HP Blueprint - Ps
HP Blueprint - Ps
0
IMPLEMENTATION
AT
Document Information
Project Name:
Project Director:
Opportunity Roadmap Phase:
Quality Review Method:
Prepared By:
3.0
27/10/2006
Preparation Date:
15/09/2006
Review Date:
25/10/2006
Review Method
Giri Chandran
Reviewed By:
Distribution List
From
Date
Giri Chandran
27/10/2006
To
Action*
Mr A Balaji
Acceptance/Signoff
HP
Phone/Fax
Due Date
Phone/Fax
Mr. V. Rajshekar
* Action Types: Approve, Review, Inform, File, Action Required, Attend Meeting, Other (please specify)
Version History
Ver. No.
Ver. Date
Revised By
Description
Ver. 1.0
14.09.06
Giri Chandran
New Document
Ver. 2.0
15.09.06
Giri Chandran
GGPL_BBP_CO_Ver2.0.doc
Ver. 3.0
28.09.06
Giri Chandran
GGPL_BBP_CO_Ver3.0.doc
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Filename
Draft Version
GGPL_BBP_CO_Ver1.0.doc
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Ver. No.
Ver. Date
Revised By
Description
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CONTENTS
1
Executive Summary.............................................................................................................................6
1.1 Background ..............................................................................................................................6
1.2 Enterprise Resource Planning (ERP) Project Objectives.........................................................................7
1.3 Overview of Blueprint Phase .........................................................................................................7
Reports ..........................................................................................................................................40
Identified GAPS..............................................................................................................................43
10
11
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EXECUTIVE SUMMARY
1.1
BACKGROUND
Gujarat Glass (P) Limited [GGPL] is a leading manufacturer of glass based products for pharmaceutical and
cosmetic industries. The manufacturing facilities are spread out in different parts of the world like India, Sri Lanka,
USA & UK.
The scope of implementation is in India & Sri Lanka. The specific solution in the scope of this document comprises
of Implementation of SAP ECC 6.0 covering Jambusar, Kosamba (in India) & Ratmalana (in Sri Lanka) plants.
Nattandiya plant was not part of the scope originally. GGPL has requested to include the same in scope. W e
have included Nattandiya plant in blueprint document with express understanding that addition efforts required
will be suitably addressed via change management.
Jambusar plant is the world's largest pharma amber bottles manufacturing plant at a single location. In all, the 7
furnaces of the company with 27 automatic production lines, many of which are electronically controlled state-ofthe-art machines, produces 7 million glass bottles and vials every day throughout the year for quality conscious
customers in the healthcare and cosmetics industry.
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Major expansion plans for capacity increase are already on anvil. After successful commissioning of those
projects, GGPL will further consolidate its position as market leader in Glass Industry.
GGPL has decided to implement an integrated ERP solution and have selected SAP ECC 6.0. HP is the
Implementation Partner for SAP ECC 6.0 implementation.
The SAP ECC 6.0 Modules, which are being implemented in Phase 1, are
1.2
FI/CO
SD
PP
MM
Materials Management
QM
Quality Management
WM
Warehouse management
HR
Human resources
1.3
This document summarizes the findings of the Hewlett-Packard (HP) consulting team, which conducted
requirement analysis of GGPL for the SAP ECC 6.0 system. The information was gathered through interviews
conducted at the GGPL plant with the managers, key users and personnel from Information Systems, as well as
through reviews of business processes, business procedures, documentation and relevant reports using Q & A db
from Value SAP methodology.
The immediate purpose of the analysis is to prepare to move forward rapidly with the implementation of GGPL's
SAP ECC 6.0 system. At the conclusion of the blueprint, the HP consultants will determine the SAP functionality
required to run the GGPL business.
The Blueprint and its associated appendices present a summarized perspective of all functional business
processes that will be implemented. Blueprint document will serve - from this point forward the dual role of both
official project scope as well as system acceptance criteria.
SAP ECC 6.0 Business Blueprint for
GGPL Controlling Module
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The body of this document describes the organizational structure, enterprise area, and SAP ECC 6.0 functional
process flows to be implemented at GGPL. Generally, requirements that can be met using standard SAP ECC
6.0 functionality through routine configuration tasks are not explicitly documented. However, certain key
requirements are explicitly identified and summarized to highlight their importance to GGPL and to document the
approach proposed to meet the requirement.
One section of the report summarizes identified gaps. The project team should discuss this list with agreement on
the approach going forward. Acceptable approaches may require:
Additional programming or technical effort
Recognition and acceptance of procedural changes ("W orkarounds") using standard SAP ECC 6.0
Additional resource commitment
The deferral of a feature to a later phase
Simply the recognition and acceptance of a limitation.
The Blueprint reiterates the SAP ECC 6.0 organizational structures that have been identified and will serve as the
basis for the initial configuration activities. The HP team believes that SAP ECC 6.0 can accurately model
GGPL's organizational requirements.
N o significant configuration choices have been identified that will prevent the future implementation of additional
capabilities within the SAP ECC 6.0 environment.
The information gathered and documented in the Blueprint is sufficient for the team to go forward into the
Realization phase. However, it is critical that both the HP and GGPL team agree on the scope of the project as
presented in this document. Acceptance - by both teams - is required to move the project into the next phase.
