Results Analysis - Completed Contract Method (CCM)

Results analysis (RA) was developed for companies with long-term projects/orders. Normally projects/orders are regarded as long-term if it takes more than one year to complete.  For controlling requirements or for balance sheet purposes (refer to accounting principles), such objects need to be valuated at regular intervals (normally monthly).  With large quantities of objects, for mid-year statements, or for the requirements of Controlling, however, results analysis for objects with shorter life cycles may be required.

     For long-term projects the actual postings recorded in FI may not necessarily reflect the current valuation and progress of the project.  If revenue is billed in advance of actual job progress, the profit can be overstated for a period.  Conversely, if progress has been recorded for a project in advance of billing, the profit can be understated for the period.  The purpose behind RA is to analyze the project and calculate revenues and costs. Any differences between calculated results and the postings previously reported in FI can be posted automatically.

     Result Analysis can generate FI-GL postings for the object (ex.: project) only when this object is settled.  Therefore the condition to generate FI postings for the object is the object settlement.  System also updates CO/PS with a special value types available in the CO/PS info system that has no precondition (such as settlement) in order to be calculated.

      The RA data is stored in the system by period; therefore it is not possible to have RA postings more than once in the same month.  The RA simulation can be done at any time, but only saved data is the basis for respective postings.

     The Result Analysis is performed at the object (ex.: billing WBS-element) level, and not at the customer level.  This is also reflected by the fact that respective FI postings are not generated at customer account level.  Therefore the multi-customer projects are valuated at totals level, disregarding the revenue flows from different customers unless this is reflected by the project structure.

There are 3 major types of projects that can be classified from the accounting (and business) perspective:
1. CAPEX (can be also CAPEX/OPEX mix)
2. OPEX
3. Customer Projects (Services, Make to Order, or whatever that involves revenue postings)

The Completed Contract Method (CCM) is probably one of the most simple (and easy to understand for non-accounting person) methods for Result Analysis.
This method applies to Customer Projects (or Revenue based projects).

With the Completed Contract Method, the costs and revenues affecting the net income are calculated as follows:

The object does not have the status X

Costs affecting net income = 0

Revenue affecting net income = 0

and therefore

Capitalized Costs (WIP) = Cumulative Actual Costs

Revenue Surplus (Deferred Revenue) = Cumulative Actual Revenues

The object has the status X

Costs Affecting Net Income = Cumulative Actual Costs

Revenue Affecting Net Income = Cumulative Actual Revenue

and

Capitalized Costs (WIP) = 0

Revenue Surplus (Deferred Revenue) = 0

Other words the revenue is recognized only upon completion of the project (complete contract).

            Status X is usually the status Final Billing or Technically Completed. But it can be any other status also.  The quantity-based POC method is represented by results analysis method 09 or results analysis type E with profit indicator C.

Or in the expert view:

For the CCM method the planned data is not relevant for the RA calculation, but only object's system status and actual postings.

Below I present the following posting example to illustrate the logic of this method:

1. January 2014: IT equipment (from stock) and Salary cost is posted to Project Expenses 70,000

2. 31/01/2014: RA calculates WIP as 70,000; Unbilled Revenue is not calculated

3. February 2014: Invoicing the customer for 90,000; no expenses for the period

4. 28/02/2014: RA calculates Deferred Revenue (Billed Revenue in Excess of Recognized Revenue) 90,000

5. March 2014: Change the project status to TECO (interpreted as Contract Completed)

6. 31/03/2014: RA posting: Clear WIP, Clear Deferred revenue.

The example of FI posting keys for Result Analysis corresponding to the above:

RA Category	Description	P&L Account	BS Account
WIPR	Work in Process	WIP Change	WIP from which Revenue can be generated
	(Requirement to capitalize)	Account
POCS	Revenue surplus	Deferred Revenue	Deferred Revenue
	(Deferred revenue)	Change Account

 
      

     For simplicity purpose I will not distinguish between different WIP categories such as Requirement to Capitalize WIPR, Optional to Capitalize WIPO, Not to be capitalized WIPP.  The RA can calculate these 3 WIP categories that also can be used.

