Profit In Inventory Management Part 1

Tips and Ideas: Profit In Inventory Management in BPC

Key Concept

Learning how to control business rules in the Microsoft and NetWeaver versions of BPC opens up ideas for complex eliminations and management of consolidation data.  Use of the Ownership application and creative use of Flow dimensions and other standard features of BPC allows for automation of Profit in Inventory Elimination combined with Intercompany AR/AP and Sales Eliminations.  Profit in Inventory Elimination (PIIE) can be calculated on an FIFO, LIFO or average basis.  Here we discuss average PIIE management and alternatives for managing the data on an ongoing basis.

Most customers continue to use Journals for Profit In Inventory Elimination combined with an out of BPC calculation or determination of values process.  Different from intercompany sales elimination, organizations must also account for Profit in inventory passed from the selling organization to the buying organization, and must eliminate the profit in inventory from the carrying value of held inventory while also recognizing the period cost of goods sold adjustment.

You can apply the functionalities of BPC automatic adjustment rules to create an automated management of this data provided the actual data load follows proper required forms easily extracted from the SAP ECC system.  There are a few different ways to accomplish this objective and we show a few ideas to get your PIIE application off the ground.

I offer 8 tips for creating the proper dimension structure and rules for an efficient Profit In Inventory management process in BPC.

Tip 1