Explain about Intercompany STP in SAP

The intercompany stock transfer process in SAP specifically focuses on the process flow for
stock transfer via outbound delivery between the receiving and issuing plants. The process is
divided into two main scenarios, involving the creation of a purchase order and subsequent
goods movements between the plants.
First Scenario: Two-Step Approach with Movement Type 643
 Create NB PO: The receiving plant creates a standard purchase order (NB document type) for
the stock transfer.
 Outbound Delivery: The issuing plant generates an outbound delivery document to start the
goods movement process.
 Transfer-Post GI (643): The goods issue (GI) is posted using movement type 643, which
transfers the stock from the issuing plant to be in transit.
 Post Goods Receipt (101): Upon arrival, the receiving plant posts the goods receipt (GR) using
movement type 101, acknowledging that the stock has been received.
 Billing: The issuing plant processes the billing for the transferred goods.
 Invoice: The receiving plant generates an invoice for the intercompany transfer.

Second Scenario: One-Step Approach with Movement Type 645

 Create NB PO: Similar to the first scenario, the receiving plant creates an NB PO for the
intercompany transfer.

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  Outbound Delivery: The issuing plant creates an outbound delivery document for the goods.
 TF Cross Company (645): The goods are transferred using movement type 645, which is
specific for cross-company transfers.
 Billing: The issuing plant proceeds with the billing for the transfer.
 Invoice: The receiving plant issues the invoice for the transaction.
The flowchart presents two slightly different scenarios:

Scenario PTP OTC

Cross-company STO in two Purchase Order type: Delivery type: NLCC
steps ·NB Standard PO, with “blank” Delivery item category: NLC
item category Billing relevance: relevant to
Movement type: billing
·643 by posting the GI via
VL02N
·101 by posting the GR via
MIGO

Cross-company STO in one step Delivery type: NLCC

Purchase Order type: Delivery item category: NLC
·NB Standard PO, with “blank” Billing relevance: relevant to
item category billing
Movement type:
·645 and 101 are triggering by
posting the GI via VL02N
T Code.

Important setting:
1) Maintain output type RD04 (Invoice Receipt MM) V/40 Processing routines (Standard
program) & Partner Functions Bill to Party.
2) Assign logical supplier -Logic address CC+ Customer and CC+ Supplier
3) Partner profile set up T Code: WE20 Partner Type LI Vendor only Inbound delivery
Partner type KU Customer need to set up both Inbound & Outbound. Message type as
IDOC type

Cross-Company Purchasing (Inter Company Code STO):

Field Selling Buying
Company Code 1200 1100
Country IN US
Material FG-100 FG-100
Plant 1201 1101
Exchange Rate 1 INR 0.012 USD
Standard Cost- Legal 1000 INR 12 USD
Standard Cost- Group 18 USD 18 USD

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 IC Vendor/Customer 1200 1100
Sales/Purchase Price 2000 INR 24 USD

For the Supplier: Create the Supplier in the Receiving (Buying) Company Code and Receiving
Purchasing Organization and assign the Supplying Plant to the Vendor General Data. (i.e. For the
Receiving Company Code, the Supplying Plant acts as a Supplier.) and assign issuing company
as a trading partner for the Control tab.
For the Customer: Create the Customer in the Supplying (Selling)Company Code (i.e., the
Customer acts as a Receiving Plant for the Supplying Company Code.)

For the Material: Create the Material in both the Plants.

Goods Receipt Accounting Document in the Legal View:

Company PK Account Amount Transaction

1100 89 Inventory FG 12 BSX (Inventory Posting)
96 GR/IR Clearing -24 WRX (GR/IR clearing account)
83 Loss PRC Var PRD 12 PRD (Cost (price) differences)

Goods Receipt Accounting Document in the Group Currency View:

Company PK Account Amount Transaction

1100 89 Inventory FG 18 BSX (Inventory Posting)
96 GR/IR Clearing -18 WRX (GR/IR clearing account)
83 Loss PRC Var PRD 0 PRD (Cost (price) differences)

Goods Issue Accounting Document in the Legal View:

Company PK Account Amount Transaction

1200 99 Inventory FG -1000 BSX (Inventory Posting)
81 GOGS SFG & FG 1000 GBB (Offsetting entry for
w/o CE inventory posting)

Goods Issue Accounting Document in the Group Currency View:

Company PK Account Amount Transaction

1200 99 Inventory FG -18 BSX (Inventory Posting)
81 GOGS SFG & FG 18 GBB (Offsetting entry for
w/o CE inventory posting)

