plant etc.)

Enter Treatment location information

Indicate what type of aid was administered to the patient

Enter additional information, this is a customer specific tab page that can be created with standard EH&S functionality to enable the client to capture specific injury details with the use of free text or phrase functionality

If person is treated at medical center, a medical service is created. Necessary information is transferred to Occupational Health and medical service is created.

From an incident / accident like an explosion, injuries can occur that need to be reported. Existing incidents/accidents can be linked to new incident/accident logs can be created, in the case of existing incidents the TIME of EVENT must be the same otherwise transfer of data will be canceled.

Generate standard reports that are available can be utilized for reporting. WWI reports can be generated for the Report Information System

Key Points

Exposure profiles, hazard identification and evaluation, and mitigation measures for work areas in order to manage risk effectively

Integration between Hygiene Monitoring and Risk Assessment

Comparing monitoring results against OEL’s (Occupational Exposure Limits)

Integration with Medical Surveillance in X81 - Occupational Health Management and Creating Plant Maintenance Notification in X71- Corrective Maintenance



2 Functional Scope – Building Blocks

2.1 Building Block: X02 –Organizational Structure

Purpose

This building block contains the settings required to establish a typical Mining organizational structure for a lean example company in bulk goods and metal mining, processing, internal transportation, maintenance and sales. The building block is based on the generic building block for organizational structures.

Function List

The following functions are provided to set-up the Mining Organizational Structure:

o Maintaining plants & storage location

o Set up Sales Area

o Assigning sales organization to distribution channel and plant

o Defining Transportation Zones

o Defining shipping points

o Maintaining Controlling Area

o Units of Measurement

Key Points

Preconfigured organizational settings on top of baseline package

Easy installation procedure by usage of a step-by-step approach

2.2 Building Block: X03 – Master data

This building block contains settings required to create commonly used master data across several scenarios for a typical lean Mining company. It also creates some of the example and commonly used master data.

Function List

The following functions are provided to create shared master data:

Define Requirement classes

Define Strategy & stragety group

Batch classes/characteristics

Variant classes/characteristics



Configuration Profiles

Material Master

Batches & Stocks

Vendor Master

Purchasing Info Records

Packing instructions

2.3 Building Block: X10 – Financial Accounting and Costing

This building block contains the Mining specific functionality for Accounting and Costing. It supports Mining specific processes in open cut mining as an example. Focus is set on cost center, equipment and product cost planning and actuals using activity based costing. Equipment cost planning is set up for a small fleet of haul trucks as an example of how to apply ABC costing and cost center costing for valuable assets in a mine.

For further details on the solution design, please see the Appendix - Contained Metal Management and Valuation.

Function List

The following functions are provided to allow accounting & costing for Mining:

Master Data

o G/L accounts

o Cost Center / Cost Center Groups

o Activity / Group Types

o Primary and Secondary Cost Elements

o Assessment Cycles

o Costing sheets

Cost Center Planning

o Cost and activity inputs planning

o Activity output/prices planning

o Overhead cost center planning & overhead keys



o Cost center reporting.

2.4 Building Block: X11 – Materials Management

This building block contains the Mining specific functionality for Materials Management. It supports Mining specific processes in the area of batch management (as a basis for capturing material quality for stockpile management as well as for sales and internal distribution). Batch-specific units of measures and Batch Valuation.The managing of the wet/dry product with different assays/batches is managed using batch-specific units of measure functionality in SAP R/3. Using this functionality, we are able to define a conversion from the base unit of measure (being wet tonnes for mySAP Mining) to dry tonnes and contained metal tonnes for each stockpile.

For further details on the solution design, please see the Appendix - Contained Metal Management and Valuation.

Function List

The following functions are provided to support the mining specific functionality in materials management:

Batch Management

Batch-Specific Units of Measure

Batch Valuation

Internal distribution (Stock transport)

Key Points

Contained Metal management

Stockpile Management

Valuation

2.5 Building Block: X12 – Sales & Distribution

This building block contains the Mining specific functionality for Sales and Distribution. It supports Mining specific processes like contract order entry with quantity schedules, commodity pricing based on metal exchange quotations as well as bonus & penalty pricing calculations based on agreed & delivered quality as well as provisional & differential invoicing capabilities.



