1. Finished Product Logistic Cost

2. AGENDA FPLC Definition and Components; FPLC Accounting; FPLC Variance
Reports

3. FPLC and its place Total Delivered Cost = Total Manufacturing Cost +
Finished Product Logistics Cost +
Product Supply Admin Cost
Through the presentation everything which is regulated by SAFE will be given from 2 points – SAFE = how it should be and REALITY = how we do it, and the inconsistency and what variations are allowed / acceptable.

4. FPLC definition
“Cost incurred from the entry of finished, wrapped pallets or unit loads to the warehousing and distribution chain, until delivery of cases to the customer's receiving dock. May include administration costs that would normally be charged to PS-NME, if the administrative tasks are provided directly by third party vendors.”
SAFE. P/(L). COPS 02 TDC.
Through the presentation everything which is regulated by SAFE will be given from 2 points – SAFE = how it should be and REALITY = how we do it, and the inconsistency and what variations are allowed / acceptable.

5. FPLC Components FPLC Local Cost Import Cost Warehousing;
Inter-site Freight;
Customer Freight;
Local General Logistics Charges;
Distributor Logistics Charges
Import Cost
Import Freight;
Taxes, Customs and Duties;
Import Logistics
Refer to SAFE. P/(L). COPS 02 TDC or COPS 03 TMC and FPLC Variances.
FPLC

6. FPLC Accounting and Standard Costing Methodology
SAFE. P(L). COPS 03 TMC and FPLC Variances.
“All P&G businesses throughout the world should use Standard Costing methods and processes for TMC and FPLC accounting.”
“FPLC Standards are developed in the SAP-CO-PA module. (Markets which do not yet have CO-PA implemented report FPLC on an actuals basis only – they do not set standards or calculate variances.)”

7. FPLC Accounting and Standard Costing Process Flow
The general process flow for a standard cost management system includes the following five steps (same for TMC and FPLC):
Develop Budget / Forecast;
Develop Annual Standards;
Accumulate Actual Costs;
Analyze Variances;
Perform Monthly Close.
SAFE. P/(L). COPS 03 TMC and FPLC Variances

8. FPLC Accounting and Inventory Valuation
SAFE. P/(L). INVENTORY 02. Inventory Valuation.
“The primary basis of accounting for product inventories is cost – the sum of both the applicable direct and indirect expenditures and charges incurred to bring an inventoried unit to its existing condition and location.”
This chapter sets a standard treatment of all TDC elements in corporate accounting books for inventory valuation – which element is inventoriable and which is not.
Also it covers Variances Holding/Release Policy.

9. FPLC Accounting and Inventory Valuation
FPLC elements
Inventoriable /
Non-Inventoriable
Warehousing
Customer Freight
Non-Inventoriable / Inventoriable
Inter-site Freight
Inventoriable (1)
GLC
Non-Inventoriable (2)
Import Freight
Inventoriable
Tax, Customs and Duties
For all Practical purpose this cost is treated as Non Inventoriable and Yearend adjustment made for the Inventory.
GLC is charged based on the Peg Rate.

10. Standard Set-ups Standards are calculated outside the SAP system.
This standard “Rate” is then maintained in COPA module at the beginning of FY.
(Note: this need to be done before the first shipment)
Rates are maintained COPA Module using the COPA Condition type

11. COPA- Conditions Following Condition Types are used Warehousing
ZCFR - Customer Freight
ZGLC - Grl Logistics Charge
ZIFR - Inter-site /Export Freight
ZWHS - Warehousing Storage
ZWHH – Warehousing Handling
ZFVR – FPLC Variance Thru ICBPs
Warehousing

12. FPLC Standard Settings Key Concepts

13. Concept I (Component)
Several components corresponding to different types of non-inventoriable costs:
Warehousing Cost
Intersite Freight
Customer Freight
GMC (General Manufacturing Charges)
GLC (General Logistics Charges)
Tax Drawback
PSAdmin
Export Admin
Interest on Capital (ESC only)
SR&A (Plant F&A)
SR&A (Plant MS)

14. Concept II (Condition Table/Record)
Each component has a “standard rate” set per a set of characteristics. This is known as a condition record.
For example, GLC can have a rate maintained per shipping DC and per product category. A condition record would specify for the DC “XX50” and the product category “Laundry”, that the GLC rate is $2000 per 1000su.
A particular component can actually have many “condition tables”, specified as part of an access sequence.
For example, GLC has two condition tables:
Table 1: Company Code x Shipping DC x Product Category
Table 2: Company Code x TDC VAL
It may be for the characteristics of a particular shipment that only one or both rates are maintained.

