How to Co-Product and By-product in Production order
Umesh Mali
November 17, 2014 2 minute read
Co-Product and By-product in Production order
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Hello Everyone,,
I wrote this document for basic understanding of Co-Product and By-Product in Production order.
Product manufacturing in industry same time other products that are usually manufactured together using one production order. We called that Co product and By product
Co-Product: Co-product is a product, we getting this product while manufacturing finished material or main material. Same material might be used in other material manufacturing process
By-product By-product is a product, we getting this product while manufacturing finished material or main material. The material valuation of a by-product is always based on the price specified by price control in the material master.
Creating a production order to manufacture co-products has the following advantages:
Main product and co-product(s) are settled to different receivers
Goods movements can be posted simultaneously for all product manufacturing in the order
1. By- Product.
Prerequisite
In BOM maintained negative quantity , Then system automatically will pick as by product.
Crete planned order and converted to production order
At time Production order confirmation, system automatically post as By-Product,
By-Product Movement type 531, See below picture
If the by-product is indicated as being relevant to costing in BOM, the total cost of the process is reduced by the costs of the by-products
The costs of by-products are calculated with the net realizable-value method. The costs of the by-products thus represent a reduction in the costs of the primary product.
If you don’t want to calculate the cost of the By-product then remove the Costing relevancy from BOM Item detail
2. Co- Product
Prerequisite
In Material master MRP View 2 select the CO product
In BOM maintained negative quantity for component.
In BOM, item of the components detail select the CO product, if you not select the Co product in Item detail system consider as By Product
Crete Production order
Good movement of the Co Product,
In Co product no automatic good receipt happen
Go to MB31 and enter the Order
In Co product Movement type is 101. See below Pic
You can calculate the cost of goods manufactured for co-products by using an apportionment structure to allocate the total costs of the manufacturing process to the individual products involved
The apportionment structure is defined in the costing view of the material master for the leading co-product click on joint production or in MRP2 view, Click on joint production and assigned apportionment structure
In the apportionment structure, you can use equivalence numbers to control how the costs of the entire manufacturing process are apportioned for the co-products in percentage in case of multiple Co product.
If no apportionment structure has been defined for a leading co-product or process material, an error message is issued.
Please refer below link for more detail of Co-Product costing and also consult with your FICO Team.
http://www.scribd.com/doc/109331756/Co-Product-settings-for-SAP-costing
I hope this document helpful to everyone…
Request to all expert suggest and guide if anything wrong in this document
Thanks & Regards
Umesh Mali
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MAN Production Planning (PP)
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17 Comments
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Prashant Deshpande
November 18, 2014 at 1:02 pm
Hi Umesh,
Your Document is very helpful and well organized.
Thanks to share with us.
Like(0)
Umesh Mali Post author
November 18, 2014 at 2:12 pm
Thanks Prashant,
Regards
Umesh Mali
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Former Member
November 18, 2014 at 1:22 pm
Thank you for document
it is usefull and help me to recall
Like(0)
Umesh Mali Post author
November 18, 2014 at 2:14 pm
Thanks Suresh Kumar,
For reviewed this document
Regards
Umesh Mali
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Former Member
May 8, 2015 at 1:45 pm
Thank You, Very useful. This is the only information I could find on the subject.
Larry Hoag
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Umesh Mali Post author
May 18, 2015 at 5:48 pm
Thanks Larry.. 🙂
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Former Member
May 19, 2015 at 1:14 pm
Nice Document…
Umesh, what will happen if same co-product has its own BOM, I mean it will also produce seperatly..how we will do the configuration?
Thanks
Sastry
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Amit Sharma
November 16, 2015 at 10:08 am
Hello Umesh,
Very well explained document..!!!
Thanx for sharing.
Regards,
Amit
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Umesh Mali Post author
November 19, 2015 at 5:54 am
Thanks Amit..
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Former Member
November 19, 2015 at 7:17 am
just wanted to confirm one thing.
whether by product is considered to be scrap??
or it can be used in any form.
