Profit Center as at Unit(mfg) or Business lline

[Former Member]

Hi Experts,

I need your input on Pros & Cons on the Profit Center if created as at Unit or Business Line.

A company is into manufacturing &  have 10 plants in different regions and 2 different business line. Management is asking us to create a profit center as business lines, i have told them that we cannot generate the TB and it will difficult for FI transaction's too if PC is as business line.

would like to get some points from you (experts) so that i can approach the mgmt with your valuable points.

regards,

YJ

[ajaycwa1981 · Accepted solution]

Hi Yogesh

First of all, your client should not dictate what should be PC or segment in SAP... Ask them to spell out their business needs and then you decide how it is to be mapped in SAP

PC is where you can track your expenses, revenues as well as Fixed Assets / Capital employed so that you can calculate ROI (Return on Investment)..

If your client feels that they can identify the FA / CE at each Business line level, then you can have PC at Business lines.... If not, then have PC at Plant level and you can provide Profitabiliy statement (Not P&L Account) at Business lines from COPA

If you have PC at Plant level - it makes your life simple.. It reduces the amount of master data to be maintained and also eases out the master data to be maintained.. Also, the FA/CE can be easily traced at Plant level, if not at Business lines..

If you have PC at business lines, then while maintaining material master, you need to assign all common inventory to a common PC.. Similarly, you need a common PC for the common cost centers in the Plant like Admin, HR, Maintenance, Utilty, etc..

br, Ajay M

[Former Member · Accepted solution]

Thanks for the input Ajay,

Actual when we given the workshop on the SAP elements and other master, they understood it and then they debated to have PC as they required so thought of give them the Pros & Cons on the financial statement other aspect at finance. so i open this thread.

[narasimhulu_konnipati · Accepted solution]

Yogesh,

What Ajay, Raman and Myself (post in FI) suggested is very clear and good approach. Ajay has explained you the clear scenario that, what happens when you create Business Line as PC.

So please take the requirements from your client, create the hierarchy and explain them why you have chosen to create Plant as a PC.

Hope this helps

[Former Member]

Hi Yogesh,

You can create Segment at business line wise and Profit center at plant level so you can draw p&l at both level.

regards

RK

[Former Member]

Hi Raman,

thanks for your input, I have already explained them about the segment but they need it as Region and business line as PC

[Former Member]

Hi Yogesh,

You can use Regin as Business area in order to derive Trial balance.

regards

Raman Rana

[Former Member]

txs,,,

But i need what is the advantages and disadvantages by having the PC as Business line when they have requirment to draw the report by Unit(plant)

rgds

YJ