Ksa Co Bbp v1final

BBP_CO

Phoenix

Business blueprintCOPhoenix

Project SAP R/3, Schneider Electric, KSA

Team Sajid BashaVersion:01Created: 22.07.10Printed:21.06.13Designed:

Business Blueprintmodule CO

For implementation project of system SAP R/3 in Schneider Electric KSAFebruary 2011CONTENTS

31Introduction

2Team Structure33Targets, Requirements and Expected Benefits31.1Targets (objectives) and Requirements33.2Expected Benefits34Module CO Operation in Target State34.1Supposed Implementation of Program-unit and Function in Module CO34.1.1Implemented program-units34.2Organisational structure of module CO in target state34.2.1Company Code34.2.2Controlling Area34.2.3Operating Concern34.3Master data34.3.1Master Data34.3.1.1Cost Center34.3.1.2Cost Center Group34.3.1.3Cost Center Hiearchy10

4.3.1.4Cost Element34.3.1.5Cost Element Group34.3.1.6Activity Type134.3.1.7Statistical Key Figures34.3.1.8Statistical Key Figure Groups34.3.1.9Internal Orders34.3.1.10Profit Centers34.3.1.11Profit Center Hierarchy16

4.4Implemented process description (Process model)17

4.4.1Distribution (CO CCA)37

4.4.1.1Plan Cycle (from indirect cost centers to direct cost centers)34.4.1.2Actual Cycle (from indirect cost centers to direct cost centers)38

4.4.1.3Actual cycle (from dummy cost centers to indirect cost centers)19

4.4.2Expense Budget Planning (CO CCA)34.4.3Activity Unit Price Calculation (CO CCA)34.4.3.1Planned Activity Unit Price Calculation34.4.3.2Actual Activity Unit Price Calculation34.4.4Product Costing (CO PC)34.4.4.1Material Types and Price Determination34.4.4.2Production Types with CO point of view34.4.4.3Cost Object Controlling (CO-PC)34

4.4.4.4Integration Points with Logistic (master data, some definitions, etc.)(CO-PC)25

4.4.4.5Standard Costing (CO PC)27

4.4.4.6Raw-Material Costing (CO-PC)2934.4.4.7Preliminary Costing (CO-PC)29

4.4.4.8Actual Costing in PP Orders (CO-PC)30

4.4.4.9Subcontracting (CO-PC)30

4.4.4.10Rework Process (CO-PC)32

4.4.4.11Period-End Closing Transactions / Actual Costing (CO-PC)33

4.4.5Project Costing (CO-PC & PS)364.4.5.1Master Data in PS36

4.4.5.2Standard Costing (plan costing)37

4.4.5.3Actual Costing39

4.4.6Services Costing (CO-PC)414.4.6.1Planned Costs32

4.4.6.2Actual Costs33

4.4.7Cost of Quality (CO-CCA & CO-PC)34

4.4.7.1IQC Appraisal Costs34

4.4.7.2FQC Appraisal Costs34

4.4.7.3Reworks Non-Conformity Costs35

4.4.7.4Scraps Non-Conformity Costs35

4.4.8Profit Center Accounting (CO-PCA)36

4.4.8.1Profit Center Structure47

4.4.8.2Profit Center Assignments34.4.8.3Revenue & Cost Elements37

4.4.8.4Statistical Key Figures34.4.8.5Planning34.4.8.6Actual Posting38

4.4.8.7MM Goods Movements39

4.4.8.8SD Billing Documents60

4.4.8.9FI Postings and FI-AA AsKSA Postings34.4.8.10Transferring Balance Sheet Items31

4.4.8.11Assessment & Distribution31

4.4.9Profitability Analysis34.4.9.1Characteristics34.4.9.2Value Fields34.4.9.3Derivation34.4.9.4Valuation34.4.9.5Actual Data Flow34.4.9.6Budgeting Process34.4.9.7Reporting34.5Integration with other modules in the target state34.5.1CO - PP34.5.2CO PS34.5.3CO CS34.5.4CO MM34.5.5CO SD34.5.6CO QM34.5.7CO FI34.5.8CO FA35Change in present organisation and result aspects36Interface requirements36.1Data Take Over36.2Interfaces37Description for the system outputs and reports37.1Abap Reports37.2Other standard outputs39List of used abbreviations77

1 Introduction

Company Trade name :Schneider Electric

Address :Industrial City 2 Riyadh

TeamBPE : Sajid Basha

BPO : Anil Kumar

BPO :

Project :Rollout Implementation of the SAP R/3 system, CO module (Controlling)

This blueprint summarises the strategies and requirements in the area of management and assurance of quality. It expresses options of their implementation within SAP R/3 module of CO.

The content of this blueprint was prepared on the basis of workshops within the frame of the project team or as applicable the working circle of integration meetings and meetings of the project key team with responsible persons of the key areas.

On this occasion, we would like to thank all employees of the company for the co-operation.

The blueprint target consists in defining the functional and process parts of the CO module and a method of their application in the processes essential to the company with the standard SAP R/3 functions.

2 Team Structure

Team MembersSajid Basha

Business PartnersYounes Souini,Anil Kumar

SAP Advisor

3 Targets, Requirements and Expected Benefits

3.1 Targets (objectives) and Requirements

Basic targets to be fulfilled by implementation of the CO Module Concept:

to assume the maximum of current processes of the Management Controlling function into CO Module

to reduce manual works on costing process

to provide an integrated system with logistic transactions

to remove duplicated works on costing and reporting cycle

to increase reliability of the results obtained

to improve planning function on costing and profitability processes

to provide an easy-to-use, comparable, reliable, costing cycle

to compare the actual results with budgeted/planned figures and analyse the variances with details

to support management decisions with detailed data and forecasts

3.2 Expected Benefits

The expected benefits resulting from the targets and requirements:

the minimum of processes outside of SAP after the system implementation

lower manual and duplicated works on Management Control function

information consistency with other modules4 Module CO Operation in Target State

4.1 Supposed Implementation of Program-unit and Function in Module CO

4.4.1 Implemented program-units

Program-unit descriptionProgram-unit namePresumption

CO-OM-CELOverhead Management Cost Element AccountingYES

CO-OM-CCAOverhead Management Cost Center AccountingYES

CO-OM-OPAOverhead Management Internal OrderYES

CO-PC-PCPProduct Cost Controlling Product Cost PlanningYES

CO-PC-OBJProduct Cost Controlling Cost Object ControllingYES

CO-PC-ISProduct Cost Controlling Information SystemsYES

CO-PAProfitability AnalysisYES

CO-PCAProfit Center Accounting YES

4.2 Organisational structure of module CO in target state

4.4.1 Company Code

The company code is an organizational unit used in accounting. It is used to structure the business organization from a financial accounting perspective. The company code represents a legal entity for financial reporting purposes. This means that in all the financial transactions and master data definitions the company code must be identified.

Schneider Electric KSA Company Code will be KSA14.4.1 Controlling Area

Organizational unit within a company, used to represent a closed system for cost accounting purposes.

A controlling area may include single or multiple company codes that may use different currencies. These company codes must use the same operative chart of accounts.

All internal allocations refer exclusively to objects in the same controlling area.

In KSA:

Controlling Area Code : ME01 Controlling Area currency : EUR4.4.1 Operating Concern

Represents a part of an organization for which the sales market is structured in a uniform manner.

By setting off the costs against the revenues, we can calculate an operating profit for the individual market segments, which are defined by a combination of classifying characteristics (such as product group, customer group, country, or distribution channel). The market segments are called profitability segments.

We can assign multiple controlling areas to one operating concern.

In KSA:

Operating Concern Code : ME01 Operating Area Currency : EUR All PA reports will be updated in monthly periods. (There will be no daily or weekly data transfer to PA module.)

4.3 Master data

4.4.1 Master Data

4.3.1.1 Cost Center

The cost center is an organizational unit in controlling area representing a clearly delimited location where costs occur. Cost center can be defined according to several different design approaches. (eg. Functional requirements, allocation criteria, activities or services provided, geographic location and/or area of responsibility) A typical approach could be for an enterprise to define a cost center for each low-level organizational unit that has responsibility of managing costs. As costs are incurred, they are assigned or posted to the appropriate cost center.

Any creation of cost centers must be assigned to the cost center hierarchy.

Schneider Electric cost centers are defined according to the organizational units in KSA.

Each cost center will be assigned to a category:

D : DVC

I : Industrial

C: Commercial

A: Administrative

4.3.1.2 Cost Center Group

Hierarchical group of cost centers defined and organized according to selected criteria.

Schneider Electric cost center groups are defined according to the reporting needs on the budget process.