Function List

The following major functions are provided to support all Mining Sales and Distribution processes:

Sales contract types to allow quantity schedules

Definition of condition types & pricing procedures

Commodity pricing quotation types

Commodity pricing calculation routines

configurable material type settings

Pricing procedures: determination in sales documents

Invoice types for provisional & differential invoicing

Copy control settings for SD documents

Key Points

Commodity pricing

Provisional & differential invoicing

2.6 Building Block: X13 – Production Planning and Control

This building block contains the Mining specific functionality for Production. SAP Best Practices for Mining is making use of the Production Planning for Process Industries (PP-PI). The main reason for that is to allow the use of Process message instructions and the user friendly interface offered by the PI Sheets. Also, it allows some features for further enhancements in the area of resource networks or storage resources that may be of interest to mining projects.

PP-PI has been configured to allow Mining specific processes in the area of operations management for Open Cut Mining, processing operations like smelting and refining as well as blending and stockpile management.

Function List

The following functions are provided to support mining, blending & production scenarios for the Mining industry:

Recipe, BOM & production version management

Production order types

Define Control keys



Production Scheduling Parameters

Define Formulas

Process instructions (PI-Sheets)

Integration to Costing

Integration to PM measurement documents

Key Points

PP-PI Production for Mining, Processing, Blending

2.7 Building Block: X14 – Bulk Transportation with Traders’s and Scheduler’s Workbench (TSW)

This building block contains the Mining specific functionality for Bulk transportation handling within the Trader’s and Scheduler’s Workbench. It supports Mining specific processes for bulk scheduling using Three Way Pegging (3WP), Nomination creation and Nomination adjustments. It also includes bulk execution through TSW ticketing and document generation triggered out of a ticket. Freight cost handling as part of the Transportation & Distribution (TD) solution is also covered here. , Stock projectioncontract order entry with quantity schedules, commodity pricing based on metal exchange quotations as well as bonus & penalty pricing calculations based on agreed & delivered quality as well as provisional & differential invoicing capabilities.

Function List

The following major functions are provided to support all Bulk Transportation processes:

TSW details activation in MM & SD documents

TSW relevancy

3WP, Nomination, SPW configuration incl. usability (screen layout configuration)

Bi-directional Nomination communication to external partners

New Movement scenario definition for TSW Ticketing

Handling of Freight Liners via TSW

Freight cost calculation (based on TD)



Key Points

TSW Bulk transport scheduling

TSW Bulk transport execution

TSW for packaged goods, non-bulk

Freight Costing within TD

2.8 Building Block: X15 – Plant Maintenance

This building block contains Mining specific functionality for Plant Maintenance. It supports processes to do corrective maintenance, preventive maintenance and rotables management.

Function List

The following functions are provided to support Plant Maintenance processes in a Mine:

Define Maintenance order types

Status Profiles

Scheduling Parameters

Define Warranty types

Costing sheets

Master data:

Functional Locations & Hierarchy for typical Open Cut Mine

Equipments & Serial Numbers

Master Warranty

Maintenance Strategies

Task Lists and Maintenance Plans

Measuring Points

Key Points

Typical Open Cut Mine set-up of functional location and Equipment

Full set-up of notification & maintenance order management



2.9 Building Block: X16 – Remote Logistics Management

This building block contains the Mining specific functionality for Remote Logistics Management (RLM). It supports Mining specific processes like supplying maintenance or project system orders at mines with materials required there. This building block covers RLM specific settings as well as some settings required for internal distribution and transportation.

