This document discusses the Batch Specific UoM and Active Ingredient Management functionalities of SAP R/3. It is a useful document to understand the role of Batch Specific UoM in the areas of Procurement / MRP / Manufacturing / Sales.

What is Active Ingredient?


In  some  industry sectors,  the  composition of  products  or components  contains  one or  more “ACTIVE INGREDIENTS”. In addition to active ingredients, material is made up of carrier materials like water or other impurities. The proportion of the active ingredient in a batch is not always fixed. These materials are handled in logistics in batch management, using active ingredient management.

Goods movements and stock movements for these materials are carried out in physical quantities Valuation, costing, availability checks, sales and planning, however, are carried out on the basis of the active ingredient quantity.

Where this function commonly used?

  • Pharmaceutical Industry,
  • Chemical Industry,
  • Food Industry,
  • Textile Industry,
  • Steel Industry and
  • Paper Industry etc.

The active ingredient management is handled through Batch Specific UoM.

Batch Specific Unit of Measure

The batch-specific material unit is an alternative unit of measure of a material, for which you can define the conversion ratio into the base unit of measure on a batch-specific basis.

Materials in which the composition or attributes of the product vary to some degree. Therefore a fixed conversion factor cannot be used to convert quantities of these products from into various units of measure. Instead, each batch has to be given an individual conversion factor.


Business Benefits of Batch specific UOM

  • Material can be tracked though out the logistics chain in alternate UOM which has dynamic conversion ratio. This will reduce creation of different materials for every conversion ratio.
  • Conversion ratio can be calculated automatically by inputting factors of batch dependencies if they are known. Material valuation of batch is possible on the basis of batch specific UOM. Material value is determined based on the amount of active ingredient or conversion ratio.
  • Material requirement planning can be done according to variable conversion ratio. MRP uses inventory correction factors to consider the actual proportion of stock available at plant and storage location level.
  • Sales price determination is possible using the product or proportion quantity the product may contain. Sales price is updated depending on the material batch data.

Batch Specific UoMs consists of two components Proportion Unit and Product Unit:

Proportion Unit


Units of measure in which you can enter proportions of the base unit of a material. The total quantity or physical quantity may be made up of several proportions.

Chemical consists of many ingredients. For e.g. 1 ltr of Orange Juice contains 30 g of Vitamin C, Also this proportion is variable based on the batch. Goods movement and stock movement is carried out in ltr of orange juice (physical quantity) whereas valuation, planning, and availability check is carried out for vitamin C (Active ingredient).

              

PROPORTION UNIT

Batch

Number

DRUG SUBS

  1. Prop. Of AI in

batch

Base UoM

Alt UoM

(kg)

(AI)

(%)

A101

100

95

95

B101

200

198

99

C101

50

45

90

Product Unit

Units of measure that describes the total quantity of a material as an alternative to the base unit of measure.


For example, a piece in a particular batch weighs 10 kilograms in total or a pipe is 1250 millimeters long.

Certain materials transactions are used not only in their base UOM but also in alternate UOM. There will be certain situation where a conversion ratio (CR) between Base UOM and alternate UOM is not fixed. Even in this scenario it is possible to use the conversion ratio between two UOM for all the stock monitoring and transactions.

                   

PRODUCT UNIT

Batch

Number

STEEL PIPES

Conversion

Ratio

Base UoM

Alt UoM

(nos)

(kg)

(kg/nos)

A101

10

1000

100

B101

20

1000

50

C101

15

1125

75


Master Data Set up

Classification Data

Batch Specific UoM needs the following master data set up in Classification:


SAP Menu –> Cross-Application Components –> Classification System –> Master Data –> CT04 – Characteristics

SAP Menu –> Cross-Application Components –> Classification System –> Master Data –> CL02 – Classes

  • In classification Master data you need to create a characteristic. This characteristic is used to store the conversion ratio during transaction.
  • In classification master data you need to create a class with class type “023”. All the characters are assigned to this class.
  • The Organizational Area S – Substance / Steel needs to be maintained in the Batch class Basic data tab, and the class characteristic to be used to store the conversion factor for Batch Specific UoM.

