SAP Cost Estimates: Procurement Types E, F, & X

By John Jordan

In SAP Product Cost Planning, the material master procurement type helps determine whether a cost estimate uses production data or a purchase price. Understanding the difference between E, F, and X helps explain why a material is costed as manufactured or purchased.

This article shows where to find procurement settings, how they affect material cost estimates, and when the special procurement key in the Costing 1 view takes priority over MRP settings.

Table of Contents

• Find the Procurement Type in MRP 2
• Procurement Types E, F, and X
• Special Procurement in MRP
• Special Procurement for Costing
• Practical Costing Checks
• Conclusion
• Glossary

Find the Procurement Type in MRP 2

Use transaction MM03 to display the material master for the relevant plant, or MM02 when an authorized change is required. In the MRP 2 view, locate the Procurement section shown in Figure 1. Use the field's possible entries help to see the available values.

Figure 1: Procurement Type in the MRP 2 View

Procurement Types E, F, and X

Table 1 summarizes the normal costing approach before a special procurement setting changes the result.

Table 1: Procurement Types and Their Effect on Material Cost Estimates

E: In-house Production

A bill of material (BOM) identifies the components needed to build an assembly. A routing identifies the production operations and standard activity quantities. These records provide the basis for calculating material and production costs.

F: External Procurement

The valuation variant controls the price source and search sequence. Depending on configuration, SAP can select a material master price or purchasing data. A purchasing info record is therefore a possible source, rather than a requirement for every externally procured material. See Purchasing Info Record Usage in Costing Variants for related guidance.

X: Both Procurement Types

Procurement type X allows a material to be manufactured or purchased. For costing, it normally follows the in-house approach when the BOM and routing are available. It does not by itself create a weighted average of make and buy costs. A special procurement key can specify a different costing approach.

Special Procurement in MRP

The Special procurement field below Procurement type in Figure 1 describes the procurement process more precisely. For example, it can identify stock transfer from another plant, subcontracting, or a phantom assembly. The key's configuration determines its meaning for the plant.

Special Procurement for Costing

The Costing 1 view contains a separate special procurement field, shown in Figure 2. An entry here takes priority over the MRP special procurement key for the cost estimate. If it is blank, costing uses the MRP special procurement setting.

Figure 2: Special Procurement Type for Costing

For example, a material may retain procurement type X for planning while using a costing special procurement key configured for external procurement. Costing then ignores the internal BOM and routing and selects a price using the valuation variant. This costing override does not change the MRP procurement process.

In SAP GUI systems, review the special procurement key configuration using transaction OMD9. Check the actual plant-specific settings rather than assuming that a key number has the same meaning in every system.

Practical Costing Checks

• Confirm the material and plant, then review procurement type and special procurement in MRP 2.
• Check Costing 1 for a special procurement override.
• For in-house costing, check the validity and selection of the BOM and routing.
• For purchased materials, inspect the valuation variant's price sequence and the relevant master data. Standard and Moving Average Prices explains the separate price control setting.
• Review the cost estimate itemization and messages in CK11N before using the settings in a costing run.

Conclusion

Start with the procurement type, then check both special procurement fields. This sequence helps explain why SAP uses a production quantity structure, an external price, or another plant's costing data.

Glossary

Bill of Material (BOM)

A structured list of components and quantities required to manufacture a product or assembly.

Costing Variant

A collection of settings that controls how SAP creates and values a cost estimate.

Material Requirements Planning (MRP)

Planning that compares material requirements with available supply and generates procurement proposals for shortages.

Procurement Type

The material master setting identifying in-house production (E), external procurement (F), or both (X).

Purchasing Info Record

Purchasing master data for a supplier and material, including purchasing conditions used when the costing strategy selects this source.

Routing

A sequence of production operations with the standard activity quantities needed to manufacture a product.

Special Procurement Key

A key that defines a more specific procurement process. A separate entry in the costing view can override the MRP entry for cost estimates.

Valuation Variant

The settings that determine which prices and rates SAP uses to value materials and activities in a cost estimate.

Further Reading

This article is based on Tip #25 from John Jordan's 100 Things You Should Know About Controlling with SAP. Browse ERPCorp's SAP books for more Product Cost Controlling guidance.

For SAP's explanation of costing overrides, see Using Special Procurement Types.