COPA - sapcollege.co · In EC-PCA we structure the units which we want to evaluate as Profit centers. You can create profit center according to region (branch offices, plants) function

Configuration – COPA SAP College

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PREFACE

Congratulations on buying this book! This book is designed to provide a one stop reference for your

entire SAP COPA needs. In this book you will find as much SAP COPA configuration as can fit between

the covers. It is the one of the most comprehensive coverage of SAP COPA module available today.

Many topics discussed theoretically as well as practically in different chapters of this book. This book

is a humble attempt made to present the point along with comprehensive examples based on real

life implementation experience.

One thing which has eaten ninety percent of my time is detailed painstakingly captured screenshots

of real life live SAP COPA system. The snapshots are crystal clear and self-explanatory. Even if you

are not able to understand what is written, the screenshot will give you the glimpse of how the

configuration is done. Further the configuration menu paths are described.

This book is ideal for beginners and intermediates, who intend to understand COPA more deeply.

The book philosophy

“Complexity kills. It sucks the life out of developers, it makes product difficult to plan, build and test,

it introduces security challenges, and it causes end-user and administrator frustration.”

Ray Ozzie – Chief software architect at Microsoft Corporation.


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Table of Contents

PREFACE .............................................................................................................................................. 2

Table of Contents ................................................................................................................................ 3

Introduction ........................................................................................................................................ 5

1 Costing based PA ............................................................................................................................. 9

1.1 Define operating concern ....................................................................................................... 9

1.1.1 Maintain characteristics ................................................................................................ 12

1.1.2 Maintain value fields ........................................................ Error! Bookmark not defined.

1.1.3 Maintain operating concern ............................................ Error! Bookmark not defined.

1.1.4 Assign controlling area to operating concern .................. Error! Bookmark not defined.

1.1.5 Define Profitability Segment Characteristics ................... Error! Bookmark not defined.

1.2 Master data .............................................................................. Error! Bookmark not defined.

1.2.1 Characteristics Values ...................................................... Error! Bookmark not defined.

1.2.2 Characteristics Hierarchy ................................................. Error! Bookmark not defined.

1.2.3 Characteristics Derivation ................................................ Error! Bookmark not defined.

1.2.4 Define and assign valuation strategy ............................... Error! Bookmark not defined.

1.2.5 Define keys for accessing material cost estimate ............ Error! Bookmark not defined.

1.2.6 Assign costing key to any characteristics ......................... Error! Bookmark not defined.

1.2.7 Assign value fields ............................................................ Error! Bookmark not defined.

1.3 Flow of actual values ................................................................ Error! Bookmark not defined.

1.3.1 Define number ranges for actual posting ........................ Error! Bookmark not defined.

1.3.2 Activate transfer of incoming sales order ........................ Error! Bookmark not defined.

1.3.3 Transfer of billing document ............................................ Error! Bookmark not defined.

1.3.4 Maintain PA transfer structure for direct posting FI/MM Error! Bookmark not defined.

1.3.5 Order and Project settlement .......................................... Error! Bookmark not defined.

1.3.6 Transfer of Overhead ....................................................... Error! Bookmark not defined.

1.3.7 Activate profitability analysis ........................................... Error! Bookmark not defined.

1.4 End user process – Costing based PA....................................... Error! Bookmark not defined.

1.4.1 Direct posting from FI ...................................................... Error! Bookmark not defined.

1.4.2 Transfer from sales order ................................................. Error! Bookmark not defined.

1.5 Information system .................................................................. Error! Bookmark not defined.

1.6 Tools ......................................................................................... Error! Bookmark not defined.

1.6.1 Transport .......................................................................... Error! Bookmark not defined.


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1.6.2 Subsequent posting of SD Documents ............................. Error! Bookmark not defined.

1.7 TABLES ...................................................................................... Error! Bookmark not defined.


