SAP CO Business Blueprint

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

Bharat Electronics Limited BUSINESS BLUEPRINT

SAP Implementation

Business Blueprint Controlling

Page 1 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION DOCUMENT APPROVALS

.......................................................

................................

Mr.Mahapatra.K

Core Team Member- BEL

.......................................................

................................

Mr.Venkataramana.K

Date

Functional Consultant-1 ......................................................

................................

Mr.Ramesh Babu M

Date

Functional Consultant-2

.......................................................

................................

Mr.Venkata Swamy.V

Date

Functional Consultant-3 .......................................................

................................

Mr.Yogesh Kulkarni Project Manager - Wipro

Date

.......................................................

................................

Sri.R.P.S.Gahlaut

Date

Page 2 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

DOCUMENT CONTROL SHEET GENERAL INFORMATION Project name

Document name

Document location

BEL SAP Implementation DOCUMENT INFORMATION Version

Filename

V 1.0

Controlling

Date

Author

Reviewed by

Changes from previous version

REFERENCE DOCUMENTS Document

Version

Page 3 of 62

Reference

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION List of Business process covered in this Document:

Contents: SLNO

Process Code

Process Description

Status

01

BO1- CO- 010

Cost Element Master

02

BO1- CO- 011

Cost Element Group

03

BO1- CO- 012

Cost Center Master

04

BO1- CO- 013

Cost Center Group

05

BO1- CO- 014

Activity Types

06

BO1- CO- 015

Activity Type Group

07

BO1- CO- 016

Statistical Key Figures

08

BO1- CO- 017

Statistical Key Figure Group

09

BO1- CO- 018

Cost Center Planning

10

BO1- CO- 019

Internal Order

11

BO1- CO- 020

Internal Order Group

12

BO1- CO- 021

Profit Center Accounting

13

BO1- CO- 022

Profit Center Standard Hierarchy / Group.

14

BO1- CO- 023

Planning & Budgeting – Prepare Initial Plan

15

BO1- CO- 024

Review Draft plan

16

BO1- CO- 025

Set-Up Plan Overheads

17

BO1- CO- 026

Allocate Plan Overhead Cost

18

BO1- CO- 027

Calculate Prices

19

BO1- CO- 028

Review Preliminary Plan

20

BO1- CO- 029

Finalize Plan & Budget

21

BO1- CO- 030

Set-Up Cost Allocation for Actual Overhead Costs.

22

BO1- CO- 031

Allocation of Actual Overhead Costs.

23

BO1- CO- 032

Product Costing.

Costs

Planned

for

Activity

Page 4 of 62

Plan

Type

Remarks

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION ORGANIZATION STRUCTURE Considering the modules to be implemented for BEL, the following Controlling organizational structure Controlling area The controlling area is the highest organizational unit in Controlling. BEL Controlling Area shall be 1000. There shall be only one Controlling Area across all company codes All company codes of BEL shall be attached to Controlling Area - 1000 with single Chart of Accounts – 1000 with single Fiscal Year Variant Z1 Company Code: A company code is the smallest organizational unit for which complete, independent accounting can be carried out. This includes the entry of all transactions subject to posting and the creation of all items for legal individual financial statements, such as the balance sheet and the profit and loss statement. As for BEL’s organization, it is proposed that the assignment of company code to be carried out as follows: Company Name

Company Code

Corporate

1000

Bangalore

1100

Chennai

1200

Ghaziabad

1300

Hyderabad

1400

Kotdwara

1500

Machilipatnam

1600

Navi Mumbai

1700

Panchakula

1800

Pune

1900

All the company codes will be using INR as the Controlling Area and Company Code currency.. Inter-company automatic posting function will be activated for BEL as all companies will maintain their full set of accounts in the same client.

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Chart of Accounts A chart of accounts is a placeholder where all the required G/L accounts can be defined. In the first place, the chart of accounts needs to be indexed so that it is possible to proceed with the G/L account management. As for BEL Organization, it is proposed that a single chart of accounts to be used for all the companies within the scope of implementation, as follows:

Chart of Accounts Description

Chart of Accounts

Chart of accounts for BEL group

1000

Table: - Charts of Accounts

Fiscal Year Fiscal year definition is configured to ensure any posting or transactions to be captured in the corresponding accounting period. Additionally, a fiscal year definition is the basis for determining posting periods as well as audit adjustment periods. A fiscal year variant is used to define the fiscal year. In short, the definition of a fiscal year It is recommended for BEL requirements to use the following fiscal year variant. Fiscal Year Variant

Description

Z1

Fiscal Year, 4 special periods

Table: - Fiscal Year Cost Center/ Profit Center Standard Hierarchy shall be 1000. Standard Hierarchy means a tree structure representing all cost centers belonging to a controlling area from a Controlling perspective. You can combine cost centers into cost center groups. You can then create cost center hierarchies from these groups by combining the groups according to decision-making area, area of responsibility, or management area. A cost center hierarchy comprises all cost centers for a given period and therefore represents the whole enterprise. This hierarchy is known as the standard hierarchy. To create cost centers, you need to define a hierarchical cost center structure (cost center group). In Cost Center Accounting, this structure is known as the standard hierarchy You can display and edit organizational units in your standard hierarchy assignment and the related master data.

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

Data Migration Considerations This section summarizes the type of data, within this module, that is envisaged to be converted from the legacy systems to SAP R/3 and the envisaged method of conversion. This section is not intended to detail or document the data conversion strategy. Data Convert

to Master Transaction

GL Master Master Record GL Balances Transaction (BS & P+L)

/ Estimated Conversion Method Volume (active) To be SAP Standard program. Considered To be SAP Standard program. Considered

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Broad Processes covered in Controlling Module are: 1. 2. 3. 4. 5. 6.

Cost and Revenue Element Accounting Cost Center Accounting Internal Orders Profit Center Accounting Planning & Budgeting Product Costing

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Reports and Forms This section summarizes the inventory of reports and forms identified within this module as being required and the envisaged method of report generation. It should be noted that standard SAP R/3 reports should be used wherever possible. No Report / Form Name Current Reports / Forms 1. KA23 - Cost Elements: Master Data Report 2. KS13 - Cost Centers: Master Data Report 3. KOK5 Internal Orders: Master Data Report 4. KAL7 - Overview of Cost Flows 5. KALR - Reconciliation Ledger: CO Line Items 6. Plan/Actual cost Comparisons 7. Target/Actual cost Comparisons 8. Planning Reports 9. Profit Center Comparison: Return on Investment 10. Profit Center: Statistical Key Figures 11. KE31 Create Profitability Report 12. KE91 - Create Report Based on Line Items 13. KE94 - Define Forms for Reports Based on Line Items 14. Analyze Costing Run 15. Detailed Reports For Material 16. Material Cost Estimate vs. Preliminary Order Cost Estimation 17. Reports for Product Cost by Period 18. Reports for Product Cost by Order 19. Cash Flow 20. Actual Costing/Material Ledger

Frequency

Method

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc Adhoc

Standard report Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc Adhoc

Standard report Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc

Standard report

Adhoc Adhoc

Standard report

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Remarks

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Cost and Revenue Element Accounting: Cost elements classify an organization’s valuated consumption of production factors within a Controlling area. A cost element corresponds to a cost-relevant item in the chart of accounts. We distinguish between primary cost and revenue elements and secondary cost elements. Primary Cost/Revenue Elements: A primary cost or revenue element is a cost or revenue-relevant item in the chart of accounts, for which a corresponding general ledger (G/L) account exists in Financial Accounting (FI). You can only create the cost or revenue element if you have first defined it as a G/L account in the chart of accounts and created it as an account in Financial Accounting. The SAP System checks whether a corresponding account exists in Financial Accounting. Secondary Cost Elements: Secondary cost elements can only be created and administrated in cost accounting (CO). They portray internal value flows, such as those found in internal activity allocation, overhead calculations and settlement transactions. When you create a secondary cost element, the SAP System checks whether a corresponding account already exists in Financial Accounting. If one exists, you can not create the secondary cost element in cost accounting. Cost Element Categories: The cost element category has a technical control function. It determines whether you can post to a cost element directly or indirectly. Direct posting means: You post a fixed amount to an account by specifying the account number. You can post directly to all primary cost elements. Indirect posting means: The R/3 System determines the account automatically at the time of posting You can not enter the account number with the posting transaction. You can only post indirectly to secondary cost elements.