Function List

The following major functions are provided to support Mining Remote Logistics Management processes:

Supply & packaging material masters

Shipping data, routes & loading area

Define RLM relevant plants and storage locations

Define supply processes and corresponding derivation

Define recommended actions

Define returns document types

Define material tracking statuses

Define blocking reason for deliveries

Key Points

Activating Remote Logistics Management

Manage complex supply strategies for the various supply materials, spare parts and items of equipment

Manage returns handling

Mange rented equipments

2.10 Building Block: X17 – Quality Management (QM)

This building block contains the Mining specific functionality for Quality Management (QM). It supports Mining specific processes like the definition of sampling procedures for bulk & metals and inspection plans. It includes Characteristics for Coal & Copper that are analysed in Laboratories and where results are maintained in SAP QM.



Function List

The following major functions are provided to support the Mining Quality management process:

Definition of characteristics measured in Laboratories

Characteristics grouping to entities (Customer, Supplier, Umpire, …)

Sampling procedure definition

Inspection plan & inspection types

Contract deviation checks

Final sample average quality value calculation

Key Points

Automatic inspection lot creation at load and discharge

QM Results recording for coal & copper

2.11 Building Block: X18 – Environment, Health & Safety

This building block contains functionality in the area of Environment, Health and Safety typically used in a Mining environment. It supports Mining specific processes and set-up in the area of occupational health for applicants, workers and contractors at mines and in the area of industrial hygiene and safety to make the work environment a safe environment.

Function List

The following functions are provided to support Environment, Health & Safety processes in a Mining environment:

Definition of Work areas

Agent types

Risk Assessments – categories and Reasons

Specifying Incident/Accident Log Entry Types

Specifying Safety Measure Types and Effectiveness

Specifying Examination Types & Protocols

HR personal master

Example data for Laboratory tests, Physical tests



Examinations and Health Surveillance Protocol

Key Points

Occupational health set-up for typical mining environment with linkage to SAP HR module

Making the work environment safe with settings for Risk Assessments

Settings to capture any Incidents and Accidents

2.12 Building Block: X19 – Demand and Supply Planning (APO)

This building block contains the Mining specific functionality for Demand & Supply Planning within the Advanced Planner and Optimizer (APO), part of SAP SCM. It allows managing your overall demand, planned production at your mines as well as all planned intermediate transports. The building block contains settings run the supply chain cockpit including the alert monitor, the damned planning & supply network planning part of APO. It also includes the settings necessary for integration to SAP ERP.

Function List

The following functions are provided to support planning in SAP APO:

SD Contract with Quantity Schedule upload into BW

Demand Planning incl long term SD contracts from above, spot sales, forecasts

Mine Production Planning in APO SNP

Heuristics for supply network planning

Management by exception through APO Alert Monitor

Stock projection in SNP

Sales order entry and Forecast consumption

CIF integration for Master data, stocks and order data like sales, stock transport, production (Bi-directional)

Key Points

Mining demand management

Mine production target planning

Mine supply network planning



Integration to SAP ERP

2.13 Building Block: X20 – Maintenance Cost Budgeting

This building block contains the Mining specific functionality for Maintenance Cost Budgeting (MCB). It allows uploading maintenance and costing information into the Business Warehouse and into Business Planning & Simulation (BPS), which is technically used to perform MCB. It includes configuration for the budget year to be planned in ERP, activation of business content in BW, creation of info packages to upload data, cube copy into BPS and MCB specific configuration.

Function List

The following functions are provided to support the MCB scenario:

Configuration Steps for Maintenance Cost Budgeting in BPS

BI content activation in Plant Maintenance

Info package definition

Configuration of Plan Budget year definition in SAP ERP

Upload of data into BW

Cube Copy into BPS



3 Appendix - Contained Metal Management and Valuation

3.1Introduction

This appendix discusses the requirements of the Mining industry with respect to the recording and management of a product based on its Gross Weight, Dry Weight and contained metal and the subsequent valuation.

SAP R/3 functionality has been used in the IS-Mining solution to address these requirements. The system has been designed to deliver the most comprehensive solution to meet the requirements as closely as possible. This does not mean other options are totally excluded.

