PP-REM and Cost Control

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

jarlein

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