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 010 Sub-Process: Cost Element Master Current Scenario / AS IS: Step SR NO

Activity

CO-01-01

Presently GL account is treated as Cost GL Account Elements. Ref: - G/L master Creation.

Input

Output Cost Elements

SAP Scenario / TO BE Process: Step

1.

Ref CO-01-01

2.

Procedures Creation of Primary Revenue Element

Creation element

of

secondary

T. Code Cost/ KA01

cost KA06

Benefits New functionality for BEL Gap Analysis NIL

Page 11 of 62

Input Validity period, Cost element name, Cost element category

Output Primary Cost/ revenue Element will be created

Validity period, Cost element name, Cost element category

Secondary Cost/ revenue Element will be created

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 011 Sub-Process: Cost Element Group Current Scenario / AS IS: Step SR NO

Activity

CO-02-01

Cost element are grouped the labour and Overheads Major Groups are 1. Labour and Overheads. 2. Material Overheads 3. Non-Manufacturing Overheads. 4. Development & Engineering This grouping is done by Finance Dept.

CO-02-02

CO-02-03

Input

Output

SAP Scenario / TO BE Process: Organizational unit storing a group of cost elements. Cost elements with similar characteristics may be grouped together in cost element group. You can define any number of cost element groups for valuation, planning and allocation purposes as part of master data maintenance. You can also arrange cost element groups in further cost element groups, creating a cost element hierarchy. Request for a Cost Element Grouping: These groups could be used for consistency and ease of use in reporting, planning, allocations, etc Changing of Cost Element Group: This process is for changing a Cost Element Group. This allows for values to be added or deleted from the group, or for other groups to be added or deleted from the cost element group (when the group is a hierarchy). Display a Cost Element Group: This process is for displaying a Cost Element Group. This would apply to a Standard Hierarchy or an Alternative Hierarchy. This allows for various cost element groups to be viewed along with their values.

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

Ref 1CO-0201& CO-0202& CO-0203 2

3

Procedures

Tcode

Creation Group

of

Cost

Element KAH1

Changing Group

of

Cost

Element

Display a Cost Element Group

Gap Analysis No Gaps

Page 13 of 62

KAH2

KAH3

Input

Output

Cost Element Group Name, Controllin g Area

Cost Element Group is created

Cost Element Group Name Controllin g Area Cost Element Group Name Controllin g Area

Cost element group is changed

Cost element group is displaye d

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

COST CENTER ACCOUNTING You use Cost Center Accounting for controlling purposes within your organization. Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization. Cost Centers enables you to valuate semi-finished and finished products in Product Cost Controlling (CO-PC), and to calculate contribution margins in Profitability Analysis (CO-PA). The “activities” of cost centers represent “internal resources” for business processes in ActivityBased Costing. The costs of each cost-accounting-relevant business transaction portrayed in the R/3 System can be assigned through Cost and Revenue Element Accounting to an account assignment object in the Controlling component (CO). For overhead costs this can be cost centers, internal orders, business processes, or overhead projects. Recording and assigning overhead costs allows you to control costs and prepare information for the subsequent areas of Cost Accounting. You can use the methods of activity allocation, assessment or distribution to further allocate Costs.

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 012 Sub-Process: Cost Center Master Current Scenario / AS IS: Step SR NO

Activity

CO-03-01

Cost Centers are created based on the Fabrication, function e.g.: - Fabrication, Assembly, Assembly, Testing, Finance, and HRD.Etc. Testing, Finance, and HRD…Etc. Details & approval from Finance dept

Input

Output Cost Centers

SAP Scenario / TO BE Process: Cost Center master Creation: A cost center is an organizational unit within a controlling area that represents a clearly delimited location where costs occur. You can make organizational divisions on the basis of functional, settlement-related, activity-related, spatial, and/or responsibility-related standpoints. You use cost centers for differentiated assignment of overhead costs to organizational activities, based on utilization of the relevant areas and for differentiated controlling of costs arising in an organization Master data determines the structure of the given application component in the SAP System and remains essentially unchanged in a live system, that is, in the current settlement periods. The system displays the master data fields on different tab pages on the basic screen. After initial entry, the system displays the basic data tab page, which is ready for input. On this tab page, the system generally displays all fields that need to be edited. You can edit more fields by selecting the appropriate tab page. You can use pushbuttons on the tab pages to go from one maintenance transaction or display transaction to another

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step 1

Ref

Procedures

CO-03-01

Cost Center Master Creation, change, display, delete, display changes

T.Cod e KS01

Gap Analysis No Gaps

Page 16 of 62

Input

Output

Cost Center, Valid From/To, Name, Cost Center Category, Person Responsible, Company Code, Hierarchy Area,

Desired Cost Center Master is created

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 013 Sub-Process: Cost Center Group Current Scenario / AS IS: Step SR NO

Activity

CO-04-01

Cost centers are majourly grouped as Production, Material, Sales…Etc

CO-04-02

Under this major groups further sub groups are there like under production Fabrication, Assembly, Testing …etc

Input

Output

Cost centers, Grouping details, Approval from Finance dept.

Cost centers Grouped

SAP Scenario / TO BE Process: You can collect cost centers according to various criteria into groups. This enables you to use cost centers to depict the structure of the organization in the SAP System. You can use the groups to build cost center hierarchies, which summarize the decision-making, responsibility, and control areas according to the particular requirements of the organization. The individual cost centers form the lowest hierarchical level. There must be at least one group that contains all cost centers and represents the entire business organization. This cost center group is described as the standard hierarchy. You can assign more cost center groups to the standard hierarchy. Cost Center Group Creation: A Cost Center Group is an organizational unit storing a group of cost centers. Cost Centers with similar characteristics may be grouped together in cost center group. You can define any number of cost center groups for valuation, planning and allocation purposes as part of master data maintenance. You can also arrange cost center groups in further cost center groups, creating a cost center hierarchy. Request for a Cost Center Group: - These groups could be used for consistency and ease of use in reporting, planning, allocations, etc You can also create any number of alternative groups. You can structure these, for example, according to organizational and/or functional viewpoints. Cost center groups enable you to perform evaluations for each decision-making, responsibility, or control area. They also support the processes during planning and internal allocations

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

Step

1

Ref CO-04-01 & CO-04-02

Procedures Creation of Cost Center Groups

Gap Analysis No Gaps

Page 18 of 62

Code KSH1

Input Cost Center Group, Controlling Area

Output Cost Center Group is created

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

ACTIVITY TYPES Activity types classify the activities produced in the cost centers within a controlling area. To plan and allocate the activities, the system records quantities that are measured in activity units. Activity quantities are valuated using a price (allocation price). In Overhead Cost Controlling, costs based on the activity quantity of an activity type are posted separately in fixed and variable portions. When you divide the activities of a cost center into activity types, you should consider whether the costs can be allocated effectively to the activity types. The prices of the activity types of a cost center can be either entered manually, or calculated by the system based on the costs allocated to the activities. Prices can be calculated either using plan costs or actual costs. You can plan, allocate, and control costs either at the activity type level of a cost center, or at the cost center level. You can enter actual costs at the cost center level. Costs entered at the cost center level are assigned using splitting You can also assign the activity type of a cost center directly. This use was designed for certain application areas (such as personnel costs and depreciation postings). When the activities produced by a cost center are used by other cost centers, orders, processes, and so on, this means that the resources of the sending cost center are being used by the other objects. Typical examples of activity types for cost centers are machine hours, administrator hours, CPU minutes or units produced.

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 014 Sub-Process: Activity Types Current Scenario / AS IS: Step SR NO

Activity

Input

Output

CO-05-01

Bellow Cost centers, work centers exist in production cost centers. A work center finds a place in routing card.