4.3.1.3 Cost Center HierarchyHierarchical structure which combines several cost centers according to certain criteria.

Standard hierarchy code will be ME01

4.3.1.4 Cost Element

Cost elements captures costs incurred within a particular accounting period. They are closely related to the general ledger accounts used in FI-GL.

There are two types of cost elements: primary cost elements and secondary cost elements.

4.3.1.4.1 Primary Cost Elements

Cost elements whose costs originate outside of CO and accrual costs that are only used for controlling purposes.

Primary cost elements will be same with the expense and revenue accounts in GL.

The primary cost elements and revenue elements are directly from the expense and revenue accounts of the P&L statement.

Primary cost elements correspond to the expense and revenue GL accounts in FI.

The following cost element categories will be used in KSA:

1 : Primary costs

11 : Revenues

12 : Sales deduction

Primary cost element will be defined after chart of accounts creation.

4.3.1.4.2 Secondary Cost Elements

Cost element that is used to allocate costs for internal activities.

Secondary cost elements do not correspond to any G/L account in Financial Accounting. They are only used in Controlling and consequently cannot be defined in FI as an account.

The following cost element categories will be used in KSA:

21 : Internal settlement

31 : Order/project result analysis

42: Assessment cost element

43 : Internal activity allocation

Secondary cost element codes will be defined in Realization Phase.

4.3.1.5 Cost Element Group

Organizational entity that combines cost elements of the same type.

Cost element groups can serve various purposes: planning, reporting, distributions, etc.

Expense budget planning process will be managed on cost element groups. L Codes will be defined as cost element groups.

L1 Personnel Expenses

L101 Salaries & Wages

L102 Overtime

L103 Bonus & Premium

L104 Social Charges & Taxes

L105 Meals & Transportation

L106 Provisions & Expenses For Bonus, Holiday and Retirement

L107 External Personnel

L108 House RentalL109 Other Personnel Expenses

L2 Communication & Promotion

L201Promotion & Documents

L202 Advertising

L203Exhibitions

L204 Customer Training & Travels

L3 Transport, Travel & Entertainment

L301 Airplane Tickets - Domestic

L302 Travel Expenses - Domestic

L303 Airplane Tickets - Foreign

L304 Travel Expenses - Foreign

L305 Entertainment & Other Travel Expenses

L4 Rental, Insurance & External Services

L401 Office Rental

L403 Cleaning

L404 Repair & Maintenance - Car

L405 Repair & Maintenance - Other

L406 Insurance

L407Professional Fees

L408 Seminar and Training

L409Bank Charges

L410General Provision Risk

L411Other External Services & Purchases

L5 Administrative & Offices Expenses

L501 Electricity

L502 Other Consumable

L503 Post & Cargo

L504 Telephone & Telex

L505 Stationary

L509Other Official Expenses

L6 Taxes & Other Costs

L601 Local Taxes

L602 Other Taxes & Penalties

L603 Warranty Expenses

L7 Provisions

L701Provisions for Stock

L702Provisions for Customer Account

L703 Other Provisions

Drafted Cost element group yet to be finalised 4.3.1.6 Activity Type

Unit in a controlling area that classifies the activities performed in a cost center.

Activity types describe the activity produced or supplied by a cost center and are measured in units of time or quantity. These are used to charge out costs from cost centers to production orders, projects, and service orders. Each activity will have a price/rate. Activities will be charged to these cost objects during confirmation.

In KSA the following activity types will be used:Activity TypeActivity NameSecondary CE

DEDEDesign Engineer Elec9431104

DFDEDraftsman Activity9431105

EXSVSRV Site Expenses9431108

LABOURProduction Direct Labour9431000

PDPSProject design Engg9431106

PDSVPROJECT DES SRV9431106

PEAUAutomation Engineer9431103

PEPSPROJECT ENGINEER PRJ9431102

PESVPROJECT ENGINEER SRV9431102

PLPSPROJECT LEADER PRJ9431101

PLSVPROJECT LEADER SRV9431101

PMPSPROJECT MANAGER PRJ9431100

PMSVPROJECT MANAGER SRV9431100

SASVService Assist SRV9431001

SESVService Engineer SRV9431001

STSVService Techni SRV9431001

SWSVSite Worker SRV9431108

TESVTesting & C SRV9431109

TRSVTrainer9431110

DMDE

Design Engineer Mech.

9431111 ( new added)

Auto also need to add few more cost activity

4.3.1.7 Statistical Key Figures

Statistical key figures represent activities or statistics in a cost center, such as the number of employees, the floor area of a cost center.

Statistical key figures will be used for different purposes in KSA:

Distribution Keys (in cycles)

Non-productive times (for reporting purposes)

In KSA, the following statistical key figures will be used:

Number of employee (quantity)

Floor area (m2)

Energy consumption (KWH)

Production times (hours)

Non-productive times for each employee

Etc.

4.3.1.8 Statistical Key Figure Groups

An organizational unit that groups together statistical key figures that are to be processed in one step.

In KSA, statistical key figure groups will be used for reporting for non-productive times. The followings will be used:

4.3.1.9 Internal Orders

Object used to monitor costs and, in some instances, revenues for an organization.

Internal orders can be used to

Monitor the costs of short-term measures

Monitor the costs and revenues related to a specific service

Monitor ongoing costs

Actual/real internal orders will be used in KSA.

Actual/Real internal orders are used to collect costs and this can be settled to the other cost objects.

The following actual/real internal order types will be used in KSA: DAI (Investment Follow-up)

General Services

MARCOM

Parameters and number ranges of the internal orders will be defined in Realization Phase.

4.3.1.10 Profit Centers

The profit center is an organizational unit in controlling area representing a clearly delimited location where revenue is generated. Any creation of profit centers must be assigned to the standard hierarchy.

PCA lets us analyze internal profit and loss for profit centers. This makes it possible for us to evaluate different areas or units within our company.

Cost centers, internal orders, projects, production orders, cost objects and materials have a profit center assignment field in their master records.

In KSA, the following organizational units are defined as profit centers:

Energy Power Construction Oil Gas & Petrochemicals Installation systems & Control Services Energy Efficiency

Industry Business Unit

Building Business Unit

IT Business Unit

Strategic Project & Prescription

Manufacturing & Logistics

Solution centre

Quality Management

Finance & IT

Human resource

Marketing Country President

Yemen BU

S2 Business4.3.1.11 Profit Center Hierarchy

Before a profit center can be created, a hierarchical profit center structure in CO-PCA must be defined.

Profit Center Hierarchy code will be PPME01.

4.4 Implemented process description (Process model)

4.4.1 Distribution (CO CCA)

Cycle:Collection of rules for cost allocation.

A given cycle can contain a number of segments. A segment consists of the following elements:

Sender objects whose values to be allocated are computed using the same rules

Receiver objects whose allocation bases are computed using the same rules

The sender-receiver relationships defined in a cycle are processed iteratively.

Cycles are only valid in the environment in which they were defined (such as planned distribution, actual distribution, etc.)

The followings will be defined in the cycles: Cost centers or cost center groups

Cost elements or cost element groups

Orders or order groups

Cost object groups

WBS element groups

Sender and receiver cost centers and related cost elements will be defined.

4.3.2.1 Plan Cycle (from indirect cost centres to direct cost centres)

Planned costs on the indirect cost centers will be posted to the direct cost centers before standard costing run. Sender cost centers are indirect cost centers, and receiver cost centers are direct and indirect cost centers in various situations. At the end of the distribution, indirect cost centers will have no planned costs.

Sender cost centers: Energy

Power Construction

Oil Gas & Petrochemicals

Installation systems & Control

Services

Energy Efficiency

Industry Business Unit


IT Business Unit

Strategic Project & Prescription

Manufacturing & Logistics

Solution Center

Distribution rules (segments and statistical key figures) are defined, but not finalized yet. All the distribution keys and strategies will be finalized in Realization Phase.

4.3.2.2 Actual Cycle (from indirect cost centers to direct cost centers)

The aim and the process will be same with the planned costs distribution. Same distribution strategies and statistical key figures will be used in the cycle. Actual cycle will be created in the system for actual cost distribution.

4.3.2.3 Actual cycle (from dummy cost centers to indirect cost centers)

Common expenses will be posted to the dummy cost centers at the invoice entry transaction. This process will make easy the invoice entry transaction. Because accountants will enter only one cost center for the common expenses.

Values of the statistical key figures will be entered to the system or transferred from other applications. (From LIS, etc.) The following statistical key figures will be used in this process:

Energy consumption (KWh)

The floor area (M2)

Number of personnel

Etc.

Statistical key figures will be finalized in Realization Phase.

Cycle will be run. (First run: test run, afterwards actual run)

The results of the cycles will be checked. There will be no amount on the dummy cost centers after cycle run. All the costs/common expenses will be posted to the related cost centers.

