Co-Product in SAP PP

In SAP Production Planning (PP), a Co-Product indicates a product that is produced simultaneously with the main product during a production process. Co-products frequently arise in industries such as chemical, pharmaceutical, and food production, where the production process naturally yields multiple products from the same raw materials and process steps. Co-Product in SAP PP: Learn how to manage multiple products produced simultaneously in a production process, optimize resources, and streamline manufacturing.

 

Key concepts of Co-Product in SAP PP

• Definition:

1. Co-products are products of equal importance that are produced during the same production process.
2. Co-products completely differ from By-products, which are secondary and less significant outputs.

 

• Integration:

1. Co-products are handled as part of the Bill of Materials (BOM) and are integrated into the Production order or Process order.

 

• Master data:

1. Co-products are conserved as separate material master records.
2. Co-products must be marked as Co-Products in the material master (MRP 4 view, you can check the “Co-Product” indicator).

 

• BOM setup:

1. In the BOM, the indicator for Co-Product is chosen for the materials designated as co-products.
2. Co-products are chosen apportionment structures, which find out how costs are distributed among the main product and co-products.

 

• Apportionment structure:

1. This is a prime feature for cost allocation in a co-product scenario. It indicates the percentage or proportion of costs to be assigned to each co-product.
2. Example: If a process yields 200 units of product A and 100 units of product B, you can allocate 67% of costs to product A and 33% to product B.

 

• Production order/Process order

1. Co-products appear automatically in the production order or process order based on the BOM setup that you have maintained in the master data.
2. Goods receipt (GR) is posted coincidently for all products (main and co-products).

 

• Costing and settlement:

1. Co-products are considered in product costing through the Cost object controlling (CO-PC) component.
2. Costs are confirmed to multiple cost objects (cost centers or materials) based on the apportionment structure.

 

• Variants in production:

1. Co-products can be managed in both discrete manufacturing and process manufacturing environments.
2. In Process Manufacturing, co-products are handled using master recipes and production versions.

 

 

Example Scenario: Food and beverage industry

Process: Cheese production

Main Product: Cheese

Co-Product: Whey (used for protein powder)

 

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Steps in SAP PP:

1. Material master:

    Create material master records for cheese and whey. Mark whey as a co-product.

2. BOM:

  Create a BOM for Cheese. Include whey as a co-product with an apportionment percentage.

3. Routing/Master recipe:

    Define the production steps required to process milk into the products.

4. Production order/Process order:

    When the order is created, both Cheese and whey are planned for production.

5. Goods receipt:

    Post GR for both products upon completion of the manufacturing process.

6. Cost allocation:

  Costs are split between cheese and whey-based on the apportionment structure defined in the BOM.

 

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Author:-

Prahlad Pawar

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