Improve Your Company's Production Efficiency with SAP Active Ingredient Management

  • by Gaetano Altavilla, Senior SAP Practice Manager
  • December 29, 2017
Learn about the Active Ingredient Management processes using SAP Materials Management, Production Planning, and Financial Accounting modules. Get details about the main customizing settings to be done in the system from a financial point of view.
Learning Objectives

Reading this article you’ll learn:

  • The most important master and transactional data relevant for Active Ingredient Management in production
  • The most important details about the customizing settings needed to implement the Active Ingredient Management solution using standard SAP tools, master data, and transactional relevant data
  • How to implement the project and to check during the pre-cutover that all the settings have been transported correctly into the quality and production environments
Key Concept
Active Ingredient Management affects all of a company’s business processes that contain at least one concentrate or one or more active ingredients. It enables you to directly process transactions in active ingredient quantities. This solution is particularly relevant for the consumer packaged goods, chemical, and pharmaceutical industries. Active ingredient management is defined based on a material’s alternative unit of measure and batch-specific material units of measure. These additional units of measure refer to the basic unit of measure that is the primary unit of measure (stock keeping unit).

Using standard SAP functionalities, the production department can manage the actual and planned values for active ingredient proportions for each process order as well as determine and settle the related production costs accurately at the process order level.

I provide you with an overview of the Active Ingredient Management process to follow to record production activities using the Materials Management (MM), Production Planning (PP) and Financial Accounting (FI) modules along with the most important master data and customizing details.

In addition to the basic unit of measure and alternative units of measure, SAP offers a batch-specific unit of measure to satisfy the following business requirements (the Active Ingredient Management solution works with batch-specific material units of measure):

  • Alternative units of a material for which the conversion ratio to the base unit of measure can be defined on a batch-specific basis.
  • Manage business transactions (in purchasing, production, and sales) that are on based on a theoretical conversion factor and manage alternate units of measure that could vary occasionally or could change for every lot that is produced or purchased.
  • In configuration for a batch-specific unit of measure, you would normally define the base unit of measure, the corresponding batch-specific unit of measure, and the conversion factor that is to be maintained as a characteristics value in the batch that would be received from purchase or production, thus allowing maintenance of an ever-changing conversion factor for every batch.
  • At the point of goods receipt, conversion of quantities maintained in alternate units based on a conversion factor maintained as the batch characteristics level is called the product unit-based batch-specific unit of measure.

Business Activities in the SAP System

Active Ingredient Management is supported in the procurement, production, and sales activities involved for the batch management, as shown in Figure 1.

Figure 1
Main activities involved in the vendor’s active batch ingredient process

In this process, the production department can create a process order in the SAP Production Planning-Process Industries (PP-PI) module specifying an appropriate batch with ingredient management. This feature is also available to the procurement and sales departments via a purchase order and sales order management, respectively.

I now walk you through the stages of configuring settings for active ingredient batch management from a master data management point of view.

Gaetano Altavilla

Dr. Gaetano Altavilla is a senior SAP practice manager. His focus is on pre-sales, delivery of SAP application solutions for large international corporations, and SAP knowledge management in Europe, the Middle East, and Africa (EMEA).

In his 18 years of SAP application experience working for many multinational companies, such as Procter & Gamble and Hewlett-Packard, he has covered a wide range of ERP logistic areas, focusing on the MM, WM, SD, LES, PP, PP-PI, PLM (QM, PM, PS) modules, as welll as CRM (TFM), SRM (EBP), SCM (SAP APO), and MES (ME) components.

Dr. Altavilla holds a degree with first-class honors in mathematics from the University of Naples and is certified in many SAP modules: SAP Logistics Bootcamp, SAP MM, SD, LE (SHP/WM/LE), PP, PLM (PM, QM, PS), SRM, CRM, SCM (APO), SCM (TM), FI, CO, and Solution Manager. He also has experience in ABAP/4 and application link enabling (ALE) and IDocs. He has participated in numerous industry conferences, such as the SAP Skills Conference in Walldorf at SAP SE.

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