today's topic is material Ledger sap material laser it is not new functionality it is there in ECC as well and but I'm going to show you an is4 because it's one of the mandatory feature in S4 and the activation of materializure is mandatory without this material laser activation even logistic people they can't create their material master hi my name is brother and I'm working as solution architect let's move into the material laser topic sap material Ledger what is that why we need it ah we if we are not going to use this material laser functionalities still we can have the inventory information that means we are going to record our inventories we are going to report our inventory but that is not valuation for example let's say you have the inventory GL account where you have the debit and credit entries are there when there is inflow of inventory so that you are recording that is as debit entry when there is outflow you are recording as credit entry so that is bookkeeping that is your accounting entry that is not the valuation if it is required that we need to evaluate our inventory with every movement of our inventory whether it is purchase whether it is production whether it is consumptions anything so when we are going to have some inventory consumption or any movement of inventory so that we are going to evaluate that time we are going to evaluate when you are going to report your inventory so that time it is at company code label obviously you are having your GL reports at company code level but when you are going to valuate your inventory so that time it is valuation area level so inventories are evaluated again repeat catch my word evaluated so inventory is evaluated and valuation area label again valuation area may be plant mostly we are using inventory or we are using valuation area as plant it can be also possible company code also we can use so that is why when you are defining your Enterprise structure particularly logistic General Logistics so there we have two options are there inventory at company code label valuation or client label uh why company code option is there let's say in where plant is not applicable okay let's say any audit form any consultancy form so if they are going to have some let's say inventories even they are for example let's say they are going to consume some inventories although when we are talking about materializer it is more related to production companies or where manufacturings are there so that applicable materializer but as in S4 it is mandated to have Metro laser so that's why company code label very rarely maybe will get a option that company code level also inventory can be evaluated but I am going to take here inventory valuation at plant level which is 99.99 we are using so what is material laser what we understood what is the meaning of material laser and when it is uh required so what is material laser so if you try to understand what is natural laser battery laser is an auxiliary uh Ledger that has three main objectives you can say why we need the Metro laser one is the carry material price in multiple currencies okay if we are going to evaluate your inventory with multiple currencies so in that case we may use Metro Ledger that means not only the company code currency we are going to use in our inventory valuation point of view if you are going to use it with company code currency with Global Currency with our hard currency multiple currency we can use so we can use three currencies suppose so in that case battery laser is required otherwise only with company code you can report it second option if you are going for multiple valuations of inventories in that case also material laser is required so we are going to go for legal valuation or we are going for group valuation profit Center valuation so in that case also Metro laser is required so one for multiple currencies I will show you in the material Master as well very soon for multiple valuations we are going to use particularly this second option is applicable the multiple valuation when you are going for stock transfer from company code to company code plan to plant so in that case it is helpful or if you are going for actual costing so that time also it is mandated to have the Metro laser functionalities like we are going to collect all our material movements on the basis of goods received your invoice received Goods issue so with reference to your production order so that time also Metro Ledger should be there most of the time in ECC company used to ignore material laser because if they are going to activate material laser then Metro laser point of view some more documents will be there and again material laser tables will be activated like your ml series table mlit material laser header document mlsd different tables again there and in ECC we are already struggling with multiple documents and multiple log tables so that is why companies used to avoid it the materializer because that time it was not mandatory feature mandatory functionality but now in S4 it is mandated to have the Metro laser but still it is not going to generate any document or it is not going to consume space because material laser part also will be part of our Universal channel so Universal journal or your AC Docker contains material laser information so without matril Ledger when you are going for inventory point of view particularly I am saying sap Erp means sap ECC system so that time we are evaluated with only one currency most of the time I'm sure you are using your inventory that is with company code currency that is without Metro Ledger but with company code currency or if you are going for Metro laser which is with a company code currency you can also add two more currencies so I can take here additional currencies again here also some comparison is there when ECC we use to configure Metro laser separately material either point of view currency configurations are required but now here it is not required so here are the currency settings coming from your Ledger