- Procurement Type = F
- Special Procurement Type = Z1 (to be configured in OMD9)#1
- Price control = S or V ? #2
#1 - When a special procurement type is assigned in material master of Product P1 in Plant B, during MRP run
or Costing run, the system will be directed towards Plant A.
This means, during MRP in Plant B, the requirement for Product P1 will be generated and transferred to
Plant A. System will not intend to manufacture P1 in Plant B. The planned order generated upon MRP can be
converted into a STO
During costing run in Plant B, system can be diverted to Plant A to read and transfer the cost estimate from
Plant A
#2 - It is an important consideration / decision to be made regarding the price control of the material in the
receiving plant. One school of thought is to have Price control V in the receiving plant, because the material is
not manufactured in this plant. Another school of thought is to have Price control S. Preferably, S, is the one
that is commonly used. This helps to roll-up the cost component split of sending plant into the receiving plant
"as-is". One can have the Price control V and still roll up the cost components in receiving plant. However,
it becomes challenging in some scenarios. I would not go into details here, and they can be provided upon
request in the comments section.
c. Valuation price of the material in the receiving plant:Valuation price of the material depends on the choice of the price control.
- If the price control is V in receiving plant, the cost of the sending plant (Standard cost) + Any planned
delivery cost (PDC) + Non deductible taxes (NDT) become the valuation price of the receiving plant. If there
are no PDCs and NDTs, then standard cost in sending plant = MAP of receiving plant.
- If the price control is S in receiving plant, you can transfer the standard cost and its components from the
sending plant. If you transfer the "released cost estimate" from sending plant, then the standard cost in both the
plants will be same. Hence, no Price differences or inventory valuations would occur during STO.
In order to transfer the "released cost estimate", you must allow "Cross plant transfer" in the Transfer control
of your costing variant. If you don't allow "cross plant transfer", then during cost estimate in Plant B, system
would recalculate the cost of P1 in Plant A and update the same in Plant B. As a result, the standard cost in
both plants can be different and can result in valuation gain/loss upon STO
- If the price control is S in receiving plant and you want to add the freight charges to the inventory value, then
you need to use the "Additive cost" feature in Product costing. In a layman's language, the standard cost in
receiving plant would become Standard cost of sending plant + manually specified freight charges.
Note that in this case, the standard cost in both the plants would be different and would result in valuation gain
during STO. The accounting entry upon PGI will be
Stock
a/c Dr 110 (receiving plant)
Stock
a/c Cr 100 (sending plant)
Val. gain a/c
d. Custom validations required in the process:-
Where the material has Price control S in the receiving plant, and the standard cost is not maintained/released,
then during PGI, the inventory in receiving plant will be valuated at ZERO. This becomes a serious concern in
accounting and balance sheet finalization.
Similarly, after the standard price in receiving plant is released (same as sending plant) and later on the
standard price is changed in the sending plant without updating the same in receiving plant, it can result in
valuation gain/loss during STO. This becomes an audit observation during finalization of accounts.
To overcome above problems, one can implement a custom check using FM MB_MIGO_BADI to check that
the price of the material in the sending and receiving plant is same. If it is not, the system shall throw an error
message, which will prevent the PGI
Thank you for reading the document. I would appreciate your feedback on the document, which will help me to
improve it further.
Next document would focus on Inter-Company Stock transfer process.
Best Regards,
Ajay Maheshwari
PS: Links to subsequent docs are enclosed here for quick reference
POD - Series 2 and POD - Series 3