/wp-content/uploads/2013/09/1_274971.jpg


/wp-content/uploads/2013/09/2_274972.jpg

/wp-content/uploads/2013/09/3_275118.png


Material Master Data

The following data needs to be maintained in the material master to work with Batch Specific UoM:

  • The batch specific UoM needs to be maintained as the alternative UoM.
  • The characteristic that is to be used to record the actual proportion of the active ingredient on a batch specific basis needs to be maintained in the Proportion / Prod. Unit tab of the Additional Data.
  • The unit of measure use has to be selected as A – For Proportion Unit and B – For Product Unit.
  • The planned proportion of active ingredient in the total amount of material is stored which is used in functions wherever required until the actual conversion factor for a batch is known.

/wp-content/uploads/2013/09/4_275119.png


  • The indicator for “Leading Batch Specific UoM” needs to be checked to enable the system to consider this in terms of Material Requirements Planning (MRP) and Availability Check. This will be further discussed in the subsequent sections.

/wp-content/uploads/2013/09/5_275129.png


/wp-content/uploads/2013/09/6_275130.png


  • The indicator for “Valuation based on Batch specific UoM” needs to be checked to maintain a valuation price for this UoM, that acts as a basis for valuating batches based on this proportion quantity / product quantity.
  • Valuation for the single batch is used to keep the price and value of each individual batch in inventory management on a value basis. Valuation for single batch is activated using the Valuation Category X.
  • If price is maintained for valuation relevant characteristic in the respective plant, the system sets the “Valuated UoM” indicator in the Accounting 1 view of the material master record.

/wp-content/uploads/2013/09/7_275131.png

Quality Management Data

  • In  Quality Management,  the  Master Inspection  Characteristics  need to  be  linked with  the  Class Characteristics to copy the inspection results from the inspection lot to the batch master record.

SAP Menu –> Quality Management –> Quality Planning –> Inspection Planning –> Inspection Characteristic –> QS21 – Create

/wp-content/uploads/2013/09/8_275132.png

/wp-content/uploads/2013/09/9_275133.png

Production Master Data

  • In order to use the functionality of Material Quantity Calculation (MQC) in Process orders, the proportion unit is used as the Component UoM instead of the base unit of measure.
  • The relevant master data set up required in Master Recipe for MQC is explained in the section Batch Specific UoM in Production.

SAP Menu –> Production – Process –> Master Data –> Master Recipes –> Recipe and Material List –> C202 – Change

/wp-content/uploads/2013/09/10_275134.png

Maintain Standard Price for Batch Specific UoM


  • A batch can be valuated based on the basis of Batch Specific UoM, for example using a particular active ingredient proportion. For this valuation (standard price) needs to be maintained for the active ingredient on which the batch valuation depends.
  • The following table explains the effects of maintaining the standard price for the AI unit on the overall value calculation of the batch:

                               

Batch A001

Batch B001

Physical Quantity

100

200

KG

Actual Proportion of AI

90

80

%

Proportion Price / AI

1000

1000

USD

Proportion Quantity

90

160

KAI

Proportion Value

90000

160000

USD

Value of Batch

90000

160000

USD

Price of Batch

900

800

USD / KG


SAP Menu –> Logistics –> Central functions –> Batch Management –> Batch specific UOM –> Standard Price –> Create (MWB1)

/wp-content/uploads/2013/09/11_275135.png

/wp-content/uploads/2013/09/12_275136.png

  • When the standard price per unit of AI in material is changed, the system automatically calculates the standard price per kg of the material and updates it in the material master. For example if Price of 150 USD is maintained per AI, the system uses the planned conversion factor of 97.50% stored in the material master Proportion/Prod. Unit to calculate the standard price of 146.25 (150 *97.50%) per kg of the material as per the following screen shot:

/wp-content/uploads/2013/09/13_275137.png

/wp-content/uploads/2013/09/14_275138.png

Standard Cost Estimate for Header Material

  • The system considers the standard price entered for the Active Ingredient into account while calculating the total cost / value of that component in the total cost.
  • Also please note that the system uses the formula entered in MQC and considers the quantity of FILLER1 as 71.167 (as calculated by MQC formula) and not 90.00 (qty entered in the BOM).


