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Author's profile photo Shuge Guo

New in Production Accounting – Event-Based Production Cost Posting

What’s new in Production Accounting in SAP S/4HANA Cloud?

In this blog post we’ll explore the recent changes in Production Accounting and establish how these changes can benefit you. We will also introduce the concept of event-based production cost posting for product costs by order.

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Pic #1: Enhanced Production Accounting

The new features of Event-Based Production Cost Posting in Production Accounting in SAP S/4HANA Cloud, (as shown in the picture above) enable real-time insights and enriched information, to follow simplified period-closing processes for production cost control.

The new features also enable parallel valuation for group and local accounting standards by using Parallel Accounting. It helps you by answering relevant production accounting questions in an intelligent way.

Product Cost by Period and Product Cost by Order are two different functions for the analysis of product costs. Product Cost by Period enables the periodic analysis of costs at the product level. Product Cost by Order enables you to analyze costs at production order and process order level. Please note, this blog post focuses on the introduction of the newly available event-based production cost postings made for Product Cost by Order.

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Pic #2: Footprint of Event-Based Posting

The above picture shows you the footprint of enhanced Production Accounting including the features for Parallel Accounting, which are planned to be delivered with SAP S/4HANA Cloud in 2021.

What is event-based production cost posting?

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Pic #3: Overall Process of Event-Based Posting

In Product Cost by Order, the production orders and process orders are the cost objects. Costs charged to production orders and process orders are usually analyzed and settled by lot. In the past, the values for WIP (work in process) and variance were calculated in Product Cost by Order at period end. As shown in the above picture, event-based production cost posting (including event-based WIP and event-based variance posting) is now available to calculate WIP and variance immediately, instead of waiting for period close. Event-based posting links cost posting to business events, such as goods issues, goods receipts, and operation confirmation.

To be more precise, Event-based WIP is posted as a separate journal entry during business events, such as goods issues and operation confirmation. The costs of event-based WIP can be reviewed in the Fiori Apps Event-Based Work in ProcessEvent-Based Production Costs and Event-Based Order Costs. Event-based variance is posted as a separate journal entry during business events, such as final goods receipt or complete technically. The event-based variance can be reviewed in the Fiori Apps Event-Based Production Costs and Event-Based Order Costs.

Event-based production cost posting combines transparency with a better view of gain or loss from production, while also reducing workloads and costs in period-end closing. Additionally,  it enables reports on cost information at a more detailed responsible area (for example, work center/operation).

The scope item for event-based production cost posting is 3F0. This scope item supports both the Make-To-Stock and Make-To-Order (valuated sales order stock) scenarios for production and process orders with the order types YBM1, YBM2, YBM3, YBM4, YBM5, YBM9, YBW1, YPK1, YQ01, YQ02. The key roles are Cost Accountant-Production and Plant Controller.

To understand what the event-based production cost posting offers in more detail, watch the video ‘Introducing Event-Based Production Cost Posting’.

This video demonstrates how to do the following:

  1. Create a production order using the Create Production Order app
  2. Confirm your production order operations with the Confirm Production Operation app
  3. Check WIP costs in the Event-Based Production Costs app
  4. Post goods issues for your production order in the Post Goods Movement app
  5. Check WIP costs in the Event-Based Production Costs app
  6. Post final goods receipts for your finished production in the Post Goods Movement app
  7. Check both variance and cleared WIP in the Event-Based Production Costs app

What are the key features?

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Pic #4: Event-Based Posting End-to-End Process

As shown in the picture above, the key features of event-based production cost posting are the following:

  • Event-based posting (including event-based WIP and event-based variance)
  • Event-based posting error and exception handling
  • Reporting on event-based WIP, event-based production costs and event-based variance

You can access the features of event-based production cost posting using the following SAP Fiori apps:

How does event-based production cost posting work?

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Pic #5: Event-Based Production Cost Posting Configuration

As demonstrated in the picture above, you can set up event-based production cost posting using the Event-Based WIP and Variance Posting configuration step in SAP S/4HANA Cloud to make the following settings:

  • Define event-based result analysis keys and account determination rules
  • Define event-based costing sheets
  • Assign event-based costing sheets to planned valuation variants per plant
  • Assign order-type-dependent parameters

Note: For new SAP S/4HANA Cloud customers, the event-based results analysis key and event-based costing sheet is set as default. Existing customers who are currently using BEI need to manually switch the settings to event-based production cost posting.

For more details about the configuration path and guidance please check here (SAP Help Portal). Please follow the 3F0 scripts to complete the set-up on the logistics side in order to make sure the end-to-end process runs smoothly.

After making all required settings in the configuration steps, event-based production cost posting is initiated when you create order master data.

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Pic #6: Order Master Data

During the creation of the event-based production cost posting, make sure to select RSEBW in the RA Key (results analysis key) field. The Event-Based Posting checkmark will be derived automatically as shown in the picture above.

Where to get more information about event-based production cost posting?

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      14 Comments
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      Author's profile photo Owen Liu
      Owen Liu

      Nice blog, thanks!

