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Product Costing (CO-PC)

How the way a plant manufactures shapes planning, shop-floor execution and period-end costing in SAP S/4HANA.

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Overview

Product costing in SAP follows the way a plant manufactures. Two choices shape it:

  • The manufacturing type decides which object collects the costs.
  • The planning strategy decides what triggers production.
Where the costs land
Manufacturing typeCosts collected onCosting approach
DiscreteProduction orderProduct cost by order
Process (PP-PI)Process orderProduct cost by order
Repetitive (REM)Product cost collectorProduct cost by period

Manufacturing types

Three ways to run production in SAP, each with its own order type, master data and typical industries.

  • PP

    Discrete manufacturing

    Built on production orders. Products are assembled and can be disassembled.

    How it works

    • Planning and execution run through production orders
    • Components are issued to the production order
    • Products and variants change often
    • Production runs on different lines and work centers
    • Costing and settlement happen on the production order

    Master data

    • Bill of materials
    • Routing
    • Work center
    • Production version

    Typical industries

    Mechanical engineering (cars, aircraft), consumer goods, electronics

  • PP-PI

    Process manufacturing

    Built on process orders. Batch-oriented production with PP-PI (Production Planning for Process Industries).

    How it works

    • Batch-oriented production
    • The master recipe is copied into the process order and adjusted to actual production
    • Process management links PP-PI to process control while the order runs
    • Costing and settlement happen on the process order

    Master data

    • Master recipe
    • Resource
    • Bill of materials
    • Production version

    Typical industries

    Pharmaceutical, chemical, food, beverage

  • REM

    Repetitive manufacturing

    Built on planned orders. The same products run repetitively or continuously on a production line.

    How it works

    • Production is driven by planned orders, planned period by period
    • Runs repetitively on a single production line
    • Simpler backflushing at confirmation
    • Costing and settlement happen on the product cost collector
    • Best for stable products, high repetition and low complexity

    Master data

    • Product cost collector
    • Rate routing
    • REM profile
    • Production version

    Typical industries

    High-volume consumer goods, electronics, automotive components

Planning strategies: MTS vs MTO

The strategy decides what triggers production. Both work with discrete and process manufacturing.

  • Make to stock (MTS)

    Production follows a sales forecast. Finished goods go to stock, and sales orders are served from that stock.

    Demand created with

    MD61
    Planned independent requirements

  • Make to order (MTO)

    Production is triggered by a customer sales order. The product is made for that order and its stock is tied to the sales order item.

    Demand created with

    VA01
    Sales order
    MD81
    Customer independent requirement

Process steps: from demand to order close

The order-based flow for discrete and process manufacturing, in 14 steps. Switch the order type to see the matching transactions.

Showing production order transactions (discrete, PP).Showing process order transactions (process industry, PP-PI).

1 · Plan

Demand and MRP

  1. Create demand

    Make to stock: planned independent requirements. Make to order: the customer sales order or a customer independent requirement.

    • MTSMD61
    • MTOVA01
    • MTOMD81

  2. Check demand

    Stock/requirements list

    • MD04

  3. Run MRP

    MRP Live creates the planned orders

    • MD01N
2 · Execute

Production orderProcess order

  1. Create the order

    Convert the planned order, one or many at once, or create the order manually

    • MD04
    • ConvertCO40
    • ConvertCOR7
    • CollectiveCO41
    • CollectiveCOR8
    • ManualCO01
    • ManualCOR1

  2. Release the order

    • CO02
    • COR2

  3. Goods issue to the order

    Movement type 261

    • MIGO

  4. Confirm the order

    • CO11N
    • COR6N

  5. Goods receipt from the order

    Movement type 101

    • MIGO

  6. Technically complete (TECO)

    • CO02
    • COR2
3 · Close

Period-end costing

  1. Overhead calculation

    • IndividualKGI2
    • CollectiveCO43

  2. Work in process (WIP)

    • IndividualKKAX
    • CollectiveKKAO

  3. Variance calculation

    • IndividualKKS2
    • CollectiveKKS1

  4. Settlement

    • IndividualKO88
    • CollectiveCO88

  5. Close the order

    Sets the status CLSD

    • CO02
    • COR2

Individual or collective: each period-end step runs for one order or for many orders at once.

Repetitive manufacturing follows a different, period-based flow on the product cost collector, so it is not covered here.

References