SAP Menu –> Accounting –> Controlling –> Product Cost Controlling –> Product Cost Planning –> Material Costing –> Cost Estimate with Quantity Structure –> CK11N – Create

/wp-content/uploads/2013/09/15_275139.png

Batch Specific UoM in Procurement (PO History Correction)

  • The Purchase Orders can be created either in Physical UoM (Base UoM) or in batch-specific quantities. If purchase orders are made in the batch-specific quantities, the purchase order quantity and physical quantity are updated in the PO history. In this way degree of fulfillment of may be determined at any time in batch-specific quantities.
  • If actual conversion factor is not known at the time of Goods Receipt, goods receipt is carried out according to the planned conversion factor. If actual conversion factor is taken from the usage decision of the QM inspection lot, the PO can be subsequently debited. This is known as Purchase Order History Correction.

/wp-content/uploads/2013/09/16_275140.png

  • As shown in the above PO, the Order Unit is KG, whereas the Order Price Unit is AI.
  • Post GR against the Purchase Order we go for the QM results recording where we will get the actual conversion factor / actual proportion of active ingredient in the batch. As per the below screen shot the actual conversion factor is found to be 90 % whereas the planned conversion factor maintained in the material master is 97.50%.

/wp-content/uploads/2013/09/17_275036.png

/wp-content/uploads/2013/09/18_275037.png

  • The system proposes to correct the PO history based on the inspection lot results using transaction MWBQ at the time of saving Usage Decision.
  • Alternatively the path for the MWBQ transaction is

SAP Menu –> Logistics –> Central functions –> Batch Management –> Batch specific UOM –> Subsequent Adjustment f. Goods Receipt MWBQ –> Enter with Ref. to Insp. Lot.

/wp-content/uploads/2013/09/19_275038.png

/wp-content/uploads/2013/09/20_275045.png

On executing the transaction after entering the appropriate inspection lot number, the system posts a material document for correcting the PO history, i.e. to debit the PO based on the actual conversion factor obtained through QM results recording.


/wp-content/uploads/2013/09/21_275046.png

/wp-content/uploads/2013/09/22_275047.png

  • As shown above, now as the actual proportion of the active ingredient in the batch is 462.463 AI (513.848 * 90%), vendor would be invoiced for the amount of 69369.450 (462.463 * 150) instead of the amount earlier calculated on the basis of planned conversion factor of 97.50 %.

Batch Specific UoM in MRP (Inventory Correction Factor)

  • Materials planning / Availability checks are usually carried out in the physical quantities.
  • When working with proportion units the system usually considers the planned conversion factor stored in the material master. However actual proportions of the active ingredients are usually different from the planned proportions.
  • Requirements planning or ATP inspection can use the inventory correction factor to consider the actual proportion stocks available at plant and storage location level.
  • The following MRP list shows that system has considered the planned conversion factor stored in the material master for requirements planning and has generated a purchase requisition of 513.848 kg for the dependent requirement of 501.002 AI.

/wp-content/uploads/2013/09/23_275054.png

  • Now as the actual conversion factor is always different from the planned conversion factor, the system takes into consideration the actual proportion of active ingredient in the batches that are there in stock to calculate a conversion factor that is further used in the MRP planning instead of the planned conversion factor.
  • Now consider the following example to see how the system calculates the inventory correction factor:

/wp-content/uploads/2013/09/24_275055.png

/wp-content/uploads/2013/09/25_275056.png

Batch

0000000731

Physical Quantity (KG)

234.959

Expected Prop. Qty (AI)

229.085

Physical Qty * Plnd conv. Factor (97.50 %)

Actual Prop. Qty (AI)

211.463

Physical Qty * Actual conv factor (90.00 %)

Variance in Prop. Qty (AI)

17.622

Expected Prop. Qty. – Actual Prop. Qty.

Variance in Prop. Qty (%)

7.692

(Variance in Prop. Qty / Expected Prop. Qty) * 100

Inventory Correction Factor

92.308

100 – Variance in Prop. Qty (%)

  • The system calculates inventory correction factor using the report RVBWSCOR. To start the report, choose

Logistics –> Central Functions –> Batch Management –> Batch-specific Units of Measure –> Determine Inventory CorrectionFactor.