GL a/c, Work Center details, Routing Card, Approval from concerned dept

Work centers created

CO-05-02

For cost a/cing purpose the hourly rate per cost center is used and the hourly rate for work center is not available

SAP Scenario / TO BE Process: Creation of Activity types: The activity type classifies the specific activities provided by a cost center along cost allocation lines. Activity inputs from a sender cost center mean that a receiver (another cost center or an order, process, and so on) is drawing on the resources of the sender cost center. Valuation of activity quantities is made with an allocation price calculated based on the managerial strategy chosen. Change Activity Type: - The activity type classifies the specific activities provided by a cost center along cost allocation lines. Activity inputs from a sender cost center mean that a receiver (another cost center or an order, process, and so on) is drawing on the resources of the sender cost center. Valuation of activity quantities is made with an allocation price calculated based on the managerial strategy chosen. Make changes to the activity type master data either at the beginning or at the end of the fiscal year in order to ensure data consistency Display Activity Type: The activity type classifies the specific activities provided by a cost center along cost allocation lines. Activity inputs from a sender cost center mean that a receiver (another cost center or an order, process, and so on) is drawing on the resources of the sender cost center. Valuation of activity quantities is made with an allocation price calculated based on the managerial strategy chosen. Deleting an activity type: - The activity type classifies the specific activities provided by a cost center along cost allocation lines. Activity inputs from a sender cost center mean that a receiver (another cost center or an order, process, and so on) is drawing on the resources of the sender cost center. Valuation of activity quantities is made with an allocation price calculated based on the managerial strategy chosen. You can only delete activity types in the current Controlling Area if no transaction data exists for the activity type in the plan, commitments or in the actual for the given fiscal year(s). You are also not allowed to plan any statistical key figures

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Reviewing changes made to activity type: - Activity types created in the system may require changes to correct errors made at the time of recording the master data or to update the data with additional information. The following screens provide an internal audit trail to verify what changes were made, when, and by whom. To review changes made to activity type master data as a step in investigating other than expected results of activity type allocations Step

1

Ref CO-05-01 & CO-05-02

2 3

Procedures Creation of Activity types

T. Code KL01

Change Activity Types

KL02

Display Activity Types

Input Controlling Area, Activity Type Beginning and ending dates. Controlling Area Activity Type

Output Create Activity Type Basic Screen

KL03

Controlling Area Activity Type

Display Activity Type Basic Screen

Activity Types changed

4

Deleting an activity types in total or for a given period of time.

KL04

Controlling Area Activity Type

Delete Activity Type Basic Screen

5

Reviewing changes activity types

KL05

Controlling Area Activity Type

Review changes to activity type

made

to

Gap Analysis -- NIL --

Page 21 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 015 Sub-Process: Activity Type Group Current Scenario / AS IS: Step SR NO

Activity

CO-06-01

New Process in SAP

Input

Output

SAP Scenario / TO BE Process: You can gather activity types with similar characteristics into activity type groups. You can use activity type groups to process multiple activity types in one business transaction within Cost Center Accounting . This is true for planning or assessment. During planning, for example, you can display and plan multiple activity types in one transaction. You can also use activity type groups during assessment (for example, assessment to specified activity type groups). As with cost elements and cost centers, the SAP System enables you to create and administrate activity type groups in parallel. For example, you can create separate activity type groups for planning and allocation purposes. You can also define additional activity type groups, for purposes such as price analysis. Create Activity Type Groups: Use this transaction to create Activity Type groups. Activity type groups are flexible structures and can be used in collective master data processing, reporting, allocations, and authorization objects. Each sub group represents a level of summarization. An Activity Type group is unique within a controlling area. There is a business need or desire to group activity types for processing and reporting requirements Change An Activity Type Group: - Use this transaction to change an Activity Type Group. When Activity Type Groups are changed both activity types and other activity type groups may be added, revoked or re-assigned to the Activity Type Group being maintained. Activity type groups are flexible structures and can be used in other activity type groups, collective master data processing, reporting, allocations, and authorization objects. Each sub group represents a level of summarization. Groups are unique within a controlling area. When deleting a group, notice that it is not deleted from the controlling area, its relationship to the next superior node is revoked

Page 22 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

Procedures Creation of Activity Type Groups

T. Code KLH1

Input Activity details

2

Changing Group

Type

KLH2

Activity type group, Controlling area

Structure changed.

3

Transaction to view an existing Activity Type Group

KLH3

Activity type group, Key Data

None – Display only

1

Ref

of

An

Activity

Gap Analysis

-- NIL --

Page 23 of 62

type

Output New group created

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 016 Sub-Process: Statistical Key Figures Current Scenario / AS IS: Step SR NO CO-07-01

Activity New process in SAP

Input

Output

SAP Scenario / TO BE Process: You can define statistical key figures as either:  

Fixed values – Key figures defined, as fixed values are valid as of the posting period, and in all Subsequent posting periods of the fiscal year. Totals values Key figures defined as Totals values are valid only in the posting period in which they are entered.

Key figures defined as fixed values are valid as of the posting period, and in all subsequent posting periods of the fiscal year. You can create, change and display statistical key figures individually or collectively. Individual processing lets you process only one statistical key figure. Collective processing lets you process multiple statistical key figures simultaneously. Change Statistical Key Figure: - The purpose of this script is to demonstrate how to change a statistical key figure. When you make changes to key figures of the category Fixed values, you must enter a new fixed value. This new value is valid for all subsequent periods, until you enter another new value. When you make changes to statistical key figures of the category Totals values, you can first reset the values using reversed +/- signs, and then enter the new values.

Page 24 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

Step

Procedures Creation of Statistical Key Figure

T. Code/ KK01

2

Change Statistical Key Figure

KK02

3

Display Statistical Key Figure

KK03

1

Ref

Gap Analysis -- NIL --

Page 25 of 62

Input Statistical key figure, Controlling area Statistical key figure Controlling area

Output New statistical key figure

Statistical key figure

Statistical key figure displayed

Statistical key figure Changed

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 017 Sub-Process: Statistical Key Figure Group Current Scenario / AS IS: Step SR NO

Activity

CO-08-01

New Process in SAP

Input

Output

SAP Scenario / TO BE Process: You can gather statistical key figures into statistical key figure groups. You can use statistical key figures, or parts of them, when you need to process multiple statistical key figures in one business transaction. Creation of statistical key figure Group: - When several statistical key figures have been created, a statistical key figure group may be necessary for reporting and monitoring the contents of the group. For example, a statistical key figure (SKF) type group could be created for all SKFs managed by Business Systems, all SKFs managed by Human Resources, etc. This will help assign responsibility for large numbers of SKFs. To create an organized way of monitoring statistical key figures by creating groups for skf’s with user defined similar characteristics

Changes To Statistical Key Figure Group: - To make changes to a previously created statistical key figure group. Enter the statistical key figure group name or click on down facing area which opens a statistical key figure group selection box. Leave the radio button

highlighted to all nodes and click on the green check mark. Make your selection from the drop down list for the statistical key figure group you wish to make changes to and click on the green check mark to continue

Display Statistical Key Figure Group: - To display a previously created statistical key figure group, enter the statistical key figure group name or click on down facing area which Opens a statistical key figure group selection box. Make your selection

from the drop down list for the statistical key figure group you wish to display and click on the green check mark to continue.

Page 26 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

Procedures Creation of statistical key figure Group

T-code

2

Changes To Statistical Key Figure Group

3

Display Group.

1

Ref

Statistical

Key

Figure

Gap Analysis -- NIL --

Page 27 of 62

Input Statistical Key Figure, Controlling area

Output SKF group created

KBH2

SKF Group details

SKF Changed

KBH3

SKF Group details

SKF displayed

KBH1

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 018 Sub-Process: Cost Center Planning Current Scenario / AS IS: Step SR NO

Activity

Input

Output

CO-09-01

Only in proction cost centers the standard man-hour availability is planned. This is not in other cost centers

Production Cost center details

Result analysis of Cost centers

CO-09-02

These details for standard hours are available in MRP II and maintained Industrial Engg.Dept.

