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Procurement process starts with creating purchase order and ends with invoice verification. In the whole process one of the important parts is material valuation. In procurement process while creating purchase orders material price is a mandatory field and it is automatically determined. This happens because material valuation is maintained in SAP system in material master. Material valuation represents integration between MM & FI (Financial Accounting) modules since it updates the general ledger accounts in financial accounting. The key points about material valuation are as follows.
Material valuation helps to determine the price of material and for which general ledger account it needs to be posted in financial accounting.
Material valuation can happen at company code level or plant level.
Material can be valuated based on different types of procurement and this is known as split valuation. Normally split valuation is used to valuate material in same valuation area (company or plant) differently. Split valuation is described in detail in below context.
Split valuation enables you to valuate stocks of a material in the same valuation area (company or plant) differently. Some of the examples where split valuation is required are as follows.
Stock that is procured externally from vendor has a different valuation price than the stock of in-house production.
Stock obtained from one vendor is valuated at a different price than stock obtained from another vendor.
Same material having different batch may have different valuation prices.
Split Valuation needs to be activated before setting any other configuration. Split valuation can be activated by following the below steps.
Path to Activate Split Valuation:IMG => Materials Management => Valuation and Account Assignment => Split Valuation => Activate Split ValuationTCode: OMW0
On Display IMG screen select Activate Split Valuation execute icon by following the above path.
By charging it to its particular cost head.