/wp-content/uploads/2013/09/26_275063.png

  • Appropriate radio button needs to be selected to Calculate & Display / Calculate & Update the Inventory correction factor in the system. Also batches with zero stock / having restricted status / having blocked stock can be included or excluded in the calculation of inventory correction factor.
  • Also whether the list output of batches along with the correction factor should be displayed can be controlled through appropriate selection factors.

/wp-content/uploads/2013/09/27_275064.png

/wp-content/uploads/2013/09/30_274693.png

/wp-content/uploads/2013/09/31_274701.png

  • Kindly note that we have considered only one batch for the calculation of Inventory correction factor. In actual scenario there can be many more batches with varying content of actual proportion of active ingredient in each batch. In such cases, the system calculates the variance for each batch and then cumulates all variances to calculate the Inventory Correction Factor.

Batch Specific UoM in Production (Material Quantity Calculation)

What is Material Quantity Calculation?

Active Ingredients are also used in production as a part of BOM component. Now since the actual proportion of the active ingredient varies from batch to batch, the system selects and adjusts with several batches to get the required quantity of active ingredient in the process order for the production process. During this process there also can be a need to adjust with other BOM component quantities or recalculate the Product quantity. These calculations are handled in SAP by Material Quantity Calculation.

Material Quantity Calculation – Functions:

  • MQC is used to calculate the component quantities if different active ingredient concentrations of batches must be taken into account.
  • MQC is used to calculate the product quantity, i.e. the base quantity of the master recipe or the order quantity if it must be adjusted to modified component quantities.
  • To calculate the expected phase scrap if its needed to be displayed in the phase data in the order and make it available for the planned / actual evaluations carried out in LIS.
  • To calculate the operation and phase quantities if they are not identical to the product quantity. This might be done in order to take the quantity difference caused by the scrap produced into account.
  • We will take the example of pharmaceutical product / industry to understand the concept of MQC. As shown in the above figure and in the below table, the system needs 250.5 AI units from Component A so that in the final composition of the Product P, the proportion of Component A would be 50.2 %. The BOM is for tablets having batch size 500 kg / 10, 00,000 tablets.

                   

BOM FOR PRODUCT TABLETS (500 KG)

Active Pharmaceutical Ingredient (API)

  1. 250.5

AI

Filler 1

  1. 150.5

Kg

Filler 2

  1. 99.0

Kg

  • Now since the proportion of the active ingredients in the raw material batches is not fixed, we need to calculate the amount of material that we need to take from each batch in KG to get the desired amount of AI. Also in order to keep the total lot size of the finished product constant we need to adjust the quantities of other raw material components in the BOM commonly known as fillers. Following is an example of how Material quantities are calculated manually:

     BATCHES FOR API:

                Capture1.PNG   

  • Now in order to fulfill our active ingredient requirement of 250.5 AI, we take 147 AI from batch B-990 and another 103.5 AI from batch B-991. This works out to be 150 kg and 112.5 kg of material in physical UoM respectively. Considering the total quantity of component now to be 262.5, we need to decrease the quantity of one of the filler material to maintain a constant batch size for the finished product as 500 kg. So as per the below calculation, the requirement quantity of Filler 2 is reduced from 99.00 kg to 87.00 kg.

Adjustment in Filler 2 Qty:-


Actual Filler 2 Qty = Total Batch Size – Filler 1 Qty – API Qty in kg

Actual Filler 2 Qty = 500-150.5-262.5 = 87.000 kg

Total Batch Size 500 kg = 262.5(API) +150.5(F1) +87.000(F2)

  • Kindly note that we have taken a simple example here for our understanding of the concept. There can be other complex scenarios in pharmaceutical as well as other industry sectors like chemicals, paper, textiles etc.

Master data set up for MQC

  • The master data maintenance for the BOM having an active ingredient component has already been discussed in the previous sections. Now appropriate formulae needs to be maintained in the master recipe to allow system do the Material Quantity Calculations for Active Ingredients / Other BOM components / Finished Product. This section describes the master data maintenance in the master recipe.