SAP Scenario / TO BE Process: Cost center planning involves entering plan figures for costs, activities, prices or statistical key figures for a particular cost center and a particular planning period. You can then determine the variances from these figures when you come to compare these plan values with the costs actually incurred. These variances serve as a signal to make the necessary changes to your business processes. Cost center planning forms part of the overall business planning process, and is a prerequisite for standard costing. The main characteristic of standard costing is that values and quantities are planned for specified timeframes, independently of the actual values from previous periods. You can take plan costs and plan activity quantities to determine the (activity) prices. These prices can be used to valuate internal activities during the ongoing period, that is, before the actual costs are known. Cost center planning has the following objectives:  To plan the structure of the organization’s future operations for a clearly defined time period. You should define performance targets and target achievement grades. You must consider the internal and external (market) factors affecting your organization.  To control business methods within the current settlement period. This ensures that you keep as closely as possible to the plan. Iterative planning lets you adapt the target performance to reflect any changes in the organizational environment.  To monitor efficiency after completion of the settlement period using plan/actual or target/actual comparisons.  To provide a basis for the valuation of organizational activities, independent of random fluctuations

Page 28 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Cost Center Plan Cost center planning consists of the following areas:   

Planning of activity quantities and/or prices Planning of costs expected to be incurred Planning statistical key figures, which are used as the basis for the allocation of costs

Together with sales planning, cost planning is the starting point for sales and profit planning. Activity-Independent and Activity-Dependent Cost Planning Activity-independent cost planning covers both primary and secondary costs, but does not refer to a specific activity type. The opposite to this is activity-dependent planning. Activity-dependent planning of primary and secondary costs enables you to plan both fixed and variable costs. You may require this functionality if your costing system uses flexible standard costing based on marginal costs. It is also possible to carry out flexible standard costing based on full costs or marginal costs. You can assign plan activity-independent costs to activity types using various rules, for example, using equivalence numbers or your own splitting rules.

Step

Ref

Procedures Ref: Process: BOI-CO-023 for details

Gap Analysis -- NIL --

Page 29 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 019 Sub-Process: Internal Orders Current Scenario / AS IS: Step SR NO

Activity

Input

CO-10-01

Here Internal Orders are called as work Orders. Types of Work orders are Production, Capital, Standing, Tooling, Procurement, Development& Engineering.

Work types

CO-10-02

This work orders are created by IED/Planning dept at the request from the concerned and authorized by finance.

Request from concern dept with approval from finance dept.

Work orders created

CO-10-03

The work Orders are closed as per advice of the IED (Industrial Engg.Dept)

Work order closing details

Work orders closed

Output order

SAP Scenario / TO BE Process: Creation of Internal Orders: The Enterprise needs to collect and analyze actual and planned costs related to a specific project or event. The project/event will span several accounting periods and all costs will be settled in the period they were incurred. Internal orders are objects in CO that collect actual and plan revenues and cost, statistical and activity data. Data is collected in the order at the transaction level. Based on the order’s purpose, the values can be settled (periodically or all at once) to a final receiver such as a cost center, general ledger account, work breakdown structure, asset, real estate object, another internal order, profitability segment, etc. The order’s inflows as well as outflows can be reported in the Internal Orders Information System. In the delivered reports, the user can drill down through the original documents to the line item. The order’s purpose is defined in Customizing in the Order Type. An Internal Order master record is created on the functional side and includes the attributes established in the order type. Use a statistical order to mange statistical detail with value detail posted to a cost center. Change Internal Order: - Internal orders are objects in CO that collect actual and plan revenues and cost, statistical and activity data. Data is collected in the order at the transaction level. Based on the order’s purpose, the values can be settled (periodically or all at once) to a final receiver such as a cost center, general ledger account, work breakdown structure, asset, real estate object, another internal order, profitability segment, etc. The order’s inflows as well as outflows can be reported in the Internal Orders Information System. In the delivered reports, the user can drill down through the original documents to the line item. The order’s purpose is defined in Customizing in the Order Type. An Internal Order master record is created on the functional side and includes the attributes established in the order type. Use a statistical order to mange statistical detail with value detail posted to

Page 30 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION a cost center. This example demonstrates an internal order used to accumulate transactions in real time and settle transactions to a cost center periodically Step

Ref 1 CO-10-01 & CO-10-02 & CO-10-03

Procedures Creation of Internal Orders:

Code KO01

Input Order Type, Short Text, Company Code, Object Class, Currency, Plan-integrated order, Cat - Receiver type, Receiver Settlement type

Output Internal Order created

2

Change Internal Order:

KO02

Internal Order Details

Internal Orders changed

3

To change the same field on several order master records: 1. Using of Manual Collective Processing 2. Automatic Collective Processing

Internal Order Details

Internal Orders changed

Internal Order Details

Internal Orders Displayed

4

Display Internal Order:

KOK2 KOK4 KO03

Gap Analysis -- NIL --

Page 31 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 020 Sub-Process: Internal Order Group Current Scenario / AS IS: Step SR NO CO-11-01

Activity Internal Orders are grouped based on the nature of the orders. Like Main equipment, Spares, Standing work orders, Service, plant Work Orders.

Input Work details

Order

Output Work Orders created

SAP Scenario / TO BE Process: Internal order groups need to be created for use in collective processing and reporting Internal Order Groups can be created either by (a) specifying specific internal order numbers to be included within a group, (b) a range of numbers that defines the group, or (c) a combonation of the two. Internal Order Creation: Internal order groups are very flexible structures and can be used in collective processing (master data and transaction), reporting, allocations, and authorization objects. Each sub group represents a level of summarization. Groups are unique within a controlling area. Change IO Group: - Order groups as well as orders can be added, revoked or re-assigned here. Order groups are very flexible structures and can be used in other order groups, collective processing (master data and transaction), reporting, allocations, and authorization objects. Each sub group represents a level of summarization. When deleting a group, notice that it is not deleted from the controlling area, its relationship to the next superior node is revoked. Delete a group by revoking its relationships to each superior node

Page 32 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

1

Ref CO-11-01

Procedures IO Group Creation:

T. Code KOH1

Input Order group Set ID

Output New group created

2

Change IO Group:

KOH2

Order group Set ID

Structure changed.

3

View IO Group:

KOH3

Order group Key-date

Display

Gap Analysis -- NIL --

Page 33 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 021 Sub-Process: Profit Center Accounting Current Scenario / AS IS: Step SR NO CO-12-01

Activity Production Divisions in a unit are treated as profit centers.

Input Production Division details

Output PCA Creation

CO-12-02

Profit center accounting is done manually by compiling data from cost ledger, GL and NMOH statement.

Cost Ledger, Gl A/cs, NMOH details

PCA Calculation

SAP Scenario / TO BE Process: Creation of Profit Center: The master data in Profit Center Accounting is the structural concepts according to which data can be posted and analyzed in Profit Center Accounting. This master data includes any number of profit centers, a standard profit center hierarchy, a dummy profit center for non-assigned postings, and, if desired, a number of alternative profit center hierarchies. The Enterprise contains Profit Centers at the lowest organizational unit that requires a full Income Statement. All actual and plan revenues are managed at the Profit Center level. Actual and plan costs are managed at the Cost Center level, and, through the assignment of one or many Cost Centers to a Profit Center, an income statement can be produced. Use Profit Center assessments or distributions to allocate actual and plan revenues between Profit Centers. Costs may be allocated between Profit Centers; however, this may be considered a “top side” adjustment because an allocation between Profit Centers will not be reflected in the assigned Cost Centers. Plan revenues in Profit Centers. Again, plan costs can be reported here if a Cost Center is assigned. Unlike Cost Centers, a Profit Center is active for all Company Codes assigned to a Controlling Area Change of Profit Center: - The Enterprise contains Profit Centers at the lowest organizational unit that requires a full Income Statement. All actual and plan revenues are managed at the Profit Center level. Actual and plan costs are managed at the Cost Center level, and, through the assignment of one or many Cost Centers to a Profit Center, an income statement can be produced. Profit Center assessments or distributions are used to allocate actual and plan revenues between Profit Centers. Costs may be allocated between Profit Centers; however, this may be considered a “top side” adjustment because an allocation between Profit Centers will not be reflected in the assigned Cost Centers. Plan revenues in Profit Centers. Again, plan costs can be reported here if a Cost Center is assigned. Unlike Cost Centers, a Profit Center is active for all Company Codes assigned to a Controlling Area.

