Procurement process starts with creating a purchase order and ends with invoice verification. In the whole process, one of the important parts is material valuation. While creating purchase orders, material price is a mandatory field and it is automatically determined. It happens because material valuation is maintained in the SAP system in the material master. Material valuation represents integration between MM & FI (Financial Accounting) modules, since it updates the general ledger accounts in financial accounting. The key points to note about material valuation are as follows −
Material valuation helps in determining the price of the material, and in which general ledger account it needs to be posted.
Material valuation can happen at company code level or plant level.
Material can be valuated based on different types of procurement; it is known as split valuation.
Split valuation helps in valuating the stocks of a material in the same valuation area (company or plant) differently. Some of the examples where split valuation is required are as follows−
Stock that is procured externally from a vendor has a different valuation price than the stock of an in-house production.
Stock obtained from one vendor is valuated at a different price than the stock obtained from another vendor.
Same material having different batch may have different valuation prices.
Split Valuation needs to be activated before setting any other configuration. Follow the steps given below to activate split valuation.
IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Split Valuation ⇒ Activate Split Valuation
Step 1 − On the Display IMG screen, select Activate Split Valuation by following the above path.
Step 2 − Click the option Split Material Valuation Active. Click on Save. Split valuation is now activated.
Some important terms under split valuation are as follows.
Valuation Area − Material may be valuated at plant level or at company code level. The level at which materials are valuated is known as valuation area.
Valuation Category − Valuation category is the criteria on which material is split valuated.
Valuation Type − Valuation type specifies the features of a valuation category.
Follow the steps given below to do split valuation configuration such as defining valuation category and valuation type.
IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Split Valuation ⇒ Configure Split Valuation
Step 1 − On the Display IMG screen, select Configure Split Valuation by following the above path.
Step 2 − Click Global Types to create valuation type.
Step 3 − Click the Create button.
Step 4 − Provide the name of the valuation type. Click on Save. A new Valuation Type will be created.
Step 5 − Now go to the same screen and click Global Categories to create valuation category.
Step 6 − Click the Create button.
Step 7 − Provide the name of the valuation category. Click on Save. A new Valuation Category will be created.
Step 8 − Now go to the same screen and click Local Definitions to map valuation type and valuation category.
Step 9 − Click the Cats. → OU button..
Step 10 − Provide valuation type, valuation category, and set the status as active, and then click the Activate button. Valuation category and valuation type are now mapped and both are activated.
After maintaining the valuation type and valuation category, you can mention them in the material master as shown below.
Go to mm02 (Change screen for material master). Here you can maintain the valuation category and valuation class in accounting view. On this basis, valuation of the material will be done in a purchase order.