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ShugeGuo
Product and Topic Expert
Product and Topic Expert
16,484

What’s new in Production Accounting in SAP S/4HANA Cloud?


In this blog post we’ll explore the recent changes in Production Accounting and establish how these changes can benefit you. We will also introduce the concept of event-based production cost posting for product costs by order.


Pic #1: Enhanced Production Accounting


The new features of Event-Based Production Cost Posting in Production Accounting in SAP S/4HANA Cloud, (as shown in the picture above) enable real-time insights and enriched information, to follow simplified period-closing processes for production cost control.

The new features also enable parallel valuation for group and local accounting standards by using Parallel Accounting. It helps you by answering relevant production accounting questions in an intelligent way.

Product Cost by Period and Product Cost by Order are two different functions for the analysis of product costs. Product Cost by Period enables the periodic analysis of costs at the product level. Product Cost by Order enables you to analyze costs at production order and process order level. Please note, this blog post focuses on the introduction of the newly available event-based production cost postings made for Product Cost by Order.


Pic #2: Footprint of Event-Based Posting


The above picture shows you the footprint of enhanced Production Accounting including the features for Parallel Accounting, which are planned to be delivered with SAP S/4HANA Cloud in 2021.

What is event-based production cost posting?



Pic #3: Overall Process of Event-Based Posting


In Product Cost by Order, the production orders and process orders are the cost objects. Costs charged to production orders and process orders are usually analyzed and settled by lot. In the past, the values for WIP (work in process) and variance were calculated in Product Cost by Order at period end. As shown in the above picture, event-based production cost posting (including event-based WIP and event-based variance posting) is now available to calculate WIP and variance immediately, instead of waiting for period close. Event-based posting links cost posting to business events, such as goods issues, goods receipts, and operation confirmation.

To be more precise, Event-based WIP is posted as a separate journal entry during business events, such as goods issues and operation confirmation. The costs of event-based WIP can be reviewed in the Fiori Apps Event-Based Work in ProcessEvent-Based Production Costs and Event-Based Order Costs. Event-based variance is posted as a separate journal entry during business events, such as final goods receipt or complete technically. The event-based variance can be reviewed in the Fiori Apps Event-Based Production Costs and Event-Based Order Costs.

Event-based production cost posting combines transparency with a better view of gain or loss from production, while also reducing workloads and costs in period-end closing. Additionally,  it enables reports on cost information at a more detailed responsible area (for example, work center/operation).

The scope item for event-based production cost posting is 3F0. This scope item supports both the Make-To-Stock and Make-To-Order (valuated sales order stock) scenarios for production and process orders with the order types YBM1, YBM2, YBM3, YBM4, YBM5, YBM9, YBW1, YPK1, YQ01, YQ02. The key roles are Cost Accountant-Production and Plant Controller.

To understand what the event-based production cost posting offers in more detail, watch the video 'Introducing Event-Based Production Cost Posting'.

This video demonstrates how to do the following:

  1. Create a production order using the Create Production Order app

  2. Confirm your production order operations with the Confirm Production Operation app

  3. Check WIP costs in the Event-Based Production Costs app

  4. Post goods issues for your production order in the Post Goods Movement app

  5. Check WIP costs in the Event-Based Production Costs app

  6. Post final goods receipts for your finished production in the Post Goods Movement app

  7. Check both variance and cleared WIP in the Event-Based Production Costs app


What are the key features?



Pic #4: Event-Based Posting End-to-End Process


As shown in the picture above, the key features of event-based production cost posting are the following:

  • Event-based posting (including event-based WIP and event-based variance)

  • Event-based posting error and exception handling

  • Reporting on event-based WIP, event-based production costs and event-based variance


You can access the features of event-based production cost posting using the following SAP Fiori apps:

How does event-based production cost posting work?



Pic #5: Event-Based Production Cost Posting Configuration


As demonstrated in the picture above, you can set up event-based production cost posting using the Event-Based WIP and Variance Posting configuration step in SAP S/4HANA Cloud to make the following settings:

  • Define event-based result analysis keys and account determination rules

  • Define event-based costing sheets

  • Assign event-based costing sheets to planned valuation variants per plant

  • Assign order-type-dependent parameters


Note: For new SAP S/4HANA Cloud customers, the event-based results analysis key and event-based costing sheet is set as default. Existing customers who are currently using BEI need to manually switch the settings to event-based production cost posting.

For more details about the configuration path and guidance please check here (SAP Help Portal). Please follow the 3F0 scripts to complete the set-up on the logistics side in order to make sure the end-to-end process runs smoothly.

After making all required settings in the configuration steps, event-based production cost posting is initiated when you create order master data.