Page 34 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Display of Profit Center: The Enterprise contains Profit Centers at the lowest organizational unit that requires a full Income Statement. All actual and plan revenues are managed at the Profit Center level. Actual and plan costs are managed at the Cost Center level, and, through the assignment of one or many Cost Centers to a Profit Center, an income statement can be produced. Profit Center assessments or distributions are used to allocate actual and plan revenues between Profit Centers. Costs may be allocated between Profit Centers; however, this may be considered a “top side” adjustment because an allocation between Profit Centers will not be reflected in the assigned Cost Centers. Plan revenues in Profit Centers. Again, plan costs can be reported here if a Cost Center is assigned. Unlike Cost Centers, a Profit Center is active for all Company Codes assigned to a Controlling Area. Step

Procedures Creation of Profit Center

T.Code KE51

2

Change of Profit Center:

KE52

3

Display of Profit Center Input – Required Fields:

KE53

1

Ref CO-12-01 & CO-12-02

Gap Analysis -- NIL --.

Page 35 of 62

Input Profit center, Valid from (Valid) to, Name, Person in charge, Profit center group. Profit center Valid from (Valid) to Name Person in charge Profit center group Profit center Valid from (Valid) to Name Person in charge Profit center group

Output Profit Center created

Profit Center Changed

Profit Center displayed

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 022 Sub-Process: Profit Center Standard Hierarchy/Group Current Scenario / AS IS: Step SR NO CO-13-01

Activity Data compilation for all these profit centers are done manually Profit Center hierarchy is 1. Unit wise: Under Unit

Input Profit center, Approval from concern dept

Output Profit Center hierarchy created

A. SBU B. Divisions.

SAP Scenario / TO BE Process: Creation of Standard Hierarchy/Group: - All profit centers must be assigned to the profit center standard hierarchy. This profit center standard hierarchy is created during the initial configuration of the SAP system. The standard hierarchy is defined with various nodes at the top level. Additional nodes and sub-nodes may be added to this profit center standard hierarchy as required. The standard hierarchy is a profit center group, or tree structure, which contains all the profit centers in one controlling area. The standard hierarchy usually corresponds to the organizational structure used in Profit Center Accounting. The standard hierarchy consists of two types of nodes:  A profit center area is an end node in the structure which is not the top node. You can only assign your profit centers to the end nodes of the structure.  A summarization area groups together profit center data at a higher level. Each node of the standard hierarchy which is not an end node is a summarization area. You cannot assign profit centers directly to a summarization area. It merely groups together the profit center areas and summarization areas which lie below it. In addition to the standard hierarchy for your controlling area, you can also create alternative profit center hierarchies -- so-called "profit center groups" -- for use in the information system, allocations and planning. In contrast to the standard hierarchy, these profit center groups do not have to contain all the profit centers in the controlling area. On the contrary, profit center groups let you select only certain profit centers and reorganize them to allow you more flexibility.

Page 36 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

1

Ref CO-13-01

Procedures Creation of Hierarchy/Group:

Standard

2

Change A Hierarchy:

Profit

Center

3

Display A Hierarchy:

Profit

Center

Gap Analysis -- NIL --

Page 37 of 62

T. Code KCH1

KCH5N/ KCH2 KCH6N/ KCH3

Input Profit center group

Output Standard Hierarchy created

Profit center group

Profit Center Hierarchy changed

Profit center group

Profit Center Hierarchy Displayed

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 023 Sub-Process: Planning & Budgeting – Prepare Initial Plan Current Scenario / AS IS: Step SR NO CO-14-01

CO-14-02 CO-14-03

CO-14-04

CO-14-05

Activity Budget is prepared as per budget manual. Prepares revenue and capital budget and this is prepared for 3 years. 1. Budget estimate for next year (BE) (At present, BE is prepared for 2006-07) 2. Revised Estimate (RE)-Current year (At present, RE is prepared for 2005-06) 3. Forecast (FC)- Year after next year (At present, RE is prepared for 2007-08) The budget exercise is bottom-up approach and prepared from division level to corp. level Revenue Budget: The sales budget is prepared based on roll on plan. This plan takes into a/c the existing pending orders from the customers and the anticipated orders. Other budgets like purchase, Inventory, Manpower, revenue, R&D, FE, budget follows the sales budget. In Capital budget is mainly divided into 1. Project 2. Augmentation Needs. Plant&Machinary, Test Instruments, Infrastructure, R&D 3.Civil Works New Structures, Miscellaneous Works, Town ship works

Input Revenue/Exp enditure details

Output Initialization Budget preparation approach

Roll On Plan details

Revenue Budget prepared

Project, Civil work Details

Capital Budget prepared

Cash Budget Projected Cash flow is prepared i.e. Cash Budget

Cash Flow

Cash budget prepared

of

SAP Scenario / TO BE Process: The planning and budgeting process starts with the setting of the overall planning parameters and ends with the approved plan and budget being distributed to the cost center managers. This process is sub-divided into 7 sub-processes as follows:    

Prepare initial plan Review draft plan Set-up plan overhead cost allocations Allocate plan overhead costs

Page 38 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION   

Calculate planned activity type prices Review preliminary plan Finalize plan and budget

SAP distinguishes between planning and budgeting. In SAP, planning is the bottom-up process of determining the level of expenses for each item of expenditures. Budgeting is the top-down process of setting the level of allowable expenditures for the cost center. Planning is by individual account codes (cost elements). Budgeting is in total and at cost center level. SAP assists in the monitoring of the plan and budget. Hence all plan items are entered into the system. These planned items can then be cross allocated among the cost centers and internal orders in Controlling. The allocation rules for these cost centers and internal order costs can be set-up in the system to be applied consistently over the period of plan and among cost objects. At BEL, SAP will be set-up to support the planning and budgeting for the cost centers, profit centers, activity types and internal orders. BEL proposes to capture plan and budget figures at individual cost center and profit center levels as well as at individual cost element level for planning. They would like to use Excel to simulate and finalize the plan and budget figures and then upload the same into SAP. They would also like to directly do planning and budgeting in SAP by using previous year figures, whenever necessary. Prepare Initial Plan This sub-process starts with the issue of the plan assumptions. These plan assumptions are contained in a plan and budget package and provide the basis for the total company plan to be developed. Typically the sales plan is developed for each strategic business unit and agreed. From these sales plan, the cost centers and profit centers plan can then be developed. This sub-process covers the preparation of the initial cost center, profit center and internal order plans. The items to be planned are: Planning items

Cost center

Activity independent costs Activity dependent costs Activity independent activity inputs Activity dependent activity inputs Activity independent statistical key figures Revenue Planning Activity types scheduled, capacity and prices

Yes Yes Yes Yes Yes Yes

Profit Center

Yes Yes

Internal order Yes Yes Yes -

Planning for each of these items is entered using input screens. These input screens are controlled by the planner profile. There is a generic profile SAPALL that can be used to plan for all these items. BEL intends to use the standard input screens as provided by the SAP system. The plan can be inputted into the SAP system manually, copied from historical data and revalued or prepared in an external spreadsheet and uploaded to the system.

Page 39 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

Procedures PREPARE INITIAL PLAN: Set planner profile

T.Code KP04

Input Plan and budget assumptions

Output Set planner profile

2

Change statistical key figures planning in CCA.

KP46/7KE5/ KP46

Statistical key figures, Plan Version, Cost centers, Profit centers

Allocation of Overheads to cost centers

3

Change cost element / activity input planning

KP06

Plan Version, Cost centers, Profit centers, Cost Elements.

