Batch Specific Active Ingredient Management

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Batch Specific UoM and Active IngredientManagement

This document discusses the Batch Specific UoM and Active Ingredient Management functionalities of SAPR/3. It is a useful document to understand the role of Batch Specific UoM in the areas of Procurement / MRP /Manufacturing / Sales.

What is Active Ingredient?In some industry sectors, the composition of products or components contains one or more ACTIVEINGREDIENTS. In addition to active ingredients, material is made up of carrier materials likewater or other impurities. The proportion of the active ingredient in a batch is not alwaysfixed. These materials are handled in logistics in batch management, using active ingredientmanagement.

Goods movements and stock movements for these materials are carried out in physical quantities Valuation,costing, availability checks, sales and planning, however, are carried out on the basis of the active ingredientquantity.

Where this function commonly used?

Pharmaceutical Industry, Chemical Industry, Food Industry, Textile Industry, Steel Industry and Paper Industry etc.

The active ingredient management is handled through Batch Specific UoM.

Batch Specific Unit of Measure

The batch-specific material unit is an alternative unit of measure of a material, for which you can define theconversion ratio into the base unit of measure on a batch-specific basis.

Materials in which the composition or attributes of the product vary to some degree. Therefore a fixedconversion factor cannot be used to convert quantities of these products from into various units of measure.Instead, each batch has to be given an individual conversion factor.

Business Benefits of Batch specific UOM Material can be tracked though out the logistics chain in alternate UOM which has dynamic

conversion ratio. This will reduce creation of different materials for every conversion ratio.

Batch Specific UoM and Active Ingredient Management


Conversion ratio can be calculated automatically by inputting factors of batch dependencies if theyare known. Material valuation of batch is possible on the basis of batch specific UOM. Material valueis determined based on the amount of active ingredient or conversion ratio.

Material requirement planning can be done according to variable conversion ratio. MRP usesinventory correction factors to consider the actual proportion of stock available at plant and storagelocation level.

Sales price determination is possible using the product or proportion quantity the product maycontain. Sales price is updated depending on the material batch data.

Batch Specific UoMs consists of two components Proportion Unit and Product Unit:

Proportion UnitUnits of measure in which you can enter proportions of the base unit of a material. The total quantity orphysical quantity may be made up of several proportions.Chemical consists of many ingredients. For e.g. 1 ltr of Orange Juice contains 30 g of Vitamin C, Also thisproportion is variable based on the batch. Goods movement and stock movement is carried out in ltr of orangejuice (physical quantity) whereas valuation, planning, and availability check is carried out for vitamin C (Activeingredient).

PROPORTION UNIT

DRUG SUBS

Base UoM Alt UoM

1. Prop. Of AI in

batch

BatchNumber

(kg) (AI) (%)A101 100 95 95

B101 200 198 99

C101 50 45 90

Product Unit

Units of measure that describes the total quantity of a material as an alternative to the base unit of measure.

For example, a piece in a particular batch weighs 10 kilograms in total or a pipe is 1250 millimeters long.

Certain materials transactions are used not only in their base UOM but also in alternate UOM. There will becertain situation where a conversion ratio (CR) between Base UOM and alternate UOM is not fixed. Evenin this scenario it is possible to use the conversion ratio between two UOM for all the stock monitoring andtransactions.

PRODUCT UNIT



STEEL PIPES

Base UoM Alt UoM

ConversionRatio

BatchNumber

(nos) (kg) (kg/nos)A101 10 1000 100

B101 20 1000 50

C101 15 1125 75

Master Data Set up

Classification Data

Batch Specific UoM needs the following master data set up in Classification:

SAP Menu --> Cross-Application Components --> Classification System --> Master Data --> CT04 Characteristics

SAP Menu --> Cross-Application Components --> Classification System --> Master Data --> CL02 Classes

In classification Master data you need to create a characteristic. This characteristic is used to storethe conversion ratio during transaction.

In classification master data you need to create a class with class type 023. All thecharacters are assigned to this class.

The Organizational Area S - Substance / Steel needs to be maintained in the Batch class Basic datatab, and the class characteristic to be used to store the conversion factor for Batch Specific UoM.



Material Master Data

The following data needs to be maintained in the material master to work with Batch Specific UoM:

The batch specific UoM needs to be maintained as the alternative UoM. The characteristic that is to be used to record the actual proportion of the active ingredient on a batch

specific basis needs to be maintained in the Proportion / Prod. Unit tab of the Additional Data. The unit of measure use has to be selected as A - For Proportion Unit and B - For Product Unit. The planned proportion of active ingredient in the total amount of material is stored which is used in

functions wherever required until the actual conversion factor for a batch is known.



