FIFO Valuations for Processed Materials

[Former Member]

Folks,

I am currently working on a project in the commodites trading and processing (coffee, cocoa, corns, cotton, etc.) industry. My client is engaged in direct trading (i.e. buy and sell) commodity and also sells processed commodities.

I have a requirement in that the client would like to have processed commodities valuated on FIFO basis. Processed commodity here means that the client will purchase commodity from the crop producer (farmer) and process the commodity and sell to their customer for further downstream process (e.g. making chocolate, corn oil, etc.). We will use process order (SAP-PP/PI) to convert the raw commodity to processed commodity.

I would like to know if it is possible in SAP if we could have the processed commodity valuated at FIFO basis. If so, how to set this up.

From product costing perspective, the processed commodity will be valuated at standard price. The raw commodity will be valuated on FIFO basis. Even if I use Material Ledger to roll up the price differences, this does not mean that the finished goods will be automatically valuated on FIFO basis. What ML will do is spread the price difference to consumption and ending inventory on quantity basis.

Points will be rewarded for helpful and relevant answers.

Many thanks,

Teck

[Former Member · Accepted solution]

Hi,

Below points may help you in fixing your issue:

Movements relevant to FIFO are movements that are taken into account during FIFO valuation.

We have to flag all goods movement types that should be included in FIFO valuation in Customizing for Material Valuation.

We do not choose between FIFO and MAP, but we can use both of them.

The values are kept separate and maintained separately. MAP is used for Material movements, while FIFO is purely for FI Valuation purposes.

All movements will use and update the MAP, but we can periodically run FIFO program to recalculate the value of your stock based on the FIFO principles. This then stores the new value in a field separate from the MAP and so you are effectively able to use both.

The ONLY way to use FIFO INSTEAD of MAP is to use batch control along with split valuation, so that every receipt and issue is monitored via a batch number and valued via split valuation "valuation types".

Hence, just use the existing SAP functions to recalculate the value based on FIFO and use MAP for the actual valuation of each movement.

Example:

GR 01/07 10 pcs @ 10 € MAP = 10

GR 02/07 10 pcs @ 12€ MAP = 11

Issue 03/07 5 pcs @ 11€ (Current MAP Value).

No further movements

Valuation with MAP 15 @ 11 = 165

FiFo 10@12 + 5@ 10 = 170

Thanks..

[Former Member]

Hi,

Thanks for the reply. I have decided to go with batch specific valuation in conjunction with Material Ledger. This will require a small user exit whereby the valuation type is defined as a procurement process.

[Former Member]

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