4.4.1 Expense Budget Planning (CO CCA)

Expense budget planning process will be managed on cost element groups (L Codes) in SAR currency.

Various CO versions will be used for each step of the budgeting process. First draft planning will be in Version 1 by the department managers. Consolidation and evaluation of budget will be done in this version by the Management Control Manager. Necessary changes will be done in Version 2 by the Finance Director and General Manager. (Data on the Version 1 will be copied to Version 2.) Budget approve process will be managed in different CO versions. If budget is approved the last version will be copied to Version 0 as the final budget figure.

4.4.1 Activity Unit Price Calculation (CO CCA)

We can use the following price calculation methods in the plan and in the actual:

Price calculation can be based on:

Period-based price

Average prices

Cumulative price

Period-based price:The system divides the costs arising in each period by the activity. This can result in different prices in each period.

Period-based price calculation method will be used with standard costing and RECO processes, in KSA.

Average prices:The average price is based on the total costs from all periods divided by the total activity quantity of an activity type from those periods. This ensures that the activity inputs of all receivers are valuated with the same price, regardless of the period in which the activity input occurs.

Average price calculation method will be used with budget costing process.

4.3.4.1 Planned Activity Unit Price Calculation

Plan price calculation determines prices for the plan activity types of each cost center and activity type.

In the plan, the SAP System considers all the planned activity relationships between cost centers. It calculates the prices iteratively by dividing the plan costs by the plan activity quantity.

Expense budget planning will be done activity-dependent on L codes in direct cost centers.

Costs of indirect cost centers will be distributed to the direct cost centers.

Planned working hours will be planned:

Manual planning: planned working hours will be entered to the system manually.

Automatic planning: after MRP run, planned working hours will be calculated on related work centers cost centers. These planned working hours can be transferred from PP to CO and used on plan activity unit price calculation.

In KSA, planned working hours will be entered to the system manually. (Number of personnel, total production times, % efficiency, non-productive times, etc.)

Planned costs will be divided by planned working hours. And the planned activity unit price will be calculated.

Plan Labour activity unit price will be calculated manually and entered to the system. Holiday provisions will be taken into consideration on labor cost planning. So the planned labor activity unit prices will be same for each period. Calculation will be made 2 times in a year. (first 6 months and last 6 months)

Overhead activity unit price calculation will be same with labor activity unit price calculation. There will be no differences between monthly figures.

All of the calculations will be based on SAR currency figures.

4.3.4.2 Actual Activity Unit Price Calculation

During actual price calculation, the system calculates iterative prices for activity types based on actual costs and actual activities. The calculation takes into account all activity exchanges between cost centers.

Activity allocations / transfers between direct cost centers will be entered to the system before activity unit price calculation.

All invoice entries in FI side, update the cost elements and cost centers in CO module.

When invoice entries finish in accounting department, budget-actual expense comparisons can be reported.

The activity unit price calculation process is same with plan cycle.

Actual labor activity unit prices will be calculated with holiday provisions (personnel expense budget) and planned working hours. Provisions and working time decisions will provide to see the same amounts on plan and actual activity prices.

Actual production overhead activity unit prices will be calculated with actual costs.

4.4.1 Product Costing (CO PC)

4.3.5.1 Material Types and Price Determination

Material Types:

Groups together materials with the same basic attributes, for example, raw materials, semi-finished products, or finished products.

When creating a material master record, we must assign the material to a material type.

The following material types will be used in KSA:

ROH Raw Material

V : Moving average price

VERP Packaging Material

V : Moving average price HALB Semi-finished Product

S : Standard price

FERT Finished Product

S : Standard price

HAWA Trading Goods

V : Moving average price ERSA Spare Parts


HIBE Indirect Materials (consumables)


UNBW Non-valuated Material

---

DIEN Services Products

---

Price Control:Indicator determining the procedure used for material valuation.

Two procedures are available in the standard system:

Valuation at standard price (S)

Valuation at moving average price or (if the material ledger has been activated) periodic unit price

(V and/or PUP)

4.3.5.2 Production Types with CO point of view

In KSA, two main production types will be implemented:

Product Cost by Order

Make-to-stock

Make-to-order

Product Cost by Period

Product Cost by Order:We can manage our costs at the level of production orders.

We can use the Product Cost by Order application component in make-to-stock and sales-order-related production environments.

In Product Cost by Order, the production orders themselves are the cost objects. Costs charged to production orders are usually analyzed and settled by lot. This means that variances can only be analyzed after the entire planned production quantity has been put into inventory.

Product Cost by Period:We can manage our costs by period at the level of production cost collectors.

The application component Product Cost by Period enables periodic analysis of costs at the product level.

In contrast to Product Cost by Order in which we analyze costs by lot, in Product Cost by Period we analyze costs by period. This means that we collect the costs on a cost object over an extended period of time, and analyze the debits and credits in each period.

Product Cost Collector:Product cost collectors enable us to collect costs at the product level independently of the production type. Regardless of whether the production environment is order-related production, process manufacturing, or repetitive manufacturing, we collect the production costs for the product on a product cost collector and analyze the costs in each period.

4.3.5.3 Cost Object Controlling (CO-PC)

Cost Object

Units of output resulting from the value-added process with which costs are identified according to how they are incurred.

Cost objects can be independent entities (called cost object IDs), or they can represent other entities such as orders or projects.

The functions of preliminary costing, simultaneous costing, and final costing can be performed on cost objects.

The following cost objects will be used in KSA:

Product cost collectors

Production orders

Service orders

Internal orders

Sales order items

4.3.5.4 Integration Points with Logistic (master data, some definitions, etc.)(CO-PC)

Bill of Material (BOM):Bill of material is a multi-level material structure that defines the composition of the main material reference.

Bills of materials contain essential master data for integrated materials management and production control. A bill of material is a complete, formally structured list of the components that make up a product or assembly. The list contains the material number of each component, together with the quantity and unit of measure.

Order BOM (BOM with reference to a sales order) :

We work with order BOMs when we specially tailor the make-to-order production of our products to the requirements of our customers. In order to meet the customer requirements, sales order specific modifications to various assemblies are often required. Furthermore, assemblies are often specially constructed for a particular sales order.

The order specific, modified or created BOMs are saved with reference to materials, sales orders, and sales order items. BOMs of this category are linked to sales orders, so they are known as sales order BOMs or order BOMs.

For Master pact, RM6, LC Component Alternative BOM:One product can be manufactured from alternative combinations of materials. The product is represented by a number of alternative BOMs (alternatives). The differences between the alternative BOMs are only small. Usually the only difference is in the quantity of individual components.

Work Center:A work Center defines the organisational units where operations or work steps are carried out that produce outputs of work. Each work center is assigned to a cost center for specific time periods that are defined in the work center master records.

Work Center in Schneider will represent a group of people, a group of machines or a single production line.

Work Center will be based on the Production Routing.

Routing:Routing is a sequence of operations that describe the process and the resources used to manufacture a product or a semi-finished product.

It defines:

operations (work steps) and their sequence

where the work must be done (work centers)

how much time is needed for the operation

the quality checks to be carried out

what materials have to be used (and when)

The activities to be produced in the operations as a basis for determining dates, capacity requirements and costs.

Allocation of components will be done to related operations.

The routing is to be defined based on the production flow and the layout on the shop floor.

The routing will consist of work centres which can be differentiated through the various operational functions.

The routing & rate routing will include the standard times: Labor, machine time, setup, other activities etc.

Rate Routing:Rate routings meet the needs of rate-based production schedules in the R/3 PP Module. It contains specification for production rate, setup and teardown times and assigned production activities. This is usually used for repetitive manufacturing.

Production Version:A production version determines which alternative BOM is used together with which task list/master recipe to produce a material.

For one material, we can have several production versions for various validity periods and lot-size ranges.

Production versions are used in discrete and repetitive manufacturing.

Production versions are used in material requirements planning (MRP), production order creation, and product costing to select the most suitable task list or recipe and the corresponding material list.

Production version will be used for DISBOS productsProduction Order: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.

In KSA, the following production order types will be used: YP10 Standard Production Order-MTS

YP11 Standard Production Order-MTO

4.3.5.5 Standard Costing (CO PC)

Standard costing will be calculated at the beginning of the month, after raw-material costing.

Necessary master data for standard costing are:

Material master data (all of the necessary views and fields)

BOM

Routing

Work Center cost Center activity type relations

BOM : material usage quantity x raw-material planned prices

Routing: standard production times x activity unit prices

Related activity types are defined in the routing master data.

Standard costing run will be calculated for the next period. Costing results will be analysed and checked.

Costing results will be marked. The planned prices will update the price of the next period field in material master data.