The indicator for Leading Batch Specific UoM needs to be checked to enable thesystem to consider this in terms of Material Requirements Planning (MRP) and AvailabilityCheck. This will be further discussed in the subsequent sections.



The indicator for Valuation based on Batch specific UoM needs to be checked tomaintain a valuation price for this UoM, that acts as a basis for valuating batches based on thisproportion quantity / product quantity.

Valuation for the single batch is used to keep the price and value of each individual batch in inventorymanagement on a value basis. Valuation for single batch is activated using the Valuation Category X.

If price is maintained for valuation relevant characteristic in the respective plant, the system sets theValuated UoM indicator in the Accounting 1 view of the material master record.



Quality Management Data In Quality Management, the Master Inspection Characteristics need to be linked with the Class

Characteristics to copy the inspection results from the inspection lot to the batch master record.

SAP Menu --> Quality Management --> Quality Planning --> Inspection Planning --> Inspection Characteristic --> QS21 Create



Production Master Data

In order to use the functionality of Material Quantity Calculation (MQC) in Process orders, theproportion unit is used as the Component UoM instead of the base unit of measure.

The relevant master data set up required in Master Recipe for MQC is explained in the section BatchSpecific UoM in Production.

SAP Menu --> Production Process --> Master Data --> Master Recipes --> Recipe and Material List -->C202 Change



Maintain Standard Price for Batch Specific UoM A batch can be valuated based on the basis of Batch Specific UoM, for example using a particular

active ingredient proportion. For this valuation (standard price) needs to be maintained for the activeingredient on which the batch valuation depends.

The following table explains the effects of maintaining the standard price for the AI unit on the overallvalue calculation of the batch:

Batch A001 Batch B001

Physical Quantity 100 200 KG

Actual Proportion of AI 90 80 %

Proportion Price / AI 1000 1000 USD

Proportion Quantity 90 160 KAI

Proportion Value 90000 160000 USD

Value of Batch 90000 160000 USD

Price of Batch 900 800 USD / KG

SAP Menu --> Logistics --> Central functions --> Batch Management --> Batch specific UOM --> StandardPrice --> Create (MWB1)



When the standard price per unit of AI in material is changed, the system automatically calculatesthe standard price per kg of the material and updates it in the material master. For example if Price of150 USD is maintained per AI, the system uses the planned conversion factor of 97.50% stored in the



material master Proportion/Prod. Unit to calculate the standard price of 146.25 (150 *97.50%) per kgof the material as per the following screen shot:



Standard Cost Estimate for Header Material

The system considers the standard price entered for the Active Ingredient into account whilecalculating the total cost / value of that component in the total cost.

Also please note that the system uses the formula entered in MQC and considers the quantity ofFILLER1 as 71.167 (as calculated by MQC formula) and not 90.00 (qty entered in the BOM).

SAP Menu --> Accounting --> Controlling --> Product Cost Controlling --> Product Cost Planning --> MaterialCosting --> Cost Estimate with Quantity Structure --> CK11N Create



Batch Specific UoM in Procurement (PO History Correction)

The Purchase Orders can be created either in Physical UoM (Base UoM) or in batch-specificquantities. If purchase orders are made in the batch-specific quantities, the purchase order quantityand physical quantity are updated in the PO history. In this way degree of fulfillment of may bedetermined at any time in batch-specific quantities.

If actual conversion factor is not known at the time of Goods Receipt, goods receipt is carried outaccording to the planned conversion factor. If actual conversion factor is taken from the usagedecision of the QM inspection lot, the PO can be subsequently debited. This is known as PurchaseOrder History Correction.



As shown in the above PO, the Order Unit is KG, whereas the Order Price Unit is AI. Post GR against the Purchase Order we go for the QM results recording where we will get the actual

conversion factor / actual proportion of active ingredient in the batch. As per the below screen shotthe actual conversion factor is found to be 90 % whereas the planned conversion factor maintained inthe material master is 97.50%.



The system proposes to correct the PO history based on the inspection lot results using transactionMWBQ at the time of saving Usage Decision.

Alternatively the path for the MWBQ transaction is

SAP Menu --> Logistics --> Central functions --> Batch Management --> Batch specific UOM --> SubsequentAdjustment f. Goods Receipt MWBQ --> Enter with Ref. to Insp. Lot.