15. Concept II (Condition Table/Record)
Following Condition Types are used
ZCFR - Customer Freight
ZGLC - Grl Logistics Charge
ZGMC - Grl Manufact. Charge
ZIFR - Intersite /Export Freight
ZPSN - PS Non-MFG Exp.
ZSRF - SR&A (Plant F&A)
ZSRM -SR&A (Plant MS)
ZTAX - TAX Drawback
ZVAR - Variance Thru ICBPs
ZWHS - Warehousing Cost

16. Concept III Access Sequence
Where multiple condition tables exist for a particular component, an “access sequence” is established so that the COPA system knows which rate to use in the event that both condition tables are maintained with valid condition records.
For example,
Table 1:
Table 2:

17. Concept IV Standard Setting
At FIRM time, the budget for a particular cost component (eg warehousing) is calculated.
This is then allocated to the different characteristic values which will share the budget, for example for DC XX50, TDC VALs laundry liquids and laundry powders.
Using this allocated budget and the FIRM shipment volume, a rate for each condition record in a condition table can be calculated.

18. Concept V - Recovery
When a shipment is posted in SAP, a posting is made to the COPS (Cost of Product Sold) account for the inventoriable cost value of the shipment.
No posting is automatically made for the non-inventoriable costs.
=> COPS only corresponds to the inventoriable TMC costs
Essentially the standard cost for the non-inventoriable components = the actual shipment volume * the standard rate. This is known as the mix-adjusted value, or the recovery.
COPA calculates these values automatically using the shipped volume interfaced into COPA from the SD billing document.

19. Concept V – Recovery(Cont.)
E.g : Customer Frt ($10/Su) x Shipment 100 Su
Cust. Frt Std Pppp810
FPLC STD P/L IN0110
$1000
$1000

20. Concept VI – Actual & Variance
Actual costs are being generated for each of the non-inventoriable cost component types. These are captured and managed versus budget on cost centers.
For Transportation & Warehousing actual cost will be posted High Level Cost center and for GLC at TDC Val Cc /PC level
At the Monthend WH & Tpt Cost will be allocated to TDC Val Cc based on the Agreed Allocation Bases.
Using the “recovery” value as calculated by COPA for a particular component and posting this as a standard cost charge to COPS, and a credit to the appropriate non-inventoriable cost center (TDC Val Cc).

21. Concept VI – Actual & Variance (Cont)
Variance is than Calculated at TDC Val level
This variance gets cleared to COPS as part of the month end process to give “actual costs” in the COPS account.
However, the generated variance is also used for logistics costs scorecard reporting.

22. Concept VI – Actual & Variance
E.g : Customer Frt ($10/Su) x Shipment 100 Su Actual Carrier Invoice is $
FPLC STD P/L IN0110
$1000
Cust. Frt Std PppppTDCV
Cust Frt Var PppppTDCV
$500
Cust Frt VAR PppppTDVC
Cust. Freight PppppTDCV
$1500
Carrier Vendor

23. Ware-Housing

24. Ware-Housing
Definition: Receiving, handling, and storage of finished products at any location prior to delivery to the customer
This Comprise Of
Ware-House Handling
Ware-House Storage

25. Warehouse- Handling Warehouse Handling:
Includes all warehousing costs related to handling incoming and outgoing product:
placement, retrieval, pick-pack, issuing to dock, and other general handling operations.

26. Warehouse- Handling Drivers of warehouse handling costs are:
Number of cases which can be stored on a pallet
the effort differences of handling the product due to pick-pack operations, ability to stack pallets when moving them around the warehouse, type of pallet handling.
Special Product handling
Warehouse Storage efficiency
Variable Cost

27. Warehouse - Storage
Warehouse Storage:
Includes all warehousing costs related to the infrastructure of the DC:
rent, depreciation, maintenance, insurance etc.