Costing results will be released at the first day of the month. All of the stock accounts will be valuated with the new planned prices. Variance accounts will be updated. (variances : standard cost for the last period and standard costs for the current period) And the standard costing results will update the current periods price fields.

A special costing variant will be used in standard costing run. (ZPPC)

4.3.5.5.1 Cost Component Structure

Controls how the results of activity price calculation or material costing are stored.

The cost component structure groups cost elements into cost components to show the following information:

Activity prices for an activity type

Cost of a process

Planned cost of a product

In Product Cost Controlling (CO-PC), the cost component structure determines the attributes for passing on the following costs:

Material costs passed on to material valuation as the standard price or inventory price

Cost of goods manufactured passed on to Profitability Analysis

In KSA, the cost component structure will be as follows:

110 Materials IG & OG 120 Packaging Materials

210 Direct Labor

220 Subcontracting Labor

310 Other production overheads (direct cost centers)

TOTAL COST OF THE MATERIAL (semi-finished or finished product)4.3.5.5.2 Costing Variant

Contains all control parameters for costing, including parameters that control how cost estimates are executed and which material prices or activity prices are used to valuate the costing items.

Costing variants will be defined and customized in Realization Phase.

Planned costing

Preliminary costing

Actual costing

RECO

Other.

4.3.5.6 Raw-Material Costing (CO-PC)

There are no BOMs and routings for raw materials in the system. Raw materials (ROH), packaging materials (VERP) and trading goods (HAWA) will be included in this process, the raw material price will be contractual price agreement with the vendor or purchase order price.4.3.5.7 Preliminary Costing (CO-PC)

We precost a production order for the following purposes:

To determine the planned costs for the material being manufactured based on the planned lot size of the order

To calculate the planning variances and use them to decide what production version to use

To be able to determine the production variances at a later time

In sales-order-related production, we can use the preliminary costing for the production order for the following purposes:

To use the planned costs calculated in this way to determine the planned costs for the sales order item

To use the planned costs calculated in this way as the basis for results analysis

Preliminary costing will be run with a special costing variant. Costing will be calculated by the system automatically according to the system status of the production order. (REL: released) There wont be a FI transaction at this step, such as valuating of stock accounts, etc.

Material costs: (BOM in the production order) planned material usage quantities x material unit prices (planned)

Labor + Overhead costs: (Routing in production order) planned operation times x planned activity unit prices.4.3.5.8 Actual Costing in PP Orders (CO-PC)

Actual costing in PP orders is not really actual costing. All of the confirmations and material movements update the costs in production orders. But the activity unit prices are planned prices at that time. Actual costing results wont update the GL accounts.

Production orders, product cost collectors, and sales order items must have the status REL (released) before they can be debited with actual costs.

Material costs: Material consumption from stock to PP orders x material unit prices (planned)

Labor + Overhead costs: Confirmed times in PP orders x planned activity unit prices

Time confirmations and material consumptions are actual in this step. Material unit prices and activity unit prices are planned values. Their actual values will be calculated after period-end closing transactions in FI and CO modules.

4.3.5.9 Subcontracting (CO-PC)

4.3.5.9.1 Subcontracting / Planned Costs

Standard costing for the subcontracted materials will be calculated at the beginning of the month, like standard products. Costing steps are same with the standard products. The difference in on the valuation strategies. Necessary strategies will be defined in customizing, in costing variant.

There wont be routing master data for subcontracted materials in the system. BOM master data will be created in the system. Special procurement indicator for subcontracting will be entered in the material master data, in accounting and MRP views.

Purchasing info record master data will be created in MM module. Purchasing info records will include subcontracting labor prices and other conditions related with purchasing and procurement processes. (Payment terms, delivery times, discounts, etc.)

Material costs : Material quantity (BOM) x planned material prices

Subcontracting labor costs: subcontracting unit price in Purchasing Info Record x quantity

FI accounts (stock accounts) will be updated with the planned prices for the next period, after standard costing run, marked and released.

4.3.5.9.2 Subcontracting / Actual Costs

Purchase order will be created for the subcontracted materials. There wont be a production order for these materials in the system. The components that the vendor needs to manufacture the end product are specified in the purchase order.

Materials will be sent to the vendor with the PO reference. Materials will be followed in special stock statuts.

The vendor performs its service and delivers the ordered material (the end product). The consumption of the components is posted.

Subcontracted materials will be receipt to our stocks. Stock accounts will be valuated with the standard prices of the materials. Vendor invoice will be entered to the system in FI module.

Material costs : consumed material quantities x actual material prices

Subcontracting labor costs: goods receipt quantity x actual unit price (invoicing price) for subcontracting services

4.3.5.10 Rework Process (CO-PC) ( Not in scope for KSA)

Routine production scenario will be completed. Confirmations and material consumptions will be done in the production orders. Rework decision will be made at the final operation in routing: final quality control.

New production order will be created. The order type will be different than normal production order: production order without material. Rework process will be managed in the rework order. Confirmations will be made and material movements will be done in the rework orders.

When rework process is finalized, Settlement rule will be defined in the order. Settlement rule will be main PP order.

Settlement will be done in CO. The rework costs will be posted to the main production order, and the main production orders costs will be increased.

4.3.5.11 Period-End Closing Transactions / Actual Costing (CO-PC)

Revaluation at Actual Prices:Revaluation at actual prices supplements revaluation of activity allocations between cost centers. It is used to correct activity allocations that occurred previously from cost centers to other cost accounting objects.

We will use revaluation at actual prices for the following objects:

Internal orders

Production orders


Sales document items (for example, sales orders)

General cost objects

Projects

WBS elements

Networks

Network activities

If a cost accounting object uses an activity from a cost center, we usually start with a plan price to allocate the activity. This is because the actual price is calculated during period-end closing. In the actual price calculation, the SAP system performs an iterative calculation of the prices for the activity types. To do this, it uses the actual costs that were debited to the cost center, and the activities actually incurred. During this process, the system accounts for all activity relationships between cost centers.

After actual price calculation, we can revaluate the objects at actual prices if they have used the activities from cost centers. We do this using Revaluation at actual prices (revaluation). The system always determines the variances between the costs posted up to this point and the costs that occur under the new prices. The corresponding sender cost center is credited by the actual price revaluation and the receiver is debited accordingly.

WIP Calculation:The WIP calculation function valuates the unfinished products. (Work in process) The WIP is valuated at actual costs. Work in process is the difference between the debit and credit of an order that has not been fully delivered. The system status of the manufacturing orders can be PREL (partially released) or REL (released).

Variance Calculation:Stage in the period-end closing process that determines variances for the following objects:


Production orders

Production variances are calculated based on the different between the actual cost against the standard cost of semi-finished and finished goods produced. Production variances can be analyzed in terms of price, quantity and other variances.

The main variance categories are:

Input price variance: Input price variances are caused by differences between the planned and actual prices of the materials and activities used. Resource-usage variance: Resource-usage variances are caused by the use of different materials and activities than were planned.

Input quantity variance: Input quantity variances are caused by differences between the planned and actual consumption quantities of materials and activities.

Lot size variance: Lot size variances are only calculated if the planned quantity is different than the confirmed quantity (the delivered quantity).

Others.

Settlement:Full or partial allocation of calculated costs from one object to another.

The following objects can be Settlement senders in KSA:

Internal orders

Production orders

Service orders

General cost objects

Sales order items

Networks

Projects

The following objects can be Settlement receivers in KSA:

Assets

Internal orders

Profitability segments

Cost centers

Sales order items

Materials

Networks

Projects

G/L accounts

The following Settlement will be performed in KSA business scenarios:

to GL accounts (WIP, variance accounts, warranty accounts, etc.)

to material (stock accounts)

to sales order (make-to-order strategy)

to cost centers

to CO-PA

4.4.1 Project Costing (CO-PC & PS)

4.3.6.1 Master Data in PS

Project Definition:The project definition is the framework for all objects within a project. The project definition contains dates as well as organizational information that are binding for the entire project.

Work Breakdown Structure (WBS):

Hierarchical outline of an undertaking described in the project definition.

The work breakdown structure (WBS) forms the basis for the organization and coordination of a project.

A WBS consists of various WBS elements. The WBS elements describe specific tasks or actions in the project to be carried out within a defined time period.

Work Breakdown Structure Element:WBS elements are the individual structure elements in the work breakdown structure (WBS).

The term describes a concrete task, or a partial task, which can be further subdivided.

Network:Object containing instructions on how to carry out tasks in a specific way, in a specific order, and in a specific time period.

Activity:An activity is a task in a network which has a defined start and finish. An activity can be broken down into activity elements.