3.1.1 Definitions

Wet/dry tonnes

Wet/Dry tonnes are used throughout this paper. This refers to gross, net and contained tonnes.

3.1.1.1.1 Wet tonnes

Physical quantity of the material: this is required in production for capacity purposes and Contained Metal Management.

3.1.1.1.2 Dry tonnes

Physical mass of the product without the moisture: this is used because the moisture may vary significantly and assays are normally based on dry tonnes.

3.1.1.1.3 Contained tonnes

The actual tonnage of contained metal in the physical tonnes. This is typically used to show for example, the amount of primary metal in a batch of product. The accounting departments and sales departments often use the contained metal tonnage to determine value and sales price.

3.1.1.1.4 Standard price

The standard price is a constant price, which does not change based on goods movements or invoices.

3.1.1.1.5 Moving average price

With batch valuation – is a weighted average of the batches in stock.

Without batch valuation – is a continuous updating average which changes upon goods receipt or invoice receipt.

3.1.1.1.6 Price control

Defines how the material is valued, using either moving average price or standard price.



3.1.1.1.7 Proportional unit standard cost

The cost per contained metal tonne of product is calculated from using the plant level standard price and an expected assay for the material content of the material. Therefore, it is the cost based purely on the metal content (in the case of the mining solution).

3.2Summary of Business Requirements for the Mining Industry

3.2.1 Overview

The requirements discussed in this paper cover both the quantification of contained metal and the valuation based on its assay.

The requirements as presented to the mining team are as follows:

To allow for the management of stockpiles using alternate views of units of measure (both physical & valuation)

To allow for the pricing of sales orders based on active components

The Mining Industry continually handles materials that need to be managed using a variety of different units of measure. Any given stock of ore, concentrate, intermediate or finished product, may need to be viewed in terms of any one of the following predominately used units of measure:

Physical quantity of the product (wet tonnes)

Physical mass without the moisture (dry tonnes)

Physical mass of its primary component or all active components (contained tonnes)

In some instances, a product will only be managed by the single unit of measure through all the different business functions, while other businesses may need to use a combination of all three units of measure on the same material.

For example:

Production employees may need to know the wet tonnes available as an input to a production process.

Accounting personnel may need to know the value of the product based on contained tonnes.

The sales department may need to sell the product based on dry tonnes or contained metal tonnes.

Predominately, assay values will be known at some point for a given quantity/batch of product. Based on these assay values the conversion from wet tonnes to dry tonnes to contained metal tonnes is possible.



3.2.2 Valuation

In the mining industry, the physical stock has valuable, non-valuable, and negative value components in the stockpile as well as moisture. There is a requirement to be able to value stock at cost per wet tonne, dry tonne or per tonne of contained metal.

3.3SAP Treatment of Contained Metal Management

3.3.1 Overview

Traditionally, alternative units of measure were defined on the material master and the materials were valued for the base unit of measure using standard costing or moving average price.

Since traditional methods are inadequate to meet the mining requirements, in the mySAP Mining solution the requirement to manage a single product based on gross, net and contained tonnage will be addressed using the following SAP R/3 System functionality:

Batch Management

Batch-Specific Units of Measure

Batch Valuation (optional)

It is important to note that the use of batch-specific units of measure is the central piece of functionality to allow these requirements to be met.

Discussed below is a concise view of the functionality of batch-specific units of measure, its integral components, and the key attributes that meet the requirements. Then the flow on effects and highlights of the integration will be discussed to show the added benefits of this solution.

3.3.2 Batch-Specific Units of Measure

In the mining industry, the composition or assay of products varies to some degree. Therefore, you cannot use a fixed conversion factor to convert quantities of these products into alternate units of measure. Instead, each batch has to be given an individual conversion factor via the use of batch classification.

The managing of the wet/dry product with different assays/batches is managed using batch-specific units of measure functionality in SAP R/3. Using this functionality, we are able to define a conversion from the base unit of measure (being wet tonnes for mySAP Mining) to dry tonnes and contained metal tonnes for each stockpile.