configuration so how you have configured your Ledger settings the same way metric Ledger settings will Metro laser currency settings will work so separately for Metro user point of view currency settings are not required or not applicable here so till now we understood what is materializer so materializer we are going to consider as one of our sub Ledger in particular in S4 like your receivable payable and asset so this will be your one of the sub ledger so the materializure data will be part of your AC docket table and we are going to have we don't have any separate table for Metro laser header data mlsd now part of your bkpf like your normal accounting document and line items it will be part of your mlid so to understand this matter laser let's see if we are going to take material laser let's take one material master and if we have activated that material Ledger for that then how the accounting screen will look like so I am going to sap screen and let's see give me one moment let me log into the system so as I said here we are going to have met religion information as per my configuration Ledger configuration so let me take a company code and let me check how many currencies I have activated here from The Ledger point of view then we will check our metric Ledger currency settings so randomly I'm going to take one company code so so far I can see here two currencies are activated here right so you can see one currency here that currency 10 which is my company code currency for your reference the company code currency I am using INR and another currency I have activated here 30 which is my Global Currency which is USD and I have activated some freely definable currency which is G1 Let's ignore it so that means for this Ledger for my company code for this Ledger I have activated two currencies company code currency INR and Global Currency now for this let's take one material Master for this company code and let's try to understand like how many currency options are there then we will go to the Metro laser analysis point of view just I am randomly going to take uh one let me check how many materials are there here foreign let's check the first one six four eight this is your material Master normal mm03 I'm using the transaction code I'm going to check my accounting View right first of all let's verify whether Metro laser is active or not so it is active so you can see here it is it's there okay so very soon I am going to explain what is single and multi-label but it is active you can say materializure is active that means at this valuation area label or plant label the materializer is active and uh when we are going to activate the material Ledger then we have two more options are there if we'll go to the price determination again we have two options are there that is single and multi-level which right now you can see here or it may be your transaction based single multi-level transaction base next question which option we should go which option we should follow whether it is transaction based or whether it is moving average I mean sorry uh it is transaction based or multi-level whether it is transaction based or single multi-label again there is no standard answer we should go for this option or we we will go for that option that means moving uh transaction based or single multi-level I will give you both options it is your call which one you are going to take obviously business you need to discuss with business and accordingly you will take the decision in this material it is selected as three that is single multi-label but let's say if I will go for option two that is transaction based so if you will select the price determination as 2 which is transaction based for a particular material then that material is not include in your actual costing calculation so in simple language I can say if you don't have any plan for actual costing then maybe you can go for option two let's say it's a trading business we are just purchasing and we are selling so in that case we we are not going for any actual cost calculation we don't have any production process so maybe in that case recommended that you should go for option two that is transaction based okay if you have actual costing plan that means in this company code we are going to use go for actual costing so in that case it is a recommended go for option three so if you'll select the price determination 3 that is single and multi-level for material that means that material will be part of your actual cost calculation so in this case the price control has to be set as standard price so in that case in the previous case the transaction based maybe you will go for moving average price because we are not going to go for a detailed variance analysis because it is like we are not going for manufacturing so it is transaction based but in this case it will be standard price so this price control here you can see it is standard price right price control has to set as standard price the standard price means the price will remain unchanged During the period and the pup will be calculated at the end of the period so if you have if you're ever about the actual cost process then you know very well that in month end or in Period and when we are going to do all the evaluation and all so that time your price will be calculated so in materializer point of view we have two options are there one is price determination as two transaction based and another one is your single multi-level so if you're going for drop if you are not manufacturing or there is no plan for actual costing then maybe you can go for option two otherwise go for option uh three now uh when we are going for Price calculation so we have two options are there moving average price and standard price now which option we will go for again there is no standard answer so every option having its own advantage and disadvantage let's talk about first the easy one that is our moving average price so if you are going for moving average price which is price control as V