Accounting Document of the Billing Document in the Legal View:

Company PK Account Amount Transaction

1200 01 Customer 2000
50 Revenue -2000 VKOA(ERL)
50 Valuation Transfer 0 8KEN

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 50 Revenue 0 VKOA(ERL)

Accounting Document of the Billing Document in the Group Currency View:

Company PK Account Amount Transaction

1200 01 Customer 24
50 Revenue 0 VKOA(ERL)
50 Valuation Transfer -6 8KEN
50 Revenue -18 VKOA(ERL)

Intercompany Payable Document in the Legal View:

Company PK Account Amount Transaction

1100 40 GR/IR Clearing 24 WRX (GR/IR clearing account)
31 Vendor -24
40 Valuation Transfer 0 8KEN

Intercompany Payable Document in the Group Currency View:

Company PK Account Amount Transaction

1100 40 GR/IR Clearing 18 WRX (GR/IR clearing account)
31 Vendor -24
40 Valuation Transfer 6 8KEN

Intra Companies

What is CO Product & BY Product?

A CO product is a product that is produced in the manufacturing process, and its cost is fully
traceable. These are the primary products for which you calculate and track costs (such as direct
materials, labor, and overhead) within the system.

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Example: If you're producing a car, the car is the CO product. You would assign costs directly to
it, such as raw materials (metal, plastic), labor, and overhead.

A BY-product is a secondary product produced during the manufacturing process, but it is not
the primary focus of production. By-products can be sold or used in other parts of the company.

Example: In the same car manufacturing process, if you end up with scrap metal or waste
plastic, these could be considered by-products. They may be sold for some revenue, or recycled,
but they are not the primary product of the process.

Key Differences:

SAP Co-Product SAP By-Product

Importance It is the main product It is a secondary product
Costing is based on the
Costing apportionment structure defined in Costing based on net realizable value.
the primary co-product.
In the Material master MRP2 view,
Material Master we need to select the CO product No need for a tick mark in Material.
tick mark.
Co-products have negative signs
BOM Settings along with co-product indicators in By-products have only negative signs.
BOM.
Confirmation GR movement type is 101 Movement type used 531 for GI
Co-products influence financial By-products will not have any influence
Financial Report
reporting. on financial reporting.
Handling in Production Orders:
When you create a production order, SAP uses these -1 values to properly adjust the quantities of
co-products or by-products produced, ensuring that they are tracked in terms of yield or output,
rather than requiring them to always match a fixed BOM quantity.
Example:
 Co-product: Suppose you’re producing a batch of product A, and along the way, you
also produce co-product B. In your BOM, the quantity for co-product B might be set to -1
to indicate that it is produced, but the exact quantity will depend on the conditions of
production (e.g., yield, machine efficiency, etc.).
 By-product: Similarly, if by-product C is produced during the same process but in much
smaller quantities, the quantity of -1 allows you to track this material as an incidental
output, without requiring a fixed quantity.
Explain about MTO Scenario:

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  SO as cost object valuated stock Sales order item is the controlling object, and the month-
end process is carried out on the sales order item level. Sales orders are used to manage
the external cost & resource and production orders are used to manage the external cost
& resource. The sales order combines all product costing resources & costs. Another term
for this scenario is sales order-related complex [Link] stock E, Account
assignment category E Valuation M

 SO as cost object non-valuated stock Sales order item is the controlling object, the
month-end process is carried out on the sales order item level. Sales orders are used to
manage the external cost & resource and production orders are used to manage the
external cost & resource. The sales order combines all product costing resources & costs.
In this scenario, variant configuration is mostly used. Special stock E, Account
assignment category E

 SO as non-cost object valuated stock Sales order automatically derives the production
order using MRP processing, with the use of valuated stock with a focus on the direct,
controllable costs incurred during the production process is the production order, not the
sales order. The month-end process takes on production orders, not sales orders. Another
term for this scenario is sales order-related mass production. Special stock E, Account
assignment category M Valuation M

Valuated mean s accounting entries will generate GR & Outbound delivery. Non-valuated no
goods movement only quantity will update.
Billing time Cost Obj is also SO. No COPA characteristics hit at that time. COPA Will hit at the
time of SO Settlement.

