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Warehouse Book & Valuation

This is one of the main and most complex applications of Greece Localization.

According to Greek legislation, SAP's ways of valuating materials can be only used for estimations and provision and are not accepted as a legal way of valuating materials.

For this a special application responsible for material valuation according to Greek GAPS and producing the Warehouse Book has been created by SAP.

Material Valuation

Material Valuation is a period end procedure –determines the actual value of remaining stock via predefined valuation methods (like FIFO, LIFO, WMA etc.) There are determined by the law two different ways to valuate materials a) Period valuation and b) Year to date valuation.

Valuation methods supported by SAP are:

• First-In-First-Out (FIFO) for raw materials and trading goods (a variant for produced materials also exists but involves many assumptions). In this case the remaining stock is valuated first       using the period's goods receipts on a first-in first-out basis and the consumptions are valuated afterwards. Thus the consumption and remaining stock prices are in principle different
• Last-In-First-Out (LIFO) for raw materials and trading goods. In this case the remaining stock is valuated first on a last-in first-out basis and the consumptions are valuated afterwards. Here also the consumption and remaining stock prices are in principle different
• Weighted Moving Average (WMA). Remaining stock and consumptions are assigned a uniform price.
• Fixed cost (FIX). Used for by-products. Assigns SAP Value to the production cost and uses the WMA to find the consumption and remaining stock value of the by-products.
• Weighted Moving Average with Work-In-Progress (WMAW). Variation of WMA in that the cost of production used to determine the input part of the valuation equation is modified so as to take into account Work-In-Progress (WIP).
• Weighted Moving Average for Plant-Level Valuation (WMAPL). Variation of WMA in which plant transfers are treated as input with values determined at the source plant. This makes sense for valuation at plant level and requires the treatment of potential circular transfers. 

Valuation Equation: A dual equation (per quantity and per value) relating initial and final stock for each valuated material within a period. There are many ways to write it down but the most generic one reads:

Q_{initial stock} + Q_inputs = Q_{end stock} + Q_output

and similarly for values:

V_{initial stock} + V_inputs = V_{end stock} + V_outputs

The left-hand side (LHS) of the equations contains known values while the right-hand side (RHS) contains objects that receive values. The valuation equation essentially amounts to a prescription of how to split the total LHS value into remaining stock and consumption values. The specific algorithm of how to do this is prescribed by the valuation method (FIFO, LIFO, WMA etc).

The ‘inputs’ to the LHS include several types:

• Goods Receipts from Purchasing.
• Goods Receipts from Production (direct material + expenses).
• Other goods receipts with ‘own value’.
• Goods receipts from subcontracting.
• Goods receipts from other stores assigned a value and accompanied by a legal document (‘λογιστική αυτοτέλεια υποκαταστημάτων’) .
• Material to material transfers (‘μετατάξεις’).
• Goods receipts from material assembly.
• Goods receipts from plant transfers (plant level valuation)
• Other Invoiced expenses (e.g. shipping costs).

There is one such ‘double’ equation for each ‘valuated object’. The precise definition of what this ‘valuated object’ is depends on the valuation level. In the simplest form it can be identified with the ‘material’ concept (valuation level = company). Other possibilities exist, though:

• Valuated object = material + plant (valuation level = plant)
• Valuated object = sales order line item
• Valuated object = project etc

Warehouse Book Ledger