it's like uh let's take one material with that option this is standard price here foreign material from that category as well 649 okay so here also material laser is activated but price determination is what price determination 2 whereas in this material it is uh I have selected for comparison purpose this is three single multi-level and it is two and if it is 2 that means here it is selected as price control as we moving average price now we should go for moving average or we should go for standard price let's take advantage uh let's take the point of what is the advantage if you are going for moving average price price control V so if we are going for moving average price or we can say advantage using moving average price that means that variance is going to occur at the time of any transaction if there will be any transaction for example if we go for external procurement or you are going for uh some gr will be there some invoice will be there so during the transaction if the variance is going to be occurred so that variance we are going to capture and that variance is going to be updated in your inventory values that means if any variance is there let's say your previous price was 6 rupees and now new price is let's say 8 and there is a variance of 2. so that variance we are not going to update in your uh you can say in the price variance account so we don't have any price variance option if you are going for transaction base 2 and you are maintaining your price control as moving average price so it will be adjusted against your material price so that is your advantage of your or you can say the feature of your moving average price to understand this one better let me take here one example okay so uh this in this video I will not put that one so if the difference and all so I will put in separate video with reference to this video I will give the link in the description so you can check this one you can pause it make it you can pause it here and you can go for that working like how the variance was captured if it is moving average I'm just analyzing here doing the analysis but you may refer that video so I will add in the link you can check here so let's say for a material particular material same material I am using here 649 which is right now it is there you can see for this material 649 if you are going for a price analysis one feature is there materializer that is using the transaction code C km3 we can do a price analysis let's check that one but just I am showing the output report I will share that video as well in the link I can you can refer that if the how the variance was captured so this is a material you can see 649 material and there is a purchase order this is a purchase price so I'm showing here the materializer update with moving average price and let's do a comparison we should go for which option whether moving average price or we should go for standard price now you can see here this particular one if we'll check this screen let's do one thing let's capture this one in one note so that it will be easy for me to explain right so you can see here this material material number 649 which is updated as price control V which is moving average price now if we'll see the price analysis this is your ckm3 which is your material laser analysis like initially the price was maintained as the opening price if you will check the opening price so let's see here the opening price so opening price was uh nothing it was not updated anything with transaction only it was there so you can see the beginning inventory is zero and the price was not maintained then there is one inflow that is a you can see gr okay so there is a Goods receipt is there the transaction I am not adding here in this video so that I will keep the ref in reference you can check that so there is a inventory inflow that means purchase order created and with reference to that purchase order that is gr processed and 80 units the goods receive is 80 units and there is preliminary evaluated so 80 into 4.5 the original price uh like it was 4.5 before this transaction 4.5 the zero was means that is no like in this month only the material transaction started there was no opening price but original price updated price was 4.5 before this transaction then we process the gr and with this gr the price uh maybe this Goods receipt is valuated with 80. so that's why 80 into 6 so it is 480. so you can see the preliminary evaluation updated as 480 and actual valuation is also 480 and what is the price it is calculated it is 6. right so original I mean 80 at a price of six so closing inventory is 480 which is updated here so that is why opening inventory was zero and with this gr it is 6. then um this is my gr then after that invoice processed so in this invoice I need to check that invoice in detail at what price it is processed let's go to that in system I'm not able to recall because I can see gr is processed at a price of 6 but I need to check that invoice as well let's go to the particular invoice this is the purchase order then we processed one GR this is material document and with reference to that yeah this is the gr so it is evaluated at a price of six so you can see this uh if you will check this image here this 80 unit gr processed so it is 480 this is 480 at a price of 6 and the corresponding entry accounting entry this one this is your gr document so initially the price was 4.5 I guess it was 4.5 then it is valuated with uh at a price of six so here you can see the updated price is what the updated price is six then next one is your invoice now let's see at what price that invoice processed this is my invoice that means vendor invoice from the logistic point of view and now it you can see it is 80 unit processed at 360 with a different price in this way there so that means variance is there so when the variance is there immediately that variance you can see 120 where I can see this 120 check this one this one 480 and now invoice is processed at 460. so here as per gr what is the