ERP Post Implementation Challenges – Part 2 Reconciling GL, Raw Material Consumption, Finished/Semi Finished Material Production, Vendor Invoice

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In my previous blog "ERP Post Implementation Challenges’ - Part 1" I have explained the concept of COGM, COGS and deriving the closing stock. In this blog I will be concentrating on the Reconciling GL, Raw Material Consumption, Semi Finished / Finished Goods Production and Vendor Invoice.

Let me divide the topic into;

Reconciliation 1:

     Opening Stock + Raw Material Receipt - Raw Material Consumed  =  Raw Material Closing Stock

Reconciliation 2:

     Receipt of Raw Material = Invoice received from Vendor

Reconciliation 3:

     Raw Material Consumed = Raw Material Issued for the Production of Finished Good

                                         = Raw Material Consumption GL

Reconciliation 4:

     Raw Material Closing Stock =  Stock GL of Raw Material

Now let us analyze each scenario;

Reconciliation 1: Opening Stock + Raw Material Receipt - Raw Material Consumed  =  Raw Material Closing Stock

As explained in my Previous Blog "ERP Post Implementation Challenges’ - Part 1" all material movements should be considered for calculating the closing stock of material.

Reconciliation2: Receipt of Raw Material = Invoice received from Vendor

     The Raw Material received should be matching with the invoice received from the vendors. I have done quite a lot of research to generate report on the list of invoices received against a material.

   Material Receipt (MB5B) with movement type 101+102 = Stock GL of Raw Material + Price Diff GL of Raw Material with Type "WE"

To find the list of Invoice generated against the Raw Material:

There can be invoice and Credit/Debit notes posted against the material.

To generate Invoice list generated against the material:

We have to combine few tables for generating the report.

Execute SQVI and create a query with the following data.

Tables: RBKP, RSEG, LFA1

Joining Condition:

Tables RBKP-RSEG -> Joining Fields BELNR,GJAHR

Tables RBKP-LFA1 -> Joining Fields LIFNR

Figure 1.0

Figure 2.0

To generate Credit Note / Debit Note list generated against the material:

We have to combine few tables for generating the report.

Execute SQVI and create a query with the following data.

Tables: RBKP, RBMA, LFA1

Joining Condition:

Tables RBKP-RBMA -> Joining Fields BELNR,GJAHR

Tables RBKP-LFA1 -> Joining Fields LIFNR

Figure 3.0

Figure 4.0

Debit / Credit will be recorded as "S" or "H"

Reconciliation 3: Raw Material Consumed = Raw Material Issued for the Production of Finished Good  = Raw Material Consumption GL

Raw Material will be consumed for the production of Semi / Finished Good, which will be created against Process Order. The total raw material consumed against a process order can be generated from transaction code KOB1.

Let me explain with an example:

Raw Material 1 (RM1) is used for the production of three Finished Good (FG1, FG2, FG3)

Material	Process Orders	Quantity Produced
FG1	10000035	67,981.00
FG2	11000035	343,842.00
FG3	12000035	61,601.00

Total Raw Material RM1 issued during the period is 106,136.00 TO. This is the quantity used for then production of 473,424.00 TO of FG1, FG2, FG3.

Figure 5.0

Table 1.0

(Report from MB51 movement Type 101 + 102)

From transaction KOB1 we will be able to equate the Finished Good Produced and Raw Material Consumed quantity.

Figure 6.0

Figure 7.0

Raw Material (RM1) Consumption GL should be updated with the value of 1,061,360.00

(Report from FBL3N Raw Material (RM1) Consumption GL + Raw Material (RM1) Price Difference GL)

Fugure 8.0

GL Entries Posted During the Process;

Raw Material Consumed for Production of Finished Good

Reconciliation 4: Closing Stock = Stock GL of Material

Generate Closing Stock report for Material from MB5B

Figure 9.0

Stock Report of Material From FBL3N

Figure 10.0

Generally We can reconcile opening, receipt, issue Closing by inputting values in the table listed below;

Material	Opening	0 Qty	Mat Receipt (101+102)	Price Revaluvation	MIR7	Issue To Production Order 261 + 262	Issue To Cost Center 201 + 202	Physical Inventory Posting	GL Consumption	Sales	Closing
	A	B	C	D	E	F	G	H	I	J	K
FG1	A	B	C	D	E	F	G	H	D+E+F+G+H	J	(A+B+C+D) - (F+G+H+J)
	1,683,916.80	54,700.53	7,539,313.34	256,027.28	670.28	7,543,679.84	0.00	0.00	7,800,377.40	161,430.24	1,828,847.87

Table 2.0

0 Quantity - Execute Transaction MB5B. Sort Based on Movement Type

0 Quantity Included Price Revaluation & MIR7 entries

0 Qty of FG1 Entry:

  0 Qty Other        =   54,700.53 +

Price Revaluation =  256,027.28

0 Qty                   -> 310,727.81

Figure 11.0

	Debit	Credit
Raw Material Consumption	XXX
Stock of Raw Material		XXX
Stock of Finished Good 1 (FG1)	XXX
COGM of Finished Good 1 (FG1)		XXX

Table 3.0

Important Transaction Codes:

Transaction Code	Description
MB5B	Material Report
MB51	Material Report
FBL3N	GL Report
FBL1N	Vendor Report
KOB1	Production Report
MCBE	Material Report
MC.A	Material Report
MC+E	Sales Report
SQVI	Dynamic Query

Table 4.0