May 10, 2016 2 minute read

Material Ledger and Value Flow Monitor – Not Distributed and non-allocated balances:CKMLCP and CKMVFM

Material Ledger and Value flow monitor. CKMLCP and CKMVFM

The objective of the blog is to explain the reason for Non distributed PRD differences in the value flow monitor.

By reading this blog you can able to answer the following questions:

Why should we use Value flow Monitor..?
The reason why price differences/ exchange rate differences not apportioned to the SFG/FG Materials.?

Material Ledger and Value Flow Monitor – Not Distributed and non-allocated balances:

The blog is more about the value flow monitor– Not Distributed and non-allocated balances, before that I will give a brief introduction to Material Ledger as it is helpful for the newcomers.

The objective of the Material Ledger:

The primary objective of the material ledger functionality is arriving the actual cost and we can see the results in multiple valuations and multiple currencies.

How system arrives the actual cost:

Initially, all the transactions are happening with the standard price, during CO Month end process we will get the variances and those variances got settled when we execute the settlement.

By following the CO Month end process (OH Calculation – There are many methods, WIP calculation, Variance calculation, and Settlement), we are able to settle the variances to the production or process order, but unable to get the actual price.

Importance of ML Run:

By performing ML run these variances/ price differences/exchange rate differences will get settled to the respective material. We will get the actual price. Actual price can be called as a periodic unit price (PUP).

I will start the primary topic – Value flow monitor – Not Distributed and Non Allocated Balances:

By reading the functionality of ML, management and everyone feels that all the variances and differences due to price and exchange rate should get settled to the material and be expecting no balances should appear in PRD GLs.

Management expectation – Differences in PRD should be zero. But it is very much difficult in real time scenarios…but …..Why…?

We will look into that……Here I am posting two questions:

Is the actual price arrived during ML run is accurate only if there are no differences found in Value flow monitor….?
Is there any hard and must rule, that the differences in PRD should be apportioned to the SFG/FG to arrive at the actual price..?

By the end of this blog, you can able to answer those questions. Please find the further details:

Nature of the differences:

Differences
Price differences
Exchange rate differences
Single level differences
Single level price differences
Multilevel differences
Multilevel price differences
Multilevel exchange differences

Reason for the differences which are appearing in the Value flow monitor:

There are many differences, it depends on the transaction history of that material.

Example – This issue I have faced recently.

There is a huge difference appearing in the value flow monitor. Management asking for the clearing that difference.

Then I went into the transaction history of that material.

I found some process orders which were partially confirmed and GR not happen. They feel that getting the output from that process order is no longer possible then they have confirmed with lower quantity and completed the final delivery.

During CO Month end process, system posted a huge variance and got settled.
After performing ML run, while analyzing the Value flow monitor found these differences which are not apportioned to the material.
The system has cleverly ignored the difference (Which is not practical and genuine) while calculating actual price calculation.
Still, there is an option of apportioning these differences if management feels it is required.
If we apportion, in my case resulted price will be negative….so we strict to Value flow monitor.