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CO MODULE INTRODUCTION
2.1
INTRODUCTION
Controlling (CO) contains all accounting functions necessary for effective decision-making process. If an
organization divides accounting into internal and external viewpoints, CO represents the internal accounting
perspective.
It provides information for managers - those who are inside an organization and are vested with directing and
controlling its operations. CO covers both the operational and the strategic aspects of management.
2.2
There are numerous interrelationships between the various CO components. Value flows can occur for many
different purposes.
W ithin the Overhead Cost Controlling area, costs can be posted to cost centers
and internal orders from other SAP ECC 6.0 modules (external costs). Cost centers can then allocate costs to
other cost centers and orders.
There are also key cost flows that can occur between the Overhead Management and Product Cost Controlling
components. Cost objects (such as production orders, etc.) can receive direct cost postings from FI (such as
when an invoice receipt is assigned to the cost object); costs from cost centers (as production activities are
performed or from overhead allocation); and costs settled from internal orders
Profitability Accounting components are tightly integrated with Overhead Management and Product Cost
Controlling. Profit Center accounting, by virtue of its basic design, receives statistical cost postings from virtually
all other CO components.
In addition to direct postings from FI, Profitability Analysis can receive cost assessments from cost centers,
settlements of cost from internal orders, and production variances settled from cost objects.
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Value Flows:
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Controlling provides you with information for management decision-making. It facilitates coordination, monitoring
and optimization of all processes in an organization. This involves recording both the consumption of production
factors and the services provided by an organization.
As well as documenting actual events, the main task of controlling is planning. You can determine variances by
comparing actual data with plan data. These variance calculations enable you to control business flows.
Income statements such as, contribution margin accounting, are used to control the cost efficiency of individual
areas of an organization, as well as the entire organization.
Integration
Controlling (CO) and Financial Accounting (FI) are independent components in the SAP system. The data flow
between the two components takes place on a regular basis.
Therefore, all data relevant to cost flows automatically to Controlling from Financial Accounting. At the same
time, the system assigns the costs and revenues to different CO account assignment objects, such as cost centers,
business processes, projects or orders. The relevant accounts in Financial Accounting are managed in Controlling
as cost elements or revenue elements. This enables you to compare and reconcile the values from Controlling
and Financial Accounting.
Other SAP ECC 6.0 modules generate data that has a direct impact on CO. For example, when nonstock consumable items are purchased, an expense is posted to the GL. At the same time, the expense
is posted as a cost to the cost center (or other object in CO) for which the items have been purchased.
That cost center's costs may later be passed on as overhead to a production cost center or elsewhere in
CO.
The Financial Accounting application area of SAP ECC 6.0 is a primary source of data for Controlling.
Typically, most expense postings to the General Ledger would result in a cost posting to CO. These
expense postings to the G/ L could be manual journal entries, accounts payable postings, or
depreciation postings from Asset Accounting (FI-AA). Revenue postings can also be created by a journal
entry to the G/ L and would also typically generate postings in CO to CO-PA and Profit Center
Accounting.
The Human Resources (HR) modules can generate several types of cost postings to Controlling. The HR
system allows you to allocate the cost of work to different Controlling (CO) objects. In addition,
planned
personnel
costs
can
be
transferred
to
CO
as
input
to
CO planning.
The Logistics area of SAP ECC 6.0 also has numerous integration points with Controlling (e.g., when
doing a goods issue to a controlling object or a goods receipt from production).
The Production Planning (PP) and the Sales and Distribution area of Logistics also works very closely with
Controlling. Consumption of activities, cost of goods issues, overhead surcharges, process allocations
and direct primary costs can be posted to the cost object (e.g. PP-production order, sales order item)
and by doing the period closing data like W IP, variances and price differences are settled to CO-PA,
CO-PCA and FI. The billing document can incur revenues directly to CO-PA or to the sales order, if the
sales order item is a cost object.
SAP ECC 6.0 Business Blueprint for
GGPL Controlling Module
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CO ORGANIZATION STRUCTURE
Controlling Area is an organizational unit used to represent a closed system for cost accounting purposes.
Controlling Area GGC would be created for Gujarat Glass Consolidated (GGPL, CGCL,). The finalized
Controlling Organizational Structure would be as follows:
Client: 400
Company
Controlling
Area
Profit Centers
Cost Centers
GGPL
HO
KOS
PIR UK
JAMB
BADDI
GGI
GG US
CGCL
FTR
RURKI
RTH
NTH
WTN
MLD
HO
Business Area /
Plant
Detailed list of Cost Center hierarchy and Profit Center Hierarchy considering GGC are enclosed in the
annexure.
Introduction of Controlling concepts viz., Controlling Area, Cost Center hierarchy, Profit Center Hierarchy would
enable GGC to track costs at the origin in a more efficient manner. Profit centers are designed based on the
Processes.
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CO MASTER DATA
5.1
CONTROLLING AREA
The Controlling Area is the business unit where Cost Accounting is carried out.
The Company Code allocated to the Controlling area must use the same operating chart of accounts and
the same fiscal year variant.