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Schedule Line:
A schedule line in SAP represents the details of when and how much of the ordered quantity is to
be delivered. It contains information such as delivery date, quantity, and relevant plant or storage
location. The schedule line links the sales order to the delivery document.
Item Category:
The item category defines the type of item in the sales order (e.g., standard items, free items, or
services). It controls how the system processes each item in terms of pricing, delivery, and
billing. For example, an item category could specify whether the item should be shipped or
whether it's a non-deliverable item.
Requirement Category:
Requirement Category in a Sales Order refers to a classification that helps determine the type of
requirement or demand that is being created for a product. It plays a key role in how materials
are sourced or planned in the system.
Requirement Type:
The requirement type in a Sales Order is used to define specific rules or conditions for the
availability of materials when creating sales orders. It is part of the availability check process,
which ensures that the required materials are available for delivery within the desired time frame.
Make-to-Stock with Product Cost Collector

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The same Product they have BOM Variance we will run, but not WIP, Product cost collector
used in repetitive manufacturing industries.
How COGS(COPA) Split will happen in Margin Analysis:
Its new functionality S4 Hana based on the standard cost estimate run and all the split
components configured based on this split will happen.
How to split the cost component structure based on the Origin group to COPA:
Origin group is used to give the connectivity between condition records & cost component
structure.
Freight accrual process (How to set the freight accrual key (FRL) in MM Pricing
procedure)
Costing sheet, Additive cost, Purchase info record
How to bring into PO:
What are the accounting entries if the freight accrual key is coming:
Freight A/C Dr (FRL)
Accrual A/C CR

Actual costing of how it will be used in Special stock

What is a product cost collector
OBYC – LKW & COC how it will work
LKW – is an accrual account if you are not re-valuating the material's actual cost system will
pick up the accrual account from LKW.
COC - will be used while revaluating consumption. When you are producing material 10 and you
are selling 6 then the system will do the re-valuation for the remaining material.
Process Order
It is used to manage production processes that involve the processing of materials in industries
such as chemicals, pharmaceuticals, oil, and food production. Process Order is used in process
industries where production involves the continuous or batch processing of materials.
Production Order
Production Order is used to manage the manufacturing or production process. It represents an
instruction to produce a certain quantity of a material or product, within a specified time frame,
using specific resources and production planning details.
How will WIP Settlement happen?

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What is a settlement profile?
Settlement profile is a configuration element used in cost accounting that determines how costs
should be settled (allocated or transferred) from one cost object to another, or to financial
accounting. It defines the rules and procedures for cost settlements in various processes, such as
internal orders, projects, or cost centers.
Single Ledger & Multiple Valuation
One ledger (Leading ledger) with multiple valuations like legal, Group & Profit center.
Multiple Ledger & Multiple Valuation
Currency type & Currency valuation profile
The currency type and valuation profile determine which valuations the system stores in which
currency. Using standards, we can store up to three different valuation views in up to two
different currencies.
What is costing sheet?
In SAP, a costing sheet is used in Product Costing (within the Controlling (CO) module) to
define and manage the overhead costs and cost rates that are applied during the costing process.
It determines how overhead costs, such as administrative or production-related expenses, are
calculated and allocated to materials, products, or services in the cost estimation process.
What is the cost of the component structure
The cost component structure allows a cost estimate to group costs of similar components such
as material, labor, and overhead. All individual costs are identified by cost elements. We are
using primary (Material, external processing) and secondary (labor, overhead) cost elements.
Template Allocation
Template Allocation is primarily a concept for distributing costs or quantities across different
cost objects, such as cost centers, internal orders, or other entities.
How will settlement happen in Template Allocation in the Period end
T Code Single CPTA Mass CPTD
Group Valuation Delta = Legal Valuation – Group Valuation
Profit Center Valuation Delta = Profit Center Valuation – Group Valuation but we can see
this group valuation.
Mixed Cost SAP mixed costing allows you to cost materials with multiple alternatives when you
manufacture a material with different production versions and master recipes.