Pic #6: Order Master Data


During the creation of the event-based production cost posting, make sure to select RSEBW in the RA Key (results analysis key) field. The Event-Based Posting checkmark will be derived automatically as shown in the picture above.

Where to get more information about event-based production cost posting?


30 Comments
OwenLiu
Product and Topic Expert
Product and Topic Expert
0 Kudos
Nice blog, thanks!
ShugeGuo
Product and Topic Expert
Product and Topic Expert
0 Kudos
Thanks!
Markus_Oertelt
Product and Topic Expert
Product and Topic Expert
0 Kudos
Great Blog!
Jan_Zielinski
Product and Topic Expert
Product and Topic Expert
Nice blog!

Just one thing: the link to the video ‘Introducing Event-Based Production Cost Posting’ doesn't work for me "403: You don't have rights to view this page"
ShugeGuo
Product and Topic Expert
Product and Topic Expert
0 Kudos
Hi Jan,

Thanks a lot for the feedback.

Please kindly try again, hopefully you can find the video now:)

Regards,
Shuge
Jan_Zielinski
Product and Topic Expert
Product and Topic Expert
Thanks! Works fine now.
0 Kudos

@shuge.guo Can we use this on SAP S4HANA On Premise 2020? Or only applicable for cloud?

ShugeGuo
Product and Topic Expert
Product and Topic Expert
0 Kudos
Hi Lauren,
Now the Event-based production cost is only for cloud.

SHuge
ganesaka
Explorer
0 Kudos
Hi Shuge,

 

Thanks for such an informative blog. One quick question around event based posting. Understand that seperate journal entry will be created for wip(event based) or for variance based on events like goods receipt etc.

Just trying to understand how gl posting will appear if multiple accounting entries gets posted based on business events. For example, I understand that once goods issue or activity confirmation is done, system will calculate and post wip as it is event based and then say if gr is also done for full qty, then wip needs to be reversed for the same order on the same month and variance /settlement entry will be posted.

This will lead to multiple postings and multiple reversals for an order in a particular month at gl level right, especially when we look at production related gla like wip, cogm etc.

Pls share your thoughts on this.

Regards

Karthik
olivia_wang
Advisor
Advisor

Hi Karthik

I am the product owner of Event-Based Production Accounting. Thank you for asking and you made a very good point about the event-based solution. The current design is only available for S/4 HANA Cloud in a first step that every business transaction will lead to event-based posting. We will consider the requirement of flexible event-based postings in our future development

alvarocorreia
Explorer
0 Kudos

Dear Shuge,

Thanks for such a good view on a great new solution and approach to product costing.

I do have some questions:

  1. Do you plan to enable the Event-Based Product Cost Posting for production of products with split valuation? There is a restriction listed in Note 2737228 - FAQ: Product Costing: Event-Based Work in Process in S/4 HANA Cloud CE2105.
  2. Is it possible to still use Period-End Production Cost Posting solution (BEI) while using this new solution in the same plant?
  3. What business or system conditions will benefit more from the new solution? E.g. in a process joint-production would we need more frequent confirmations perhaps with more sensors to be able to find insights and act on them?

Many thanks,

Best regards,

Alvaro

olivia_wang
Advisor
Advisor
0 Kudos
Hi Alvaro

For your questions:

  1. Event-Based Product Cost Posting has been supported with split valuation without mixed costing. If you use produced product with split valuation but no mixture price, that could be work, I have updated FAQ note accordingly, thanks for notifying me.

  2. Yes. Event-Based Product Cost Posting and Period-End Production Cost Posting is activated and differentiated with RA key at order type level. That means you could use one order type for event-based orders and another order type for period-end orders in same plant. Please notice 3F0 is the strategic solution of SAP and capabilities like Universal Parallel Accounting is only enabled with 3F0

  3. If I got your question correctly, for joint production scenario the cost distribution will be also worked in event-based manner (with business transaction confirmation, goods issue etc.) which no manual actions like CO8A/CO8B is needed. In the same time WIP or variance value on order item level will be calculated. For customers have frequent confirmation and short-living objects, we will consider the requirement of flexible event-based postings in our future development

0 Kudos
Hello Olivia,

 

We are live and running production with the EVP Accounting in the Cloud 2111.  This definitely saves time at month end.

We have an event-based production order with event-based costing sheet that missed applying overhead to one (late) posting on a DLV order.  Can we manually re-run overhead application on the order to catch-up burden for this posting and if so, what is the trigger-process?