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Introduction

In order to sustain and thrive in this contemporary and dynamic environment, rapid and timely

decision making is more essential than to make right decision. Organization profitability is one the

core parameter to assess when it comes to designing organization goals, objectives and strategies to

achieve them. In this blog, I am going to discuss the tools incorporated in SAP ERP to analyse

organization profitability

The Intent and Purpose of CO-PA

In addition to mapping contribution margin accounting with actual and planned figures, the purpose

of CO-PA is to answer various business questions, for example:

1. Which customer do I earn the most money from?

2. Which products are the key to my business success?

3. Which specific products are successful with which specific customers?

4. Was my last marketing campaign successful?

5. What effect has my new price strategy had on the purchasing behavior of my customers?

6. Should I grant a customer further discounts to increase the sales quantity?

7. Are my contribution margins in a business area sufficient to cover the fixed costs assigned

there

These are just some of the questions that CO-PA can answer—provided you have customized it

correctly. As you will recognize from the various questions, CO-PA is designed as a sales controlling

tool. In principle, however, it can map all of the elements of contribution margin accounting down to

earnings before interest and tax (EBIT). Which CO-PA-relevant organizational structure is

advantageous here?

There is one alternative to COPA which is Profit Center Accounting and here are the the usage of

both applications.

Profit Center Accounting (EC-PCA) Profitability Analysis (COPA)

If an organization wants to analyze its internal Profits and loss department wise or as per different areas within your company, then it is recommended to used Profit center accounting.

CO-PA is used to help organization to analyze its profitability as per market segments by extracting sales, profit/loss and cost related data from other modules like SD , Production and MM.

EC-PCA can be used by companies in any branch of industry (mechanical engineering, chemical, service industries and so on) and with any form of production (repetitive manufacturing, make-to-order manufacturing, process manufacturing).

CO-PA can be used by companies in any branch of industry (mechanical engineering, wholesale and retail, chemical, service industries and so on) and with any form of production (repetitive manufacturing, make-to-order manufacturing, process


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The profit-relevant data is displayed by period.

Profit Center Accounting uses Period accounting and Cost-of-sales accounting.

manufacturing).

The data can be analyzed by period, or by order or project.

Profitability Analysis uses Cost-of-sales accounting method.

In EC-PCA we structure the units which we want to evaluate as Profit centers. You can create profit center according to region (branch offices, plants) function (production, sales), or product (product ranges, divisions).

The market segments are structured like product, customers, orders, other characteristic and Organization units such as company codes or business area wise. It support management in decision making by provided in-depth reports from market oriented viewpoint

Customer+ Product= Market Segment (niche marketing)

CO-PA Organization Structure

In order to use functionality of CO-PA (Profitability Analysis), the operating concern must be create which is highest hierarchical unit in combined FICO module. The structure and assignment of operating concern, controlling area and company code is shown in the figure below,

The Operating Concern

In an SAP system, the operating concern is the organizational unit responsible for Profitability

Analysis (COPA). What are organizational units in the SAP system? You usually use organizational

units to map your company structure: you set up company codes for your independent accounting

units; you create sales areas in SD; you define plants etc. for MM and PP. The entire remaining

customizing of your SAP system is based on this organizational representation of your company

structure. The organizational structure is the backbone of your system.

In an operating concern, you define all operating concern-relevant master data that you need for

your subsequent work with CO-PA. You then assign the operating concern to one or more controlling

areas. Here I would recommend a 1:1 relationship—i.e., assign the operating concern to only one

controlling area. You may wonder whether it makes sense to define a 1:1 relationship here when


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you will want to evaluate data across the group or company later on. Your thinking is correct, but the

clue is in the assignment of controlling areas to company codes: a controlling area is the

organizational unit of the CO module—you can assign one or more company codes to one

controlling area. To enable you to perform evaluations across the group or company (and not only in

Excel or a business warehouse, which would lead to further costs), you have to assign all of your

“live” company codes to one controlling area. You then assign this controlling area to the operating

concern. This ensures that you can see not only your costs across the group, but also your revenues,

contribution margins, and of course, your profit.

Common error in practice

If you do not think through the mapping of the organizational structure in the SAP system thoroughly from the very beginning, meaning that you have to make

changes later, you will have to check the customizing that is based on this structure whenever you make changes. SAP projects often take longer and

become unnecessarily expensive because the management thinks about changes to organizational structures during the SAP implementation phase.

The SAP implementation is later deemed to have taken very long and been too expensive, but in reality, it is the management decisions that have caused the extended time frame. Consultants, on the other hand, are very happy.