Each controlling area has a unique standard hierarchy; the highest node is created when maintaining the
Structure. To the standard hierarchy of cost centers are attached all the cost centers created for a Company
code.
5.2
5.3
COST ELEMENTS
In SAP, Controlling Module will have its own set of data for the purpose of Cost accounting & Controlling.
All expense related G/ L accounts in FI are made Primary Cost Elements in CO. Other than this, to measure
the internal flow of costs between Cost objects, some objects are created only in CO termed as Secondary
Cost Elements .
Detailed explanation is as below:
Primary cost elements
The primary cost elements are the reflection in Controlling of a financial account, used to assure the instant
reconciliation of the postings.
The difference between FI and CO is that in CO; it is mandatory that the posting be made using both a cost
element and a cost object (cost center, internal order etc.)
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5.4
5.5
INTERNAL ORDERS
An instrument used to monitor costs and, in some instances, the revenues of an organization.
Internal orders can be used for the following purposes:
Monitoring the costs of short-term jobs
Monitoring the costs and revenues of a specific service
Ongoing cost control
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6.1
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Cost elements are per controlling area, since GGC has the same operative chart of accounts all the P&L GL
accounts will be created as cost elements.
Description of Improvement
This will provide capability for detailed recording of data that forms the basis for cost accounting. Depending on
the cost elements chosen (for e.g. excluding secondary cost elements for drawing up P&L statement on profit
centers) reports can be drawn up.
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P&L
General
Account
exists in
CAAS
Requirement for
Secondary Cost
Element
This account is a
Primary Cost
Element
Is a new P & L
GL Account
neccessary
Yes
Can-not be made
secondary Cost
Element
No
No
End
Yes
Create Secondary
Cost Elements
It is then created
as a Primary Cost
Element at HQ
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6.2
Description of Improvement
Efficient monitoring of costs through cost centers.
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6.3
Description of Improvement
Not Applicable
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6.4
SKF can be used across all the company codes, based on the requirement of cost allocation.
Description of Improvement
Not Applicable
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6.5
COST ALLOCATION
Cost allocations are performed under controlling area (GGC), each company codes can allocate their costs
using the Standard allocation tools provided by SAP.
Reposting
Periodic reposting is an allocation method that uses rules defined in the form of cycles for correcting postings to
cost centers.
During this process, the original cost element remains the same. Line items are posted for the sender as well as
for the receiver, enabling the allocation to be recorded exactly.
Only primary costs can be reposted. Periodic reposting can be reversed and repeated as often as required.
Distribution
Distribution is a method of internal cost allocation that allocates primary costs. The allocation is done using
Distribution Cycles by specifying rules for the settlement of primary costs on a cost center
Main features of this process are as below:
The original cost element is retained in the receiver cost center
Information about the sender and the receiver is documented in the Controlling document.
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Assessment
Assessment is a method of internal cost allocation by which the costs of a sender cost center is allocated
(transferred) to receiver CO objects (orders, other cost centers, and so on) under an assessment cost element
(category 42). The method works according to the keys defined by the user.
It is used when it is unimportant or not possible for the user to know the break down of costs that a cost center
will receive in an allocation. E.g. allocating general & administrative costs. Further analysis is available through
CCA reporting.
The concept and procedure would remain the same for profit center Assessment and Distribution cycles.
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Description of improvements
A systematic approach to distribute costs and revenues between CO objects.
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6.6
INTERNAL ORDERS
Order Type
An order type has a large amount of control information important to order management. This information
includes a range of default values that are used when a new order is created with this order type.
Any new order is created under an order type that results in transfer of certain parameters to the order.
All the above order for each Co code is defined as a separate order type. It is named as per following naming
convention:
Sitename - Purpose Internal Order,
e.g. Order Type 300 is TLV
Internal Orders are created at controlling area level and at company code level, in which company codes under
if required can create Internal Orders for capturing costs for shot term simple projects and also for statistical
reporting.
Description of Improvement
Internal order would help in planning, budgeting and tracking the costs of a particular nature of expense / cost.
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6.7
The basic ingredients of product cost are batch cost, packing cost and conversion cost. Conversion cost includes
labor cost and overheads.
Batch Cost:
In SAP, for material valuation, the number of units required for completion of a Finished Product would be picked
up from Bills of material and the value per unit from Material Master. Raw Materials will be valuated at moving
average price and Semi Finished Materials will be valuated at standard cost estimate.
Packing Cost:
Packing cost depends upon the customer specification of the finished product and also depends upon the place
of export.
Conversion Cost
Overhead Cost
The Overhead cost would get calculated as per the parameters given in the overhead-costing sheet
maintained in the Valuation Variant.
Labor Cost:
The number of Labor hour time would get picked up from Routing master, maintained in PP and the
Activity price would be get picked up from cost centre Activity price maintained.
6.7.2
At the beginning of the period, the Standard Cost Estimate is created, marked and released for both Finished
Products and Semi Finished Products.
Raw materials are maintained at Moving Average Price. So, at the beginning of the period, when a Standard
cost estimate is being created the system would take the latest weighted average Price from the material master
and the same would be the standard cost of the material for the period. Thus, on creation of the Standard cost
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estimate, it would be marked and released. On Marking the new price would be calculated and get reflected in
the Future Planned Price of the material master. On Releasing the Future planned price would become the Present
Price. The Inventory will be valuated at Standard price.