On executing the transaction after entering the appropriate inspection lot number, the system posts a materialdocument for correcting the PO history, i.e. to debit the PO based on the actual conversion factor obtainedthrough QM results recording.



As shown above, now as the actual proportion of the active ingredient in the batch is 462.463 AI(513.848 * 90%), vendor would be invoiced for the amount of 69369.450 (462.463 * 150) instead ofthe amount earlier calculated on the basis of planned conversion factor of 97.50 %.

Batch Specific UoM in MRP (Inventory Correction Factor)

Materials planning / Availability checks are usually carried out in the physical quantities. When working with proportion units the system usually considers the planned conversion factor

stored in the material master. However actual proportions of the active ingredients are usuallydifferent from the planned proportions.

Requirements planning or ATP inspection can use the inventory correction factor to consider theactual proportion stocks available at plant and storage location level.

The following MRP list shows that system has considered the planned conversion factor stored in thematerial master for requirements planning and has generated a purchase requisition of 513.848 kgfor the dependent requirement of 501.002 AI.



Now as the actual conversion factor is always different from the planned conversion factor, thesystem takes into consideration the actual proportion of active ingredient in the batches that arethere in stock to calculate a conversion factor that is further used in the MRP planning instead of theplanned conversion factor.

Now consider the following example to see how the system calculates the inventory correction factor:



Batch

0000000731

Physical Quantity (KG) 234.959 Expected Prop. Qty (AI) 229.085 Physical Qty * Plnd conv. Factor

(97.50 %)Actual Prop. Qty (AI) 211.463 Physical Qty * Actual conv factor

(90.00 %)Variance in Prop. Qty (AI) 17.622 Expected Prop. Qty. - Actual Prop.

Qty.

Variance in Prop. Qty (%) 7.692 (Variance in Prop. Qty / ExpectedProp. Qty) * 100

Inventory Correction Factor 92.308 100 - Variance in Prop. Qty (%)

The system calculates inventory correction factor using the report RVBWSCOR. To start the report,choose

Logistics --> Central Functions --> Batch Management --> Batch-specific Units of Measure --> DetermineInventory Correction Factor.



Appropriate radio button needs to be selected to Calculate & Display / Calculate & Update theInventory correction factor in the system. Also batches with zero stock / having restricted status /having blocked stock can be included or excluded in the calculation of inventory correction factor.

Also whether the list output of batches along with the correction factor should be displayed can becontrolled through appropriate selection factors.



Kindly note that we have considered only one batch for the calculation of Inventory correction factor.In actual scenario there can be many more batches with varying content of actual proportion of activeingredient in each batch. In such cases, the system calculates the variance for each batch and thencumulates all variances to calculate the Inventory Correction Factor.

Batch Specific UoM in Production (Material Quantity Calculation)

What is Material Quantity Calculation?

Active Ingredients are also used in production as a part of BOM component. Now since the actual proportion ofthe active ingredient varies from batch to batch, the system selects and adjusts with several batches to get therequired quantity of active ingredient in the process order for the production process. During this process therealso can be a need to adjust with other BOM component quantities or recalculate the Product quantity. Thesecalculations are handled in SAP by Material Quantity Calculation.

Material Quantity Calculation - Functions:

MQC is used to calculate the component quantities if different active ingredient concentrations ofbatches must be taken into account.

MQC is used to calculate the product quantity, i.e. the base quantity of the master recipe or the orderquantity if it must be adjusted to modified component quantities.

To calculate the expected phase scrap if its needed to be displayed in the phase data in the orderand make it available for the planned / actual evaluations carried out in LIS.

To calculate the operation and phase quantities if they are not identical to the product quantity. Thismight be done in order to take the quantity difference caused by the scrap produced into account.

We will take the example of pharmaceutical product / industry to understand the concept of MQC. Asshown in the above figure and in the below table, the system needs 250.5 AI units from Component



A so that in the final composition of the Product P, the proportion of Component A would be 50.2 %.The BOM is for tablets having batch size 500 kg / 10, 00,000 tablets.

BOM FOR PRODUCT TABLETS (500 KG)Active Pharmaceutical Ingredient(API)

1. 250.5 AI

Filler 1 1. 150.5 Kg

Filler 2 1. 99.0 Kg

Now since the proportion of the active ingredients in the raw material batches is not fixed, we needto calculate the amount of material that we need to take from each batch in KG to get the desiredamount of AI. Also in order to keep the total lot size of the finished product constant we need to adjustthe quantities of other raw material components in the BOM commonly known as fillers. Following isan example of how Material quantities are calculated manually:

BATCHES FOR API:

Now in order to fulfill our active ingredient requirement of 250.5 AI, we take 147 AI from batch B-990and another 103.5 AI from batch B-991. This works out to be 150 kg and 112.5 kg of material inphysical UoM respectively. Considering the total quantity of component now to be 262.5, we needto decrease the quantity of one of the filler material to maintain a constant batch size for the finishedproduct as 500 kg. So as per the below calculation, the requirement quantity of Filler 2 is reducedfrom 99.00 kg to 87.00 kg.