Batch-specific units of measure allow you to handle materials like these throughout the entire logistics chain.

Stock Overview Stocks can be displayed in the base UoM (wet tonnes), dry tonnes, and in contained metal tonnes



Purchase Order Pricing

Gross tonnes of product can be purchased with pricing based on the amount of contained metal.

Sales Order Pricing Gross tonnes of product can be sold with pricing based on the amount of contained metal.

Balance Sheet Valuation

Product valuation can be based on contained metal rather than gross (wet) tonnes

Product Costing The valuation of product based on contained metal is integrated with Product Costing.

Goods Movement Valuation

The valuation of goods movements can be derived based on the contained metal quantity rather than gross tonnes.

The concept of batch-specific units can best described by the following example:

If we examine the example where wet, dry and contained metal are derived, different stockpiles of the same product can be managed individually based on its own assay.

Figure 1

By defining the moisture and nickel content as batch characteristic values (see Figure 1), the system is able to determine the quantity of dry material and nickel in each of the individual stockpiles.

3.3.3 Split Valuation (Batch Valuation) & Batch-Specific Units of Measure

Batch-managed materials can be valued at valuation area level (plant), batch level (split valuation), or via batch-specific units of measure (split valuation). Each of



these three levels of valuation each have their own unique features concerning pricing control (standard or moving average) and how each is managed.

The use of batch-specific units of measure supports all three methods. The method of valuation allows different stockpiles (batches) to be valued differently based on their assay (characteristic values) and the contained metal (proportional unit) price.

That is rather than dollars per tonne of ore, the product is valued based on how much of the active component (nickel, gold, silver, and so on) is in the ore.

This method demonstrates a more accurate balance sheet valuation on goods receipt and the cost of goods sold (COGS) result on delivery as it uses the standard price of the batch.

That means that the cost of goods sold and posted at delivery time is based on the metal contained in the batch, not the moving average of all batches or the periodic standard cost of the material.

3.3.4 Product Costing

For many companies and commodities, the value of the stock can be based on dry or wet tonnes. However, for some companies and commodities, there is a requirement to value stock based on metal content. To meet all of the above requirement, batch valuation and batch specific units of measure have been adopted in the mySAP Mining solution.

To value inventory based on contained metal cost, it is necessary to work out a cost per tonne of contained metal and use that to value batches (daily production) based on their different levels of contained metal. A batch with more contained metal will be valued at more.

To work out a cost for contained metal of a certain grade the business needs to specify an “expected” or “planned” metal content. At the same time, the cost of producing an “expected” tonne of this grade (in gross or wet tonnes) is calculated including labor, overhead, and materials. The system then calculates the cost per contained metal tonne by applying the expected metal content to the gross (base unit of measure) tonne.

For example, the grade expected is 50% nickel per wet tonne. If the cost of 1000 wet tonnes is $5000 (calculated using standard costing functionality) the cost per tonne of nickel with a grade percentage of 50% is spread over less tonnes making each tonne of nickel more expensive (for example, $5/0.5 = $10/TNi).

This $10/TNi is then used to valuate batches for the material.

So for example a batch of 1000 wet tonnes of production has 60% nickel content then there is 600 tonnes of nickel valued at $10/TNi. The value of the batch is then $6000 for a batch of 1000 wet tonnes.

The value of stock on SAP for the grade on inventory is a weighted average of all the batches in stock.



Refer to Figure 2 below, which demonstrates an example where the cost per tonne of nickel is $500 per tonne.

Figure 2

3.3.5 Batch Valuation

Figure 2 above illustrates how batches are valued using batch-specific units of measure and how the valuation depends on the unit of measure used.

Price Control

Batches are valued in the mySAP Mining solution at standard price. The valuation of the product at material/plant level is at moving average price, which is a weighted average of the standard cost of all the batches in stock.

Units of Measure

In the Mining Industry, product may have its standard cost calculated and based on wet tonnes, dry tonnes, or Primary Active Component tonnes. Each method of valuation can greatly impact the value of the product as recorded on the Balance Sheet. In all cases, it is only possible to create a standard cost estimate in the base unit of measure of the product in question.