Changes in activity input plan

4

Change activity type / activity price planning

KP26

Plan Version, Cost centers, Profit centers, Cost Elements, Activity types

Using types

5

Change cost element / activity input planning

KP06

Plan Version, Cost centers, Profit centers, Cost Elements, Activity types

Changing cost elements/ activity types

6

Change overall planning

KO12

Plan version, Internal orders

Over all plan Changed

7

Change cost/revenue element planning

KPF6

Plan Version, Cost centers, Profit centers, Cost Elements, Activity types

9

Copy planning

KO14

Historical Plan Data

Copying plan

12

Create plan revaluation

KPU1

Historical Plan Data

Plan revaluation

13

Plan revaluation

KSPU

SKF, types

Initial prepared

1

Ref CO-14-01 To CO-14-05

Gap Analysis -- NIL --

Page 40 of 62

Activity

Activity

plan

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 024 Sub-Process: Review Draft Plan Current Scenario / AS IS: Step SR NO

CO-15-01

Activity Input Draft plan of the Budgets are reviewed Initial budget at division / SBU /Units. details

Output Approved budget from board of directors.

SAP Scenario / TO BE Process: Cost centers: Planning overview: - SAP provides a transaction for viewing all the planned items for the cost centers. However it only allows the viewing of a single cost center each time. Nevertheless it is possible to print out the plan for all cost centers using the ‘Execute multiple time’ function of this transaction SAP provides a transaction for viewing all the planned items for the internal order. However it only allows the viewing of a single internal order each time. Nevertheless it is possible to print out the plan for all internal orders using the ‘Execute multiple time’ function of this transaction The draft plan reports printed from work steps (1) and (2) are reviewed to identify error and adjustments. If no errors are detected and no adjustments are required, then the cost allocations of these planned cost center costs and internal order costs can commence. If errors are found, then the original plan entry needs to be changed. If there are many errors/changes, then the changes can be prepared in a spreadsheet and uploaded to the SAP system using the plan uploads programs provided. If there are only few changes, then the changes can be entered directly into the system

Page 41 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

1

Ref CO-15-01

2

Procedures Cost centers: overview

Planning

Orders: Planning overview

T-code KSBL

Input Initial details

KABL

Initial details

Gap Analysis -- NIL --

Page 42 of 62

Plan Plan

Output Plan overview at cost centers Plan overview at internal orders

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 025 Sub-Process: Set-Up Plan Costs for Plan Overheads Current Scenario / AS IS: This sub-process is to set-up all the cost allocation templates required to allocate the cost center and internal order costs as well as profit center revenues. SAP supports various cost and revenue allocation methods. The most typical cost allocations used are:      

Re-posting of cost center and internal order costs Distribution of cost center costs and profit center cost and revenues Surcharging of cost center and internal order costs Settlement of internal order costs Assessment of cost center costs and profit center cost and revenue Direct posting of profit center plan figures.

The re-posting of costs, distribution and assessment of costs and revenue are similar except that cost (revenue) assessment uses an assessment cost element to record the allocation of costs (revenue) whereas cost re-posting and cost (revenue) distribution uses the original cost elements to record the allocation of costs (revenue). The difference between cost re-posting and cost distribution is that the partner object is not captured in cost re-posting.

Step SR NO

Activity

CO-16-01

New process in SAP

Input

Output

SAP Scenario / TO BE Process: Cost allocation is the transfer of costs among cost centers and internal orders. SAP provides the following functions to assist in the cost allocations of cost center and internal order costs  Periodic re-posting of cost center and internal order costs  Distribution of cost center costs  Settlement of internal order costs  Assessment of cost center costs The activity independent cost center costs for activity type producing cost centers also need to be allocated to the activity types of the cost center. This is supported by the cost center costs splitting function of SAP. It is recommended that: a) Periodic re-posting be used as an aid to data entry b) Assessment be used for allocation of cost center and profit center costs c) Settlement with settlement cost element be used for internal order costs

Page 43 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step 1

Procedures Change cycle for planned periodic reposting

T-code KSW8

Input

Output

Planned overhead details

Changed periodic reporting

2

Execute planned distribution cycle for cost center

KSVB

Cost centers

Distribution to cost centers

3

Execute planned distribution cycle for profit center

4KEB

Profit center

Distribution to profit centers

4

Change cycle for planned distribution for cost center

KSW8

Overheads details

Overheads distributed to cost centers

Change cycle for planned distribution for profit center

4KE8

Overheads details

Overheads distributed to profit centers

5

Maintaining Costing sheet

KZS2

Base value, Surcharge rate, Credit objects, Surcharge cost elements.

Cost sheet

6

Planned centers

KSP4

Cost center wise overhead details

Cost center wise overheads calculated

7

Plan overhead calculation: internal orders

KGP2

Internal order wise overhead details

Internal order wise overhead calculated

8

Cost settlement of planned internal order costs (Individual processing)

KO9E

Planned internal order costs

Plan settlement

9

Create planned assessment cycle for cost center

KSU7

Assessment cycle name, Validity period.

Planned assessment cycle to cost centers.

10

Create planned assessment cycle for profit center

3KE7

Segment identifier, Assessment cost element, Sender and receiver information, statistical key figures, activity quantity and costs.

11

Execute planned assessment cycle for cost center Execute planned assessment cycle for profit center

KSUB

Cycle Data

Cycle Run

3KEB

Execution

Cycle Processing

12

Ref

overhead

calculation:

cost

Page 44 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION 13

Change cycle for planned assessment for cost center Change cycle for planned assessment cycle for profit center

14

KSU8

Cycle Data

Cycle Run

3KE8

Cycle Data

Cycle Processing

Splitting rules, Cost assignment to splitting rules

Splitting structure

15

Splitting of cost center costs to activity types

16

Assignment of cost center to splitting structure

OKEW

Cost centers

Assigning to cost centers

17

Planned cost splitting

KSS4

Planned details

Setting up of planned costs to planned overheads

Gap Analysis -- NIL --

Page 45 of 62

OKES

cost

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 026 Sub-Process: Allocate Plan Overhead Cost Current Scenario / AS IS: Step SR NO CO-17-01

Activity New process in SAP

Input

Output

SAP Scenario / TO BE Process: The typical sequence for cost allocation is: a) Periodic re-posting of cost center and internal order costs b) Distribution to cost center / profit center costs / revenues c) Overhead cost surcharging for cost center and internal order costs d) Settlement of internal order costs e) Assessment of cost center / profit center costs / revenue f) Splitting of cost center costs However there may be circumstances where this sequence is not followed. In all cases, (e) and (f) should be the last two cost allocations.

Page 46 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

1

Ref

2

3

Procedures Execute planned periodic re-posting

T-code KSWB

Input Internal orders, centers

cost

Output Periodic repostings

Execute planned distribution cycle for cost center

KSVB

Cost center costs & revenues

Planned Costs

Execute planned distribution cycle for profit center

4KEB

Profit center costs & revenues

Planned Costs

Planned overhead calculation: cost centers

KSP4 –

Planned over heads details

Overhead surcharges of cost center

. 4

Plan overhead calculation: internal orders

KGP2

Planned over heads details

Overhead surcharges of Profit centers

5

Plan settlement (Individual processing)

KO9E

Settlement OH Data

Plan Settlement

6

Execute planned assessment cycle for cost center

KSUB

Cycle Data

Assessment of cost center / profit center costs / revenues

Planned details

Allocation of planned overhead costs

7

Execute planned assessment cycle for profit center

3KEB

Planned cost splitting

KSS4

Gap Analysis -- NIL --

Page 47 of 62

cost

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 027 Sub-Process: Calculate Planned Activity Type Prices Current Scenario / AS IS: Step SR NO

Activity

CO-18-01

New process in SAP

Input

Output

SAP Scenario / TO BE Process: This sub-process is required to ensure that the quantities of activity planned and the prices charged are proper. The quantities of activity types produced should be equal to the quantity required by the consuming cost centers and internal orders. The activity prices must be accurate to ensure that all the cost center costs of the maintenance cost center are fully absorbed by the receiving cost centers and internal orders.

