Using standard SAP functionalities, the production department can manage the actual and planned values for active ingredient proportions for each process order as well as determine and settle the related production costs accurately at the process order level. I provide you with an overview of the Active Ingredient Management process to follow to record production activities using the Materials Management (MM), Production Planning (PP) and Financial Accounting (FI) modules along with the most important master data and customizing details. In addition to the basic unit of measure and alternative units of measure, SAP offers a batch-specific unit of measure to satisfy the following business requirements (the Active Ingredient Management solution works with batch-specific material units of measure):

• Alternative units of a material for which the conversion ratio to the base unit of measure can be defined on a batch-specific basis.
• Manage business transactions (in purchasing, production, and sales) that are on based on a theoretical conversion factor and manage alternate units of measure that could vary occasionally or could change for every lot that is produced or purchased.
• In configuration for a batch-specific unit of measure, you would normally define the base unit of measure, the corresponding batch-specific unit of measure, and the conversion factor that is to be maintained as a characteristics value in the batch that would be received from purchase or production, thus allowing maintenance of an ever-changing conversion factor for every batch.
• At the point of goods receipt, conversion of quantities maintained in alternate units based on a conversion factor maintained as the batch characteristics level is called the product unit-based batch-specific unit of measure.

Business Activities in the SAP System

Active Ingredient Management is supported in the procurement, production, and sales activities involved for the batch management, as shown in Figure 1. In this process, the production department can create a process order in the SAP Production Planning-Process Industries (PP-PI) module specifying an appropriate batch with ingredient management. This feature is also available to the procurement and sales departments via a purchase order and sales order management, respectively. I now walk you through the stages of configuring settings for active ingredient batch management from a master data management point of view.

Master Data

To maintain active ingredient data for a material, you need to complete these steps:

1. Maintain the classification view of the material master
2. Maintain the additional data view proportion/product unit of measure
3. Define an alternative unit of measure in the material master’s additional data details
4. Maintain settings for work scheduling
5. View details about the bill of material (BOM) and recipe used to produce the material
6. Configure valuation details for the produced material
7. Display the BOM
8. Display the master recipe
9. Maintain the Purchasing Info Record