There are four categories of activities in the Project System:

Internal activities

External activities

General costs activities

Service activities

4.3.6.2 Standard Costing (plan costing)

4.3.6.2.1 Equipment Standard Cost

The standard cost of the equipment mainly is composed of two main parts, product cost of the equipment and the Project Office cost that will be used in design of this equipment. Product cost may only be calculated after the BOM and routings are finished. That is trivial because the costing of a product will be calculated by the material used for this product and the activity costs that will be spent for production will be calculated by the time planned for production and standard activity unit price in the relevant cost centre.

As the BOM and routing is completed, it is so important to run the standard costing for the newly created this finished good. The level of the Product Cost Detail may be seen in CO-Product Costing.

Of course we have to refer at this point to the materials that have no material code that are existing on Equipment BOMs. Normally there is no standard cost for materials without code. But to make the cost planning efficient on the BOM there can be a forecasted cost on this BOM line. Otherwise, only after Purchase Orders are created for these materials the Price on Purchase Order will be seen for these materials which will delay the complete cost calculation of the equipment and so the project.

The Project office standard cost will be calculated by the time planned and entered to PS (work in hours on activity) by the Project Office Responsible, and the Standard Unit Price of the Labour Activity in Cost Centre Project Office.

These two will give us the equipment cost which will be accumulated on related Equipment WBS. Since every equipment on the Project will have different WBS, it will be easy to distinguish the cost of different equipment on the project.

4.3.6.2.2 Planning of Purchasing and SubcontractingThe initial cost planning for the materials and the subcontracting activities to be procured by EPS will be done on PS module as these are added to project. The cost of the materials to be internally procured will be calculated by the standard price of this material and the quantity allocated for the project.

For external procurement, there will be a price entry on PS as these are added to activities as components. This will be seen as the planned costs. Later when the Purchase Orders are created, the prices on Purchase Order will be regarded as planned costs.

4.3.6.2.3 Planning of Financial ExpensesThe only financial cost that will be charged to the project will be the Insurance expense. The planned cost will be entered as a cost element to Project Plan.

4.3.6.2.4 Planning of Other CostsThe planning of the other costs (such as plane and meal expenses of EPS project and customer) will be entered as cost expenses to the project.

4.3.6.2.5 Planning of Services CostsThe Services departments activities that will be used in the project will be planned first by the planned man-hour of this activity and the planned hours will be multiplied by the labour activity unit price of the Services Cost Centre.

Later as the Services department is notified and a CS order is created, the planned cost on the CS order will be regarded as planned cost.

4.3.6.3 Actual Costing

4.3.6.3.1 Actual Production Costs

Actual Production costs are settled to the Equipment Finished Good Stock when the goods receipt is done. Here all the costs are actual, actual quantity of material and actual price of material, actual labour spent and actual unit price of Labour activity. When the equipment is delivered to Customer, the Finished Good will be deducted from Stock and Project WIP will increase with this same amount.

4.3.6.3.2 Actual Services Costs

On the CS order the actual material, labour and other expenses will be accumulated. These actual costs will be affected to Project Actual Costs. Actual costs on the CS orders will be settled to the project. So, services costs will be accumulated on the project.

4.3.6.3.3 Actual Expenses

Expenses such as insurance, transportation, or plane will be related to the project during the entry of the invoice. (Since we do not open a Purchase Order for these expenses, but directly post the invoices from Accounting) These invoices had to be related to the Project during the invoice approval cycle.

4.3.6.3.4 Settlement to PA

These actual expenses will be accumulated at WBS header (Project WIP) until an invoice is made. As the invoice is prepared from the SD, it is important to distinguish between partial invoicing and last invoice. When the last invoice is prepared all the actual costs are to be Settled to Cost of Goods Sold, and the turnover and all the costs are also to be settled to Profitability Analysis at the end of each period. The product pyramid will be on Dummy material on SD order. Therefore the related activity/Family will get this turnover and costs.

For partial invoices the situation is more complex. There may be unrealised cost on the Project but the invoice may be related to some part of it. Therefore to put all the accumulated cost to COGS and PA may result in wrong judgements. So the cost to be settled here has to be calculated by the forecasted margin.

4.4.1 Services Costing (CO-PC)

Costs of Services activities will be followed on CS orders. CS orders will be cost objects in CO. Actual costs will be collected on CS orders, and Settled to the related objects. (SD orders, cost centers, GL accounts, CO-PA, etc)

Services projects will be managed in PS module. The main costing process will be same with the other projects in PS.

Planned Services activity unit price will be calculated at the beginning of the year, and will be used during the year. Actual activity unit price will not be calculated. The differences will be followed on commercial based costs.

Costing items of CS order will be: Material costs

Labor costs

External labor (subcontracting costs)

Overheads

Expenses (*)

Others

(*) job expenses (specific to CS order: travel, accommodation, food, etc.)

4.3.7.1 Planned Costs

CS Orders will be created and released.

Necessary components will be assigned to the CS orders. Task list will be defined in the CS orders. Activity planning will be made in the CS orders.

External services (subcontracting jobs) will be defined in CS orders, if needed.

Other costs will be planned in the CS orders manually.

Cost planning programme will be run in CS order.

Estimated costs will be entered to the system, if needed. Cost estimation will be managed out of SAP, before planned costing run.

4.3.7.2 Actual Costs

CS orders will be created and released.

During the service orders, necessary materials will be posted from stock to service orders. All of the materials will be managed with reference in Services Department.

If defined, necessary subcontracting services will be purchased with a purchase order in MM module. Account assignment type will be order in the PO item, and the related Service order number will be defined in PO account assignment field. Related GL account will be defined in PO, too. With invoice entry transaction, the value of the external services will be posted to the service order.

Other additional costs will be posted to the related service orders at the invoice entry transaction automatically. The important point is link between the invoice and service order number. Related employee in services Department will provide necessary information (service order number) for FI posting to the accountants.

4.4.1 Cost of Quality (CO-CCA & CO-PC)

4.3.8.1 IQC Appraisal Costs

Standard labor time will be entered to inspection plans, quality control operations.

QM work centers will be assigned to the related cost centers.

CO activity types will be assigned to the operations in inspection plan. QC labor activity will be used in the IQC calculation.

QM orders will be created and assigned to the materials at the beginning of the month. Materials will be grouped (work center basis) and assigned to the QM orders.

Test results will be recorded. Activity confirmations (with standard activity price) will be entered to the system and multiplied by planned activity unit prices. Labor expenses will be accumulated on the QM orders.

Materials consumed during the income quality control tests will be posted to the related cost center.

QM orders will be closed at the end of the month. (system status will be TECO : technically closed)

Settlement rule of the QM orders will be cost centers. Settlement will be done in CO module.

4.3.8.2 FQC Appraisal Costs

Final quality control operations will be defined in PP routings. The last operation will be final quality control. A special control key will be used in the routings. (QM01)

Standard final quality control times will be entered to the routing master data.

Final quality control operations will be assigned to the related work centers. Direct labor activity will determine in the routings.

Inspection lots are generated when PP orders are created.

Results will be recorded for the inspection lots. Final quality control times will be confirmed in PP orders with standard times. Confirmed standard quality control times will be multiplied by the planned labor activity unit prices.

Labor times will be accumulated in the PP orders, final quality control operations.

Final quality control costs will be added production costs.

4.3.8.3 Reworks Non-Conformity Costs

Rework process is explained in PP scenarios. Topic: 4.4.5.10. Rework process

4.3.8.4 Scraps Non-Conformity Costs

Non-conform materials will be posted directly to the related cost centers in IQC operations.

Non-conform semi-finished products and finished products will be confirmed on the PP orders as scraps.

Customer returns will be entered to the system in SD module. Non-conform finished products will be posted to Services cost center. Control and maintenance times will be accumulated in CS orders. Confirmed times will be multiplied by services labor activity unit price.

Material costs + services labor costs = costs of customer returns.

4.4.1 Profit Center Accounting (CO-PCA)

CO-PCA primarily serves to calculate internal (plan and actual) results for profit centers according to the cost-of-sales accounting approach.

In addition, CO-PCA lets us analyze certain balance sheet items by profit center. This also makes it possible to control the necessary key figures for an area of responsibility.

Profit Center Accounting is account-based. That means, the values are updated in CO-PCA according to account. Consequently, we can reconcile the data here with that in Financial Accounting.

CO-PCA provides us with a comprehensive and flexible information system for analyzing our data by period. We can access the original postings from FI, CO, SD, MM, and so on directly to identify potential weaknesses.

EC-PCA provides you with a comprehensive and flexible information system for analyzing your data by period. You can access the original postings from FI, CO, SD, MM, and so on directly to identify potential weaknesses. Using the report/report interface, you can drill down to the information systems of other components.