SAP PS - Configure Budget Availability Control (BAC)

Purpose

The purpose of this document is to document the entire Configuration required for Budget Availability Control (BAC) including Budget Profile and Tolerance Limits. At the end of the document, examples of BAC response based on the tolerance limit set are documented.

General Information

The configuration for BAC can be divided into two steps
- Maintaining Budget Profile
- Defining Tolerance Limits

Maintaining Budget Profile

Detail Configuration steps with screen shots for Budget profile are listed below:

Go to Maintain Budget Profile using the Transaction code or Menu Path stated below:

Transaction Code	OPS9
Menu Path	SPRO --> SAP Reference IMG --> Project System --> Costs --> Budget --> Maintain Budget Profile

Select “New Entries”
• Profile – Budget Profile Enter the name for the new Budget Profile, say “ZCAP”

• Text – Description for Budget Profile
Enter the Description for the Budget Profile, Example -> “Profile for Capital Projects“

• Timeframe: Based on the business requirement, specify the number of years in the past/future you would like to plan/budget projects for.
For the purpose of illustration, the budget profile is maintained such that the Budget can be maintained for 5 years in the past/ 5 years in the future and the start year (current year) as the reference point.

• Total values (Indicator): Check this indicator so that overall values can be maintained for budget.

• Annual values (Indicator) – Check this indicator if business prefer to maintain the budget on annual basis.

• Representation :
• Decimal places and the Scaling factor would help in controlling the layout of the filed group values that have constant units.

• Decimal Places - Number of Decimal Places (say ‘2’ )

• Exchange Rate Type – M

Maintain the exchange rate type that would be used for the BAC calculations.

• Program Type Budget - Program type for budgeting In case of Investment Projects, this field will be significant, as this will ensure that WBS elements with a given budget profile cannot receive overall or annual budgets unless the WBS element (or a WBS element above it in the hierarchy) is assigned to a program position of an investment program with the correct program type entered here.

Select the Program Type for the Budget Profile, example “Z001”

• Activation Type – Availability Control Activation Type

This Field determines whether and how availability control should be activated.

There are three activation types:

0 = cannot activate: This activity type may cause an already active availability control to be deactivated.

1 = automatic activation when budget is assigned. Upon selecting this activation type, at least one tolerance limit should be maintained for the budget profile.

2 = background activation when percentage of consumption is exceeded For the Project used in this illustration, as we want to activate Budget Availability
Control when Budget is allocated, maintained the Activation Type as “1“

• Usage - Usage in % for background activator.
- Use this indicator, only when the activation type ‘2’ has been used. By maintaining a percentage value in this field, say 50, the system will activate BAC when the assigned funds of the WBS is more than the 50 % of the budget available on the WBS. Since we have opted for Activation type ‘1’ – Automatic activation during Budget allocation, this usage field is left blank.

• Overall- Availability control against overall value.
- Select the Overall indicator so that the budget checks would be done against the Overall budget values and not against the annual values.

• Object Currency (Indicator) - Availability Control in Object Currency
- In case if business prefers budget checks to be done against the Object currency values, only then check this indicator.

• Releases(Indicator) - Availability control against releases
- If the business requirement is such that the budget is released as and when required and the budget check accordingly should be for the released budget
only, then check this indicator. If the Budget check needs to be done for the entire amount budgeted, then leave this indicator deselected.

• Budgeting Currency-
- Controlling Area Currency(Indicator) - Budgeting/Planning in the Controlling Area Currency
- Object Currency (Indicator) - Budgeting/Planning in the Object Currency
- Transaction curency (Indicator) - Budgeting/Planning in the Transaction Currency

Select the Controlling Area currency.
• Save the Budget Profile.