In GGC, the Standard Cost Estimate would include both Batch cost, Packing cost and Conversion cost.
The material cost would get picked up from the latest weighted average price as on the date of creating the
standard cost estimate from the material master. The Conversion cost would get picked up from the Planned
Activity price maintained and Overhead costing sheet.
The marking and releasing of standard cost estimate would happen at the beginning of a period as described.
6.7.3
In repetitive manufacturing, the costs per material or per production version are determined via a product cost
collector (product cost per period).The costs for a period can be viewed through the Product cost collector.
For normal production of glasses the Repetitive Manufacturing process will be followed. Repetitive Manufacturing
Process is applicable for products that are continuously made in high volumes.
Process:
Product Cost Collector is created at the time of Production Process. This Production Process number is updated in
the manufacturing orders assigned to the Product Cost Collector.
The production version is linked to the Cost Collector through the Production Process number. The system auto
creates a settlement rule and the receiver is always a Material, with the facility of periodic settlement.
The Controlling link is established because the system picks the Planned and Actual Costing Variants from the
Order Type.
The Costing Sheet is picked from the valuation variant from the Costing variant.
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This ensures that the same Costing sheet is used in preliminary costing and actual overhead calculation. So with
all these links the standard costing estimate could be run for the materials.
With back flush the materials are issued to production and the finished goods posted to warehouse.
Since the settlement rule is auto generated the scrap is also posted in sequence and there is no separation of
scrap from variance.
6.7.4
Discrete manufacturing (i.e. manufacturing with production orders) typically involves frequently changing products
and therefore manufacturing in restricted production lots. Another characteristic of discrete manufacturing is the
varying sequence of work centers through which different products flow during production.
Discrete manufacturing will be used for production of Molten Glass, Mould Manufacturing, Sand and Polythene.
Production Orders:
A Production order defines which material is to be processed, at which location, at what time and how much
work is required. It also defines which resources are to be used and how the order costs are to be settled.
Process:
Creation of Production Order.
Issue materials against production order.
Confirm production order.
Goods receipt against production order.
6.7.5
2. Variance Calculation:
Variances will occur when actual costs posted to the cost collector differ from the Target or Standard.
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3. Settlement
The purpose of settlement is to pass to the General Ledger the results from the calculations done in W ork in
Process and Variances in both Order Related production and Repetitive Manufacturing. If the settlement is not
run, the books are not going to be balanced.
Discrete Manufacturing is allowed two settlement methods: Full Settlement and Periodic Settlement. This means
that whatever costs remaining in the production orders are passed to FI.
Repetitive Manufacturing only Periodic Settlement is allowed for the Run Schedule Header (once a cost collector
has been settled, it cannot be re-processed for the period).
Settlement is a financial transaction, which does not interfere with the normal production process.
Description of Improvement
Not Applicable
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6.8
A dummy profit center GGC Dummy has been created. This is used by the system when there is no profit center
assignment even though the field is made mandatory.
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PCA
Planning
The principal aim of profit center planning is to provide data and key figures for the purpose of planning for
responsibility areas (profit centers).
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Once you have transferred actual data to Profit Center Accounting, you can analyze it immediately
according to the period accounting approach using the Standard Reports in the information system.
Description of improvements
Profit Center would help in analyzing the revenue earned by a Profit center against the cost incurred.
Providing valuable profitability reports to the management for decision making purposes.
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6.9
PROFITABILITY ANALYSIS
Operating Concern:
Operating Concern GGC will be created for GGC.
Profitability Segment:
In Profitability Analysis, income and expenses are analyzed by profitability segments. Profitability Segments are
made up of combinations of characteristics and value fields.
Characteristics:
Characteristics in Profitability Analysis are the criteria according to which we can create and analyze plan and
actual data.
Example: Characteristics for Profitability Reporting are Customers and Processes
Value Fields:
The value fields contain values and quantities that are updated or planned for particular objects.
Example: Value fields are Billing Income, Communication, IT Expenses, Travel Expenses, etc.
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CO-PA Planning
Planning in Profitability Analysis allows you to plan sales, revenue and profitability data for any selected
profitability segments. You can display the entire planning process of your company in different ways, depending
on your business demands.
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Description of Improvement
Online Profitability Analysis would help in analyzing the revenue earned and expenses incurred for a
period based on customer, process and sub-process wise.
Providing valuable profitability analysis reports to the management for decision making purposes.
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7
Sr.No.