Step 1. To maintain the classification view of the material master AI-1200, follow menu path Logistics > Materials Management > Material Master > Material > Create > Immediately or use transaction code MM01. In my example, the classification view was already maintained, so I am going to use transaction code MM03 to display the data. After you execute transaction code MM03, specify the material code, plant, and views to be displayed. Click the Classification tab and the system shows the screen in Figure 2. Make the appropriate entries as shown in Figure 2. For my example, enter 023 in the Class Type field and in the Assignments section, enter AICL0001 in the Class column. Describe the material in the Description column. Step 2. To maintain the additional data view proportion/product unit of measure, use transaction code MM02 or follow menu path Logistics > Materials Management > Material Master > Material > Change > Immediately. In the initial screen that opens (not shown), click the Additional Data option, and in the screen that opens (Figure 3), select the Production/prod.unit (proportion/product unit of measure) tab. In the Proportion units section of Figure 3, specify the appropriate characteristic in the field in the Characteristic column, enter a plan value within the allowed range for the characteristic in the field in the Plan Value column, and then in the field in the AUM (alternative unit of measure) column, enter a value for the proportion/product unit (for my example, enter KI1, which is the new proportion unit in which the active ingredient is measured). Step 3. Define an alternative unit of measure in the material master’s additional data details. Select the Units of measure tab and define the conversion ratio between the AUM KI1 that is used to track the active ingredients and the reference unit of measure KG. In this case 80 KI1 corresponds to 100 KG (Figure 4). Step 4. Maintain the settings for work scheduling. In the Work scheduling tab, you need to select the Batch Management check box. Note that the Base Unit of Measure field has the value KG, and the Version Indicator check box is selected. The view shown in Figure 5 indicates that these two settings have already been defined.   Step 5. View details about the BOM and recipe used to produce the material AI-1200. To complete this step, click the ProdVersions (production versions) button shown in Figure 5. This action displays the screen in Figure 6. Populate the following fields as shown in Figure 6: To lot size, Valid from, Valid to, Detailed planning (select 2 Master Recipe from the drop-down options under Task List Type), Alternative BOM (enter 1), and BOM Usage (enter 3). Step 6. Configure valuation details for the produced material. To complete this step, select the Accounting 1 tab (Figure 7). In this tab the Valuation Category field should be valuated as X and also the Val.type (valuation type) field should be populated (for my example, enter the batch number 0000000113). The valuation is then defined at the Material Code/Plant/Val.type combinations level. Step 7. Display the BOM. The production planning department can display the BOM by using transaction code CS03 or following menu path Logistics > Production > Master Data > Bills of Material > Bills of Material > Material BOM > Display. In the initial screen that opens (not shown), enter the Material code, plant, and usage. After you press Enter, the system shows the details in the Material tab in Figure 8. You can see that the quantity of the component has been maintained using the proportion/product unit, the value KI1, which is the proportion unit in which the active ingredient is measured. Step 8. Display the master recipe. To complete this step, use transaction code C203 or follow menu path Logistics > Production – Process > Master Data > Master Recipes > Recipe and Material List > Display. To change the master recipe, execute transaction code C202. This action opens the initial recipe selection screen (not shown) in which you specify the Recipe Group as the value AI000, press Enter, and then select the Operations tab. The system then displays the details shown in Figure 9. In this screen, you can define the list of operations relevant for the master recipe along with the details of their description, resource, control key, base quantity, and related UoM. Step 9. Maintain the Purchasing Info Record. The purchasing department maintains the purchasing information record either by using transaction code ME11 or following menu path Logistics > Materials Management > Purchasing > Master Data > Info Record > Create. In my example, the document was already created, so to update it according to your vendor’s agreement, use transaction code ME12. This action opens the screen in Figure 10 in which you make sure that the conversion unit of measure has been maintained. Then go to the Purch. Org. Data 1 view by clicking the Purch. Org. option highlighted in Figure 10. In the next screen validate or update the Control and Conditions details (Figure 11).

Transactional Data

To perform the production cycle for Active Ingredient Management materials, standard SAP MM/PP transactions are used. Performing this cycle requires the completion of five steps:

1. Create a process order
2. Post the goods issue of the material containing active ingredients
3. Post the goods receipt of the material containing active ingredients
4. Settle the process order
5. Display the process order cost balance

Step 1. Create a process order. To create a process order for the semifinished product AI-1200 use transaction code COR1 or follow menu path Logistics > Production - Process > Process Order > Process Order > Create > With Material. After you enter the material code AI-1200 in the Material field, 1100 in the Plant field, and PI01 in the Type field, press Enter. You then see the details in the General Data tab of the screen shown in Figure 12. In Figure 12, input data or select options in the following sections:

• In the Quantities section, enter a value in the Total Qty (total quantity) field (e.g., 80,000 KI1)
• In the Dates section, enter the current date in the Start field
• In the Scheduling section, select 1 Forwards from the drop-down list of options in the Type field

Then click the Materials button. The system then displays the screen shown in Figure 13. In Figure 13, enter data for 10 KG of the material AI-1203. Enter AI-1203 in the field in the Material column, 10 in the field in the Requirement quantity column, and KG in the field in the U… (Unit of measure) column. Enter an item category of L in the field in the It… (Item category) column. In the Storage Locati… (Storage location) column, enter 0001 as a third component and leave the Batch field blank. The component is kept in stock and is processed in operation 10 in the production process. At this stage, determine the costs for the process order using the function display cost itemization. To complete this step, follow menu path Process Order > Functions > Determine Costs. In the menu bar of the initial screen that the system opens (not shown), click Goto and then select Costs > Detailed Statement. The system then displays the costs with the current valuation of the stocks at the moving average price at the plant level, not at the planned value (Figure 14). In the screen shown in Figure 15, reachable by clicking the Materials option in Figure 12, you can assign a batch, handled with a specific unit of measure, to material AI-1203. Determine the costs for the process order again using the option to display the cost itemization and compare the costs with those costs that were first determined. Follow menu path Process Order > Functions > Determine Costs. In the menu bar of the initial screen the system displays (not shown), click Goto and select Costs > Detailed Statement. The system displays the costs for material AI-1203 using the stocks’ current valuation at batch level (Figure 16). Then, at this stage, click the save icon to save your order. The system shows the message shown in Figure 17.

