1. SAP Material LedgerView from ABC Perspective ITT-SAP Yannick
Kounga 1
2. IS MATERIAL LEDGER DIFFICULT? No 2
3. How is Material Valuated in SAP? depends on the price
control that was set for the material in the material master. 1.
Moving Average Price (V-Price)- - Adjusted with every receipt - If
at all, only to be used for raw materials and materials procured
externally 2. Standard Price (S- Price) - Constant or Stable for
long period. - Recommended for all material types 3. Material
Ledger: - Standard Cost during the month - Periodic Moving Average
Price at the month end. Costing Methodology 3
4. What is Material Ledger? Sub ledger of GL ,Management Tools
1- The term "Material Ledger" is not a "financial" Ledger but a
capture-and-report mechanism of inventory values. 2- It is an
enhanced sub- ledger for Materials. ML tables are the base for
Material valuation data like goods movements, price changes,
variances. 4- Enable the calculation of the periodic unit price for
each material before the period close (can be used as next period
standard). Material Ledger 5. A fundamental task of the material
ledger is managing inventories in multiple currencies and/or
valuations 3- If Material Ledger is set up for multiple currencies
and these currencies are aligned with currencies in Financial
Accounting, then Material Ledger values reconcile with Financial
Accounting values in all aligned currencies. 4
5. Driving Factors for implementing Material Ledger Do we need
Material Ledger at ABC ? Does ABC want to value inventories in
multiple currencies real-time? Does ABC want to value inventories
at standard cost but also want to evaluate inventories at moving
average cost? Does ABC want to amortize purchase and production
variances over the life of the inventories? YES / NO ? Does ABC
want an effective transfer pricing mechanism between its various
businesses across legal entity? Does ABC want to support Different
Global Statutory Reporting requirement by Company Code (FIFO/LIFO)?
5
6. FEATURES OF MATERIAL LEDGER Do we need Material Ledger at
ABC ? 1.Actual Costing. During the period, valuation of all goods
movements is done with the preliminary valuation price which is
normally the standard price. All variances from the preliminary
valuation are maintained in the ML. At period end, revaluation of
ending inventory can be performed with the determined actual price.
This is not mandatory. Actual prices can be calculated for
statistical purposes only. 2.Parallel currencies and/or valuations
of material stocks. All goods movements in the ledger can be
maintained in 3 currencies. The values are translated into other
currencies using the historical exchange rates. Prerequisite for
usage of transfer pricing functionality. 3. Information Provide
accurate profitability information. What Else? 6
7. Weighing the Pros and Cons of the SAP Material Ledger SAP
Without ML /LEGACY Single Material Valuation Strategy (what Else?)
SAP Material Ledger Multiple Currency Allows Inventory values and
Inventory transactions to be valuated in local currency and group
currency (Up to 3 Currencies) Multiple Valuation Combine the
benefits of Standard Price Control for preliminary valuation and
Moving Average Price Control for Balance Sheet Enable accurate
periodic valuation Settle proportionate price variances to period
end inventories Roll up price variances throughout the production
process Enable Transfer Pricing for intra- company transfers ML
generates 6 views: 7
8. Benefits of Material Ledger for ABC Integrate planning with
a single model across ABC to improve organizational alignment and
Financial Performance. What Else? Provides global unit cost
information across plants and legal entities providing an global
transparent view of costs and variances Integrate and align cost
structure to reduce cost Maximizes corporate profitability
Analytical information by scorecards, statutory reports, and
performance analysis Value Inventory in Multiple Currencies Provide
accurate profitability information Provide real-time information
quickly Revolution of COGS 8
9. Material Ledger & Periodic Moving Average Price . A
Periodic Moving Average price is the moving average price of that
period. This price avoids the fluctuations seen in Traditional
Moving Average price and is more dynamic than Standard price.
Periodic MAP = (Cumulated Receipts at Standard Price) + (Cumulated
Price Differences) / Cumulated Receipt quantity E.g = (126 tonnes *
900 USD) + 2,106.90 USD / 126 tonnes = 916.72 USD/tonne 9
