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Introduction:
Split valuation is a feature in SAP Material Management (MM) that enables companies to manage and assign different values to various segments of the same material within the same valuation area (such as a plant or company code). This functionality is only applicable when using the moving average price control, meaning that materials subject to split valuation can only be valued using the moving average price method.
Reasons for Implementing Split Valuation:
- Different Material Origins: When a material comes from different sources.
- Variations in Quality: When the same material exists in different grades of quality.
- Material Status Differences: When the material has different statuses.
- In-house vs. External Procurement: Differentiating between materials produced internally and those procured from external suppliers.
- Variation in Deliveries: Differentiating between different deliveries of the same material.
Valuation and Accounting Considerations:
Each valuation type within split valuation can have its own distinct valuation price. This allows for financial differentiation even if the material code remains the same across items. The valuation can vary based on factors such as the supplier or quality of the material, directly impacting accounting and costing processes. For instance, different batches can be assigned different prices, reflecting their unique characteristics.
Use Cases:
Split valuation is particularly beneficial in industries where the cost of materials is heavily influenced by procurement or production conditions. This is common in sectors such as pharmaceuticals, chemicals, or food and beverages, where different batches may originate from various sources or be produced under varying conditions, resulting in differing values.
Benefits of Split Valuation:
- Enhanced Costing Accuracy: By assigning different values to stocks based on specific characteristics, companies can achieve more accurate costing and pricing strategies.
- Improved Inventory Management: Businesses can better manage inventories with diverse origins, qualities, or other attributes, ensuring efficient and effective stock utilization.
- Regulatory Compliance: In highly regulated industries, like pharmaceuticals, correctly tracking and valuing batches is crucial for compliance.
- Risk Management: By categorizing stocks according to valuation types, companies can better manage risks related to price fluctuations, supplier reliability, or quality differences.
Split Valuation needs to be activated before setting any other configuration. Follow the steps given below to activate split valuation
Path to Activate Split Valuation
IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Split Valuation ⇒ Activate Split Valuation
TCode: OMW0
Step 1 − On the Display IMG screen, select Activate Split Valuation by following the above path.
Step 2 − Click the option Split Material Valuation Active. Click on Save. Split valuation is now activated.
Some important terms under split valuation are as follows.
- Valuation Area − Material may be valuated at plant level or at company code level. The level at which materials are valuated is known as valuation area.
- Valuation Category − Valuation category is the criteria on which material is split valuated.
- Valuation Type − Valuation type specifies the features of a valuation category.
Split Valuation Configuration
Follow the steps given below to do split valuation configuration such as defining valuation category and valuation type.
Path to Configure Split Valuation
IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Split Valuation ⇒ Configure Split Valuation
T Code: OMWC
Step 1 − On the Display IMG screen, select Configure Split Valuation by following the above path.
Step 2 − Select Global Types to create valuation type.
Step 3 − Select the Create
Step 4 − Provide the name of the valuation type. Click on Save. A new Valuation Type will be created.
Step 5 − Now go to the same screen and click Global Categories to create valuation category.
Step 6 − Select the Create
Step 7 − Provide the name of the valuation category and Attributes. Select Save. A new Valuation Category will be created.
Step 8 – Select Valuation Category and Click the Types -->Cat.
Step 9 – Select respective Valuation Type for above selected Valuation Category and Select Activate.
Step 10 − Now go to the same screen and Select Local Definitions to map valuation type and valuation category.
Step 11 − Select the Cats. → OU
Step 12 – select valuation category set the status as active, and then click the Activate. Valuation category and valuation area are now mapped and both are activated.
Material Creation with Split Valuation
1. Create Material (MM01)
Create material with required views.
Mention details in required field in all selected views
And in Accounting View 1, should specify the valuation category
Step 2: Create material with Valuation type
Specify Material Number and select only Accounting View 1
Mention the Valuation Type,
Material has created with valuation Type
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