How to group requirements across several WBS using valuated project stock?

[ann_hustis]

We are in the steel structure industry; our finished goods are pieces of steel that are cut, bent, drilled and marked with the finished good number.

We are using Project System for costing and SD for logistics processes. Our requirement is to work with valuated project stock as the finished goods often sit in inventory more than 1 month. This is also to align with the contractual billing agreement and COGS recognition.

We want to analyze our costs per WBS element which for us are sections of the steel tower.  (The entire tower is a Project). 

We are using the Mill Products solution which means we use Combined Orders so that many pieces of steel are cut at the same time under a single Header Order/operation but then after that operation is confirmed each finished good continues to be made under a separate Child Order within the Combined Order. 

We need to create a single Combined Order across several WBS elements so that production quantities are large enough. To do “requirements grouping” across several WBS elements SAP offers these 2 solutions.  We are using S/4HANA version 2021.

1. PMMO – not acceptable because it works with only non-valuated stock; we need to use valuated stock
2. GPD – GPD is deprecated but it does work with both valuated stock and non-valuated stock BUT it doesn’t do FI postings, it does only CO postings and moreover within a CO version that is not 0; this does not work for us reporting wise both in S/4 and in our reporting tool.

Any suggestions as to how to structure such a model to optimize the production and at the same time obtain the detailed financial  postings as stated above?

Thank you very much!

[Ken_Melching]

A few clarifying points. PMMO is the latest improved version of GPD.  Both PMMO and GPD always required Non-Valuated Project Stock.  GPD does do FI postings, it is in the last Distribution step.  

Just Requirements Grouping can be used separate from GPD and can be used with Valuated Project Stock.  It also can be used in S/4HANA.

When you want to group requirements are you talking about grouping across projects or just within a project?  Either are possible.  This dictates how you do the grouping and subsequent Combined Order.

The Combined Orders use complicates the WBS account assignment.  I think all of the Production Orders in a Combined Order would need to have the same WBS account assignment.

[Lakshmipathi · Accepted solution]

Why PMMO and GPD don’t fit is because, PMMO (Pegging, Distribution, and Summarization) is designed for non‑valuated project stock only. Great for logistics grouping, but not usable when you need valuated stock and FI postings.

GPD (Grouping, Pegging, Distribution) is technically supports both valuated and non‑valuated stock, but in S/4HANA 2021 it is deprecated. It only creates CO postings (in non‑zero versions), not FI postings → breaks your reporting and COGS alignment. So neither fits your requirement for valuated stock + FI postings.

Standard Options in S/4HANA 2021 are

1. Valuated Project Stock + Combined Orders without GPD
Keep each WBS element as the account assignment for its child orders. Use Combined Orders only for the common cutting/bending operations. After the header operation is confirmed, split into child orders pegged to the correct WBS. This way, costs flow to the WBS via the child orders, and FI postings are created because stock is valuated.

Downside: you lose the automatic “requirements grouping” across WBS, but you preserve FI integrity.

2. Network Activities with Valuated Stock
Instead of grouping via GPD, model the shared operations as network activities assigned to multiple WBS elements. You can issue materials to a network activity, capture costs, and then settle to the WBS. This gives you FI postings (because stock is valuated) and allows you to analyze costs per WBS. More flexible than combined orders, but requires careful design of networks.

3. Custom Extensibility for Grouping
Some customers build a custom grouping logic using extensibility (e.g. CDS views, allocation rules) to redistribute costs from a combined header order to multiple WBS elements. This way, you run one large production order, but at confirmation/settlement the system allocates costs to the relevant WBS. This preserves valuated stock and FI postings, but requires development effort.

4. Strategic Split of Projects
If grouping across WBS is essential, one option is to split the project definition so that the combined order can be tied to a single WBS/project, then allocate costs back to the “real” WBS hierarchy via settlement rules. Not elegant, but sometimes used when reporting requirements are strict.

[ann_hustis · Accepted solution]

Thank you very much, Lakshmipathi for taking the time to provide such a detailed answer. Your first 2 paragraphs sum up our problem completely! I will bounce your suggestions 2. 3. and 4. off of our FI/CO team. In the meantime I'm going to try introducing a HALB BOM level so after the Combined cutting operation we do a goods receipt. Then we gather the common child material planned orders (which are cross-WBS elements) into a FERT Combined Order and then produce these FERTs.

[ann_hustis · Accepted solution]

Thank you very much Ken for answering this. We want MRP to group requirements across more than 1 WBS element but always within the same Project. For example, let's say we are producing a steel tower with 6 sections; for us this is 6 WBS elements within the same Project. The same FERT material A appears 2x in each section so we want MRP to plan and then we will make  one Combined Order of 12 pieces of material A; we don't want to make 6 combined orders of 2 pieces each. When using the CPD model we encountered the problems as Lakshmipathi detailed in the first 2 paragraphs of his answer.