Step 2. Post the goods issue of the material containing active ingredients. To post the goods issue for the components used in production use transaction code MIGO with MvT 261 or follow menu path Logistics > Materials Management > Inventory Management > Goods Movement > Goods Receipt (MIGO). The system then displays the screen shown in Figure 18. After validating the data in terms of quantity, batch, and location, click the Post button to post the document. The system then generates the material document number shown in Figure 18. In production the system calculates and proposes the number of batches and the quantities required to produce a company’s product based on planned alternative unit of measure values stored in the material master. It posts the consumption of actual quantities and values based on the actual alternative unit of measure data stored in the batches specified in the transactional documents (e.g., goods issues postings). For conversion of total quantities to batch-specific quantities, such as proportion quantities or product quantities, generally the planned conversion factor is stored as a characteristic in the material master record and the actual conversion factor is stored in the batch master record. Step 3. Post the goods receipt of the material containing active ingredients. To post the goods receipt for the purchase order in the base unit of measure, use transaction code MIGO or follow menu path Logistics > Materials Management > Inventory Management > Goods Movement > Goods Receipt (MIGO). After validating the data for quantity, batch, and location, click the Post button to post the document. The system then generates the material document number shown in Figure 19. Step 4. Settle the process order. To settle the process order’s costs, you can use transaction code KO88 or follow menu path Logistics > Production - Process > Process Order > Period-End Closing > Settlement > Individual Processing. This action displays the screen in Figure 20. Populate the Order, Settlement period, and Fiscal Year fields. In the Processing type field choose Automatic from the drop-down list of options. In the Processing Options section, select the Check trans. data (check transactional data) check box. Click the execute icon (highlighted in Figure 20) to run the settlement report. The system then displays the details shown in Figure 21.

If you click the Settlement executed link, you can view the details of the settled document that the system generated (Figure 22).

Step 5. Display the process order cost balance. To display the cost balance of the process order, use transaction code COR3 or follow menu path Logistics > Production - Process > Process Order > Process Order > Display. This action displays the screen shown in Figure 23.

After having specified the process order document number in the Process Order field, press Enter. In the menu bar of the refreshed screen (not shown) click Goto and select Costs > Balance. You then can view the details in the Cost Balance section (Figure 23).

Customizing Activities

Now I describe six customizing activities that you need to complete:

1.  Activate a batch-specific unit of measure
2. Create a unit of measure for a proportion unit
3. Define a proportional unit
4. Define a ratio unit of measure
5. Create the conversion factor characteristics for the batch class
6. Assign the conversion factor characteristics to a batch class