Coverage in
Business Blue
Print document
Covered
(Y/N)
INDIA Operations
1.00
1.01
RM Batch Costing
Pg no: 27
Yes
1.02
Pg no: 27
Yes
1.03
Pg no: 27
Yes
1.04
Trading Items
Pg no: 27
Yes
1.05
Polythene
Pg no: 27
Yes
1.06
Sand
Pg no: 27
Yes
2.00
Budgeting
2.01
Sales Budget
Pg no: 35
Yes
2.02
Pg no: 35
Yes
2.03
Energy Cost
Pg no: 19
Yes
2.04
Mould Cost
Pg no: 19
Yes
2.05
HR Cost
Pg no: 19
Yes
2.06
Pg no: 19
Yes
2.07
Plant OH
Pg no: 19
Yes
2.08
Sales OH
Pg no: 19
Yes
2.09
HO OH
Pg no: 19
Yes
2.10
Export Incentives
Pg no: 19
Yes
2.11
Pg no: 19
Yes
2.12
Pg no: 32
Yes
3 .00
Valuation
3.01
Finished Goods
Pg no: 27
Yes
3.02
Semi-finished Goods
Pg no: 27
Yes
3.03
Pg no: 27
Yes
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4.0 0
Cost Allocation
Pg no: 22
Yes
5.01
RM Batch Costing
Pg no: 27
Yes
5.02
Pg no: 27
Yes
5.03
Pg no: 27
Yes
5.04
Trading Items
Pg no: 27
Yes
5.05
Polythene
Pg no: 27
Yes
5.06
Sand
Pg no: 27
Yes
6.00
Budgeting
6.01
Sales Budget
Pg no: 35
Yes
6.02
Pg no: 35
Yes
6.03
Energy Cost
Pg no: 19
Yes
6.04
Mould Cost
Pg no: 19
Yes
6.05
HR Cost
Pg no: 19
Yes
6.06
Pg no: 19
Yes
6.07
Plant OH
Pg no: 19
Yes
6.08
Sales OH
Pg no: 19
Yes
6.09
HO OH
Pg no: 19
Yes
6.10
Export Incentives
Pg no: 19
Yes
6.11
Pg no: 19
Yes
6.12
Pg no: 32
Yes
7.00
Valuation
7.01
Finished Goods
Pg no: 27
Yes
7.02
Semi-finished Goods
Pg no: 27
Yes
7.03
Raw Materials
Pg no: 27
Yes
8.00
Cost Allocation
Pg no: 22
Yes
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REPORTS
S.No.
Description
Cost Center:
01
Actual/Plan/Variance
(S_ALR_87013611)
Cost Center:
02
Actual/Plan/Variance
(S_ALR_87013612)
Cost Center:
03
Actual/Plan/Variance
(S_ALR_87013612)
Selection criteria
Output
Cost Center:
04
Actual
/
Actual Controlling area,
year, Cost center(s)
comparison Quarterly
Fiscal
Quarterly comparison
(S_ALR_87013623)
Cost Center:
05
Actual
/
Actual Controlling area,
year, Cost center(s)
comparison Fiscal year
Fiscal
(S_ALR_87013624)
Cost Center:
06
Variances
Variance
(S_ALR_87013627)
Cost Center:
07
(KSB1)
Cost Center:
08
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(KSBP)
Internal Order:
09
List of
variance
Orders
(S_ALR_87012995)
Internal Order:
10
List of
variance
Orders
(S_ALR_87012993)
Internal Order:
11
List of Orders
cumulative balance
(S_ALR_87012995)
Internal Order:
Actuals Comparison
12
Yearly /
period
Quarterly
Controlling
area,
Actual values of period 1 to N
comparison period, order(s)
(S_ALR_87013001/2/3)
Cost Elements:
13
(S_ALR_87013599)
PCA:
14
PCA:
15
16
PCA:
Plan / Actual / Variance
Record
type,
Version,
Controlling Area, Company
Actual line items posted in the
Code,
Posting
period,
profit center
Fiscal year, Profit Center,
Display variant
Company Code, Key date,
GL Accounts, Profit centers,
Customers /
Vendors,
Accounting document
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(S_ALR_87013340)
17
Profitability
Analysis:
Operating
Display Actual Line Item
Period/Year
List (KE24)
18
Profitability
Analysis:
Operating
Display Plan Line Item List
Period/Year
(KE25)
19
Execute
Profitability Operating Concern, Profit Reports on Customers, Processes
Reports (KE30)
Center, Controlling Area
and Sub-Processes
Concern,
Concern,
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IDENTIFIED GAP S
Production Budgeting Optimizer: The facility of optimizing the production budget is one of the requirements
which are identified as GAP.
Payback period for Projects: Monitoring Payback period for projects (Internal Orders).
Cost Center Budget - Availability check.
Line wise and Furnace wise profitability.
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Sr. No.
HP Response
Status
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This is SD report.
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Available in PP
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Pack to Melt - Budget & Actual Product Wise , Line Wise &
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Is taken care of by QM
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Job Stabilization time Analysis Product wise & Line wise ( Daily,
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11
11.1
BACKGROUND
Gujarat Glass (P) Limited [GGPL] is a leading manufacturer of glass based products for pharmaceutical and
cosmetic industries. The manufacturing facilities are spread out in different parts of the world like India, Sri Lanka,
USA & UK.
This Blueprint document is prepared based on the very few information that was extracted from different
documents provided and the limited access to the existing SAP system.
Corporate office:
Marlton, NJ
Manufacturing plants in USA (Assumed)
1. Flat River, MO
Manufacturing: Glass Flint container manufacturing in Missouri and decoration / coated products operations in
New Jersey.
At present, the number of Furnaces and lines are unknown.