If materials are valued based on wet or dry tonnes, then each of the stockpiles is considered to have cost the same (or close to) per tonne regardless of the metal



content. This allows stockpiles to be valued based on the true cost to remove from the ground, which in most cases is independent of the metal content of the material.

Although the scenario utilizes the use of product valued based on the metal content and not the base unit of measure (wet tonnes), not all businesses value their stock based on this method.

The following combinations are possible:

Valuation Based on Wet Tonnes

The material master can be created with a base unit of measure of wet tonnes.

Normal pricing and costing functions based on the material at plant level is possible.

Moving average or standard pricing possible.

Batch-specific units of measure have no effect on the valuation of the product.

Using batch-specific material unit of measures, a conversion to dry tonnes and active components is possible.

The physical management of wet, dry and contained metal tonnes is possible.

Valuation Based on Dry Tonnes

The material master can be created with a base unit of measure of dry tonnes.

Normal pricing and costing functions based on the material at plant level is possible.

Moving average or standard pricing possible.

Batch-specific units of measure have no effect on the valuation of the product.

Using batch-specific material units of measure, a conversion to wet tonnes and active components is possible.

The physical management of wet, dry and contained metal tonnes is possible.

Valuation Based on Primary Active Component(s)

The material master can be created with a base unit of measure of wet tonnes.

The accounting view of the material master record is defined with a valuation category “X” (split valuation based on batches).

The accounting view of the material master at plant level is defined as “V” (Moving/Weighted average)

The accounting view of the material master at plant/batch level is defined as “S” (Standard)

The standard price defined on the material master at plant/batch level represents the standard price of the batch with its unique assay/value.



Using batch-specific material units of measure, a conversion to dry tonnes and contained metal tonnes is possible.

Batch Consumption

Without Batch Valuation

If materials are valued without batch valuation based on wet or dry tonnes, then each of the stockpiles is deemed to have the same cost (or close to) per tonne regardless of the content of the active component. This allows stockpiles to be valued based on the true cost to remove from the ground, which in most cases is independent of the metal content of the material.

When the next process consumes this material, the consumption of the material is at the same value regardless of the primary metal content of the ore. In this case, a process engineer will, in most cases, draw from the high concentrate stockpile to ensure high metal recovery at minimum cost. If the low concentrate stockpile were to be consumed, the cost of the material would be the same however the rate of metal recovery would be low, hence leading to a non-favorable variance to the process.

In addition, high stocks of low content material may be left in stock at high value (cost) but a low net realizable value that may require to be written off at year end.

With Batch Valuation

If the material were to have its value based on its primary metal component, then the value of each stockpile would represent the standard cost to remove the active component from the ground. This allows a business a financial as well as a physical model of the active component(s) that exist in the business and promotes the use all stock piles (not just high concentrate stockpile). This will result in the follow on production process to be more accurately monitored in terms of true process variances and not input variances.

3.4Integration

The following section discusses the use of products through different functional areas with the following attributes:

Batch-specific units of measure being used with valuation active for a single component

Material valuation is based on Valuation Category “X” (split based on batch)

3.4.1 Process Orders & Goods Receipts

Process Order Creation

In the Mining solution, the batch is created at the time of the process order creation. When batch-specific units of measure and batch split valuation is used, issues exist with regard to the postings to the order and the batch value.



When an order is created and a batch created for the order, the material master accounting view for the batch is not created automatically. This occurs as part of the first inventory posting for the batch.

Planned costs uses moving average price at the time of creating the process order, as the batch characteristics are not known at this point.

Goods Receipt

The value of the goods receipt is determined by the batch characteristic values of the batch at the time. If the batch characteristics have been maintained, then the goods receipt is at this value. If the batch characteristic values have not been maintained, the goods receipt value is at the standard price at the material plant level, as it is assumed that the batch has a standard percentage of the valuable mineral. When the batch is subsequently changed, the subsequent goods receipts are valued at the correct value.