Result
Configuration of Budget Profile is completed for which Tolerance limits are to be set.


Example
Below is the screen shot for Budget Profile ZCAP as an Example.

Define Tolerance Limits
Tolerance Limits are set for defining what actions are to be taken when the Budget is overrun. Example: Warning will be shown if the Budget Exceeds 70% of Budget available. Warning with mail to the Person responsible when the Budget Exceeds 90% of Budget available. Hard stop Error will be shown if the Budget Exceeds 100% of Budget available. Different Budget Profiles can have different Tolerance settings.


Detail Configuration steps with screen shot for Tolerance limits are listed below:

• Go to Maintain Define Tolerance Limits using the Menu Path stated below:

Menu Path

SPRO --> SAP Reference IMG --> Costs --> Budget --> Tolerance Budget

Select “New Entries”
• COAr – Controlling Area. Enter Controlling area.

• Prof. – Budget Profile

Enter Budget Profile for which you want to set the Tolerance Limits. In this example, “ZCAP”

Tr. Grp – Tolerance Group
Tolerance Group is the Activity Group for which you want to set the Tolerance
limits.

E.g. Activity Group 00 – Purchase Requisition, Tolerance settings for this activity group will be applied only for Budget overrun due to Purchase Requisition.
Below is the list of allowed Activity Groups:

Select Activity Group “00” for setting Tolerance limits to give warning message and an email when PR exceeds 90% of Budget.

• Act. - Availability control action
This field indicates what action is triggered if the defined tolerance limit is exceeded.

Enter “2” in this field as we want a warning message and an email when PR exceeds 90% of Budget.

• Usage - Usage rate in %
The "usage" represents the ratio of funds commitments to the budget, expressed as a percentage. If this value is exceeded because of budget reductions or assigned funds in commitments which are too high, the specified action is triggered.
Enter “90” in Usage Field.

• Save the Tolerance Limits for PR for 90% Usage.

• Below is sample of business requirement for Tolerance Limits for below Activity Group and Budget Profile combinations.

Result
Tolerance Limits were successfully set for Budget Profiles and Activity Groups.



Example
Below is the screen shot of a Tolerance Settings for Budget profile ZCAP when budget exceeds 90% and 100% of WBS Budget.

Examples of BAC actions:

• Created a project (FS00141) and assigned the WBS FS00141 to an Investment Program.

• Distributed the budget to the project using transaction IM52 for a value (USD 1000.00).

• Since the activation type maintained for the budget profile ZCAP is automatic activation upon budget allocation, the status of the WBS for which the budget is
distributed will now be BUDG AVAC

• WBS Person responsible is maintained on the WBS

Now create a PR for USD 901.00, which is 90.1% of the available budget (USD 1000.00). In this example, created PR for qty 1, hence the valuation price is same as the PR amount.

Check that the account assigned object is the WBS element for which the budget has been maintained.

• If the requisitioned tries to save the PR, then system will pop-up the below messages

• Once the PR is saved, a warning mail will be triggered to the person responsible maintained on the WBS. Below is the screen shot of how the message will look like at the SAP Business Workplace (SBWP) in the inbox of the person responsible maintained on the WBS.

• In the above message, the following details can be noticed.

- PR number which has triggered this warning message
- WBS FS00141 for which the PR has been assigned and for which the budget check was done
- Assigned funds are 99.00 USD less than budget which means the available budget on the WBS is now 99.00 USD

• For this same WBS copying the above created PR 20001251, if the Purchase Order is tried to create for USD 1001.00 which is a dollar over the budget allocated, the system as per the tolerance limit set (Hard stop error when assigned funds exceed 100% of available budget) should throw a hard stop error.

• With reference to PR 20001251, create a PO for USD 1,001.00. Check that the WBS is the same used on the PR and budgeted FS00141

• When the buyer, tries to save the PO, the following message window will pop-up and prevents from saving the PO. The message displays the amount by which the available budget exceeded. (USD 1.00)

• Similarly in case of the other activity groups, BAC would trigger appropriate action based on the tolerance limits set.