2. Mays Landing, NJ
At present, the number of Furnaces and lines are unknown.
The objective of the document is to provide comprehensive Blueprint in relation to the information available and
operations/manufacturing which is told to be similar to Kosamba / Jambusar glass plants.
Implementation of the Blueprint is NOT in scope.
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11.2
CO MODULE INTRODUCTION
(Based on work done for India/Sri Lanka implementations)
11.2.1 INTRODUCTION
Controlling (CO) contains all accounting functions necessary for effective decision-making process. If an
organization divides accounting into internal and external viewpoints, CO represents the internal accounting
perspective.
It provides information for managers - those who are inside an organization and are vested with directing and
controlling its operations. CO covers both the operational and the strategic aspects of management.
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Value Flows:
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Controlling provides you with information for management decision-making. It facilitates coordination, monitoring
and optimization of all processes in an organization. This involves recording both the consumption of production
factors and the services provided by an organization.
As well as documenting actual events, the main task of controlling is planning. You can determine variances by
comparing actual data with plan data. These variance calculations enable you to control business flows.
Income statements such as, contribution margin accounting, are used to control the cost efficiency of individual
areas of an organization, as well as the entire organization.
Integration
Controlling (CO) and Financial Accounting (FI) are independent components in the SAP system. The data flow
between the two components takes place on a regular basis.
Therefore, all data relevant to cost flows automatically to Controlling from Financial Accounting. At the same
time, the system assigns the costs and revenues to different CO account assignment objects, such as cost centers,
business processes, projects or orders. The relevant accounts in Financial Accounting are managed in Controlling
as cost elements or revenue elements. This enables you to compare and reconcile the values from Controlling
and Financial Accounting.
Other R/ 3 modules generate data that has a direct impact on CO. For example, when non-stock
consumable items are purchased, an expense is posted to the GL. At the same time, the expense is
posted as a cost to the cost center (or other object in CO) for which the items have been purchased.
That cost center's costs may later be passed on as overhead to a production cost center or elsewhere in
CO.
The Financial Accounting application area of R/3 is a primary source of data for Controlling. Typically,
most expense postings to the General Ledger would result in a cost posting to CO. These expense
postings to the G/ L could be manual journal entries, accounts payable postings, or depreciation
postings from Asset Accounting (FI-AA). Revenue postings can also be created by a journal entry to the
G/L and would also typically generate postings in CO to CO-PA and Profit Center Accounting.
The Human Resources (HR) modules can generate several types of cost postings to Controlling. The HR
system allows you to allocate the cost of work to different Controlling (CO) objects. In addition,
planned
personnel
costs
can
be
transferred
to
CO
as
input
to
CO planning.
The Logistics area of R/ 3 also has numerous integration points with Controlling (e.g., when doing a
goods issue to a controlling object or a goods receipt from production).
The Production Planning (PP) and the Sales and Distribution area of Logistics also works very closely with
Controlling. Consumption of activities, cost of goods issues, overhead surcharges, process allocations
and direct primary costs can be posted to the cost object (e.g. PP-production order, sales order item)
SAP ECC 6.0 Business Blueprint for
GGPL Controlling Module
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and by doing the period closing data like W IP, variances and price differences are settled to CO-PA,
CO-PCA and FI. The billing document can incur revenues directly to CO-PA or to the sales order, if the
sales order item is a cost object.
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11.3
CO ORGANIZATION STRUCTURE
(The agreed organization structure covers the operations of U.S. (GGI) company code).
Controlling Area is an organizational unit used to represent a closed system for cost accounting purposes.
Controlling Area GGC would be created for Gujarat Glass Consolidated (GGPL, CGCL, GGUS, GGI, and PIR
UK). The finalized Controlling Organizational Structure would be as follows:
Client: 400
Company
Controlling
Area
Profit Centers
Cost Centers
GGPL
HO
KOS
PIR UK
JAMB
BADDI
GGI
GG US
CGCL
FTR
RURKI
RTH
NTH
WTN
MLD
HO
Business Area /
Plant
Detailed list of Cost Center hierarchy and Profit Center Hierarchy considering GGI are not available due to lack
of information while framing the BBP.
Introduction of Controlling concepts viz., Controlling Area, Cost Center hierarchy, Profit Center Hierarchy would
enable GGC to track costs at the origin in a more efficient manner. Profit centers are designed based on the
Processes.
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11.4
CO MASTER DATA
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11.5
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Assessment is a method of internal cost allocation in which costs are apportioned from a sender cost center to
receivers (cost centers, internal orders) using an assessment cost element. The costs are apportioned according to
an allocation base (tracing factor) defined by the user. Assessment can be run for both plan and actual values.
Cost elements are per controlling area, since GGC has the same operative chart of accounts all the P&L GL
accounts will be created as cost elements.
Description of Improvement
This will provide capability for detailed recording of data that forms the basis for cost accounting. Depending on
the cost elements chosen (for e.g. excluding secondary cost elements for drawing up P&L statement on profit
centers) reports can be drawn up.