Step 1. Activate a batch-specific unit of measure. To activate ingredient management functionality at the client level use transaction code OMWS or follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Logistics - General > Batch Management > Batch-Specific Material Units of Measure > Activate Batch-Specific Material Unit of Measure (Figure 24). Step 2. Create a unit of measure for a proportion unit. For production processes, purchase processes, or sales processes, there can be an alternate unit of measure that can vary occasionally or can change for every lot that is produced or purchased. Therefore, SAP has come up with something called a batch-specific unit of measure. To use a batch-specific unit of measure, a characteristic is required to be added to the batch class that would carry the conversion factor for deriving the alternate batch-specific unit of measure. Therefore, it is mandatory to create this unit of measure as a prerequisite for the entire solution. If this unit of measure already exists in the system, then you can go to the next step. You should create the non-dimensional unit of measure that would be used as a unit of measure for the characteristics through the use of SAP transaction code CUNI. To create a unit of measure for your active ingredient that should act as a proportion unit of measure, follow customizing menu path Tools > Customizing > IMG > Edit Project (SPRO) Push button: SAP Reference IMG. SAP NetWeaver > General Settings > Check Units of Measurement or use transaction code CUNI. In the initial screen that opens (not shown) click the Units of Measurement (no dimensions) button and then click the create icon. This action displays the screen in Figure 25 in which you define the commercial and technical units of measure that are used to manage the active ingredient unit of measure along with descriptions and conversion details, such as decimal places. Step 3. Define a proportional unit. To complete this step, assign the unit of measure from task 1 (A01), the role of proportion unit of measure. Enter the unit of measure in the table of the batch-specific material units of measure and search for an appropriate reference unit of measure with the dimension mass. Follow menu path Tools > Customizing > IMG > Edit Project (SPRO). Click the SAP Reference IMG button (not shown) and follow menu path Logistics - General > Batch Management > Batch-Specific Material Units of Measure > Edit Batch-Specific Material Unit of Measure or use transaction code BMA1. Make a new entry for the unit of measure KI1 with reference to Primary Unit of measure KG. It should be capable of being used as a batch-specific unit of measure. You can enter the dimension Mass as the reference unit of measure as shown in Figure 26. Step 4. Define a ratio unit of measure. In this step you define a ratio unit of measure (i.e., you calculate a proportion unit from a base unit). First, you define the relationship between the active ingredient (the proportion unit) and the physical quantity for the unit of measure from task 2 (V01). This step helps the system to convert a basic unit of measure to a batch-specific unit of measure. Similarly, you can also configure the conversion of a batch-specific unit of measure to a basic unit of measure. To complete this process follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Logistics - General > Batch Management > Batch-Specific Material Units of Measure > Calculate Proportional Factors > Define Calculation of Proportion Quantity from Base Quantity or use transaction code BMA3. In the screen the system displays click the New Entries button (Figure 27). Step 5. Create the conversion factor characteristics for the batch class. To complete this step execute transaction code CT04. This action displays the screen shown in Figure 28. In this screen you assign the characteristics to the batch class of the product that requires the batch-specific conversion. When you create the characteristics, you should assign the unit of measure created in the step 3 – Define a proportional unit. For example, you can create a characteristic called AIC01 with a description of active ingredient with a unit of measure of U01. The characteristic that is created should be in numeric format characteristics (i.e., characteristics that accept as admissible values only numeric values), and it cannot carry multiple values. All the data you need to define for this characteristic is shown in Figures 28 and 29. In the Basic data tab in Figure 28, for my example, enter AIC01 in the Characteristic field and Aroma (active substance char.) in the Description field. In the Status field choose Released from the drop-down list of options. In the Format section, select the options and populate the fields as shown in Figure 28. Under Value assignment, for my example, select the Single-value option. In Figure 29, the range of values for the characteristic is defined. To reach the screen shown in the Figure 30, select the Restrictions tab and enter the Class type for which the Characteristic can be associated. In my example it is 022 – Batch (at plant level). Step 6. Assign the conversion factor characteristics to a batch class. To complete this step, use transaction code CL02 and assign the characteristics (conversion factor characteristics) to the batch class. In Figure 31, you also need to classify the batch class at the header as a special batch class by entering the value S (substance steel) in the Organizational area field. You also include the value S for the characteristics in the screen where you list the characteristics of the class (characteristics tab of the “class change” transaction). This activity instructs the SAP system to use this characteristic in carrying out the batch-specific unit of measure functionality.

In Figure 32, assign the characteristic AIC01 to the Class AICL0001.