Assembly Processing with SAP PS

Assembly Processing
 This process is used throughout SAP R/3 logistics applications to automatically generate the following order types:

• Planned order
• Production order
• Process order
• Service order
• Network (project)

The order type used in the Project System is the network.
Assembly Processing in the Project System:
Business Scenario
Assembly processing is relevant for businesses using the Project System to plan products or services that are produced or carried out several times in a similar constellation. Although the projects, for example, for different customers, they consist of similar activities, but the structure of the project remains the same. Details, such as quantities or the amount of work involved, can differ.
Prerequisites
1-To use assembly processing in the Project System, you have to have created a standard network in the system. The system uses this standard network to create the executable network during assembly processing
2-You need to have set up a material master that supports assembly processing.
3-You should maintain a link between the material master and the standard network. This is done in the Project System and is described in Linking Materials and Standard Networks.
 Process Flow

1. You start assembly processing by creating a sales document for a material. This sales
   document can be

• An inquiry
• quotation
• A sales order

The system then:

1. Configures the material, if necessary
2. Creates a network using the standard network as a template
3. Configures the network, if necessary
4. Schedules the network backwards from the required delivery date
5. check material availability
6. Costs the network and transfers these costs to the sales document.

When you save the sales document, the system saves the network together with the sales document.

If applicable, it also generates a project definition and work breakdown structure. The project number is derived from the sales document number.
Advantages of Assembly Processing
 Assembly processing creates a link between the sales document and the project. This means that the same information is available to the employees in the sales department and to project management. The system automatically updates changes to the sales document in the network and vice-versa.
Since the system schedules the network and checks material availability when you create a sales document, you can immediately inform the customer whether you can complete the project on the date he/she requested. If not, the system proposes a date on which it is possible to complete the project.
As of Release 4.6 it is possible to use assembly processing with project stock. There is now a logical connection between the sales order number and the stock segment. This means that you can create deliveries in the Sales and Distribution component for a project that has been generated using assembly processing. Subsequently you can use the standard delivery functions in this component.
Test in IDES System: All Testing has been done in IDES System.
As per prerequisite we need to create following:
1-       Standard WBS
2-       Standard Network
3-       Material
4-       Link between the Network, Material and Standard WBS
5-       Create Sale Order
 Create Standard WBS
TC : CJ91
Path:  Choose Logistics ® Project management ® Basic data and then Standard structures ® Standard WBS® Create
In this case we are using Std. Project Definition E-1004 as template and we will create new standard WBS No. E-9802
After enter the above data press enter.
Now select icon  to display the WBS element.
You can add / delete the WBS element here.
Here Release the WBS Element.
 Now Release The WBS Element. (Remember without Release Status system will not allow to post any actual cost to new created project)
2- Remember that For All WBS Element, Operative indicator Account Assigned & Planning Element should be ticked.
Create Standard Network
TC: CN01   Path: Choose Logistics ® Project management ® Basic data and then Standard structures ® Standard networkà Create
Select the icon  to copy from Template.
Now enter standard Network ( Which one you want to copy ) .
Here you will link WBS to Network .( it is very important to create a new operative project from sale order )
Select the  for choose activities:
You can create activity here as per requirement .
You can maintain the relationship among the activities. Now Press the Total Tab :
Now here you can decide that under which WBS element , Which activity will assigned .
Here you can say that 1030 activity should assign to WBS element  E-9802-01 .
Save the network
Create Material
TC: MM01
Path: Logistics ® Production ® Master data ® Material master or Logistics ® Material management ® Material master and then Material and create (special or general)
Create material with using already exist material E-1004.
Maintain the necessary setting in Material Master. (It is necessary for Assembly processing).
Select Sale ORG 1
Press the conditions :
The amount which enters here will be the sale value of material. During creation of sale order system take the sale order value from here.
Select the relevant Item Category Group.
Maintain Strategy in MRP3 View and save then Exit.
Assignment of Material to Network :
TC: CN08
Path: Logistics ® Project management ® Basic data and then Standard structures ® Network parameters from sales order ® Edit.
Press  to enter new line .
Here we will link material to Standard Network & Standard WBS .
Assembly Processing
Create Sale Order:
TC: VA01
Path: SAP Menu àLogistic àSales and DistributionàSalesàOrderàCreate
Select the Order Type / Sale organization and Distribution Channel
Enter
Enter the Required field like Ship to party, PO No. ,Required Delivery Date ,Material No. and Quantity .Then Press Enter .
 Save the Sale Order and note down the Sale Order Number .
Last Four Digit of sale order number will use the project number with prefix E .
For our case : Sale document No. is 8170 so Project number will be E-8170.
Check in Project Builder.( CJ20N)
Now we can see that System has created new operative project in background.
And it has assigned activities to WBS accordingly.