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P&L
General
Account
exists in
CAAS
Requirement for
Secondary Cost
Element
This account is a
Primary Cost
Element
Is a new P & L
GL Account
neccessary
Yes
Can-not be made
secondary Cost
Element
No
No
End
Yes
Create Secondary
Cost Elements
It is then created
as a Primary Cost
Element at HQ
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Description of Improvement
Not Applicable
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SKF can be used across all the company codes, based on the requirement of cost allocation.
Description of Improvement
Not Applicable
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Cost allocations are performed under controlling area (GGC), each company codes can allocate their costs
using the Standard allocation tools provided by SAP.
Reposting
Periodic reposting is an allocation method that uses rules defined in the form of cycles for correcting postings to
cost centers.
During this process, the original cost element remains the same. Line items are posted for the sender as well as
for the receiver, enabling the allocation to be recorded exactly.
Only primary costs can be reposted. Periodic reposting can be reversed and repeated as often as required.
Distribution
Distribution is a method of internal cost allocation that allocates primary costs. The allocation is done using
Distribution Cycles by specifying rules for the settlement of primary costs on a cost center
Main features of this process are as below:
The original cost element is retained in the receiver cost center
Information about the sender and the receiver is documented in the Controlling document.
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Assessment
Assessment is a method of internal cost allocation by which the costs of a sender cost center is allocated
(transferred) to receiver CO objects (orders, other cost centers, and so on) under an assessment cost element
(category 42). The method works according to the keys defined by the user.
It is used when it is unimportant or not possible for the user to know the break down of costs that a cost center
will receive in an allocation. E.g. allocating general & administrative costs. Further analysis is available through
CCA reporting.
The concept and procedure would remain the same for profit center Assessment and Distribution cycles.
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Description of improvements
A systematic approach to distribute costs and revenues between CO objects.
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Order Type
An order type has a large amount of control information important to order management. This information
includes a range of default values that are used when a new order is created with this order type.
Any new order is created under an order type that results in transfer of certain parameters to the order.
All the above order for each Co code is defined as a separate order type. It is named as per following naming
convention:
Site name - Purpose Internal Order,
E.g. Order Type 300 is TLV
Internal Orders are created at controlling area level and at company code level, in which company codes under
if required can create Internal Orders for capturing costs for shot term simple projects and also for statistical
reporting.
Description of Improvement
Internal order would help in planning, budgeting and tracking the costs of a particular nature of expense / cost.
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The basic ingredients of product cost are batch cost, packing cost and conversion cost. Conversion cost includes
labor cost and overheads.
Batch Cost:
In SAP, for material valuation, the number of units required for completion of a Finished Product would be picked
up from Bills of material [BOM Master] and the value per unit from Material Master. Raw Materials will be
valuated at moving average price and Semi Finished Materials will be valuated at standard cost estimate.
Packing Cost:
Packing cost depends upon the customer specification of the finished product and also depends upon the place
of export.
Conversion Cost
Overhead Cost
The Overhead cost would get calculated as per the parameters given in the overhead-costing sheet
maintained in the Valuation Variant.
Labor Cost:
The number of Labor hour time would get picked up from Routing master, maintained in PP and the
Activity price would be get picked up from cost centre Activity price maintained.
11.5.7.2
At the beginning of the period, the Standard Cost Estimate is created, marked and released for both Finished
Products and Semi Finished Products.
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Raw materials are maintained at Moving Average Price. So, at the beginning of the period, when a Standard
cost estimate is being created the system would take the latest weighted average Price from the material master
and the same would be the standard cost of the material for the period. Thus, on creation of the Standard cost
estimate, it would be marked and released. On Marking the new price would be calculated and get reflected in
the Future Planned Price of the material master. On Releasing the Future planned price would become the Present
Price. The Inventory will be valuated at Standard price.
In GGC, the Standard Cost Estimate would include both Batch cost, packing cost and Conversion cost.
The material cost would get picked up from the latest weighted average price as on the date of creating the
standard cost estimate from the material master. The Conversion cost would get picked up from the Planned
Activity price maintained and Overhead costing sheet.
The marking and releasing of standard cost estimate would happen at the beginning of a period as described.
11.5.7.3
In repetitive manufacturing, the costs per material or per production version are determined via a product cost
collector (product cost per period).The costs for a period can be viewed through the Product cost collector.
For normal production of glasses the Repetitive Manufacturing process will be followed. Repetitive Manufacturing
Process is applicable for products that are continuously made in high volumes.
Process:
T Code KKF6N is used for creating the Product Cost Collector. At the time of creation, the system internally
creates a Production Process. This Production Process number is updated in the manufacturing orders assigned to
the Product Cost Collector.
The production version is linked to the Cost Collector through the Production Process number. The system auto
creates a settlement rule and the receiver is always a Material, with the facility of periodic settlement.
The Controlling link is established because the system picks the Planned and Actual Costing Variants from the
Order Type.
SAP ECC 6.0 Business Blueprint for
GGPL Controlling Module
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The Costing Sheet is picked from the valuation variant from the Costing variant.
This ensures that the same Costing sheet is used in preliminary costing and actual overhead calculation. So with
all these links the standard costing estimate could be run for the materials.
The order could be triggered by the T Code MFBF. With backflush the materials are issued to production and the
finished goods posted to warehouse.