This reconciliation is necessary to ensure that the quantity of activity types scheduled by the maintenance (sending) cost centers matches the quantity consumed by the receiving cost centers. Any variance between these quantities will lead to erroneous system calculated activity type prices. If mismatches are detected, the system will propose the total activity consumed to be adopted as the scheduled level of activity types. If this is not acceptable, then adjustments are to be entered via Set-up Initial Plan This price determination will result in activity types consumed being valued and charged to the consuming cost centers. If the splitting of activity independent cost center costs to the activity types of the cost center is omitted in the earlier sub-process (Allocate Plan Overhead costs), then the system will automatically invoke this cost splitting before calculating the activity type prices. Step

1

Ref

Procedures Plan reconciliation

T-code KSPI

Input Quantity of activity types scheduled by the cost centers

Output Planned Prices

KSPI

Pricing details

Calculation of planned activity type prices

. 2

Activity price calculation

Gap Analysis -- NIL --

Page 48 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 028 Sub-Process: Review of Preliminary Plan Current Scenario / AS IS: Step SR NO CO-19-01

Activity Preliminary Budgets are reviewed at division / SBU /Units /Corporate Office

Input

Output

SAP Scenario / TO BE Process: In this sub-process, the plan data entered and cost allocations performed in the previous subprocesses are reviewed to identify errors and adjustments required. If no adjustments are required, these plan reports may be presented to senior management for concurrence. If errors are detected or the senior managers propose changes to the plan, then the previous subprocesses are used to make changes to the data entered and amend the cost allocation templates. This is an iterative process and may be re-processed until senior management is in full agreement with the proposed plan. Multiple versions of the plan may be kept so as to keep track of the changes made to the plan.

Page 49 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

Ref

1

Procedures The preliminary plan reports are reviewed to identify error and adjustments.

2

3

TCode N/A

Input

If no errors are detected and no adjustments are required, then the cost center, profit center and internal order plans can be presented to the senior management team for review and concurrence.

cost center, profit center and internal order plans

If errors are found, then the original plan entry or the cost / revenue allocations need to be changed. In the event that changes to cost / revenue allocations are required, then a reversal of the original cost / revenue allocation is required. The initial plan and budget are presented to the senior management team for consideration.

Reversal of the original cost / revenue allocation

Any revision request arising from the presentation to the senior management team will be evaluated and the plan adjusted accordingly.

Gap Analysis -- NIL --

Page 50 of 62

N/A

N/A

-

Output cost center, profit center and internal order plans

-

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 029 Sub-Process: Finalise Plan & Budget Current Scenario / AS IS: Step SR NO

Activity

CO-20-01

Board of directors approves all budgets based on the draft budget

Input

Output

final

SAP Scenario / TO BE Process: Once the proposed plan is agreed, it has to be transferred to the plan version ‘0’ and locked from changes. This is the ‘active’ plan version in SAP. The final plan and allocated budget is then printed out and distributed to the cost center and profit center managers for their compliance. Copy planning: - In SAP, plan version ‘0’ is the active plan version. Hence the final cost center plan has to be copied to plan version ‘0’. The entry parameters are:  Source plan (version, plan period, and cost centers)  Target plan (version ‘0’, plan period and cost centers) Budget planning: - Once the final cost center plan has been copied to version ‘0’, the allotted budget can be entered against each cost center. Copy plan version – Internal orders: - In SAP, plan version ‘0’ is the active plan version. Hence the final internal order plan has to be copied to plan version ‘0’. The entry parameters are:  Internal orders or internal order groups  Source plan (version and plan period)  Target plan (version ‘0’ and plan period) Original budget: - Once the final internal order plan has been copied to version ‘0’, the allotted budget can be entered against each internal order.

Page 51 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step 1

Ref

Procedures Copy planning

T-Code KP97

Input Source Plan, Target Plan

Output Plan Copying

2

Budget planning

KPZ2

Overall cost center budget

Budget planned

3

Copy plan version – Internal orders

KO14

Internal orders, Source Plan, Target Plan

Plan will be Copied

4

Original budget

KO22

Overall internal budget

Final Plan & Budget

5

The reports on the cost centers, profit centers and internal orders plan and budget are distributed to the responsible managers.

N/A

Gap Analysis -- NIL --

Page 52 of 62

-

order

Reports

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 030 Sub-Process: Set-up Cost Allocation for Actual Overheads Current Scenario / AS IS: Step SR NO

Activity

CO-21-01

New process in SAP

Input

Output

SAP Scenario / TO BE Process: This sub-process is to set-up all the cost allocation templates required to allocate the cost center and internal order costs. SAP supports various cost allocation methods. The most typical cost allocations used are:      

Re-posting of cost center and internal order costs Distribution of cost center costs Surcharging of cost center and internal order costs Settlement of internal order costs Assessment of cost center costs Assessment of profit center costs and revenues

In most cases the cost allocation methods used for the cost objects are the same for the planned and actual costs. Indeed the same cost allocation template may be used on both the planned and actual costs. However there is no restriction in the SAP system to enforce the same cost allocation method for the planned and actual costs in the cost objects. Nevertheless, using different cost allocation methods on the planned and actual costs will make cost comparison between planned and actual difficult and inconsistent. Cost allocations are the transfer of costs among cost centers and internal orders. SAP provides the following functions to assist in the cost allocations of cost center and internal order costs  Periodic re-posting of cost center and internal order costs  Distribution of cost center costs  Overhead surcharging of cost center and internal order costs  Settlement of internal order costs  Assessment of cost center costs The activity independent cost center costs for activity type maintenance cost centers also need to be allocated to the activity types of the cost center. This is supported by the cost center cost splitting function of SAP. Sender cost centers and their corresponding receiver cost centers have to be identified and allocation rules need to be defined and frozen.

Page 53 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION It is recommended that:  Periodic re-posting be used as an aid to data entry  Assessment be used for allocation of cost center costs  Settlement with settlement cost element be used for internal order costs Periodic re-posting of actual cost centers and internal orders costs Periodic re-posting allows for the costs posted to a central cost center to be transferred to other cost centers. This function is useful as a data entry tool for costs, which are allocated to cost centers and internal orders in a pre-set manner and formula. This function is typically used for entry of utility charges, telephone and insurance. Periodic re-posting can only be used to re-post primary costs. The entry parameters are:  Periodic re-posting cycle name  Validity period For each segment of the cycle, the required information are:  Segment identifier and name  Sender and receiver information  Sender values  Receiver tracing factor and rule  Receiver weight-age factor (where appropriate) Allowable tracing factors are:  Fixed amounts  Fixed portion  Percentage Variable factors (statistical key figures, activity quantity and costs)

Page 54 of 62

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

Procedures Create cycle for actual periodic reposting

T. Code KSW1

Output Allocation Cycle

KSW5

Input Periodic re-posting cycle name, Validity period Posting Data

2

Execute actual periodic re-posting

3

Change cycle for actual periodic reposting

KSW2

Cycle Data

All errors & Adjustments Update to Step 2

4

Cost distribution of actual cost center costs

KSV1

Distribution name, Validity period

5

Execute actual distribution cycle

KSV5

Test run for Step 4

Ensuring Errors

6

Change cycle for actual distribution

KSV2

Error details

Clearing the errors found in Step 5 (If any)

7

Overhead surcharging for cost centers and internal orders costs

KS02

Changing cost center

8

Change internal orders

KO02

Updating Overhead rate in cost center Updating the ‘Costing sheet’ field in the internal order master.