Assembly Processing in SD and PS

INTRODUCTION

 

Assembly processing is one of the rarely used but extremely robust process used in various industries. This process encompasses the functionalities of receiving the order and planning all the requirements of the order by passing the requirements to various other related modules. Once all the components are received they are assembled and handed over to customer.

Based on the business requirement, a sales order can lead to any of the orders including  production order, planned order, a network or a process order. Based on this linkage configurations are to be done in the respective modules along with configurations in sales and distribution.

This chapter explains about the creation of a network in project systems while creating a sales order in SD. The functionality of assembly request can also be linked with various other functionalities like milestone billing in SD, milestone management in PS, Schedule and cost management in PS etc. However this document concentrates only on the configuration required for creating a network automatically when a sales order is created. During the course of the document, some of the obvious configurations are assumed to be known to the basic consultant and hence not dealt in much detail.

PROCESS FLOW

 

The process starts with the creation a sales order using a material code. The material codes in this case are very limited and are specific to every variation.

The sales order item will trigger a requirement transfer. As a result the requirement class triggers a network considering the requested delivery date of the sales order as the finished date of the network. At the same time, a project is created for the entire sales order and WBS element will be created for each of the line item.

If the network is enabled with milestones for activities, then milestone billing can be automatically triggered in sales order if the item category is also accordingly configured.

Now we have a sales order, a project for it, various line items each item having a WBS element and a network. Now it is possible to manage each of these line items in PS using schedule and milestone management. Accordingly when milestones are confirmed in PS, milestone billing can be triggered in sales orders.

At the end when all the items are delivered the project can be settled and closed. This document doesn’t deal about deliveries for project as my knowledge level in this area is minimal.

CONFIGURATION TRANSACTION CODES

 

Though I have the system with me, I don’t want to put the screen shots because of customer confidentiality. Hence I am trying to explain as much as information through text. In case of any doubt the same can be discussed in the comment on this content.

VOV8

VOV7

VOV6

Configuration Paths in Transfer of Requirements

CN91

CN08

CL24N

CN01

STEPS IN CONFIGURATION

The first of the configuration is the sales order type. This is the basic configuration in SD and hence I skip this configuration.

The header configuration is followed by the item category configuration. If milestone billing functionality is to be used, then the Billing plan type in the item category should have a value indicating the Milestone billing. A copy of billing plan type can be made by copying the billing plan type 01. Similarly the billing relevance can be maintained as I for billing based on billing plan and order related billing. Except this all the other settings for item category is same for assembly processing as for any other processes. Also it should be remembered that variant configuration is a robust functionality used in assembly processing to dynamically determine various project and sales parameters and hence the item category should also consider the use of variant configuration if needed.

Schedule line configuration is same as the normal schedule line configuration and hence I am not dealing much about it.