price 480. so at this time what is your inventory price it is six but at the time of invoice it is valuated inventory is valuated at 360. so everything is transaction based so on the basis of transaction we are evaluating the inventory so this is as for invoice and there is a difference is there 120 but as here it is we are updating the material or we are evaluating inventory with moving average price so we are not going to take these variance separately this variance we are going to adjust against your material price so that's why you can see here the closing inventories at what price 360. initially it was 480 then 1 480 is debate or plus 120 is credit which is adjusted against your invoice the difference amount so 80 into 2 rupees may be different so that one uh it is uh no 360 valuated 80 units of inventory so the difference 120 is adjusted against your inventory so now what is your closing inventory so closing inventory is 360. okay so original price was Zero because of the transaction your price updated as six the moment we have processed zero so original price you can see you can follow the series The Metro price keep on changing so original price zero then it is 6 because inventory evaluated with gr at a price of six then invoice price is different so inventory price is 360. so again the difference adjusted and now price is worth 4.5 opening price with transaction Goods received with transaction invoice so this is your invoice so what we observed if we are going for moving average price then you can see the price keep on changing good thing is that here separately we don't have to do this price variance analysis we are not going to transfer this one to Copa we are not going to do all these things so immediately this price uh you can say it is updated so this is you can set the benefit of your moving average price but that that is not true so it is not like we should go for moving average price but as I said if you will go for uh actual costing this is not helpful or now I am going for the disadvantage of your moving average price Advantage good easy to calculate the main disadvantage of your moving average price or price control as V if you are going to maintain that one that means the value of material consumption is almost completely depend on transaction so at the time of goods issue in the system when you are going to do if an invoice received or a settlement manufacturing order is posted in the system that time every time simply we can say the price is keep on changing so that price is very fluctuating so the posting is not reflected in the value of material Master issues because every time the price is keep on fluctuating so that is the number one disadvantage of your moving average price another disadvantage with this material price if you we will maintain the moving average price as V that it is not going to give you the guarantee of consistence of your management cost management from the production process because every time there is a fluctuation in the price so we don't have a static price here so that is another problem third problem related to moving average price if by mistake user entered some wrong information so during the data entry if wrongly something entered then because it is purely depend on your data entry or it is related to your transaction based so immediate some unwanted changes will be there in the material price so simply I can say we have very very minimal control on material if you are going for moving average price so that is why you will find that companies if they are going to go for moving average price for their secondary materials like spares some lubricants packing material so for the secondary materials they use to go for the moving average price so in this example I explained what is the advantage and disadvantage for moving average price and we have taken one example related to purchase so this particular material and we have analyzed from the metal treasure point of view now come to opposite side that is the standard price so what is the advantage of standard price with standard price or price control s here also we will take one example okay this Metro so here price control is what standard price is so your goods movement are evaluated with a constant price During the period so During the period irrespective of any transaction the price of the material will remain same whether there will be any received with different value if there will be invoice with a different value the price is not going to change the price will be constant During the period And if any variance will be there that we are going to capture separately and we are going to record that with a separate account that we will transfer to P and L from external income statement point of view and that we are going to also do the analysis from the profitability analysis point of view in tenery so let's take one example for that also foreign again here also the transaction related to purchase of this one I will add in the separate video so that you can take the reference of for this particular video so material laser purchase process related to standard price and our material number is 648 let's go for that price analysis I was talking about you can valuate with multiple in your currencies so as you can see in INR if I will change it to group currency so it is in USD so this is the benefit of Metro laser so we have a detailed analysis related to inventory and I'm just showing you the purchase process only now let's take the other material six four eight now here is this metal price is maintained at standard price yes so android price and the standard price is eight now irrespective of any transaction you will find the price material price will remain same so here also let's go into detail now this is the material price related to trans material analysis related to standard price material number 648 which is maintained with standard price this is maintained with standard price and the price is eight so original price was eight the closing price is also you can see eight irrespective of any transaction here also same similar activities are there so one gr processed at a price of that is you can see the actual value it is 80 units 80 unit at a price of you can see it as per the transaction it is 13.25 okay and what is your actual value here the actual value is this one this price okay so material inventory is valuated at a price of 13.25 as per the transaction gr but what is your premium value preliminary value you can see 640. 