The graphic below shows how a report is built in the cost-of-sales approach.

1. The revenues and the costs of sales are listed in the report rows by account.

2. Variances in production orders are assigned via the accounts to which the data was posted. You can assign all debits and credits to the production cost centers using a separate function area, for example Production, for the variances in the production cost centers. The difference which arises gives you the desired variances.

3. The rest of the overhead for the period is entered in the corresponding report rows by function area.

4. The report rows for data from non-operating results are found using the corresponding accounts.

4.3.9.1 Profit Center Structure

In KSA, the following profit centers are defined: NRG BU Oil Gas & Petrochemicals

Power ISC

Services

Energy Efficiency (EEM) Industry Business Unit


IT Business Unit

Yemen BU

S2 Business

Support functions profit center Dummy

(*)The dummy profit center is the default profit center to which data is posted when the corresponding object has not been assigned to a profit center.

We can find out which objects are not assigned to profit centers by analyzing the postings assigned to the profit center. We can also assess or distribute data from the dummy profit center to the desired profit centers.

It may happen that some objects in our system are inadvertently left without an assignment to a profit center. In this case, postings to accounts which are defined as revenue or cost elements are assigned to the dummy profit center of the controlling area to which the object posted to belongs. This ensures that us internal and financial accounting data are reconciled.

The dummy profit center is structured just like a normal profit center. The only difference is a flag indicating that it is the dummy profit center.

The other dummy profit centers are specific for KSA. Theyre characteristics/definitions are like normal profit centers.

(**) Dummy- profit centre are allocation profit centers. They will be used for cost allocations.

4.3.9.2 Profit Center Assignments

We divide our company into profit centers by assigning all the objects which contain profit-related data to your profit centers. By making these assignments, we can also display selected balance sheet items in CO-PCA.

We can only assign objects from one controlling area to a profit center

These assignments make it no longer necessary for us to post our data explicitly to profit centers. The system automatically transfers the data to CO-PCA when it is posted to the original object. We can reflect both actual and plan data from the assigned objects in Profit Center Accounting in this manner.

The following data is transferred to Profit Center Accounting:

Revenues and sales input - through assignment of sales document items

Direct costs - through assignment of production orders and cost objects

Overhead costs - through assignment of account assignment objects from Overhead Cost Controlling (cost centers, orders etc.)

An objects assignment to a profit center is stored in that objects master record.

4.3.9.2.1 Assigning Materials

Assignments of materials to profit centers provide the default values for assignment of sales orders and manufacturing orders.

With internal goods movements also (such as stock transfers or material withdrawals) the profit center is derived from the material master, if no other account assignment has been made.

The assignment of materials also forms the basis for the transfer of material stocks to Profit Center Accounting.

The assignment material plant is only valid for a single plant.

In KSA, all materials will be assigned to the related profit centers in master data. Core Unit products and LV products will be managed in the same plant (SA01). The differentiation for common materials between profit center will be made on the CO objects. (sales orders, production orders, etc.)

4.3.9.2.2 Assigning Cost Centers

We need to assign cost centers to profit centers so that we can reflect all the primary costs from Financial Accounting and all secondary allocations from Cost Center Accounting in Profit Center Accounting.

The assignment of a cost center also implicitly assigns all the assets which belong to that cost center to the profit center.

In KSA, following cost center profit center assignment will be used:

Cost Centersshort Text of the CCProfit Center

BL100BLG GeneralBLG

BL200BLG MarketingBLG

BL304BLG Vertical SalesBLG

BL300BLG SalesBLG

BL400BLG ProjectsBLG

EE100EE General ManagementEEM

EE400EE ProjectsEEM

IN100IND General ManagementIND

IN200IND MarketingIND

IN300IND SalesIND

IN304IND Vertical SalesIND

IS100ISC General ManagementISC

IS301ISC Diffuse market SalesISC

IS200ISC MarketingISC

IS300ISC Riyadh SalesISC

IS303ISC Jeddah SalesISC

AP100A P C GENERALITB

NG100NRG General ManagementNRG

NG200NRG Energy MarketingNRG

NG300NRG Energy SalesNRG

OG100OGP General ManagementOGP

OG200OGP MarketingOGP

OG400OGP ProjectsOGP

OG300OGP SalesOGP

PC100PCO General ManagementPCO

PC300PCO Riyadh SalesPCO

PC200PCO MarketingPCO

PC301PCO Distributors SalesPCO

PC302PCO Panel Builder Sales PCO

PC304PCO Verticalized SalesPCO

PC303PCO Jeddah SalesPCO

SB100S2 General ManagemnentS2B

SR100Services General ManagementSRV

SR400Services PorjectsSRV

SR600SERVICE I T & CSRV

SR300Services SalesSRV

YE100Yemen General ManagementYEM

CP100Country President's CostFIN

FI100Finance General ManagementFIN

FI201Accounts TransactionalFIN

FI202Accounts Tax and customsFIN

FI203Accounts LegalFIN

FI204Accounts Other FunctionsFIN

FI301IT Infrastructure & NetworkFIN

FI302IT Application ManagementFIN

FI303IT User SupportFIN

FI304IT Transformation ProjectsFIN

FI305IT Other FunctionsFIN

FI101Management ContorlFIN

HR101Recruitment / Internal CommuncationHRD

HR201TrainingHRD

HR301Administration HRD

HR401MaintenanceHRD

HR501Safety & SecurityHRD

HR102Transactional shared servicesHRD

ML100M&L General ManagementMNL

ML501M&L MethodsMNL

ML101M&L Production / Fab & AssemblyMNL

ML601M&L PurchaseMNL

ML701M&L LogisticsMNL

ML702M&L Logistics- Transportation OutboundMNL

ML801M&L Store / Incoming Goods & IssueMNL

MK200Marcom - Commercial costMKT

MK201Marketing support / Price ExcellanceMKT

QA100Quality Assurance QAM

SR500AFTER SALES SERVICEQAM

SO401Automation ProjectsSFB

SO405Design GeneralSFB

SO402Project SFB

SO404Design ProjectsSFB

SO403Solution 3 ProjectsSFB

SO900TenderTND

SP100SPS Sales SupportSPS

SP305SPS PromotionsSPS

4.3.9.2.3 Assigning AssetsBy assigning assets to profit centers, we can represent profits and losses due to the sale of assets as well as accrued depreciation and interest in Profit Center Accounting.

This assignment also makes it possible to transfer asset portfolios to Profit Center Accounting.

An asset is always transferred implicitly to Profit Center Accounting via an assigned internal order or cost center. Where the asset is assigned to both objects, it is transferred to the profit center contained in the master data for the internal order.

Other assignments will be managed during transactions, if needed.

4.3.9.3 Revenue & Cost Elements

The transaction data in Profit Center Accounting is stored in the accounts contained in the chart of accounts for our controlling area. These accounts include those from Financial Accounting which are used in Controlling (primary revenue and cost elements) and accounts which occur only in controlling (secondary revenue and cost elements).

In addition, we can also transfer some accounts used only in Financial Accounting (payables/receivables, material stocks, work in process, and so on) in order to analyze assets, material inventories, product stocks, and changes in stock by profit center. These particularly include payables and receivables, material stocks; work in process, and others.

We can define any number of hierarchical structures of accounts for use in the information system, allocations and planning. These structures are called account groups. These account groups are only valid in Profit Center Accounting.

Cost and revenue account groups will be defined in Realization Phase.

4.3.9.4 Statistical Key Figures

Statistical key figures provide information on non-monetary data for profit centers, such as the number of employees, number of machines, capacity usage, market information, and so on. We can group statistical key figures together into statistical key figure groups.

4.3.9.5 Planning

Planning will not be done in CO-PCA. Only actual data will be monitored on profit centers.

4.3.9.6 Actual Posting

All the postings in Financial Accounting, Materials Management, Assets Management and Sales and Distribution and Controlling which affect profits are reflected in Profit Center Accounting.

Profit centers cannot receive direct postings in the R/3 System. Instead, the data is posted to other objects and passed on from there to a profit center in Profit Center Accounting. This makes it possible to display our companys results by profit center based on the original postings and with no additional work.

The system stores the following currencies in Profit Center Accounting:

Company code currency (SAR)

Any one Profit Center Accounting currency for each controlling area (EUR)

The currency in which the business transaction was processed (transaction currency)

4.3.9.7 MM Goods Movements

The graphic below illustrates how the system determines the profit center for an MM goods movement. In Profit Center Accounting, the data in the MM document is posted to the profit center determined by the system.

As we can see from the graphic, the profit center for an MM goods movement can be determined either dynamically (the material/plant combination in the document is decisive here) or indirectly via the preceding document.

