Hello Everyone,,

I wrote this document for basic understanding of Co-Product and By-Product in Production order.

Product manufacturing in industry same time other products that are usually manufactured together using one production order. We called that Co product and By product

Co-Product: Co-product is a product, we getting this product while manufacturing finished material or main material. Same material might be used in other material manufacturing process


By-product By-product is a product, we getting this product while manufacturing finished material or main material.  The material valuation of a by-product is always based on the price specified by price control in the material master.

Creating a production order to manufacture co-products has the following advantages:


  • Main product and co-product(s) are settled to different receivers
  • Goods movements can be posted simultaneously for all product manufacturing in the order


1. By- Product.

   

Prerequisite


  • In BOM maintained negative quantity , Then system automatically will pick as by product.


pic 2.JPG

  • Crete planned order and converted to production order
  • At time Production order confirmation, system automatically post as By-Product,
  • By-Product Movement type 531, See below picture

pic 3.JPG


  • If the by-product is indicated as being relevant to costing in BOM, the total cost of the process is reduced by the costs of the by-products
  • The costs of by-products are calculated with the net realizable-value method. The costs of the by-products thus represent a reduction in the costs of the primary product.
  • If you don’t want to calculate the cost of the By-product then remove the Costing relevancy from BOM Item detail


2. Co- Product


     Prerequisite


  • In Material master MRP View 2 select the CO product


pic 4.JPG

  • In BOM maintained negative quantity for component.


pic 5.JPG


  • In BOM, item of the components detail select the CO product, if you not select the Co product in Item detail system consider as By Product


pic 6.JPG

  • Crete Production order
  • Good movement of the Co Product,
  • In Co product no automatic good receipt happen
  • Go to MB31 and enter the Order
  • In Co product Movement type is 101. See below Picpic 8.JPG


  • You can calculate the cost of goods manufactured for co-products by using an apportionment structure to allocate the total costs of the manufacturing process to the individual products involved
  • The apportionment structure is defined in the costing view of the material master for the leading co-product click on joint production or in MRP2 view, Click on joint production and assigned apportionment structure
  • In the apportionment structure, you can use equivalence numbers to control how the costs of the entire manufacturing process are apportioned for the co-products in percentage in case of multiple Co product.
  • If no apportionment structure has been defined for a leading co-product or process material, an error message is issued.


Please refer below link for more detail of Co-Product costing and also consult with your FICO Team.

http://www.scribd.com/doc/109331756/Co-Product-settings-for-SAP-costing


I hope this document helpful to everyone…


Request to all expert suggest and guide if anything wrong in this document


Thanks & Regards

Umesh Mali

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16 Comments

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  1. Sastry TL

    Nice Document…

    Umesh, what will happen if same co-product has its own BOM, I mean it will also produce seperatly..how we will do the configuration?

    Thanks

    Sastry

    (0) 
    1. Umesh Mali Post author

      Hello Shreyas,,,

      you can consider the by product as Scrap and adjust the quantity at the time of confirmation.

      There is many more form we can you as By Product according to business requirement.

      You can set by product as costing relevant and non costing relevant.

      Regards
      Umesh Mali

      (0) 
  2. Andy Yeri

    Hi Umesh,

    Clear explanation, good. I think we all know that the starting point for the main product’s production could be its Sales Order or PIR’s/Forecasts. When the Main prod is made, the co-prod is automatically produced too. My question is, what if we receive demand only on the co-product & not on the main product? I was wanting to know if we could have co-products set up for a main product, but ONLY produce some co-products, selectively, by entering demand just for them.

    Cheers

     

    (0) 

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