• Supply Chain Management
• Financial Management
• Production Controlling and Financial Statement
• Pros and Cons of Different Valuation Methods
• Group Costing and Corporate Controlling
• Accounting Standards
• Parallel Currency and Valuation
• Transfer Pricing
• Integrated Planning and Performance Management
• Business Performance Management
• Activity Based Management
• Optimal Configurataion of SAP Architecture

Pros and Cons of Different Valuation Methods

Standard Price without Material Ledger

• Inventory valuation always at a frozen price
• Simple and intuitive

• Actual costs are not considered
• Identifying the variances that are reflected in the price changes remains difficult, as the analysis of the detail throughout the supply chain cannot be obtained
• Consumption always shown at standard price value

Variable Price without Material Ledger Pros Inventory valuation automatically adjusted to actual price Consumption shown at moving average value Cons When price varies frequently, the consumption doesn’t show the moving average value in absence of stock coverage for the period. Prices remain unrealisticand in some cases it is impossible to understand the link between the final price and the purchase price.

Periodic Balance Sheet with Material Ledger

	click to enlarge pictures

• Realistic prices: valuation of inventory at monthly average and valuation of movements such as, for example, goods receipts, at actual prices.
• Consumption value for cost objects at monthly average price consistent with the value at time of Material Ledger close.

• Activation of Material Ledger required, which leads to inevitable complexity.
• Postings in FI directed to a parallel set of accounts. 
• When unexpected results show, it is very difficult to understand where the issue generated from (e.g. goods receipt with a different value than expected)
  
  
  
  
  

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