Kind regards,

Tony D
olivia_wang
Advisor
Advisor
Hi Tony

If overheads are missing for any business transaction then it is likely due some error during OH calculation. In such a case there has to be a corresponding log in the App Postprocess Event-Based Postings - Overhead Calculation. Here the root cause of the error can be found and also reposting can be tested and triggered – either online for one order or a user can navigation to the Schedule Product Costing Job and use a job template Postprocess Event-Based Postings – Overhead Posting to process even more logged errors together.

For rerun OH calcualtion without error infomration showed up in App Postprocess Event-Based Postings - Overhead Calculation, that's currently not possible yet. In such a case SAP need anyway analyze why OH are not calculated and no error is caught – that ideally should not happened, but if you encounter that please raise a ticket to SAP.
mustafazs
Explorer
0 Kudos

Hi

Thanks for such an informative blog.

Is this functionality (Event based WIP, Variance & Revenue Recognition) available on S4Hana Cloud Private Edition 2022 for UAE.

Regards

Mustafa Sakerwala

olivia_wang
Advisor
Advisor
0 Kudos
yes, as long as UPA is activate, the event-based in available in private edition 2022
mustafazs
Explorer
0 Kudos

Hi Olivia

Thanks for your prompt response. I was checking further on UPA and found that UPA is allowed for select customers and not available / supported for UAE Country.

I am referring to OSS Note # "3191636 - Universal Parallel Accounting: Scope Information", from where I picked up the above statement. Can you please confirm as well.

Regards

Mustafa Sakerwala

olivia_wang
Advisor
Advisor
0 Kudos
Yes, for 2022 only pilot net new customers (w/o legacy data) could activate UPA.

What is UAE country?
mustafazs
Explorer
0 Kudos
United Arab Emirates 🙂
olivia_wang
Advisor
Advisor
0 Kudos

UPA greenfield implementation is available for the countries: DE, US, FR, RO and JP. UAE not in the scope.

mustafazs
Explorer
0 Kudos
Ok Thanks Olivia for the confirmation. Cheers!!
former_member796275
Discoverer
0 Kudos
Hi,

thanks a lot for this informative blog. How ist results analysis determined, for example for provisions for impending losses or provisions for missing costs?

Thanks and regards

Uwe
roscho
Explorer
0 Kudos

Hi, can you post the link to the video. I cannot open it. 

Nagendra_D
Explorer

Hi
Do we have any similar blog for Product Cost by Period with UPA activated in latest SAP Version (OP/fiori) ? If yes, could you please share the link.

EvaWang
Product and Topic Expert
Product and Topic Expert
0 Kudos

Hallo Nagendra,

Thanks a lot for your feedback, we will consider this. and will link to this blog once its available. 

Nagendra_D
Explorer
0 Kudos

Hi Eva

Thanks for your response. Could you please let me know if the Product Cost by Period is going to behave in the similar fashion as Product Cost by Order when UPA is implemented with even based production costs ?

I don't think there with be any WIP in our scenario (Product Cost by Period) where we are doing the backflush of goods issue & activity posting at the time of goods receipt posting. However, there will be some variances. So when we post the goods receipt, the variances will be automatically captured and posted to financial accounting ? No need of settlement ?

EvaWang
Product and Topic Expert
Product and Topic Expert
Nagendra_D
Explorer
0 Kudos

Thank you Eva for sharing the blog on Product Cost by Period. It helps a lot in understanding the concept. I was doing some testing on Product Cost by Period (Event Based) with UPA activated, and couldn't get the variance categories populated in the product cost collector. As part of assembly backflush, gr, gi and activity confirmation are posted. Still, I am not able to get variance. There is no WIP as Reporting Point confirmation is not active. Could you please let me know what might be causing the issue ? I believe there is no separate calculation and posting of variance required when event based (3FO) functionality is active.

EvaWang
Product and Topic Expert
Product and Topic Expert
0 Kudos

Product Cost by Period (Event Based) only posts WIP ( reporting point is required) and total price differences in an event-based approach.to split variance into the variance categories is done via Postprocess Event-Based Postings - Product Costing (Job Template) . event-based variance split on the SAP internal road-map, however, the development will be pending on the customer usage of this solution. 

Nagendra_D
Explorer
0 Kudos

Thank you Eva. I have another question on the period end process for Product Cost Collector (PCC).

With UPA implementation, I see there is no Cost Splitting (KSS2) available but we do have Actual Activity Rate Calculation transaction (KSII). As per traditional S/4 HANA without UPA, we did KSS2 before executing KSII. How do we calculate actual activity rate now with UPA activated ? Do we need to calculate the actual activity rate offline and load it using Manage Cost Rates - Actuals fiori app ? Then PCC can only be revaluated with actual activity rate using Actual Costing since Order Revaluation (CON2) is also not available ?

Thank you