Options for Profit Center Valuation in Material Ledger

Answers by SCM team -> SCM

Abbott is considering following options:
Option 1:
Configure C+V profile with
1st currency as Legal valuation in Co. Code currency and
2nd currency as Group Valuation in Group Currency temporarily.
PCA configuration will point to legal valuation in controlling area currency (USD).
At a later date, add Profit Center valuation to C+V profile and add
3rd currency in GL as Profit Center valuation. Change PCA configuration to point to
Profit center valuation in Group currency.
Questions for Option 1:
1.

Will the system allow this change?

No changes to the Currency Valuation Profile are to substantial -> custom project

2.

Will there be any problems, such as aborts, when transactions are carried out in
SD, MM or FI modules?
I f you perform non supported changes this might be the result (I would also
include CO).

3.

Can they be overcome? Any estimated man-hours for overcoming these system
problems?
Everything can be overcome given time and money Hard to answer in regards
of man hours - Do you want to have the answer for the PC valuation
implementation from scratch or the additional effort to perform a nonstandard
change? What is the data volume to consider at the time of change? Abbottwill
have a history for group and no history for profit center valuation this can lead
to unexpected situations especially if ML actual costing is used.
From my point are the efforts rather substantial especially potential downtime
requirements due to large data volume.

4.

Would you recommend prototyping the scenario?

SCM What is the starting point for the prototype do you know how the config will
be set up? No starting point + a somewhat unclear target will create a foggy
prototype -> answer is NO under current circumstances.

We are aware that that issue of loading the Profit center valuation for all open
items and GL balances will come up again then.
Option 2:
Configure C+V profile with
1st currency as Legal valuation in Co. Code currency and
2nd currency as Group Valuation in Group Currency temporarily.
3rd currency will be legal valuation in group currency.
PCA configuration will point to legal valuation in controlling area currency (USD). At a
later date add Profit Center valuation to C+V profile and change 3rd currency in GL to
Profit Center valuation in Group currency. Change PCA configuration to point to Profit
center valuation in Group currency.
Questions for Option 2:
1.
2.

3.

4.

Will the system allow this change?

No, changes to the Currency Valuation Profile are to substantial -> custom
project
Will there be any problems, such as aborts, when transactions are carried out in
SD, MM or FI modules?
SCM f you perform non supported changes this might be the result (I would also
include CO).
Can they be overcome? Any estimated man-hours for overcoming these system
problems?
SCM Hard to answer - Do you want to have the answer for the PC valuation
implementation from scratch or the additional effort to perform a nonstandard
change? What is the data volume to consider at the time of change? Abbottwill
have a history for group and no history for profit center valuation this can lead
to unexpected situations especially if ML actual costing is used.
It is beneficial to have 30 for consolidation purposes so the set up can actually be
used for other purposes.
Would you recommend prototyping the scenario?
SCM This makes more sense than Option 1. I think it is hard to prototype the
cutover from this option to 10 / 31 / 32 due to missing data.
We are aware that that issue of changing the values for open items and GL
balances in 3rd currency from Legal valuation to Profit center valuation will come
up again then.
SCM: This assumption is not 100% correct there are values out there so I expect
no dumps just incorrect values in relative terms this is much more desirable.

Option 3:
Configure C+V profile with
1st currency as Legal valuation in Co. Code currency,
2nd currency as Group Valuation in Group Currency, and
3rd currency as Profit center valuation in Group currency.
PCA configuration will point to Profit Center valuation in Group currency. Create an
ABAP object to execute MR21 to change Profit Center valuation by copying legal
valuation. This object would also translate if legal valuation were in other currencies than
USD before copying. This is a stopgap arrangement before Abbott has enough settings
for Product Costing to create a transfer price variant, pricing procedure and a costing
variant to enjoy the benefit of TP functionality. In the meanwhile profit center reports in
USD will be available from the 3rd currency.
Abbott is aware that there will be additional work involved in running this ABAP object
not only every quarter (normal frequency) but also after any unplanned cost estimate
creation for new materials.
Questions for Option 3:
1.

2.

3.

Will Tcode CKMADJUST work in new GL environment and populate the 3rd
currency values for inventory GL accounts?
SCM CKMADJUST just posts the differences from all inventory values in profit
center valuation and the value in the GL account. This posting is a correction
posting. I am not aware if your splitting rules would get active on this one. I
expect the posting to hit the 2nd local ledger and if set up the 3rd one.
Do you foresee issues in intercompany billing involving profit centers with the
forced Profit center valuation?
SCM I do not see more issues here in general there are activities to make the
profit center valuation values passing over to the next entity if you do not want
to use it right now I would set up a transfer price rule that is like no uplift, or a
user exit take the legal value. This will reduce overhead.
Do you see issues with this design?
SCM: if you add certain customizing you might generate additional likes that
waste DB space try to avoid wasting space on lines you do not need (yet).
This option will be the easiest go get the 32 going later on.
I think this is the option you should go for once the profit center valuation is
correctly initialized and the maintenance is automated you would have a view you
could use with a fair amount of mostly likely only internal efforts. If you do not
want to use it the view would post an automated set of values (just do not look at
it).

OPTION 4:
Please check if the following possibilities can be considered.
Abbott could use the profit center valuation without a local ledger storing the data
(instead a SPL could be used):
no GL impact (which can be an issue for subsequent processing)
no open item issue in foreign currency
no reconciliation to the GL (rather an issue than a help)
SPL has less restrictions than the GL (higher degree of freedom that can
become an issue)
the CO related issues stay the same
PCA can be used for other purposes in all options. The question is more: How would you
like to use it, what is the purpose?
The SAP ledger concept is fairly flexible and not all ways to set it up satisfy all
requirements.
Questions to Abbott:
- Will there a need to eliminate Business Unit revenues?
- Will the profit center valuation be used for internal or external purposes?