SAP Consumer Products for Apparel & Footwear

SAP Consumer Products for Apparel & Footwear: Product Controlling (CO)
Overview
Special structures are available in AFS to illustrate products or materials and their characteristics (e.g. style/color/size). These special structures (known as grid dimensions, categories) facilitate the processing of logistical business processes at the levels below the material master. At the same time, these structures also influence product controlling in the R/3 system. AFS-specific functionality enhances R/3 standard product controlling to accommodate these characteristic levels. Additional functionality is available in the areas of product and material valuation, product cost planning, cost object controlling and profitability analysis.

Fig. 28: Product Controlling

At the same time, all other R/3 standard accounting components (e.g. financial accounting, overhead cost controlling, etc.) are fully supported in the AFS solution.

Split Valuation with AFS Materials

Split Valuation

Stock keeping units (grid values and categories) of an AFS material or product generally do not have the same purchase price or production cost. Procurement costs, raw material expenditure and production costs can vary tremendously, making flexible material valuation of stock keeping units essential. AFS takes valuation differences at product characteristic level into account by managing SKUs separately with regard to valuation. You can assign a separate valuation price to each stock keeping unit, which can either be a standard price or a moving average price.

Valuation of SKUs

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SAP Consumer Products for Apparel & Footwear

Fig. 29: Split Valuation of AFS materials

As costs for sizes, colors or categories of a material do not always significantly differ, and to avoid numerous single valuations impairing performance unnecessarily, AFS can combine separate grid and category material characteristics in a so-called valuation type. The common valuation of any number of stock keeping units for a particular material is simplified using valuation types.

Grouping with Valuation Types

Product Costing for AFS Products

In the apparel and footwear industry, material usage and production processes generally depend on the sizes, colors etc. to be produced. Consequently, manufacturing costs of the produced stock keeping unit can sometimes differ significantly. With AFS, it is possible to calculate the manufacturing costs of a product at the level of the produced stock keeping unit. Stock valuation of products to be calculated occurs in the same way as raw materials or trading goods by using split valuation for stock keeping units. You can create separate costings for valuation types of a product, and release these for stock valuation and product cost controlling. The system carries out valuation type costings based on one determinable preference SKU for each valuation type.
Costing of Valuation Types Product Costing

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SAP Consumer Products for Apparel & Footwear

Fig. 30: Costing of Valuation Types Product Characteristic-Dependent Quantity Structure

The basis of product costing is the respective quantity structure (bill of materials and routing). In AFS, a products quantity structure can be defined dependent on grid and category. Product costing in AFS examines this grid or categorydependent determination. In the costing of a particular SKU, the system explodes the bill of materials according to the grid values/categories to be calculated and determines the relevant routing together with its operations. The most important costing elements of a product are material and production costs. The system determines a products material costs based on the prices and quantities of the components used. At the same time, the system looks at grid or category-dependent component prices and quantities over the entire costing roll up (and all production steps). The system plans the production costs based on the respective routing and the operations defined therein. In addition, material and production costs can be debited with an overhead rate.

Cost Elements

Special Production Scenarios

When determining the quantity structure, product costing considers production scenarios typical to the apparel and footwear industry, such as plantindependent production or subcontracting of materials. In the case of subcontracting, the system determines the relevant costing information automatically from the purchasing info record of the subcontractor. In the case of externally procured materials, you can create raw material costings with a respective cost component split. You can refer to the conditions of the purchasing info record, for example. In this way, delivery costs such as freight or customs can be included in the material valuation.

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SAP Consumer Products for Apparel & Footwear

Cost Object Controlling

Cost object controlling in the R/3 system facilitates the controlling of planned costs and actual costs with reference to cost objects. Depending on the production scenario, the system uses various objects for the collective cost. The production order is at the center of product controlling during anonymous make-to-stock production. Cost object controlling for production orders allows the target costs to be compared with the actual costs of a production order and analyzed. Cost object controlling in the system takes the entire controlling process into consideration as well as target and actual product characteristicdependent material valuations and manufacturing costs. The target costs are the planned costs of the finished product based on the lot size in the production order. However, the product costing planned costs are different: these are based on a (planned) costing lot size. The actual costs arise from the actual consumption of resources by the production order (for example, inventory withdrawal).
Anonymous Make-to-Stock Production

Fig. 31: Production Order Processing

Following final delivery of an order, you can determine and settle the resulting costing variances (planned, target, actual) separately according to variance categories (scrap variance, input variance, lot size variance, etc.). In general, the sales order is the relevant controlling document in make-to-order production. The system, therefore, facilitates the collection of all sales order costs across the entire production spectrum, and updates these in the controlling object Sales Order for evaluation. At the same time, logistical make-to-order production can also be carried out without sales order controlling processing. In this case, the cost object controlling results in a production order as in anonymous make-to-stock production.

Variance Determination

Customer Make-to-Order Production

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SAP Consumer Products for Apparel & Footwear

Profitability Analysis for AFS Products

Profitability analysis in the R/3 system (CO-PA) lets you evaluate market segments classified according to products, customers, orders, or any combination of these or strategic business units such as company codes, business areas, or profit centers with respect to your companys profit or contribution margin. As seen from the marketplace, the aim of the system is to provide your sales, marketing, product management and corporate planning departments with information to support internal accounting and decision making.
AFS-Specific Characteristics

Master data or basic structures can be freely defined for profitability analysis. You determine the analysis objects (characteristics) and the analysis value fields for your profitability analysis. The system creates a multi-dimensional analysis object from the combination of characteristics, from which an analysis can be planned and identified by the comparison of costs and revenues. As well as the R/3 standard characteristics region, customer etc. you can also integrate a series of AFS-specific information in the CO-PA characteristic structure. In this way, you can establish which profit is issued with which seasonal products. Furthermore, you can also ascertain which contributions of a particular size or size group contributed to this profit.

Fig. 32: Profitability Analysis for AFS Products

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SAP Consumer Products for Apparel & Footwear

Profitability analysis is part of various integration relationships to upstream R/3 components. With regard to AFS, the transfer of actual data is especially significant as R/3 standard has been enhanced to include the AFS product structure (style/color/size). The following figure shows the most important integration relationships of profitability analysis with upstream components.

Profitability Analysis at Product Characteristic Level

Fig. 33: Integration of the Profitability Analysis

AFS supports actual value flows in the same way as the R/3 standard system. The system creates revenues and sales deduction from sales orders or billing documents with your sales conditions. The costing valuation can occur with the help of the respective product/SKU plan costing, or with the help of defined conditions. The system takes valuations and conditions on SKU level into consideration from both the revenue and costs side.

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