80 into 80 640. so same is updated here and here the price difference is there okay in this case price difference was there but if I will check this particular material you can see the price difference adjusted against the material master or with your GL okay so I forgot to show you that let me show you that then I will come to this one so I am going to check this particular material GL for this moving average then I will do a comparison with this one so let's go to the GL entry and try to get the idea this is just a one pending point from my previous example so let's check once again that particular image so in initial transaction was 480 same is updated with your gear so this is my packing material GL where we are using moving average price so it is updated with 480 then inventory evaluated with invoice 360 360 and difference is there 120 so here we are not using any price variance account separately so directly it is adjusted against your moving up against your material price so this is with moving average price whereas if you take the second example original price is one zero six zero but it is valuated with 640. here the difference is there variance is there so you can see the price difference of 420 here but this 420 we are going to adjust against your price variance account check this inventory 640 with there is no change in your inventory price it is updated 640 as per your preliminary value as for it is preliminary value 640 is updated then where we have recorded this 420 difference that we are going to capture with a different account now check combinedly so your inventory value is 640 then this transaction 420 so difference of 420 difference of 420 adjust against your price variance account so this we will transfer to income statement this will be transferred to your Copa so in case of standard price we are going to keep the price constant but if any variance will be there I'm just showing the properties example same we have the production process also variance will be there input variance will be there your resource variance will be there so all these variants we are going to capture but better price will we will keep constant so this difference we are separately capturing with a different account right so you can see this 420 is adjusted against your debated with your price variance account then coming to the analysis then we process the invoice we process the invoice here now with this invoice the difference amount is adjusted against your difference account there is no adjustment with your material price whereas when moving average if you are going to check it is adjusted against your preliminary value of my inventory so initially it was debited 480 then credited 120 difference in case of moving average whereas if you go for standard price the material is unchanged it is adjusted against your difference account it is adjusting in case your price variance account so actual difference is what actual difference is 260 debits same is recorded with your price variance account 160. so 260 is there it is so this is a character or this is all about your if we are going to evaluate our inventory with standard price so now we we did a detailed comparison with moving average price or standard price now what is the benefit of standard price I already explained what is the benefit of standard price so if you are going to take standard price then price will be constant and if any variance will be there that we are going to separately we are going to capture so during your manufacturing process when we are going to issue the goods there will be no difference so here the Metro price we are going to take at the time of consumption of your material at a price of 8 although there was some transactional differences are there but that we are not going to capture here with material that we are going to separately capture with our price variance account this account and that we are going to adjust in month end so in month end in Period end we are going to have the pup calculation will be there now what is the disadvantage of standard price some people they will also argue for the disarmony standard price the disadvantage of the standard price is that it is constant for the entire period it is not going to it does not reflect in the actual cost during that during the periods the standard price can lead to incorrect value valuation of the price when there will be some procurement will be there like you can see here we have two transactions are there which Goods received an invoice but that is not going to it is not going to change in your material so if I am going to right now out of this 80 kg if you are going to issue a material 50 kg or with against your production confirmation or against your production order then it will be evaluated at 50 into 8 it is 400. this price we are going to do whereas you can see the Metro price is what Metro price is 13.25 but as it is not evaluated so it will not reflect so that you can save one disadvantage or consequence okay so this is one of the disadvantages but still uh with next question which method we should be able which should you use here in both case what is the conclusion in this case again this is not my conclusion I'm just I have given both comparison the standard price and moving average price and uh industry point of view what we are following that I am saying because it is always it is divertible so conclusion is that both material price we are going to use both price control we are going to use that is your V and V or V and