Responsibility area:  Calculate and post Inventory Reserve


Start the transaction ZFI_INVENTORY_SMOG


Inventory SMOG report: initial screen



  1. Select variant:  /SMOG_TEMPLATE

  2. Enter the company code 

  3. Key date: Last day of the month before quarterly

  4. Material type: ZMAT and ZVER
  5. The materials created less than a year ago and null stock should not be considered in the calculation. - They must to be flagged.
  6. Variant layout: /SMOG_TP


       



  1. Click on "Valuation level" 
  2. Select "Company code"

and enter


Note: The rate of coverage is calculated at company code level and not batch level -The reason is that in some plants we only have the transfer of stock between 2 locations and no sale or consumption, which means that these plants always have 100% depreciation.



Click on 

  1.   Check “Tax Price 1” (where the range of coverage is stored) and “Tax Price 2” (where the Net realizable value is stored)

  2. Check “0=0” Level 1

  3. Click on 

  4. Add “Stock Value” to the already selected values.

    The calculation of impairment will be based on the lowest of the 3 values

    - Stock value (=standard)
    - Value Level 1 (= Tax Price 1)
    - Value Level 2 (= Tax Price 2)

 and enter   if you have a message you can click on 

Then start the calculation by clicking on   Ignore the warning message   




Click on 

Enter:

  • “Upper limit” = “key date”
  • “Lower limit” = “Upper Limit” – 12 months

The range of dates corresponds to the period of analysis of the monthly stocks 



Click on 

  1. Enter the range of date in the first range as the analysis period for the determination of consumptions.

  2. Select  the option “Determine consumption via user exit” to apply the  rules  to calculate the range of coverage (average consumption).


Then execute the transaction



SMOG Report Functions

     1.The total stock are summarized by the batch stock, non batch stock and stock in transit.

     2. Reserves and Financial depreciation


  • Fin.Depr: value is calculated from ZWFA21A stored in field tax price 2 in material master data
  • ROC(M):  value is calculated from MRN1 stored in field tax price 1 in material master data
  • %Reserve:

           If ROC<12, then %Reserve = 0 

           If ROC>12 & ROC<24, then %Reserve = 0.5

           If ROC>24 & ROC<36,  then %Reserve = 0.75 

           If ROC>36, then %Reserve = 1

  • Financial Depreciation: based on Solvay standard : If source price is ‘COPA’ and Market price < Total value, then Financial depreciation = Total value - Market price
  • Coverage: (Stock qty * % Reserve)* Standard material price
  • Blocked Qty: (Off spec material) material batch with blocked status then total batch stock is blocked (100% provision).  
  • Blocked Amt: Blocked Qty * Standard Material Price
  • Aged Qty:  (Obsolescence material) When the day until expiration is less than 0, the whole batch stock will be aged (100% provision).
  • Aged Amt: Aged Qty * Standard Material Price
  • NetCover: Coverage - blocked amt - aged amt - blocked amt adj
  • FinReserve: NetCover + blocked amt + aged amt + blocked amt adj
  • Good: Total value - Financial Reserve


IMPORTANT

The program ZFI_INVENTORY_SMOG will prioritize the 3 following rules:


1.Identify any blocking stock of the batch 
If yes, it will be proposed to be 100% reserved

2.Identify the aging of the stock/batch based on Expiration Date
If date expired, it will be proposed to be 100% reserved

3.Identify the Range of Coverage (RoC) based on the last 12 months of consumption ( average consumption / average stock)
Reserved proposed based on following ranges 

If ROC<12, then %Reserve = 0
If ROC>12 & ROC<24, then %Reserve = 0.5
If ROC>24 & ROC<36,  then %Reserve = 0.75
if ROC>36, then %Reserve = 1, so for cases where ROC is equal or ≈ 9.999, it means that there is no consume for a long time 

Note: If stock status is blocked or expired → Depreciation is 100%.