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Split Valuation Split valuation helps in valuating the stocks of material in the same valuation
area (Company or Plant). It refers to the valuation type on a material master. Typically,
organizations want to track the material cost.
Ex New, Used or Repaired Stock. Valuation type in the material master used to track this stock
separately and specify what type of stock is being moved or purchased.
SAP allows you to valuate stocks of material either together or separately.
Use of Split Valuations:
 Different Origin of the materials.
 Different grades of quality for the material
 Different status of the materials
 Differentiation between in-house & external procurement.
 Differentiation between different deliveries or suppliers
Mix costing without split valuation Two Different Version of Production but no need of
separate valuation.
 Normal material is nothing special in the master
 Need to create 2 or more BOM, Item category is L -Stock item
 Need to create 2 or more routing
 Master data for Mixed costing T Code:CK91N
 Mixing ratio T Code:CK94
 Cost estimate- Cost will be split based on the ratio that was maintained in CK94
 Actual Overhead calculation T Code: KGI2
 Actual template allocation T Code: Single CPTA & Mass: CPTD
 Enter direct activity allocation T Code: KB21N
 Variance calculation T Code: KKS2/KKS1
 Settlement T Code: KO88 /CO88

Mixed costing with split valuation Procurement and Production Split Valuation
 Activate the split valuation
 Create valuation type 1 for old material,1 for new material
 OBYC setup
 Inventory - BSX
 COGM - GBB~AUF
 Price difference - PRD~PRF
 Consumption - GBB~VBR
 GRIR – WRX
 Revaluation - UMB
 Valuation category maintained in the accounting view
 Header material price control V and price determination 2
 Once valuation type (New & Old material) entered in the material price control S
& price determination 3

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  Create 2 Routing & BOM 1 for old material & 1 for new material and maintain 2
production versions in the material master.
 Procurement alternative T Code: CK91N
 Mixing ratio T Code:CK94
 Cost estimate- Cost will be split based on the ratio that was maintained in CK94
 In CK24 price has been updated based on valuation type

Split Valuation – Without Mix Costing Procure or Production Decision

Transport Management System:

It is used inbound & outbound Sales & purchase
 We can create nomination it is like a transport request.
 This nomination will create the freight order, which is include quantity, price then
FSD – Freight settlement document will create the in-TM module.
 Freight settlement documents will create Freight PO in SAP.
 Freight PO is ERS based which means directly creating the invoice like service
entry sheet.
How will the cost be updated in the material ledger once the freight settlement is
completed?
 There are certain BADIs available that we can use to transfer the cost distribution
to the material ledger. This is for inbound freight.
For Outbound you can use some COGS account.

What is activity input planning and how to use it? KP06

It is used for cost planning and is focused on individual cost elements and cost planning on cost
center on detail.
Activity dependent planning: If the company is a manufacturing entity; The product is
produced in the production cost center. During production, various manufacturing activities are
carried out, such as machine hours, labor, and utilities. To allocate these costs to the product, an
activity rate is required. To calculate this rate, activity-based planning must be done at the
manufacturing cost center level. In all such cost centers, we establish activity-dependent
planning.
Activity Independent Planning: In cases where only expenditure needs to be planned and no
activity rate is necessary, such as in departments like Finance or Purchasing where no
manufacturing activities are performed.

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What is activity output planning? In a manufacturing company, we need to plan various
activities involved in producing a specific product, including machine time and labor hours. To
do this, you need to establish planned activities with both fixed and variable rates. For example,
you would set a cost rate for each activity, such as $50 per machine hour and $30 per labor hour.

What are the scenarios where I should use these planning methods? We can use the planning
methods on the scenario below scenario
1. Activity type output planning KP26
2. SKF planning KP46
3. Activity Input Planning KP06
4. Plan Allocations -->Assessment, Distribution
5. Indirect activity allocations

In outsourced manufacturing, SAP provides the CPOM (Contract Purchase Order

Management) order type. In the purchase order you will create the subcontracting order (CO
order) in the background and there you can do order settlement (like process order or production
order), and everything can roll up to inventory.
Sub-Contracting
 Manufacturing Out-Source
1) Create RM & FG (Procurement type as F & Special procure type in MRP2)
2) Create BOM
3) Create Purchase info record ME11N with Vendor, Material, Pur Org, Plant and info
category as Subcontract
4) Costing Itemization as ‘L’ as Subcontract
5) In the PO Item category as ‘L’ as Subcontract
6) RM transfer to Vendor (MIGO) via transfer posting with movement type 541 (Material is
transferred to subcontractor using movement 541 in SAP.) No subsequent accounting document.
7) GR from Vendor against PO

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  Partial Manufacturing Out-Source
1) Create RM & FG (Procurement type as F & Special procure type in MRP2)
2) Create Routing here we need to assign purchase info & GL (No BOM) PP01 = internal
Manufacturing PP02 = External Manufacturing
3) Create Purchase info record ME11N with Vendor, Pur Org, Plant and info category as
Standard without material
4) Costing Itemization as ‘F’ as External activity
5) Create production order in this external tab, all the details are auto filled the Purchase Request
will be created automatically. Then do the confirmation on CO11N
6) Create Purchase Order - [ME21N]
7) Service Received Against Purchase Order - [MIGO]