In this case it may be required to control the sequence that these processes. Alternatively, SAP Note 191042 describes a workaround using the CATT tool.

3.4.2 Variance Analysis

In the period end processing, variance calculation is slightly different due to the use of batch valuation.

The balance of the order must equal zero to be settled; therefore, the total variance will equal the balance on the order.

The variance is calculated as follows:



Figure 3

As you can see in Figure 3 above, the output variances are partly due to a difference in the metal content of the batch, the standard cost, and a small variance due to the initializing goods receipt.

3.4.3 Sales & Distribution Processes

Delivery

Using batch-specific units of measure with batch valuation, the standard cost of the batch is used when the delivery is posted. Therefore, the cost of goods sold uses the batch standard based on the contained metal. This achieves greater accuracy in profitability reporting.

Billing

Using the batch-specific units of measure, product can be priced based on its alternative units of measure.

The ability to price product based on batch-specific units of measure does not rely on valuation based on batch-specific units of measure.

In the pricing, the batch standard that is being sold is used to determine the profit on the sales order.

3.4.4 CO-PA

In the mySAP Mining solution, there is potential use of costing-based profitability analysis, however, it has not been demonstrated here.

Billing

Although an example has not been delivered in this phase of the mySAP Mining solution, the effects of posting to costing-based profitability analysis (PA) were investigated.

In costing-based PA, the cost of goods sold is posted into PA at the time of Sales & Distribution (SD) billing. At the same time, all the detail from the sales pricing is transferred as well as the breakup of the standard cost at plant level (based on the 50% nickel) plus a variance to the batch standard used for cost of goods sold.

Batch standard (with nickel @ 60%) for 600 TNi is $6000 ($10 x 600) whereas the plant standard (with nickel @ 50%) for 600 TNi is $3000 ($5x600). Therefore, there is a variance of $3000 due to the difference in assays.

3.4.5 Revaluation

After marking and releasing, the proportional unit standard is updated based on the average assay percentage on the material master.



It is then used to calculate a batch standard based on the characteristics of the batch for new batches. For existing batches, the future price on the accounting view is updated using the new proportional unit standard cost. This will then need to be activated in another process before it can be used to value batches.

3.5Considerations for Batch-Specific UoM & Split Valuation

A number of considerations need to be taken into account with using batch-specific units of measure and/or batch split valuation. The key points are listed below:

The system stores stock values in the base unit of measure and converts to the alternate units of measure at each individual request. This can be seen in the use of the stock overview transaction MMBE. Parallel inventory management, with update of two or more quantities in the stock segments, is not supported.

The process of valuated batch-specific material units of measure requires the Material Master at plant level to be managed with a valuation category of “X” (batch).

It is not possible to define a moving average price (MAP) for contained metal, you can only use a standard price.

For each batch of Inventory, a respective accounting view of the material master must exist for the material/batch (valuation type).

If a batch is created manually, the system will require the entry of the Valuation Type for the batch. If the valuation type is not yet created, the system will NOT automatically create the valuation type accounting view of the material master.

If the batch level = material a batch can be created manually without a valuation type being defined, this is only possible if the plant is not defined on the initial (input) screen for the batch create transaction.

The creation of the batch from the production / process order or via the function module VB_CREATE_BATCH, does not create the material master / batch accounting view.

When an inventory movement is carried out, the transaction creates and accounting view for the batch (Valuation type) being created. In this case the valuation type = the batch number. The standard price is updated at this time.

If a process order exist for a split valuated material (based on batch) it is only possible to receive one unique batch against that order. If a goods receipt against a different batch is to be carried out, a new order is required.

With valuation based on batch-specific units of measure, the material at plant level will have a price control of ‘V’ (moving/weighted average price) and a valuation category of X. The price control of the material at plant/batch level will be “S” (standard pricing). This allows the material at the batch/plant level to have a standard price based on the metal content, while the material at the plant level displays the weighted average of the different batches of that material in that plant.


