In the previous post, we had seen important considerations for managing inventory in your company. In this post we will discuss some facilities provided in standard SAP systems for managing inventory.
Inventory can be managed both with and without valuation in SAP. Some materials do not need to be valuated and thus do not need valuation. So these materials can be managed only by quantity. But most materials need to be managed by valuation. Valuation of materials is taken care of in SAP at various levels. In SAP there are valuation area, valuation category, valuation type and valuation class.
At the broadest level, there are valuation areas. Valuation areas are mostly done at plant level or company code level. Valuation areas correspond to chart of accounts in financial module. Valuation category is defined as whether the material is procured externally or it is produced in-house. Valuation type defines an externally procured material’s origin. Valuation class defines which material types have the same characteristics or in case when within the same material type characteristics are different then if different valuation classes can be created within the same material type. So essentially valuation class is used for grouping of material types.
Depending on various valuation levels, the same material can be procured or produced in-house at different prices.
Valuation levels also play an important role in determining which general ledgers to be used for debits or credits for material movements.