These are followed by the configuration for transfer of requirements. This is where the SD module is integrated with the PS module. It involves the following steps to determine the strategy group or the strategy type. It can be based on the normal rules for TOR. The strategy group can be determined from any one of the following methods viz…the combination of item category and MRP type,from  material master and so on.  Using this configuration either the requirement class is determined using the strategy group (if the strategy group is maintained in material master) or using the requirement type (if the MRP type is maintained in material master). The requirement class is the one which dictates the integration between SD and PS and the desired requirement class can be seen from the transaction code OVZG. The configuration at the requirement class should have the following fields filled.

The availability button should be switched off as the material availability is not enabled in assembly processing.

The field Requirements transfer should be ticked on in the requirement class

The assembly type should be 2. This will ensure that a network is created automatically if the relevant configurations are done.

The field Order type should be filled with the network type which is to be created while creating sales order.

The field Capacity check can have the value as 1 or 2 based on requirement of capacity

The fields related to costing and configuration can be left empty here as they can also be handled in other places which will take precedence over this configuration.

The field special stock can have the value as E to make sure that stock is reserved against the sales order.

The field Account Assignment Category should be enabled with the value D. This will ensure that the project or its subordinate levels can be used as account assignment objects. Based on the configuration in PS either the network and activity number or the WBS elements can be used as the account assignment objects.

The field Consumption should be configured with the value P to ensure project based consumption.

These fields are the mandatory fields to be updated. The remaining fields are optional and can be configured based on need. The fields related to costing, settlement, and valuations are best left empty here and configured in the respective modules.

Once these configurations are done in SD the process will work as follows.

When a sales order item is put, based on its item category, schedule line category configuration, the transfer of requirements is triggered and the correct requirement class is determined. Using the requirement class the system will try to create a network. However to create a network system will need another set of data from PS module. The set of data needed after doing the basic set of PS configuration are explained here.

At first a standard project should be created in PS using the transaction code CJ91.  In order to do this the project definition, the project profile etc are needed and the PS consultant will be in the best position to configure the project profile for this activity.

A standard project should also include a standard WBS element with all the necessary set up like planning element, account assignment element, billing element and other organisational elements. The creation of standard project and standard WBS element should follow the coding mask and the coding mask should take care of the number of characters for the sales order. Because any operative project or the WBS element will have the sales order number in the project as a standard functionality in assembly processing. For example if the coding mask is enabled as A/xxxxxxxxxx/ _____ then the characters xxxxxxxxx represent the sales order and the code with 10 characters will be used to fill up the sales order number while creating the project.

This is followed by the creation of standard network in CN01. The network can have the standard WBS element at the header and item level for all the activities if necessary.

Also in parallel the material master should also be set up by the MM consultant to be used in Sales order. The material master should have all the four MRP views and the MRP type should be kept as ND or the relevant MRP type to trigger the correct requirement type and hence the correct requirement class. If the MRP type is maintained as ND, then the strategy group should be maintained as the correct group which directs to the desired requirement class for the customer requirement.

Once these set up are completed, the final set up will be in the transaction code CN08 where the material code will be linked to a standard network.  This data should have the correct network order type as maintained in the requirement class. Also the standard WBS element maintained in this transaction code should be the one which is used in the network. Generally in standard network we use only one standard network. If multiple standard WBS elements are used in standard network activities, then in CN08, this field can be maintained with empty values.  The values MRP controller and the network profile are mandatory and should be maintained by the PS consultant.

If this is done in PS the transfer of requirements while trying to search for the network will have the necessary set up in CN08 and it will create an operative network.

It is also possible to have variant configuration enabled in assembly processing. Using this for example based on the complexity of the configuration and the activities required, different standard networks can be mapped to the same material using CL24N. 