Since the settlement rule is auto generated the scrap is also posted in sequence and there is no separation of
scrap from variance.
11.5.7.4
Discrete manufacturing (i.e. manufacturing with production orders) typically involves frequently changing products
and therefore manufacturing in restricted production lots. Another characteristic of discrete manufacturing is the
varying sequence of work centers through which different products flow during production.
Discrete manufacturing will be used for production of Molten Glass, Mould Manufacturing, Sand and Polythene.
Production Orders:
A Production order defines which material is to be processed, at which location, at what time and how much
work is required. It also defines which resources are to be used and how the order costs are to be settled.
Process:
Creation of Production Order.
Issue materials against production order.
Confirm production order.
Goods receipt against production order.
11.5.7.5
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2. Variance Calculation:
Variances will occur when actual costs posted to the cost collector differ from the Target or Standard.
3. Settlement
The purpose of settlement is to pass to the General Ledger the results from the calculations done in W ork in
Process and Variances in both Order Related production and Repetitive Manufacturing. If the settlement is not
run, the books are not going to be balanced.
Discrete Manufacturing is allowed two settlement methods: Full Settlement and Periodic Settlement. This means
that whatever costs remaining in the production orders are passed to FI.
Repetitive Manufacturing only Periodic Settlement is allowed for the Run Schedule Header (once a cost collector
has been settled, it cannot be re-processed for the period).
Settlement is a financial transaction, which does not interfere with the normal production process.
Description of Improvement
Not Applicable
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A dummy profit center GGC Dummy has been created. This is used by the system when there is no profit center
assignment even though the field is made mandatory.
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PCA
Planning
The principal aim of profit center planning is to provide data and key figures for the purpose of planning for
responsibility areas (profit centers).
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Once you have transferred actual data to Profit Center Accounting, you can analyze it immediately
according to the period accounting approach using the Standard Reports in the information system.
Description of improvements
Profit Center would help in analyzing the revenue earned by a Profit center against the cost incurred.
Providing valuable profitability reports to the management for decision making purposes.
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Operating Concern:
Operating Concern GGC will be created for GGC.
Profitability Segment:
In Profitability Analysis, income and expenses are analyzed by profitability segments. Profitability Segments are
made up of combinations of characteristics and value fields.
Characteristics:
Characteristics in Profitability Analysis are the criteria according to which we can create and analyze plan and
actual data.
Example: Characteristics for Profitability Reporting are Customers and Processes
Value Fields:
The value fields contain values and quantities that are updated or planned for particular objects.
Example: Value fields are Billing Income, Communication, IT Expenses, Travel Expenses, etc.
SAP ECC 6.0 Business Blueprint for
GGPL Controlling Module
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CO-PA Planning
Planning in Profitability Analysis allows you to plan sales, revenue and profitability data for any selected
profitability segments. You can display the entire planning process of your company in different ways, depending
on your business demands.
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Description of Improvement
Online Profitability Analysis would help in analyzing the revenue earned and expenses incurred for a
period based on customer, process and sub-process wise.
Providing valuable profitability analysis reports to the management for decision making purposes.
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11.6
REPORTS
S.No.
Description
Cost Center:
01
Actual/Plan/Variance
(S_ALR_87013611)
Cost Center:
02
Actual/Plan/Variance
(S_ALR_87013612)
Cost Center:
03
Actual/Plan/Variance
(S_ALR_87013612)
CONTROLLING
Selection criteria
Output
Cost Center:
04
Actual
/
Actual Controlling area,
year, Cost center(s)
comparison Quarterly
Fiscal
Quarterly comparison
(S_ALR_87013623)
Cost Center:
05
Actual
/
Actual Controlling area,
year, Cost center(s)
comparison Fiscal year
Fiscal
(S_ALR_87013624)
Cost Center:
06
Variances
Variance
(S_ALR_87013627)
Cost Center:
07
(KSB1)
Cost Center:
08
(KSBP)
SAP ECC 6.0 Business Blueprint for
GGPL Controlling Module
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Internal Order:
09
List of
variance
Orders
(S_ALR_87012995)
Internal Order:
10
List of
variance
Orders
(S_ALR_87012993)
Internal Order:
11
List of Orders
cumulative balance
(S_ALR_87012995)
Internal Order:
Actuals Comparison
12
Yearly /
period
Quarterly
Controlling
area,
comparison period, order(s)
(S_ALR_87013001/2/3)
Cost Elements:
13
14
PCA:
15
16
Record
type,
Version,
Controlling Area, Company
Actual line items posted in the
Code,
Posting
period,
profit center
Fiscal year, Profit Center,
Display variant
Company Code, Key date,
GL Accounts, Profit centers,
Customers /
Vendors,
Accounting document
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17
Profitability
Analysis:
Operating
Display Actual Line Item
Period/Year
List (KE24)
18
Profitability
Analysis:
Operating
Display Plan Line Item List
Period/Year
(KE25)
19
Execute
Profitability Operating Concern, Profit Reports on Customers, Processes
Reports (KE30)
Center, Controlling Area
and Sub-Processes
Concern,
Concern,
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11.7
GAPS
The requirements are NOT in place. Hence GAPS could not be prepared.
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