      Author's profile photo Shuge Guo
      Shuge Guo
      Blog Post Author

      Thanks!

      Author's profile photo Markus Florian Oertelt
      Markus Florian Oertelt

      Great Blog!

      Author's profile photo Jan Zielinski
      Jan Zielinski

      Nice blog!

      Just one thing: the link to the video ‘Introducing Event-Based Production Cost Posting’ doesn't work for me "403: You don't have rights to view this page"

      Author's profile photo Shuge Guo
      Shuge Guo
      Blog Post Author

      Hi Jan,

      Thanks a lot for the feedback.

      Please kindly try again, hopefully you can find the video now:)

      Regards,
      Shuge

      Author's profile photo Jan Zielinski
      Jan Zielinski

      Thanks! Works fine now.

      Author's profile photo Lauren Zhang
      Lauren Zhang

      @Shuge Guo Can we use this on SAP S4HANA On Premise 2020? Or only applicable for cloud?

      Author's profile photo Shuge Guo
      Shuge Guo
      Blog Post Author

      Hi Lauren,
      Now the Event-based production cost is only for cloud.

      SHuge

      Author's profile photo KARTHIKEYAN GANESAN
      KARTHIKEYAN GANESAN

      Hi Shuge,

       

      Thanks for such an informative blog. One quick question around event based posting. Understand that seperate journal entry will be created for wip(event based) or for variance based on events like goods receipt etc.

      Just trying to understand how gl posting will appear if multiple accounting entries gets posted based on business events. For example, I understand that once goods issue or activity confirmation is done, system will calculate and post wip as it is event based and then say if gr is also done for full qty, then wip needs to be reversed for the same order on the same month and variance /settlement entry will be posted.

      This will lead to multiple postings and multiple reversals for an order in a particular month at gl level right, especially when we look at production related gla like wip, cogm etc.

      Pls share your thoughts on this.

      Regards

      Karthik

      Author's profile photo Olivia Wang
      Olivia Wang

      Hi Karthik

      I am the product owner of Event-Based Production Accounting. Thank you for asking and you made a very good point about the event-based solution. The current design is only available for S/4 HANA Cloud in a first step that every business transaction will lead to event-based posting. We will consider the requirement of flexible event-based postings in our future development

      Author's profile photo R Anthony Dickens McTrusty
      R Anthony Dickens McTrusty

      Hello Olivia,

       

      We are live and running production with the EVP Accounting in the Cloud 2111.  This definitely saves time at month end.

      We have an event-based production order with event-based costing sheet that missed applying overhead to one (late) posting on a DLV order.  Can we manually re-run overhead application on the order to catch-up burden for this posting and if so, what is the trigger-process?

      Kind regards,

      Tony D

      Author's profile photo Olivia Wang
      Olivia Wang

      Hi Tony

      If overheads are missing for any business transaction then it is likely due some error during OH calculation. In such a case there has to be a corresponding log in the App Postprocess Event-Based Postings - Overhead Calculation. Here the root cause of the error can be found and also reposting can be tested and triggered – either online for one order or a user can navigation to the Schedule Product Costing Job and use a job template Postprocess Event-Based Postings – Overhead Posting to process even more logged errors together.

      For rerun OH calcualtion without error infomration showed up in App Postprocess Event-Based Postings - Overhead Calculation, that's currently not possible yet. In such a case SAP need anyway analyze why OH are not calculated and no error is caught – that ideally should not happened, but if you encounter that please raise a ticket to SAP.

      Author's profile photo alvaro correia
      alvaro correia

      Dear Shuge,

      Thanks for such a good view on a great new solution and approach to product costing.

      I do have some questions:

      1. Do you plan to enable the Event-Based Product Cost Posting for production of products with split valuation? There is a restriction listed in Note 2737228 - FAQ: Product Costing: Event-Based Work in Process in S/4 HANA Cloud CE2105.
      2. Is it possible to still use Period-End Production Cost Posting solution (BEI) while using this new solution in the same plant?
      3. What business or system conditions will benefit more from the new solution? E.g. in a process joint-production would we need more frequent confirmations perhaps with more sensors to be able to find insights and act on them?

      Many thanks,

      Best regards,

      Alvaro

      Author's profile photo Olivia Wang
      Olivia Wang

      Hi Alvaro

      For your questions:

      1. Event-Based Product Cost Posting has been supported with split valuation without mixed costing. If you use produced product with split valuation but no mixture price, that could be work, I have updated FAQ note accordingly, thanks for notifying me.
      2. Yes. Event-Based Product Cost Posting and Period-End Production Cost Posting is activated and differentiated with RA key at order type level. That means you could use one order type for event-based orders and another order type for period-end orders in same plant. Please notice 3F0 is the strategic solution of SAP and capabilities like Universal Parallel Accounting is only enabled with 3F0
      3. If I got your question correctly, for joint production scenario the cost distribution will be also worked in event-based manner (with business transaction confirmation, goods issue etc.) which no manual actions like CO8A/CO8B is needed. In the same time WIP or variance value on order item level will be calculated. For customers have frequent confirmation and short-living objects, we will consider the requirement of flexible event-based postings in our future development