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ERP Post Implementation Challenges – Part 3 Preparing The Cost Sheet

ERP Post Implementation Challenges – Part 3 Preparing The Cost Sheet

Author: Ranjit Simon John

The main aim for any organization to implement any form of ERP is for various reasons, more profit, better decision making, easy reach of customers etc bottom line is more and more profit and no doubt SAP is the best option any organization can have.

We have implemented SAP ERP with the standard funstionalites with very little number of custom made reports. Initially it was very difficult to conculde whether SAP was taking us in the right direction since analysing and studying the system requires expert brains. We could see entries hitting finance from all directions and we were totally lost. IT department was given two options, either to discard SAP or proceed, the option was left out for us. Like all the other departments did it would have been easy for us to submit our weapons and surrender. Infact we decided to gather all strength and fight. The main idea that guided us through the entire battle was if we have to surrender that would have been a defeat from our side not SAP’s, since SAP is a best practice ERP practiced and succesfully run by hundreds of organizations through out the world.No doubt SAP is a 100 % proven best practice across various verticals. The more and more I explore SAP my passion towards SAP grows.

We finally won the battle, sorted out all issues, clarifications. But the final clarification will be having only when the cost sheet is prepared and tallying with the GLs. I have to mention one tool that helped me in preparing the cost with ease, EXCEL4APPS GLWand, in simple terms excellent and simple.

Using GLWand and  MS Excell I have prepared a cost sheet with dashboards suiting for our requirement, only standard SAP and GLWand used for the prepartion of the entire cost sheet.

Below given is an highlight the management dashboard prepared highlighting all details relating to the material selected.

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Figure 1.0

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Figure 1.1

My second graphical dashboard provided details pertaining to sales, break even point etc.

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Figure 1.2

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Figure 1.3

I have created nearly 25 different graphical reports against each material, which provides with entire details relating to a particular material selected.Details like;

  • Month wise production cost,
  • Sales price,
  • Variance,
  • Variance / Ton,
  • Over head consumptions,
  • Raw material consumptions,
  • Other expense,
  • Electricity consumption,
  • Administration expense.

By analysing the dashbaord management gets a clear understanding about the status of the particular material.

Apart from the graphical dashnoard I have developed nearly 40 reports relating to each material.

I will share with you how I have prepared the dashboard.

Previously every month I use to prepare report on the Opening, receipt / production, Consumption, closing, sales etc report seperately. So though since all these datas are interrelated why can we integrate them and get the final report.

Below attached is a snapshot of the main control page of my workbook.

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Figure 2.0

I have 9 Master Data entry sheets where every month I have to key in the values manually.

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Figure 3.0

Let me take you though each data entry page;

Report MD1: Material Consumption Report

All Finished and Semi Finished Good will be produced against a process order. In this report we have to fill in the quantity and Amount of Finished / Semi FInished good produced for the month (Using the corresponding Process Order) and the rawmaterials used forthe production of the Finished / Semi FInished good.

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Figure 4.0

The material produced should be the 101+102 (Semi Finished / Finished Material Receipt) quantity in all the other reports ex: MB5B, MB51. The Materials Consumed should be the 201+202 or 261+262 (Raw Material Consumed) quantity in all the other reports ex: MB5B, MB51.

This details can be extracted by executing transaction code KOB1 by providing the process order number.

The Material Produced will be updated in the Stock GL with document type “WE“. The raw material issued for producing the finished good will be updated in the consumption GL with document type “WA.

So by inputting values in Report MD1 we have updated Finished / Semi FInished Good Stock and Raw Material Consumption GL.

Report MD2: Over Head Consumption Report

In this report we have to fill in the quantity and Amount of Finished / Semi FInished good produced for the month (Using the corresponding Process Order) and the Overgeads used for the production of the Finished / Semi FInished good.

This details can be extracted by executing transaction code KOB1 by providing the process order number.

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Figure 5.0

The values entered in this sheet dose not have any relation with the postings in any of the GL accounts. Values from this sheet is used for production order variance calculation.

Report MD3: Material Receipt Report

All raw material receipt has to be filled in this sheet. For Semi Finished / Finished good material receipt (material produced) we have entered in Report MD1.

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Figure 6.0

Raw Material Stock GL will be updated with the values entered in this sheet with document type “WE”. Material receipt can be extracted from transaction codes “MB5B” with movement types 101 +102

Material Issued for production has been updated in the stock GL with document type “WA“. So WE – WA = Closing Stock.

No we have calculated the Material Receipt, Material Consumption, Closing Stock and Opening Stock for the next month.

Report MD4: Standard Sales Report

Material Sales for each month has to be entered in the sheet.

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Figure 7.0

The details entered in this sheet will be updated in COGS GL. Details of sales can be extracted using transaction code “MC+E“.

Report MD5: 0 Quantity Report

While calculating the closing stock of material you have to consider if any entry has been made against the particular material with 0 quantity and with price.

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Figure 8.0

While Cacluating the closing stock price 0 quantity amount is also considered.

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Figure 9.0

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Figure 10.0

For understanding more about COGM and COGS please go though the blog

For calculating the actual over head postings we have to extract the details from GL account either against cost center of material based on how you have done the psting. For us we have it against material as well against cost center.

In my excell I have created the required formats and layouts for the cost sheet I needed and used GLWand for pulling out the required data from SAP. So each time I dont have to log on to SAP, I need to only refresh the excell to be filled in with the latest data.

I have prepared nearly 40 reports pertaining to single material, providing more calrity to management on each and evry activity  perofmed on the materila from start till end. Every month after period close the graphical dash board will be submitted to management which gives them a clear understanding about each material.

SAP BI helps us in this as well as in hundreds of other funcationalites like this, since we were not clear on whether to invest more on the ERP side I thought of developing a dashboard like this.

I remember a dialogue from the movie “Pearl Harbour”, after they attacked Pearl Harbour, the Japanese prime minister saying “‘ All what we have done is to awaken a sleeping giant'”. If any company decides to implement SAP ERP and if they dont have the control then this will be the case, without ERP the company will work in the way it is working; once you decide to implement SAP ERP then make sure the full system is in your control. Prepare the cost sheet on a regular basis and ensure that all postings, updations in system are done correctly. Conduct SAP Audits regularly atleast thrise a year. Please check the blog on SAP Audit;

If you require help on cretaing the dash board and cost sheet please contact me.

Please go though my other blogs also;

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