8) Goods Received from Production Order - [MIGO], Variance Calculation – [KKS2] Settlement
– [KO88]

Indirect activity allocation with example? Indirect activity allocation is primarily used when
the activity produced by one cost center is consumed by others, and determining the exact
amount used by each cost center is either unknown or difficult to calculate.
Example: I am conducting a QC (Manual & automatic) check for a product, and the salary and
rent expenses related to it have been posted under a single cost center. Now I want to split the
how much I paid for manual & automatic in this scenario I can use indirect activity allocation to
find the how much I paid for manual & automatic.

Indirect Activity Allocation using SKF:

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 Cost center quality control gives quality check service to 3 production cost centers.
Two activity types are used.
[Link] Hours-Manual (Act type category = 2 Indirect determination, indirect
allocation)
[Link] Hours-Automated (Act type category =3 Manual entry, indirect allocation)
Both activity types are allocated based on SKF (test items). The allocation method used is
indirect activity allocation.
Splitting: Costs that are incurred in the cost center quality control are to be split between the two
activity types. For that we need to define the Splitting Structure and assign it to the cost center.
Actual activity valuation:
During allocation activity quantity is valuated with plan price or manually set price
initially when actual price calculation is not done. At the time of actual price calculation, we can
optionally reevaluate the allocated activity. Variance amount is posted. After revaluation process
sender balance will be zero.

In transfer price how to roll down the price difference for intercompany? What I need to
do in this -If it is restricted & special stock then only, we can be able to roll down. Sending
company code stock should be assigned in the receiving company code stock.
Special stock and need to transfer posting – Movement type 413
Balance sheet to Balance sheet transfer unrestricted inventory to restricted inventory.
How price difference will move below scenario
Unrestricted Inventory – Month end it will move
Restricted Inventory (Special stock)-Immediately it will move.
How can I do stock transfer for Special stock?
Special stock and need to transfer posting – Movement type 413
Balance sheet to Balance sheet transfer unrestricted inventory to restricted inventory.
How to you define COGS split structure – It will be based on cost component structure. COGS
Split posting entry. Set up default 5 Cost component split from Actual costing (ML).
CKMLCP – What will happen if we select revaluation of inventory & if we do not select
revaluation of inventory.
What will be the impact in asset accounting if we maintain a single ledger & parallel
ledger-If we maintain parallel ledger like N1- Ledger in currency type 11,31 & N2- Ledger in
currency type 12,32 we will face issue in depreciation, so we need to maintain single ledger in
Asset accounting. So, we need to maintain multiple currency in the leading ledger(0L) and
currency type 10 & 30 in the Nonleading ledger.

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In the above combination we can maintain in ECC because it will post only in BSEG so non
leading will not post in this table but in S4 it will post BSEG & ACDOCA table due to this
technical implications SAP suggesting that maintain Single ledger with multiple valuation &
parallel ledger maintain.

Margin Analysis KEDR what are the derivations we can do?

1) Derivation Rule- Combination of source & target value will derive the COPA
characteristics. Example I will enter Country + State in source filed based on that
It will fill sales region like North or South. In the condition tap we can maintain it
needs to appliable only for certain company code or customer.

2) Table lookup – This is especially useful when you want to derive values from
existing data based on a matching condition, which eliminates the need to
manually enter or hardcode them. Example I want derive the customer group into
COPA characteristics in the source table look up I will keep combination of
Customer +SO+ DC+ Division in the target it will drive the Customer group.
3) Move -A "move" lets you move the content of any source field or a constant to
any target field. Example Customer number to Ship to Party.
4) Clear -A "clear" lets you delete a characteristic value (reset to " " (blank) for
CHAR fields or "0" for NUMC fields). It will useful for clear any particular field
based on plant or Sales organization.
5) Enhancement- We can use this functionality if we are unable to achieve the
desired result using any standard methods. We can use component 003 of
customer enhancement "COPA0001" to define your own derivation logic.

What is Top-down distribution? How will entries be posted in the top-down distribution?
If you are using a common freight carrier with multiple products & different customer you are
spending $5k you can mentioned particular customer.

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What is the difference between COPA assessment & top-down distribution?
COPA assessment you are doing from cost center, but this is something you are doing from
generic level to lower level for specific company code or customer or product.

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