1

Ref

. calculation:

cycle

Periodic RePosting

Creation of actual distribution cycle

9

Actual overhead centers

cost

KSI4

Test run for errors in cost centers

Error detection

10

Actual overhead calculation: internal orders

KGI2

Test run for errors in Profit centers

Error detection

11

Maintain costing sheet

KZS2

Cost Sheet

12

Cost settlement of actual internal order costs

KO02

Over head details Actual settlement, Settlement, receivers, Tracing factor, Validity period Settlement type

13

Actual settlement processing)

KO8

Settlement rules

Updating Settlement rules

14

Change internal order

KO02

Internal Order Information

Re-tested after Updating Settlement rules

(Individual

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no

Changing internal order

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION 15

Cost assessment of actual cost center costs

KSU1

Segment identifier and name, Assessment cost element, Sender and receiver information Sender values, Receiver tracing factor and rule, Receiver weightage factor

Creating actual assessment cycle

16

Execute actual assessment cycle

KCU5

Assessment Cycle Information

Error detection in Assessment cycle

17

Change cycle for actual assessment

KSU2

Errors

Rectification of errors

18

Splitting of cost center costs to activity types

OKES

Splitting structure

19

Assignment of cost center to splitting structure

OKEW

Splitting rules, Cost assignment to splitting rules Identified splitting of costs (cost center wise)

20

Actual cost splitting

KSS2

21

Splitting structure

OKES

22

Assessment of actual profit center costs and revenues

3KE1

23

Execute actual assessment cycle

24

Change cycle for actual assessment

Cost splitting

Actual cost splitting All errors and adjustments identified in step 20 Assessment cycle name, Validity period

Rectification

3KE5

Running assessment cycle in test mode

Identified error rectification

3KE2

Actual cost details

Setup cost allocation for actual costs

Gap Analysis -- NIL --

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Create actual assessment cycle

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 031 Sub-Process: Allocation of Actual Overhead Costs Current Scenario / AS IS: Step SR NO

Activity

Input

Output

SAP Scenario / TO BE Process: The typical sequence for cost allocation is: a) Periodic re-posting of cost center and internal order costs b) Cost distribution of cost center costs c) Overhead cost surcharging for cost center and internal order costs d) Settlement of internal order costs e) Cost assessment of cost center costs f) Assessment of costs and revenues in profit center accounting However there may be circumstances where this sequence is not followed. In all cases, (e) and (f) should be the last allocation cycles. Step

2

1

Ref

Procedures Execute actual periodic re-posting

T-Code KSW5

Input Cost centers & Internal Order costs

Output periodic posting

KSV5

Cost centers & Internal Order costs

Reversing Cost distributions and re-running if required.

KSI4

Cost centers

Overhead Costs

Execute actual distribution cycle .

calculation

–

cost

re-

3

Actual overhead centers

4

Actual overhead calculation – order

KGI2

Internal order costs

Handling over head surcharging of internal order costs & processed in ‘Production mode

5

Actual settlement processing).

KO88

Internal Order costs

Settlement of costs and error rectification

(Individual

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION 6

Execute actual assessment cycle

KCU5

Assessing cost center costs in ‘Test Mode’’ and then processing in ‘Productive mode’

actual overhead cost’ allocations.

7

Execute actual assessment cycle

3KE5

Assessing Profit center costs in ‘Test Mode’’ and then processing in ‘Productive mode’

Allocation Actual overhead costs

Gap Analysis -- NIL --

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of

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION

BO1- CO- 032 Sub-Process: Product Costing Current Scenario / AS IS: Sl.nu

Procedure

Input

Output

CO-01-01

Material Cost: - This calculated as per actual material consumption and this is captured from all the withdrawals from stores through SRR (Stores Requisition Receipt) and SRP (Stores Requisition Pink) Material Overheads: - This is calculated based on the predetermined rate on the material cost. (At present this 4.5%) Composite Labour Cost: Actual labour hours recorded in each production cost center* Composite Labour hour Rate in each production cost center. NMOH (Non-Manufacturing O/Hs): Calculated as per NOMH rate

SRR/SRP

Material cost

Material Cost

Material Rate

Labour Rate

Labour Rate

CO-01-02 CO-01-03

CO-01-04

Hour

NMOH Rate

O/h

NMOH

SAP Scenario / TO BE Process: Product Cost Planning (CO-PC-PCP) is an area within Product Cost Controlling (CO-PC) in which you can plan the non order-related costs of, and determine prices for, materials and other cost accounting objects. You can use Product Cost Planning to break down the costs of your company’s products, such As  Manufactured materials.  Services  Other intangible goods Product Cost Planning comprises the following: Cost Estimate with Quantity Structure

Costing materials that have access to a quantity structure in PP

Cost Estimate without Quantity Structure

Costing materials without a quantity structure in PP

Price Update

Transferring the results of material cost estimates to the material master Planning new products and services using base planning objects

Reference and Simulation Costing

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Easy Cost Planning and Execution Services

Rapid cost planning without master data within an ad hoc cost estimate

In order to carry out costing, Product Cost Planning accesses master data in other components, such as BOMs, routings, and work centers from Production Planning, and cost centers, activity types, and business processes from Overhead Cost Controlling. Conversely, you can make the costing results available for other applications. For example, you can use the costing results to update the standard price in the material master and carry out material valuation using this price. Process

Description

Usage

Transaction Code

Material Costing → Edit Costing Run

Cost estimate for multiple materials with BOM and routing

CK40N - Edit Costing Run

Material Costing → Cost Estimate with Quantity Structure

Cost estimate for a material with BOM and routing or master recipe

Mark/Release of Standard Cost Estimate

Customer wants to Mark standard cost estimate

Is used to process mass data and is created automatically using Production Planning data (product cost estimate) Is created automatically using the Production Planning data (product cost estimate) This document describes the procedure to Mark a standard cost estimate. This transaction will Mark in the Future field of the costing view in the material master

Transfer of Cost Estimate Results to This transaction will the Material Master post a new standard Record to the Current field of the costing view in the material master and update the Financial accounting general ledger depending on inventory Change. Material Costing → Cost estimate for a Is created using data Cost Estimate Without material without BOM you entered Quantity Structure or manually (unit Material Costing  Price Update Release of Standard Cost Estimate

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CK11N – Create CK13N – Display CK33 - Compare

CK20

CK24 - Price Update

CKUC - Edit Multilevel

BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION routing

costing) or transferred from a non-SAP system

KKPAN – Create KKPBN – Change KKPCN – Display CK33 - Compare

Reference and Simulation Costing

Base Object Cost Estimate

Is created using data that you enter manually (unit costing)

CKUC - Edit Base Planning Object – Multilevel KKE1 - Create Base Planning Object KKE2 - Change Base Planning Object KKE3 - Display Base Planning Object KKEB - Revaluate Base Planning Object

Easy Cost Planning & Execution Services Edit Ad hoc Cost Estimate Cost Estimate Edit Ad hoc Cost Estimate

Adhoc Cost Estimate

Is created using a CKCM - Edit planning form Costing Model (costing model that CKECP - Edit Ad can access the Hoc Cost Estimate data in the SAP system

You can use the costing run to process mass data. It enables you to cost, mark, and release more than one material at the same time. Every processing step involved in costing with quantity structure is performed by the costing run, from the same screen. The cost of the material can be created for a number of reasons including margin analysis, make-buy decisions, and profitability analysis are among the most common. The costing view identifies values by material, activities and cost elements. The cost estimate with quantity structure enables you to calculate the non-order-related cost of goods manufactured and the costs of goods sold for products, based on the BOMs and routing in the Production Planning module. The system creates a quantity structure, which is the BOM and routing combination, using data from the PP master data. You determine what data is selected for costing by means of the costing variant in Customizing for Product Cost Planning. The system valuates the quantity structure based on the valuation variant contained in the costing variant in Customizing.

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BHARAT ELECTRONICS LIMITED SAP IMPLEMENTATION Step

Procedures Edit Costing Run (To cost, mark, and release more than one material at the same time)

T-Code CK40N

Input Material Plant Details

Out Put cost, mark, and releas e more than one mater ial

2

Procedure to cost a material

CK11N Create

Material Plant Details

Cost Estim ate

3

This document describes the procedure to create a Base Object Planning cost estimate., which can be used with access to R/3 or a stand alone spreadsheet. You can enter a multilevel by entering a base cost object cost estimate.

KKE1 Create Base Planning Object KKE2 Change Base Planning Object KKE3 Display Base Planning Object

cost object

Base Objec t Plann ing cost estim ate

CK24 Price Update

Plant, Material details

Price Updat e

1

Ref

For change/ Display related Transactions need to be used.

4

This document describes the procedure to release a standard cost estimate. This transaction will post a new standard to the Current field of the costing view in the material master and update the Financial accounting general ledger depending on inventory Change

Gap Analysis -- NIL --

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