4.3.9.8 SD Billing Documents

The graphic below illustrates how the system determines the profit center for an SD billing document. In Profit Center Accounting, the data in the MM document is posted to the profit center determined by the system.

For an SD billing document, the profit center is - with one exception - always determined indirectly via the preceding document.

The exception to this rule is an SD billing document with valuated project stock. With this type of billing document, the profit center is determined dynamically from the WBS element contained in the actual SD billing document.

4.3.9.9 FI Postings and FI-AA Assets Postings

The graphic below illustrates how the system determines the profit center for FI and FI-AA postings. In Profit Center Accounting, the data in the FI or FI-AA document is posted to the profit center determined by the system.

The profit center is always determined dynamically from the FI or FI-AA document.

4.3.9.10 Transferring Balance Sheet Items

We can transfer the following balance sheet items to Profit Center Accounting in the standard R/3 System at end of period:

Payables and receivables

Material stocks

Assets Work in Process

4.3.9.11 Assessment & Distribution

Assessment and distribution are described under the umbrella term Allocations.

Assessment and distribution of relevant overhead costs is performed at period closing (actual data) or plan closing (plan data). This is usually done directly in CO and then reflected in the data in Profit Center Accounting.

If we have an allocation profit center in our profit center hierarchy, we may need to assess or distribute costs again in Profit Center Accounting.

In Profit Center Accounting, the allocation function allows you to allocate the following plan and actual data.

Costs (assessment and/or distribution)

Revenues and sales deductions (assessment and/or distribution)

Balance sheet items (distribution)

Assessment is made using a special cost/revenue element.

In distribution, the original cost/revenue element/account number is retained.

4.4.1 Profitability Analysis

There are two forms of profitability analysis in CO-PA:

Costing-based profitability analysis

Account-based profitability analysis

Profitability analysis in CO-PA is based on the cost-of-sales accounting method. In KSA, we will activate Costing-based Profitability Analysis.

Costing-Based Profitability Analysis:A form of profitability analysis in CO-PA.

Costing-based Profitability Analysis represents costs, revenues, and revenue deductions for internal controlling purposes. The direct costs are collected from the relevant material cost estimate for the product sold. All values are stored in value fields.

Cost of Sales Accounting:Cost-of-sales accounting is a type of Profitability Analysis. It is used to support decision-making in sales and marketing departments. With this approach, the revenue for the units sold is transferred from the SD system or from an external billing system to CO PA. Sales deductions and manufacturing costs are assigned to each unit sold.

Profitability Analysis makes it possible evaluates market segments, classified by product, by customer, by profit center, and so on. This CO module can answer this type of =S= questions like margin by customer, by country, by DAS activity and by product family.

4.3.10.1 Characteristics

The characteristics in Profitability Analysis represent those criteria according to which you analyze your operating results and your sales and profit plan. Valid values of these characteristics are combined to form profitability segments.

Profitability Segment:

Object within Profitability Analysis to which costs and revenues are assigned.

A profitability segment corresponds to a market segment. We can calculate the profitability of a profitability segment by setting off its sales revenues against its costs.

A profitability segment in an operating concern is defined by a combination of characteristic values.

Field NameDescriptionUseData TypeLengthOrig. TableData Element

Fixed Characteristics

BUKRSCompany CodeFChar4BUKRS

FKARTBilling TypeFChar4FKART

GSBERBusiness AreaFChar4

KAUFNSales OrderFChar10

KDPOSSales Order ItemFNumc6

KNDNRCustomerFChar10KNA1KUNDE_PA

KOKRSCO AreaFChar4KOKRS

KSTRGCost ObjectFChar12KSTRG

PPRCTRPartner Profit CenterFChar10PPRCTR

PRCTRProfit CenterFChar10MARCPRCTR

PSPNRWBS ElementFNumc8PS_PSP_PNR

RKAUFNROrderFChar12AUFNR

SPARTDivisionFChar2MARASPART

VERSIVersionFChar3RKEVERSI

VKORGSales OrganizationFChar4MVKEVKORG

VRGARRecord TypeFChar1RKE_VRGAR

VTWEGDistribution ChannelFChar2MVKEVTWEG

WERKSPlantFChar4WERKS_D

Copied Characteristics

ORTO2Zone (District)FChar35KNA1

VKBURSales Office (Region)FChar4VBAK

VKGRPSales Group (Sub Region)FChar3VBAK

KDGRPCustomer GroupFChar2KNVV

KVGR1Customer Group-1FChar3VBAK

KVGR2Customer Group-2FChar3VBAK

Customer Hierarchy-1



Product Hierarchy-1

Product Hierarchy-2

Product Hierarchy-3

Product Hierarchy-4

Product Hierarchy-5

Product Hierarchy-6

AUARTSales Order TypeFChar4VBAK

Project Number

Country

Characteristic Values in KSA customizing:

BUKRS Company Code

KSA1 Schneider Electric KSAFKART Billing Type

ZKF2 Standard / Distributed Billing Document

ZKP2 Project Billing Document

ZL2 - Debit Memo-KSA

ZPLK - Project Debit Memo-KSA

ZRE - Credit fr ReturnsKSA

KOKRS CO Area

ME01 Schneider Electric KSASPART Division

Sl.NoDivisionsDescription

111 Enrgy

212Oil&Gas

313 Power construction

414Services

515Installation system&contols

616Building automation &security

717Indusrtry

818ITB

919Schneider internal sales Export

1021Energey efficeancey

1122S2

1223Yemen -KSA

VKORG Sales Organization

1100-Products 1300-Projects 1400-Service 1800-Export

VRGAR Record Type

Key which separates data in CO PA according to its source.

A Incoming Sales Order

B Direct Posting from FI

C Order/Project settlement

D Overhead Costs

F Billing Data

G Customer Agreements

H Statistical Key Figures

I Order-rel. Project

X For manual entries if required

VTWEG Distribution Channel

Sl.NoDistribution ChannelDescription

130Local

240Export

300common

WERKS Plant

SA01 EPS4.3.10.2 Value Fields

Value fields contain values and quantities that were updated or planned for particular objects.

In costing-based profitability analysis, value fields represent the highest level of detail at which we can analyze quantities, revenues, sales deductions, and costs for profitability segments in profitability analysis or contribution margin accounting. We are free to define which revenues and costs go into which value fields for profitability reports or sales and profit planning when we set up our system.

The following value fields will be used based on the requirements known as of today:

Pricing conditions of SD module

PR00 Gross price

PN00 Net Price

Discount types:

ZD01 - % of basic discount

ZD02 - % of additional discount

ZD03 - % campaign discount

ZD05 - % Commercial discount ZDO6 - % Contract Dis-1 ZDO7 - % Contract Dis2 ZDO8 - % Marketing Discount

ZDO9 - % Dis-Free Goods ZD90 - % cash discount

ZSDK- % Special discount

Sales quantity (invoiced)

Order intake quantity

Cost of Goods Sold

Standard price

Cost components in PC module Materials Intra Group Materials Outer Group Materials without reference Packaging Materials

Direct Labor

Subcontracting Labor

Other production overheads (direct cost centers)

IBC Overheads (indirect labor + overheads on the indirect cost centers depreciation) IBC Depreciation (direct c.c. + indirect c.c.) DVC Material

DVC Labor

DVC Others

IBC

CBC

ABC

Management allocations

Variance (if needed) Other value fields will be defined during Realization Phase, if needed.

4.3.10.3 Derivation

Derivation is the process by which the system automatically fills characteristic fields that do not have values.

Derivation Rule:Rule that we define in derivation using IF-THEN logic, which controls how certain target characteristic values are automatically derived from source characteristic values.

Derivation Strategy:The derivation strategy is a list of steps the system performs to derive unknown characteristic values from known values.

In KSA, customer hierarchy and product hierarchy characteristics will be derivated in CO-PA. Other derivation rules will be defined in Realization Phase, if needed.

4.3.10.4 Valuation

Valuation is the process of identifying or calculating cost accounting values in Profitability Analysis. We can valuate both plan and actual data.

In KSA, valuation using material cost estimates method will be used. This method makes it possible to determine the costs of goods manufactured when a transaction is updated in CO-PA. This method is the main integration point between CO-PC and CO-PA.

Standard cost estimate results will be updated at the beginning of the period. All of the transactions will be transferred to CO-PA with standard costing results. After period-end closing transactions in CO, Material Ledger results will update related value fields in CO-PA.

Special conditions types will be used for configurable products in SD. Because, standard cost estimate will be calculated in SD orders. The costing results will not update material master records. All of the information will be kept in the sales orders. And the costing results will be transferred to CO-PA with these special condition types. Necessary condition types will be defined during Realization Phase according to the different scenarios.

