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Material Ledger in SAP S/4HANA

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Material Ledger in SAP S/4HANA


By Paul Ovigele


Paul speaking


Table of Contents


Chapter 1: Introduction to Material Ledger in SAP S/4HANA

This chapter explains what the Material Ledger is, how it has evolved from SAP ERP
to SAP S/4HANA, and how the two systems compare. We discuss two new tables in
SAP S/4HANA and how they differ from those in SAP ERP. This chapter explains why
the Material Ledger has been made mandatory in SAP S/4HANA for customers who
use inventory valuation.

Chapter 2: Configuring Currency Types, Ledgers, and Valuation Views

This chapter explains the new approach for defining parallel currencies in the Universal Journal and how these currencies are integrated with valuation views and management accounting/controlling versions. It introduces the new concept of single valuation and multi-valuation ledgers and discusses the features of each option.

Chapter 3: Group Currency and Valuation

SAP S/4HANA has improved the transparency into the actual cost flow and transfer prices. This chapter explains how to set up and use transfer pricing with group valuation in the Material Ledger for both standard and actual cost. We’ll demonstrate an intercompany purchase and sale, as well as show how the intercompany profit is eliminated in the group valuation view.

Chapter 4: Profit Center Valuation

This chapter explains how the transfer pricing process works using profit center valuation in the Material Ledger. It examines the business case for using profit center transfer pricing, including how to use this functionality with both standard and actual cost. The chapter further demonstrates how a markup is added in the profit center valuation view when a sale occurs between two profit centers.

Chapter 5: Configuring Actual Costing

This chapter discusses the different configuration steps of actual costing, such as the definition and assignment of Material Ledger types, update structures, and actual cost component split. We’ll also explain the configuration of the accounts posted with actual costing.

Chapter 6: Actual Costing Run and Analysis

This chapter explains the process of new actual costing in SAP S/4HANA using the Material Ledger and highlights the changes to the data flows and closing process. It also explains the various ways to analyze the postings made by the Material Ledger actual costing calculation, such as with material price analysis and valuated quantity structure transactions.


Watch Paul Ovigele present the Keynote at the SAP Controlling Financials 2022 Conference in San Diego, CA:



Meet Paul Ovigele and other SAP Expert Speakers in-person at SAP Controlling Financials Conference Sept 17-19, 2023 in San Diego, CA:

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Chapter 7: Actual Costing and Peripheral Transactions

This chapter describes peripheral transactions that may impact actual costing, such as changing the standard cost during the month, debiting or crediting a material directly, distributing consumption variances, and changing the actual cost component split.

Chapter 8: Parallel Cost of Goods Manufactured

This chapter discusses the case for using parallel cost of goods manufactured (COGM) to calculate an alternative activity rate for a different accounting principle. In addition, it addresses how this parallel activity rate is used to calculate a different actual cost at the end of the period.

Chapter 9: Balance Sheet Valuation

This chapter explains the basic process of balance sheet valuation in SAP S/4HANA using the Material Ledger. It discusses the methods of valuing inventory according to various methodologies, such as first in, first out (FIFO) and last in, first out (LIFO). It further demonstrates how the alternative valuation run (AVR) can be used to recalculate the balance sheet value in accordance with these methodologies.

Chapter 10: The Material Ledger and Peripheral Applications

Companies use their SAP systems in different ways, and not all companies use the system in the way the standard Material Ledger functionality is expected to be used.
This chapter explains how the Material Ledger works with these specialized scenarios, such as split valuation, make-to-order (MTO) processing, daily actual cost, and stock in transit, and also highlights the flexibility that can occur when using the Material Ledger in these situations.

Chapter 11: Reporting

This chapter explains reporting and analytics in Material Ledger in SAP S/4HANA with Transaction CKMLCP. It introduces the relevant SAP Fiori apps including the Trial Balance app and several Material Inventory Values apps, and discusses other traditional reporting options, including drilldown reports and ABAP List Viewer (ALV) reports.

Chapter 12: Conclusion

The conclusion summarizes the chapters and describes potential areas for future innovation in the Material Ledger in SAP S/4HANA.


Continue Reading: Material Ledger in SAP S/4HANA


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