Moving Average Price: Learn How It Functions in Project Stock and Figure Out How to Explain the Unexplainable

  • by Robert Jackson, SAP MM Consultant and MM/PM Training Specialist
  • January 17, 2013
A lot can go wrong if you don’t understand moving average price. Sort out the complexities that arise when material movements, invoices, reversals, and purchase order history interact with moving average price. Understand both the cause and the cure for the frustration and confusion.
Key Concept
Materials that are entered into an SAP system as inventory are either plant stock or special stock. The most common examples of special stock are consignment stock and project stock. Consignment stock is stock that is loaded into and managed within an SAP system, and is usually on site, but actually still belongs to a vendor. Project stock is stock that is obtained for and dedicated to a specific project. An SAP project is a large unit of work that is managed by the Project System module and is broken down into smaller units of work called work breakdown structures (WBSes). Resources in the form of funding, labor, and materials are allocated to the project at the WBS level. Plant stock then is any inventory that is not special stock. It is neither still owned by a vendor, nor obtained for and dedicated to an SAP project. Plant stock is obtained by the company and entered as inventory for normal use – that is, for any purpose or work that is not project related. For example, in a maintenance type facility, plant stock would be obtained and kept on hand as recommended spare parts for various systems and equipment that would likely require repair or replacement at some point in the future.

Executive Summary

Your project or company uses SAP materials management (MM). Go-live occurred some time ago. Any consultants you may have used are long gone, and you’re now in sustainment mode. You – the users, managers, and support personnel – are left to function with what was created. You are expected to understand the system resulting from all the configuration and you must make it work. But how do you deal with the complexity and confusion of MM on a daily basis? Here are some issues related to MM:

  • Nothing is more confusing to users than the depiction in purchase order (PO) history of multiple goods receipts or reversals, invoices or reversals, and subsequent debits or credits that do not balance out. This report clarifies the confusion, explains how to correct it, and tells when to stop trying to correct it.
  • Why do some goods receipts and some invoices affect moving average price while others do not? For those that do, the degree of effect can vary widely. For most users, that effect is either unknown, or represents a mysterious lack of logic on the part of the system. This report pulls back the curtain for the reader, exposing the logic and the effect that it brings about.
  • The meaning of the following error message is not clear to users: Moving Average Price for material is negative. This message also confuses most users with regard to when and whether or not the error is encountered. This report removes the confusion by explaining the functionality involved and the circumstances that determine when the error does and does not occur. It also provides options on how best to deal with the error when it does occur.
  • Few users understand, and many misuse the MR11 transaction (Maintain GR/IR Clearing Account). Its depiction in PO history is counterintuitive and at odds with both its intended use and actual impact. This report provides the reader with an understanding of its purpose, its functionality, and the reasons to avoid its use.

I cover the following topics in this report:

  1. MR21 price change
  2. Goods receipts Mov types 101 & 505
  3. Goods receipt reversal (Mov type 102)
  4. Effect of a GR reversal on PO history (Three-Way Match)
  5. Conditional goods receipt (Mov type 103)
  6. Invoices
  7. Invoice reversals
  8. Subsequent debits or credits
  9. Credit memos
  10. MR11 (Maintain GR/IR Clearing Account)
  11. MB1C/561 & 562 Initial Entry of Stock & reversal (i.e., Pennies from Heaven and its Reversal)
  12. 561/562 On Split Valuated Materials
  13. MB1B Transfer/ 415 & 416 Plant Stock to Project Stock and its Reversal
  14. MB1B Transfers/415Q Project to Project
  15. Goods Issues against a Work Order (Mov Type 261)
  16. Goods Issue Reversal /262
  17. Price Control V or S on a WBS
  18. Error Message: “Moving Average Price for material is negative”
  19. MI07/701 & 702 - Gain/Loss by Inventory

I also include examples and Q&As to show you the logic behind system actions that may at first glance seem random. Examples include the frustration of not being able to get the value of the reversal of a goods receipt to match the original goods receipt value. Another is the confusion created by repeated unsuccessful attempts to get the goods receipt and invoice sections of the purchase order (PO) History tab on a PO to match.

Robert Jackson

Robert A. Jackson has 13 years of experience with ERP software including 11 years experience with SAP. He is an SAP-Certified Consultant in Materials Management and has significant experience in the development and presentation of SAP Plant Maintenance training. He also has 27 years of experience in commercial nuclear power maintenance with 17 as a certified Nuclear Training Instructor/Developer for maintenance training programs. Robert has developed, presented, and managed training programs at three separate nuclear power plants for journeyman technicians, maintenance contractors, and management positions.

For the last 10 years, he has served as an MM consultant, Tier III customer support, and configuration specialist on a project for the US Navy involving maintenance. During that time, he also assisted the project’s Training Department in the creation and review of numerous training guides and authored many training bulletins.

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6/2/2015 12:45:33 PM

I have a question on two of your invoice examples. In section Invoices, says to use lower of quantities for GR and invoice, then $81 is multiplied by 2/4 (ratio of on hand to invoice qty). In section Error Message Negative, says to use lower of quantities for GR and invoice AND on hand, then $40 is not multiplied by 6/5 (ratio of on hand to invoice qty). Why not? The two invoice examples seem to be the same. Thank you.
2/7/2013 3:34:44 AM
Kees van Westerop

I really like this article because it gives a great overview of the way SAP handles the movign average price of materials.
in the past I have also worked with moving average prices and the main issue was always how to correct errors. To give an example. I was working in the Netherlands, so in euros, and we received a purchase invoice in USD for a material with one supplier and large quantities. By mistake the invoice was entered in GBP and although it was blocked for payment it was manual released and paid.
Because of this for a while the moving average was much too high. As soon as the mistake was discovered it was tried to correct it. But this was impossible because it concerned far too many sales transactions.
In companies I had similar experiences and in some cases the business decided to start using standard prices again because it was not possible to correct mistakes.
So my question is how to deal with mistakes which are discovered after a while?

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