Standard cost estimate, actual costing and costing for configurable products will be based on different costing variants in CO-PC.

4.3.10.5 Actual Data Flow

4.3.10.5.1 PA MM

No actual data flow.

4.3.10.5.2 PA PS

Cost planning

Actual costing

Settlement of cost and revenues

4.3.10.5.3 PA FI

Not planned.

4.3.10.5.4 PA CCA

Cost allocations

Overhead costs (administrative, technical, commercial, etc.)

4.3.10.5.5 PA PC

Planned costs (standard costing results)

Actual costs

Variances

WIP calculations

Budget costs

4.3.10.6 Budgeting Process

Sales budget is not in scope for KSA4.3.10.7 Reporting

Standard reports provided for CCA,PCA,CO-PC & CO-PS apart from that the following reports also available.Profit & Loss by Schneider activity BW reportK Y View Profit and loss _Business Unit - BW reportWorking Capital employed & Expenditure report- BW report

FZE Booking Integration with EPS for KY View- BW report

Project backlog report

DVC/MBC/SFC By function- BW report4.4 Integration with other modules in the target state

In the system single processes of the CO module are integrated to other modules in the following processes:

4.4.1 CO - PP

Master data : BOM, routings, work center cost center assignments

Cost centers, activity types

Standard values activity types costing formulas

Production types

Make-to-order

Make-to-stock

Collective orders

Repetitive manufacturing

District manufacturing

Variant configuration

PP order types

Confirmations

Settlement rules

SOP, MRP results

Information systems

Special scenarios

Reworks

Scraps

Subcontracting scenarios

Costing and profitability analysis

4.4.1 CO PS

Project definition, WBS, WBS element, network, activity

Budget planning

Plan costing

Modifications / revisions

Confirmations

Result analysis

Settlement to COGS and to CO-PA


4.4.1 CO CS

Master data : task lists, work center cost center assignments,

Cost centers, activity types

Service order types

Confirmations

Subcontracting scenarios

Settlement rules

Billing process


4.4.1 CO MM MM movements (ML transactions)

Consumption movements to CO object (production orders, projects, cost centers, service orders, etc.)

ML (stock valuation in different currencies)

4.4.1 CO SD

Pricing conditions

Organizational structure (SD areas)

SD document types (order types, billing types)

Make-to-order strategy / plan costing in SD orders

Budget process (Sales budget, estimated sales prices, forecasting methods, PA SIS data transfer, etc.)

Profitability segment, profitability reports, etc.

Settlement to CO-PA

4.4.1 CO QM

Cost of quality report

QM orders

Task lists, activity types, work center cost center assignments

Confirmations

4.4.1 CO FI

Primary cost element master data (cost & revenue elements)

Posting from FI (invoice entries, etc.)

Records from to FI to CO objects

Transfer of balance sheet accounts to PCA

4.4.1 CO FA

DAI follow-up / real internal orders

Depreciation costs on the cost centers

5 Change in present organisation and result aspects

Strong integration between logistic transactions and financial results

Plan costing / standard costing concept

Profit center accounting concept

Order based costing (production orders, services orders, projects, etc.)

Costing in two currencies (SAR & EURO) with transaction based conversions

Less manual work, automatic records on stock and cost accounts

6 Interface requirements

6.1 Data Take Over

There will be no data take-over for CO module. All the master data of CO module will be created manually.

Only sales figures (quantities and amounts) of past 2 years will be transferred from excel to SAP with a batch input programme.

Estimated purchasing prices for budget will be transferred to the system from excel environment.6.2 Interfaces

No interfaces in current phase.7 Description for the system outputs and reports

7.1 Abap Reports

Standard reports of CO module are provided and the following reports are finalised in BW .

Profit & Loss by Schneider activity BW report

K Y View Profit and loss _Business Unit - BW report

Working Capital employeed & Expenditure report- BW report

FZE Booking Integration with EPS for KY View- BW report

Project backlog report

DVC/MBC/SFC By function- BW report7.2 Other standard outputs/printThere is no output for CO module.9. List of used abbreviations

KSA: Schneider Electric KSAEPS : Electronic Department

WBS: Work Breakdown Structure

BOM : Bill of Material

SD : Sales and Distribution Module

PS : Project Systems Module

MM : Material Management Module

CS : Customer Services Module

PP : Production Planning Module

FI : Financial Accounting Module

QM : Quality Management Module

FI-AA or FA : Asset Accounting Module

CO-PA: Controlling Profitability Analysis Module

CO-PCA: Controlling Profit Center Accounting Module

CO-CCA: Controlling Cost Center Accounting Module

CO-PC: Controlling Product Cost Controlling Module

SOP: Sales & Operation Planning

SIS: Sales Information SystemCheck the results

Cycle creation

Transfer from LIS

Distribution of

common expenses

Payroll

(data flow from HR)

Collection of

actual costs

Check the results

Cycle creation

Transfer from LIS

Run the cycle

Manual entry

Statistical key

figure values

Invoice entry from

FI

/

Check the results

Plan

Cycle Creation

Transfer from LIS

Run the cycle

Manual entry

Statistical key

Figure values

Expense budget

Planning

Run the cycle

Manual entry

Statistical key

Figure values

Invoice entry to

the dummy cost

center

Transfer from LIS

(Planned working

hours)

Plan activity unit

price calculation

Manual entry

(Planned working

Hours)

Splitting

Distribution

(Plan cycle)

Expense budget

Planning

Plan-Actual

Comparison

(expenses)

Actual data flow

From FI to CO

(Postings)

Actual working

hours from

confirmations

Actual activity unit

price calculation

Splitting

Distribution

(actual cycle)

Period-end closing

Transactions in FI

Release

Mark

Standard costing

run

Planned activity

Unit price

Calculation

Routing

creation

BOM creation

Material master

data creation

MNL

SPS

MKT

HRD

WIP

calculation

Variance

Distribution

Asset settlement

Variance analysis

Variance

calculation

Revaluation

of PP orders

Actual activity

unit price

calculation

Period-end

transactions

in CCA

Cost Planning

Planning of other

costs/manual

Definition of

external services

(subcontracting)

Task list &

Activity planning

Component

assignment

CS order

Creation & release

Revaluation of

CS Orders

Actual activity

unit price

calculation

Period-end closing

transactions in CO

Invoice entry

from FI

Purchasing

of external services

(subcontracting)

Material

consumption

(MM movement)

CS order

Confirmations

Confirmation

Month end

operations

Confirmation

Rework

Order

Confirmation

PP Order

Purchasing Info

Record

creation

Release

Mark

Standard costing

run

BOM master data

creation

Special procurement

& costing types

on the master data

Material master

data creation

Invoice receipt

Period-end closing

transactions

Goods receipt

Send materials

to the vendor

PO creation

Settlement

from rework order

to the main PP order

New PP order

creation

(without material)

Settlement

From rework order

to the main PP order

Confirmations

Rework decision

Confirmations

(time & material)

PP order

creation

PP Order

Work center

Routing

Month end

operations

Control

Operations

Month Begin

Operations

Work center

Inspection

Plan

Customer

Returns

FQC

IQC

S2B

S2B

Oil & Gas

Energy Sub group

Cost Center Group 2

Cost Center Group1

CP

Hr& Admn

F & A

Quality

EPS Indust

Marketing

SOL

Country President

HR & Admin

Solution center

Marketing

Mfg. & Logistic

Q & A

Planning of

other project costs

Planning of

Project hrs activities

Mark & Release

Planning of

labor activities

Planning of Services

Activities

Standard Costing Run

BOM & Routing

Creation

Equipment Master

Data Creation

Reporting

Costing run on

the project

Planning of

other costs

Planning of customer

related expenses

Planning of

financial expenses

Planning of purchasing

(materials & services

Reporting

Settlement to PA

(monthly)

Actual

costs-others

Actual

customer related

expenses

Actual financial

expenses (insurance)

Purchasing of

materials and services

with actual prices

Actual expenses

of activities

Actual project Hours

(Confirmation)

Actual costing of

PP Orders

Actual labor Activity

(Confirmation)

Actual costing of

CS Orders

PP Order

Confirmation

Business Support

Support Functions

Delegated Business

Profit center group

XXXXX

Finance & Accounts

Yemen

ITB

Building

Industry

EEM

TND

services

ISC

Power

NRG BU

Yemen

ITB

Building

Industry

Power Sub group

Cost Center Hierarchy

S2 B

S2

EEM

Power Sub group

Support Business

Profit Center Group

Production Related

FIN

Dummy Profit Ctr.

S

Ksa Co Bbp v1final

Documents

cost object

cost element34

cost center34

cost center group34

cost of quality cocca

cost center hiearchy10

indirect cost centers19

dummy cost centers