S because both are having its own advantage and disadvantages so when we are going for moving average price so you can say it could be theoretically much closer to on your actual cost if you are going for moving average but it can lead to incorrect valuation because of the variance the best valuation method for your inventory depends on what type of business it is as I said if it is trading business then there is no manufacturing there is no production without production we are going to continue so in that case we can recommend that we should go for moving average price so the process on the uh other hand if we are going for uh calculation that we we are going for production and in-house production is there so in that case we should go for standard price where we are calculated the price and in without considering all these variants into inventory so in Period end we are going to calculate those variances or we are going to transfer to your income statement and Copa this is what we are actually following in the industry right so trading business small business where manufacturing is not that we should go for moving average price and if it is manufacturing one then we should go for standard price so this is one example so like this we can have also impact in your uh other cost calculation point of view also one point also I missed here if there will be any exchange rate difference will be there because of exchange rate difference if any variance is also there that is also going to reflect in the material nature as well okay so here I can't see let me take a different one so that you can see that as well this one also in reference I will add the videos like how I got this difference so X and red point of view that you can check there I'm trying to recall yes exchange rate difference is there so here also because of transaction so here also you can see exchange rate difference is that you can check this one 9.46 with reference to invoice so if any exchange rate difference will be there related to your transaction because and these are all logistic tractions we are getting the accounting impact but transactions are logistic transaction you can see your Source document invoice right so if an exchange rate difference will be there that also we are going to capture through Metro laser again this will be transferred to your cost calculation point if you all because it is your exchange rate loss again so if it is cost it is going to impact your cost that will be transferred to any cost object and again we are going to settle it normally we can transfer to any particular cost center then from cost center we can go for the month end allocations by that we can transfer the values to the cost of production calculation so I hope you got some clarity on this difference related to our purchase process now what is the other area where we can use uh Metro laser so it is also applicable with our cost calculation that means we can have cost calculation or if we are going for the cost estimate or if it is calculated the standard price standard cost so that will also we can have in different currencies so let me take one example so where we can take this cost calculation what was again I need to check so right now you can see uh the valuations the cost calculation valuation in my INR which is one of my currency if you have Metro laser then we can also get the cost estimate result in another currencies too okay so right now it is there in the INR if I will go to right now it is company code currency or your object currency if I want to go to controlling area currency that also we can see in USD so controlling area currency and Company code currency in both we can get the information that is also because of Metro Ledger we can see also similarly if we go for any Metro Ledger impact if we want to see in your actual costing or in any order if you want to see there also we can also get that information let's go into that this is the production order manufacturing order and there we are going to do the analysis it's completed order it's cost calculated actual cost is calculated variance is also calculated taking something it's a very interesting what Metro laser like it's not like any one transaction you will find the impact of Metro laser it procuremented in voice in production in manufacturing in actual cost calculation variance in marginalizes everywhere you will find the use of materializure so it is very demanding feature as well as it is very interesting one and uh in S4 as it is mandatory so companies are also started using every company they started using materializer in detail so all these data whatever I'm showing here it is all my batch configuration data so all these company these are all these scenarios uh I did in the live sessions only so those I am showing you okay so this is one material I mean sorry it is one cost calculation process which is uh my related to the production order and this is my production order and right now you can see it is in one currency that is INR here also if you want to see in other currencies that also we can get here because of Metro laser it is possible so previous one I have shown you the plant cost that is your standard cost calculation and this is your actual cost calculation so here you can see it is there in USD so this is also possible with material ledger so it's a very very demanding interesting feature so uh you should Explore More on this battery laser if any question please add in the comments I will try to answer those calls okay and don't forget to check other two videos because here I did just did analysis suppose how these variance is there so those activities those transaction invoice exchange rate uh gr so those things in in reference I added those I will add those videos link you should also check those so that you will get like how we got this difference particularly I am talking about these two so how we got this 160 credit 420 day bit or difference or this one so these two videos also I will add there thank you