Adjustment in Filler 2 Qty:-Actual Filler 2 Qty = Total Batch Size - Filler 1 Qty - API Qty in kgActual Filler 2 Qty = 500-150.5-262.5 = 87.000 kgTotal Batch Size 500 kg = 262.5(API) +150.5(F1) +87.000(F2)

Kindly note that we have taken a simple example here for our understanding of the concept. Therecan be other complex scenarios in pharmaceutical as well as other industry sectors like chemicals,paper, textiles etc.



Master data set up for MQC

The master data maintenance for the BOM having an active ingredient component has already beendiscussed in the previous sections. Now appropriate formulae needs to be maintained in the masterrecipe to allow system do the Material Quantity Calculations for Active Ingredients / Other BOMcomponents / Finished Product. This section describes the master data maintenance in the masterrecipe.



The above screen shot shows the formula maintained for Filler 2 BOM component. The functionCQSM (Quotient Sum of added up Weighted batch quantities or characteristic values) has beenused in the formula of Filler 2 quantity calculation. This function is used to calculate the total ofthe physical batch quantities from the active ingredient quantities of batches based on the activeingredient concentrations. Similarly other functions of the Material quantity calculation can be used todefine formulae as and when required.

Batch Determination & Material Quantity Calculation in Process Order



As shown above, we have two batches of Active Ingredient Material 3691 - 0000000990 &0000000991 with physical quantities of 149.500 kg and 148.500 kg respectively. But since thepotency of the batches is 98 % and 92 %, the active ingredient proportion (quantity) in them is146.510 AI and 136.620 AI respectively.



Select the marked button above in Materials screen of the process order to execute batchdetermination for the selected component (Active Ingredient material). The system proposes thebatches for the raw material based on the Batch Search Strategy (Selection Criteria and Sort Rule)defined in Customizing. Appropriate batches are selected and batch determination results are copiedto the process order.



Once the batch determination is completed, click on Material Quantity Calculation icon to go forcalculation of the component quantities and product quantities. As per the formula entered in themaster recipe, it has recalculated the Filler 2 component quantity from 98.50 kg to 91.167 kg. Theseresults are copied into the process order on clicking on the Execute button. Similarly if aformula is entered for re-calculating the process orders header material quantity, the



same can be done by clicking on the Calculate Product Quantity button in the MQCscreen. The process order can then be saved.



The principal advantage of MQC is that it eliminates the need of manual calculation that has to bedone for every process order that contains active ingredient as a raw material component. Thus itreduces the possibility of human error.

Batch Specific UoM in Sales

The system stores the batch-specific quantity as the quantity sold in the sales and distributiondocuments.

If the sales unit is a batch-specific unit, the billing document is also created in batch-specific units.The billing quantity is derived from the cumulated batch quantity using the actual conversion factorsof the batches.

In the delivery, batch-specific quantities and batch-specific units are transferred from the order, anddisplayed as quantity sold and sales unit. For partial deliveries, the physical quantity is calculatedusing the actual conversion factor (batch is known at this point).

In pricing, you can calculate prices, discounts, and surcharges based on batch-specific quantities andbatch-specific units. When you do this, you may only use one quantity as a basis for calculation foreach condition record, even when several batch-specific units (for example, active ingredients) areallocated to the material.

Configuration Settings

Define UoM in Global Data

SPRO --> SAP Net Weaver --> General Settings --> Check Units of Measurement



Activate Batch Specific UoM

SPRO --> Logistics General --> Batch Management --> Batch-Specific Material Units of Measure -->Activate Batch-Specific Material Unit of Measure

Edit Batch Specific UoM

SPRO --> Logistics General --> Batch Management --> Batch-Specific Material Units of Measure --> EditBatch-Specific Material Unit of Measure



Calculate Proportional Factors

SPRO --> LogisticsGeneral --> Batch Management --> Batch-Specific Material Units of Measure -->Calculate Proportional Factors --> Define Calculation of Proportion Quantity from Base Quantity

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Batch Specific Active Ingredient Management

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