Assembly Process in Project Systems With Screenshots

Assembly Process
Assembly Process is used to plan products or services that are produced or carried out repetitively.
Advantage being changes made in the sale document automatically updated in the network and vice versa. Helps keeping project team and sales team on same page.
Assembly process omits MRP planning and generates an operative order directly.
Assembly Process Flow: Example
Create sales order, quotation, RFQ  with Requested delivery date, quantiy - requirement qty and date copied from sales order to the network, backward scheduling is carried out for the network and availablility check is done for Material. system proposed date if we cannot meet the given date.
Material with Network is populated
Planned cost, confirmed delivery date provided by the system - Based on the quantities the network is adjusted accordings with respect to Execution factor.
Save the Sales order
Operative structure will get generated up on saving of Sales order.
1. SD / PS Process
i) Network - Header assigned network without a project will be generated, sales doc is the cost object.
ii)WBS and Network - Generate a network through sales order and when you save system create WBS and assigns the sales order item to a WBS element. Project is controlling object.
iii)WBS - we can assign a saled document item to WBS element, Project is controlling object.
iv)WBS and Production Order - production orede is manually assigned to the project.
2. Project number from Sales Document
TCode - CJ91
 


If there are two line items (refering to two networkss) in a sales order no: 1563
with No SD/PS assignment - Project number generated will be T-1563
with SD/PS assignment ticked - there will two numbers generated T-1563-10, T-1563-20 for two line items( refering to two networks).
Only one root indicator is not set in the project profile to avoid any errors.
3. Prerequisites for Assembly Processing.

• Standard network as template (and possibly standard WBS).
• Material with sales views ( and possibly MRP views).
• Material is assigned to Standard network.
• Requirements class that enables assembly in the sales order.

Material views
Item category group is important for selecting the item category in the sales order.




 


Material is assigned to Standard network
TCode - CN08

   


Requirements class that enables assembly in the sales order
TCode - OVZG
 
 

4. Determining the Requirement Class  - Configuration Settings  
 a)Main Strategy  - Determining Requirement Class by Main Strategy
Planning strategy is linked to requirement type
Requirment type is linked to requirment class.
i) TCode - OPPT
 


ii) TCode - OPPT
 
iii) TCode - OPPS
 
iv) TCode - OVZH
 


v) TCode - OVZG
 


Comparision between Strategy and Requirement Classes  - illustrates the data is same in both plannig strategy and requirement class. This is the reason this method is main strategy as if we have planning strategy in material master directly we are giving requirement class to the system.
   


b)Cofiguration Settings - MRP Group
If System not able to find the Requirement class based on the above stragegy it will tries to find out based on MRP Group.
If planning strategy is not maintained in the material master, system picks the same from MRP group, in the MRP group we have planning strategy and the above cycle is repeated to get the requirement class.
TCode - OPPU
   
   


c) Cofiguration Settings - Item Category 
If System not able to find the Requirement class based on the above two stragies it will tries to find out based on Item Category.
From Item category group maintained in the material master and sales document type entered in the sales order system determines item category.
 
Item category linked with requirement type
 
Requirement type is linked to requirement class.
i)   TCode - VOV7
     

 ii)  TCode - SPRO

    

iii)  TCode - VOV4

    

 iv)  TCode - OZVI

    

 v) TCode - OVZH

   

5. Typical Example
Create a sales order - Input order type, sales org, distribution channel, division.


Sales order overview - provide sold to party, ship to party and req. deliv date.



      

 Sales order overview - Enter the material



     

Sales order oveiw- Enter order quantity


     

Sales order oview - At this point of time there is no WBS reflecting against the material. once we save the sales order, network is scheduled and proposes the delivery date and generates the operative structure.

      

 Sales order overview - once the sales order is saved , open the same sales order and we can see the project is created and sales order is assigned to this project.


     

Project - We can open the project in CJ20N, look at the assignment details and Req.dlv dt.


      


Project  - illustrates the execution factor. Network is adjusted accordingly ,for the activities dependent on the quantity of the material. execution factor is equal to the quantiy based on which the multiplication happens and nework is adjusted to suit the production of required quantity.