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PP-REM and Cost Control Good

The article discusses PP-REM, a production method that enhances cost control and simplifies completion confirmation through back-flushing, particularly beneficial in industries like automotive. It outlines the requirements for implementation, including BOM creation and standard cost estimation, and highlights the importance of avoiding work in progress (WIP) and managing COGI issues. Additionally, it emphasizes the integration of cost accounting and production processes, offering various reporting tools and the necessity of order settlement at month-end.

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17 views3 pages

PP-REM and Cost Control Good

The article discusses PP-REM, a production method that enhances cost control and simplifies completion confirmation through back-flushing, particularly beneficial in industries like automotive. It outlines the requirements for implementation, including BOM creation and standard cost estimation, and highlights the importance of avoiding work in progress (WIP) and managing COGI issues. Additionally, it emphasizes the integration of cost accounting and production processes, offering various reporting tools and the necessity of order settlement at month-end.

Uploaded by

thomassapapo
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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January 23, 2017

PP-REM and Cost Control


Jarlei Nascimento
ERPfixers Blog Series

Repetitive production is a special type of production that can be used in integrated


production scenarios or for a specific situation. This article explains some uses and
configurations regarding PP-REM.

For a long time, industries have been using PP-REM to obtain a continuous flow of
production. PP-REM is highly recommended for production because it provides
product stability and low complexity. This type of production is well used in
automobile industries, but it can also be employed in other industry types, such as
for wires and nails manufacturing.

The main goal is to reduce the cost control and simplify the completion confirmation
via back-flushing process.

SAP provides a PP-REM area by means of OPP3 transaction – please check


information on PP-REM configuration here.

There are only four requirements for PP-REM implementation:

 REM Profile (OSPT / OSP2)


 Material Master Configuration ( MM01 / MM02)
 Production Version (C223 / MM02)
 Product Cost Collector ( KKF6N / KKF6M - Collective)

The main question regarding CO is the Cost Collector (KKF6N), which will allow the
material to be continuously settled without a specific production order. However,
before initiating the cost collector, we need to follow preceding steps:

1. Create a BOM and a Routing (rate routing)


2. Define the standard cost estimate for current date and period (CK11N)
3. Release this standard cost estimate (CK24)

Here, there is a crucial point of discussion: WIP. Normally, it is possible to avoid WIP
when using PP-REM, but this is linked to the routing configuration. If this is
configured with Report Point and with a different point of confirmation (report
pointing) until the final confirmation, WIP will be possible [KKAT / KKAQ – WIP Display
& KKAS / KKAO – WIP Calculation]. The reason lays between one point and another,
since the process will generate more work – of course, these points must be aligned
with the production and there is no impact in the Cost Collector configuration (but
the production manager must ensure the correct production confirmation).

Another important factor is regarding COGI. We have noticed the same problems
with no row material available when confirming the Production Order, rather than
with PP-DIS. It is possible to avoid COGI via SAP configuration. COGI is a big problem
and we know that it must be “zero” by end of the day.

There are many reports to use in PP-REM, for instance to track the confirmation point
by point using the report MF26. There are other reports as well, such as product
costs [MCRK], product cost collection [KKBC_PKO], preliminary costing for cost
collector [MF30] and so on.

The production confirmation occurs through the specific PP transaction (MFBF),


where there are some additional functionalities, such as reversal, scrap, change of
row materials used, etc.

PP-REM uses the movement type 131 to confirm production order, which differs from
PP-DIS SAP that uses the movement type 101. Like this, the material movement
presents different account information.

After confirming, is possible to analyze variances [KKS5 Collective / KKS6 Individual –


the variances calculated with the version 0 will be evaluated to COPA.

At end of the month, it is critical to execute the order settlement [CO88 / KK87]. In
this stage, the order balance can be balanced transferring the differences to FI and
to the Profit Center Accounting. Additionally, it is possible to verify the contribution
margin in COPA.

Below we can see some important tables behind PP-REM:

 Cost collector [AUFK]


 Reporting point quantities [CPZP]
 Reporting point documents [CEZP]
 Document log [BLPP]

PP-REM offers an easy way to integrate CO and Production and should be considered
whenever possible mainly to scenarios with low complexity but keeping the
information and responsibilities that you can see in other scenarios.

Author: Jarlei Nascimento

Jarlei has much experience in SAP, developing solutions to customers and companies to leverage their
business needs, with deep knowledge of process (Procurement, Controlling, Production) and SAP
Modules. Aligned with strong skill to build and develope teams to support the business, using as a basis
the methodologies available nowadays (Scrum, Lean, Six Sigma, ITIL, PMI, Prince2, etc).

Module(s): Controlling, Materials Management, Production Planning

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