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Treating of utility production in manufacturing plants

former_member193808
Active Contributor
0 Kudos

Hi,

We have a plant which mainly producing steel. There's an in-house power plant, which produce and supply electricity to plant and admin buildings. The shortage is procured from outside.

In production process, we have activities defined (Power in house and power external) to capture the cost against work center (operations).

The power used by other areas (buildings, maintenance etc) which are charged to CC.

At the month end, the sum of all is the power produced by plant.

The business requirement is that, they need to capture the in-house production of power !

So, the raw materials used (coal,fuel, etc) and activities (labour, fixed costs) needs to be consumed to a cost element and produce power (which can be non-valuated material or pipeline material). Then the power produced is consumed to cost center (stock cannot exist).

If an order / cost element to be created to capture power production, should i use production order as cost element, or a CO order (CO Production order)?

There's no requirement of standard cost Vs actual (only actual will do) analysis. So, CO order can also be created and declare actual GR and GI without creating BOM structure.

My doubt is - what is the correct process? I believe power should be either a pipe line material or an activity, which shouldn't be produced to stock at first place. What is the best practice followed and how can we cater the business requirement?

Thanks

Prem

Accepted Solutions (1)

Accepted Solutions (1)

milton_gallegos
Active Participant

Hello Prem:

Searching on SCN you can find some discussions like these:

Some of them, could give you more information and then you can figure your doubt,

Kind regards,

Milton

former_member193808
Active Contributor
0 Kudos

Hi Milton,

I had gone through most of them, which is why the materials are made activity in production orders.

The issue is to treat in-house generation of power and water.

Whether this should be handled in CO or PP, which is correct practice and why.

Thanks

Prem.

milton_gallegos
Active Participant
0 Kudos

Hello Prem:


If an order / cost element to be created to capture power production, should i use production order as cost element, or a CO order (CO Production order)?

There's no requirement of standard cost Vs actual (only actual will do) analysis. So, CO order can also be created and declare actual GR and GI without creating BOM structure.

¿Which department will manage the generation of power?. Production or Controlling?. Finally a production order is a kind of CO Order.

My doubt is - what is the correct process? I believe power should be either a pipe line material or an activity, which shouldn't be produced to stock at first place. What is the best practice followed and how can we cater the business requirement?


If you handled with activity type  in CO, you should check this scenario with CO consultant to verify the business requirement. For example you have to calculate plan and real tariff for the activity type.

On the other hand if you use PP module you can plan and excecute "the generation of power" like a manufacturing process. In addition the actual cost will be calculated (machine, raw material , labor and overhead).

Kind regards

Milton

Answers (1)

Answers (1)

rupesh_brahmankar3
Active Contributor
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Hello Prem,

I have no idea is there any provision in IS-Utility for it, The industry solutions module of SAP has industry specific processes. Actually steam and power will handled through the IS-Utility, as these are not stock-able items. In ECC I would say it should be treated as the pipeline material.

No stock for these materials.

We can record the consumption. In MIGO transaction, special stock type is “P”

Goods issue of pipeline material with 261-p against the process order a settlement liabilities is created for this pipe material

Posting withdrawals creates liabilities to the vendor from whom the pipeline material is obtained. These liabilities are settled periodically.

Pipeline deliveries are settled with the transaction MRKO

Please refer the SAP help document,

Inventory Management: Pipeline Handling

Pipeline Handling - Materials Management (MM) - SAP Library

Best Regards,

R.Brahmankar

former_member193808
Active Contributor
0 Kudos

Dear Rupesh,

Thanks for your reply.

Actually my question is on production of power. The consumption part is taken care as activity types. So, power is created as activity against work centers and consumption is tracked as activity.

Now, there's an internal power plant and the power generated in this plant needs to be measured. How to treat this is the issue.

Thanks

Prem

rupesh_brahmankar3
Active Contributor
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Hello Prem,

As I know there is no standard solution in SAP ECC for it. However, you can check IS-Utility solution on it

In ECC you can use the activities to receiver allocation  functionality of  KB21N.

You can use Kb21N to post the activity like Power generation please check it with your CO person..


Best Regards,

R.Brahmankar

former_member193808
Active Contributor
0 Kudos

Dear Rupesh,

We do not have IS-Utility.

However, the findings and finalization is as below:

It is possible to do from both PP order or CO order. There are pros n cons in both areas.

In PP, It's not a PP process, and planning, scheduling, capacity, mrp etc are not relevant for this. However, master data (BOM, routing for activity) can be maintained.

In CO, co order can be created, but if standard costing / variance to be calculated, user will have to maintain BOM and routing each time they create the order.

In our case, standard cost (plan) is not so relevant as power plant will anyway produce whatever required / as per capacity. So, the actual costing only matters. However, we have decided to go with PP orders with new order type.

Once produced, the same will be issued to CC.

Thanks

Prem