/wp-content/uploads/2013/09/32_274736.png

/wp-content/uploads/2013/09/33_274737.png

  • The above screen shot shows the formula maintained for Filler 2 BOM component. The function CQSM (Quotient Sum of added up Weighted batch quantities or characteristic values) has been used in the formula of Filler 2 quantity calculation.  This function is used to calculate the total of the physical batch quantities from the active ingredient quantities of batches based on the active ingredient concentrations. Similarly other functions of the Material quantity calculation can be used to define formulae as and when required.

Batch Determination & Material Quantity Calculation in Process Order

/wp-content/uploads/2013/09/34_274738.png

/wp-content/uploads/2013/09/35_274742.png

  • As shown above, we have two batches of Active Ingredient Material 3691 – 0000000990 & 0000000991 with physical quantities of 149.500 kg and 148.500 kg respectively. But since the potency of the batches is 98 % and 92 %, the active ingredient proportion (quantity) in them is 146.510 AI and 136.620 AI respectively.

/wp-content/uploads/2013/09/36_274743.png

/wp-content/uploads/2013/09/37_274744.png

  • Select the marked button above in Materials screen of the process order to execute batch determination for the selected component (Active Ingredient material). The system proposes the batches for the raw material based on the Batch Search Strategy (Selection Criteria and Sort Rule) defined in Customizing. Appropriate batches are selected and batch determination results are copied to the process order.

/wp-content/uploads/2013/09/38_274745.png

/wp-content/uploads/2013/09/39_274747.png

  • Once the batch determination is completed, click on Material Quantity Calculation icon to go for calculation of the component quantities and product quantities. As per the formula entered in the master recipe, it has recalculated the Filler 2 component quantity from 98.50 kg to 91.167 kg. These results are copied into the process order on clicking on the Execute button. Similarly if a formula is entered for re-calculating the process order’s header material quantity, the same can be done by clicking on the “Calculate Product Quantity” button in the MQC screen. The process order can then be saved.

/wp-content/uploads/2013/09/40_274748.png

/wp-content/uploads/2013/09/41_274749.png

/wp-content/uploads/2013/09/42_274751.png

  • The principal advantage of MQC is that it eliminates the need of manual calculation that has to be done for every process order that contains active ingredient as a raw material component. Thus it reduces the possibility of human error.

Batch Specific UoM in Sales

  • The system stores the batch-specific quantity as the quantity sold in the sales and distribution documents.
  • If the sales unit is a batch-specific unit, the billing document is also created in batch-specific units. The billing quantity is derived from the cumulated batch quantity using the actual conversion factors of the batches.
  • In the delivery, batch-specific quantities and batch-specific units are transferred from the order, and displayed as quantity sold and sales unit. For partial deliveries, the physical quantity is calculated using the actual conversion factor (batch is known at this point).
  • In pricing, you can calculate prices, discounts, and surcharges based on batch-specific quantities and batch-specific units. When you do this, you may only use one quantity as a basis for calculation for each condition record, even when several batch-specific units (for example, active ingredients) are allocated to the material.

Configuration Settings

  • Define UoM in Global Data

SPRO –> SAP Net Weaver –> General Settings –> Check Units of Measurement

/wp-content/uploads/2013/09/43_274755.png

  • Activate Batch Specific UoM


SPRO –> Logistics – General –> Batch Management –> Batch-Specific Material Units of Measure –> Activate Batch-Specific Material Unit of Measure

/wp-content/uploads/2013/09/44_274756.png

  • Edit Batch Specific UoM

SPRO –> Logistics – General –> Batch Management –> Batch-Specific Material Units of Measure –> Edit Batch-Specific Material Unit of Measure

/wp-content/uploads/2013/09/45_274761.png

  • Calculate Proportional Factors

SPRO –> Logistics–General –> Batch Management –> Batch-Specific Material Units of Measure –> Calculate Proportional Factors –> Define Calculation of Proportion Quantity from Base Quantity

/wp-content/uploads/2013/09/46_274766.png

To report this post you need to login first.

13 Comments

You must be Logged on to comment or reply to a post.

  1. Allyson Meneses Morales

    Hi,

    Thanks for the document, it’s very helpful.

    Do you know, if this functionality is applicable in production models with intermediate and end products valued in standard price and also with execution of actual costing?

    Regards,

    Allyson

    (0) 

Leave a Reply