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Umesh Mali Post author
November 19, 2015 at 9:21 am
Hello Shreyas,,,
you can consider the by product as Scrap and adjust the quantity at the time of confirmation.
There is many more form we can you as By Product according to business requirement.
You can set by product as costing relevant and non costing relevant.
Regards
Umesh Mali
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Former Member
November 19, 2015 at 6:54 pm
thanks for the information
Like(0)
Former Member
June 27, 2016 at 6:13 am
Hello umesh,
Thanks for your wonderful document.
I have one doubt.
Is there any possibility’s to maintain By-Product for Finished product…??
Like(0)
Former Member
January 30, 2017 at 6:49 am
Excellent Document
Like(1)
Umesh Mali Post author
March 8, 2017 at 10:50 am
Thank you Meenakshi 🙂
Like(0)
Andy Yeri
May 12, 2017 at 3:09 pm
Hi Umesh,
Clear explanation, good. I think we all know that the starting point for the main product’s production could be its Sales Order or PIR’s/Forecasts. When the Main prod is made, the co-prod is automatically produced too. My question is, what if we receive demand only on the co-product & not on the main product? I was wanting to know if we could have co-products set up for a main product, but ONLY produce some co-products, selectively, by entering demand just for them.
Cheers
Like(0)
Former Member
December 15, 2017 at 11:28 am
Hello,
Nice Document
Like(0)
SAP Co-Products and By-Products
Author Written by Velmurugan Saravanavelu and last updated on Posted onMay 26, 2017.
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Welcome to the tutorial about SAP co-products and by-products. This tutorial is part of our SAP PP course. In this tutorial, we are going to learn what are co-products and by-products, what is the difference between them, business examples of co-products and by-products, and SAP settings relevant to them.
SAP Co-Product
Co-products are materials which are produced in one production process. That is, more than one final product will come out from a production process. These products will be part of the financial reporting. Any of these products will be considered as “Primary co-product” and all other products will be known as secondary co-products. Production process which gives co-products is called as “Join Production”.
SAP By-Product
By-product is an output from a production process which can be useful/sellable or sometime can be waste.
Business Example of SAP Co-Products and By-Products
Consider the Foundry Industry which manufactures castings from liquid/molten metal. Castings A and B are molded from the same mold pattern. These are intention products for this process and there are also metal wastes produced from operations like fettling and runner raiser removal process. Here, castings A and B are known as co-products and metal wastes are known as by-products.
Business Example of SAP Co-Products and By-Products
SAP Co-Product Vs By-Product
To have a better understanding of differences between co-products and by-products, let’s compare them in a table.
Material Master Settings
SAP co-products should have a special indicator in their material masters in MRP 2 view. In our example for materials casting A and casting B as shown on the screenshot below.
SAP Co-Product Indicator in Material Master Record
On the other hand, for the by-products this co-product indicator need not to be set.
No SAP Co-Product Indicator in Material Master Record of By-Product
Bill of Material for Primary Co-Product
In this example, any one of the castings will be consider as a primary co-product (casting A) and another one is the secondary co-product (casting B) and bill of material (BOM) will be created for the main co-product only.
Here, the assumption is that a total of 300 KG of molten metal will be used for casting A (160 KG), casting B (120 KG) and scrap from operations (20 KG).
Bill of Material for the Main Co-Product
In the bill of materials, both the secondary co-product and the by-product will be maintained with a negative sign. But the secondary co-product will have “Co-product” indicator at the item level of BOM. This indicator is not required for the by-product (called METALSCRAP in our example).
Co-Product Indicator at the Item Level of BOM
Apportionment Structure and Co-Products
Co-products are costed based on apportionment structure defined in the primary co-products.
MRP 2 View of Co-Product
Go to master record of a co-product and click on “Join Production” button located on MRP 2 view.
Cost Apportionment to Co-Products – Apportionment Structures
Next, assign a suitable source structure.
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