SAP Assembly Scrap in S/4HANA: MRP and Costing

By John Jordan

SAP assembly scrap is a planned allowance for expected manufacturing losses. In SAP S/4HANA, it can increase the production quantity and dependent component requirements needed to deliver a required yield. Material costing uses the relevant scrap settings when calculating planned component and activity quantities.

This guide explains the classic material-master assembly scrap setting, its effect on a 100-PCB example, where to maintain it in MM02, and how to review the resulting cost estimate. For the broader costing process, see our S/4HANA Product Cost Controlling guide.

How Assembly Scrap Affects MRP and Costing

In the classic material-master calculation, assembly scrap is an uplift on the required yield. With a requirement of 100 good PCBs and an assembly scrap setting of 10%, the illustrative quantity is:

100 × (1 + 10%) = 110

Figure 1 shows relevant component and activity quantities increasing from 100 to 110 in the Quantity Costed column. The extra planned inputs raise the manufacturing cost for the required output. The exact impact depends on the BOM, routing, fixed and variable quantities, valuation, and other scrap settings.

Figure 1: Component and Activity Quantities with Assembly Scrap

Check the Percentage Basis

A 10% assembly scrap uplift is not the same as rejecting 10% of total input. If your shop-floor reject rate is measured as scrap divided by total input, a 10% reject rate implies 100 ÷ 0.90 = 111.11 input units for 100 good units, equivalent to an uplift of approximately 11.11%. Confirm the percentage basis before transferring a measured rate into master data. Rounding and the planning method can also affect quantities.

Maintain Assembly Scrap in MM02

The following SAP GUI steps apply to the classic material-master process in SAP ECC and SAP S/4HANA on-premise and Private Edition. In Cloud Public Edition, use the supported product-master apps available for your role and scope.

1. Open transaction MM02 and enter the assembly material.
2. Select the MRP 1 view and the relevant plant.
3. Review the Assembly scrap (%) field shown in Figure 2.
4. Enter the agreed planning allowance, save the material, and review its effect in the relevant planning and costing processes.

The classic menu path is Logistics → Materials Management → Material Master → Material → Change → Immediately.

Figure 2: Assembly Scrap Field in the MRP 1 View

Base the allowance on a defined production process and percentage convention. Review routing scrap and BOM-item exceptions before changing the material-master value.

Review Assembly Scrap in a Material Cost Estimate

Use CK11N to create and analyze a material cost estimate with quantity structure. To display a saved material cost estimate, use CK13N. Select the relevant material, plant, costing variant, dates, and lot size for your comparison.

The classic creation path is Accounting → Controlling → Product Cost Controlling → Product Cost Planning → Material Costing → Cost Estimate with Quantity Structure → Create.

Figure 3: Cost Estimate with Assembly Scrap

Review the itemization and the Scrap and Scrap Quantity columns in the illustrated layout. Check the additional quantities and costs at the component and activity levels. A 10% scrap setting does not guarantee a 10% increase in every cost component or in the total cost estimate.

For a controlled comparison, use the same quantity structure, valuation assumptions, and costing lot size. Separate quantity changes caused by scrap from changes in prices, activity rates, or overhead. See our guides to costing sheets and overhead and mixed costing for related cost drivers.

Assembly, Component, and Operation Scrap Compared

BOM-item exception: With operation scrap and the Net indicator set on a BOM item, costing uses that item’s operation scrap instead of the assembly scrap from the material master. Review this setting when one component does not increase in line with the assembly allowance.

Planned Scrap and Actual Scrap Variances

Planned assembly scrap affects planning quantities and the cost estimate. Actual yield and scrap are recorded during production confirmation. The planned allowance does not itself record actual rejected units.

In classic Cost Object Controlling, scrap variance calculation values unplanned scrap with target costs. The comparison uses planned operation scrap and confirmed operation scrap, with the appropriate configuration and cost-estimate data. Extra component usage can instead appear as an input quantity variance; every scrap-related difference does not automatically become a separate scrap variance.

Check the variance variant, target-cost basis, cost-estimate itemization, and consistency of the routing and component-to-operation assignments when analyzing the result. Reporting and calculation options differ by deployment and scope. For more detail, see Production Variance Analysis in SAP S/4HANA and our Fiori apps for manufacturing variance management.

Assembly Scrap Review Checklist

• Percentage basis: Distinguish an uplift on net yield from a reject rate measured against gross input.
• Correct master data: Check the material, plant, BOM, routing, production version, and validity dates used by planning and costing.
• Overlapping allowances: Review assembly, component, and operation scrap together, including BOM-item Net indicators.
• Comparable cost estimates: Hold lot size, prices, activity rates, and valuation assumptions constant when isolating the effect of scrap.
• Actual data: Review confirmed yield, scrap, component consumption, and activity quantities before interpreting the variance.

SAP Documentation

See SAP Help on component and assembly scrap examples, BOM-item scrap and the Net indicator, and variance calculation. Select the documentation for your release and deployment.

Glossary

Activity Type

A measurable service supplied by a cost center, such as machine or labor hours. Product costing values planned activity quantities using the relevant activity rates.

Assembly Scrap

A planned allowance for expected assembly losses. In the classic material-master process, it increases quantities relative to the required yield and can affect component and activity consumption in costing.

Component Scrap

A planned allowance for losses of an individual component. It can be maintained in the BOM item or component material master and increases the relevant component requirement.

Cost Center

An organizational unit in Controlling used to plan, collect, and analyze costs. Cost centers can supply the activities consumed by manufacturing orders.

Material Requirements Planning (MRP)

The planning process that calculates material requirements and procurement proposals. Assembly scrap can increase the quantities planned to meet a required yield.

Net Indicator

A BOM-item setting relevant to scrap calculation. In material costing, it allows BOM-item operation scrap to be used instead of assembly scrap from the material master.

Operation Scrap

Planned loss associated with an operation. Routing operation scrap supports operation-level planning; BOM-item operation scrap affects the required quantity of the component with the relevant Net indicator setting.

Scrap Variance

The value of unplanned scrap calculated using the applicable target-cost basis and variance settings. It must be distinguished from planned scrap cost and input quantity variances.

Standard Cost Estimate

A planned material cost estimate based on the selected quantity structure and valuation settings. Relevant scrap allowances can increase the component and activity quantities included in it.

Valuation Class

A material valuation attribute that groups materials for automatic G/L account determination. It works with transaction keys and the applicable account-determination rules; it does not define the assembly scrap percentage.

Yield

The usable output quantity from a production operation or order. Distinguish required good output from total input and rejected quantities when calculating scrap rates.