Common error in practice

A fellow consultant once told me that he was called to a customer who had already gone live with SAP but was having problems with his Report Writer reports. The

customer wanted to evaluate his costs across the group, but the reports did not allow him to do this. Unfortunately my colleague could not help him: the

customer had set up one controlling area for each company code, meaning that he could only see the costs of this company code in the Report Writer

reports for this controlling area. This example shows how important it is to think about your organizational structure in the SAP system thoroughly in advance.

However, to work with only one operating concern, all controlling areas and company codes must

work with the same fiscal year variant, generally K4 (here, the fiscal year corresponds to a calendar

year with four special periods). All company codes must also use the same chart of accounts.


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PA module is the most important module, when it comes to analysing the results of organisation.

In profitability analysis you basically collect the revenues from the sales order, the cost from the

production order, cost center or internal order and analyse their results.

The interesting part about PA is that when it collects the cost and revenues it also collects the

characteristics associated with costs and revenues and this is what makes it stand out.

For e.g. using PA you can find out the following:

Profit of a certain product

Profit of a certain product in a certain region

Profit of a certain product in a certain region by a certain customer

Profit of a certain product in a certain region by a certain sales person

And the list can go on in depth

The aim of the system is to provide your sales, marketing, product management and corporate planning departments with information to support internal accounting and decision-making. Two forms of Profitability Analysis are supported: costing-based and account-based: Costing-based Profitability Analysis: It is the form of profitability analysis that groups costs and revenues according to value fields and costing-based valuation approaches, both of which you can define yourself. It guarantees you access at all times to a complete, short-term profitability report. Account-based Profitability Analysis: It is a form of profitability analysis organized in accounts and using an account-based valuation approach. The distinguishing characteristic of this form is its use of cost and revenue elements. It provides you with a profitability report that is permanently reconciled with financial accounting. You can also use both of these types of CO-PA simultaneously.


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1 Costing based PA

We will configure operating concern 7000 (Organisational structure of CO-PA). Controlling area FS00

is assigned to operating concern. Company code FS00 is attached to controlling area.

1.1 Define operating concern

An operating concern represents an organizational unit in your company. It is the valuation level for

Profitability Analysis (CO-PA).

Structure

You structure an operating concern by selecting characteristics and value fields

Characteristics - You should ask yourself at what level your analyses should be performed,

such as the sales organization, region, product, or customer level.

Value fields - You should ask yourself which values and key figures should be analysed, such

as revenues, sales deductions, costs, or quantities.

We can use user-defined and sap delivered structures and value fields.

Access the activity using the following navigation options:

SAP Easy Access Controlling -> Profitability Analysis -> Structures -> Define Operating Concern -> Maintain Operating Concern

Transaction code KEA0


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The operating concern 7000 is created and activated, but before activating operating concern we

need to define or select characteristics and value fields for operating concern. So in below step we

will see how to configure characteristics and value fields.

Master Data in CO PA

Currency of operating concern

Master data in Profitability analysis


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Profitability segment: Profitability Segment- object within Profitability Analysis to which

costs and revenues are assigned. A profitability segment corresponds to a market segment.

You can calculate the profitability of a profitability segment by setting off its sales revenues

against its costs. A profitability segment in an operating concern is defined by a combination

of characteristic values. Characteristics can be concepts that already exist in the R/3 System

(customer, product, sales organization, and so on).


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1.1.1 Maintain characteristics

What are the characteristics?

Characteristics are nothing but those aspects on which we want to break down the profit logically

such as a customer, region product, sales person etc.

Several essential and obvious characteristics are pre-defined automatically for every operating

concern; these are known as fixed characteristics.

In addition to fixed characteristics, up to 50 non-fixed characteristics can be added to an operating

concern.

Characteristics can be categorised in four types:

Fixed characteristics: Some characteristics are automatically pre-defined in every operating

concern.

Pre-defined characteristics: In addition to fixed characteristics, a number of other pre-

defined characteristics are available in the field catalogue and can be added to operating

concern.

Copying characteristics from reference table: You can create characteristics by coping from

table.

Characteristics created from scratch: You can create characteristics, by defining own logic to

derive values.

To derive values of these characteristics, it is necessary to create derivation rules or table lookup

rules unless they are readily available in the sender application (For e.g. in SD data flow to CO-PA,

fields on the billing document).

Characteristics derivation makes it possible for the system to automatically derive unknown

characteristics value (especially for user defined characteristics) if these are dependent on

characteristics whose values are known.


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