28. Drivers of warehouse storage costs are:
The number of cases which can be stored on a pallet (Storage Efficiency)
The effort differences of storing the product, due to stack height factor, special storage conditions, length of storage etc.
Special Storage Requirement (Cold Storage Pringles)
Fixed Cost

29. Warehousing - Budget
At the beginning of the FY Total warehousing budget for a particular warehouse is splited into storage & handling
This is to enable it to split down to the various product levels (e.g. TDC Val) based on the separate cost drivers for storage & handling.
Allocation factors for storage budget will be set based on:
positions occupied in the warehouse (stackability)
average length in storage (inventory volume)
Allocation factors for handling budget will be based on:
no. of pallets to be shipped

30. Warehousing – ‘Budget’
From allocated” budget per product hierarchy apply FIRM shipment volume (Trade + Affiliate)
Standard Warehousing Handling and Storage “rate” is calculated in $/su.
Also Firm Budget (Absolute Budget) needs to be uploaded in the SAP CO Module at High Level Cc
WH Budget is than need to be allocated to TDC Val cc using planned Assessment cycle.
This is required for two purpose
1) To track the Actual Warehousing cost against the Budget
2) Split the Warehousing Variance into Spending and recovery Variance for better understanding of Variance cause.

31. Warehouse – ‘Actual Cost’
Actual WH Cost is be posted to the Cost element which is part of EPSTORAGE and EPHANDLING Grp
– Salary
– Dep Machinery & Equip
– Mntce & Repair
– Trf to SC WH Storage
– Trf to SC WH Handling
Actual WH Cost center is posted to WH High Level cc.
Ppppp800 (pppp = plant Code)

32. Warehouse – ‘Actual Cost’
At the MEND
Total WH Cost will be Allocated to TDC Val Cc using the Assessment Cycle ( : Storage) ( : Handling)
Bases of Allocation :
Storage : Average Inventory in Pallets
Handling : Shipment in Pallets

33. Allocation – ‘Actual Cost’
Invoice
Storage
XXXX
Handling
“800” Cost Centers
TDCVAL -1
TDCVAL -2
TDCVAL -3
WH Allocation
Storage
Handling

34. Warehouse- ‘Cost Elements’

35. Warehouse- ‘Standard’
COPA Calculates the Mix Adjusted Standard for each shipment.
At the Month-end Cost Accounting post the Recovery entry to WH Cost at TDC Val
Entry to Post the Recovery
Dr : Trade FPLC (CATPC)
Dr : I/C FPLC (CATPC)
Cr. WH Storage Mix Adj Std (TDCVAL)
Cr : WH Handling Mix Adj Std (TDCVAL)

36. Cost Flow FI CO COPA High Level CC ACTUAL COPA MIX ADJ STD Plan TDCVALB
TDCVAL A
COPA
COPA
MIX ADJ STD
Plan
TDCVAL A
TDCVAL B

37. Spending & Recovery Variance
Plan/Budget
Actual
Recovery
100
250
(150)
Variance =Actual – Recovery
Warehousing Variance is further reclass to Spending and Recovery Variance

38. Warehouse- Spending/Recovery Variance

39. FPLC- P/L View P/L as Release P/L Generated WH Storage Spen/Rec (TDCv)
FPLC Var tr toP/L
TDCv
FPLC STD
CATPC AA YY XX
P/L as Release
WH Handle
Spend/Rec(TDCv)
FPLC STD
CATPC BB YY
P/L Generated
Note : YY = AA +BB

40. Customer Freight

41. FPLC Components Customer Freight (=Outbound)
Freight to move finished product to the customer from plants, warehouses, RDCs, or custom packers.
This is applicable for the customer located in the same country as well as the customer located in a different country.

42. FPLC Rate “Customer Freight”
Cost of transporting the finished product from the selling DC to the customer.
Drivers:
freight company
transportation type
route (or source/destination combination)
the amount of product which fills the truck (ie volume-full or weight-full)
how efficiently the trucks are filled

43. Customer Freight – ‘Actual’
Actual Cost will be posted to High Level transportation Cost center.
Cost Center : Ppppp810
GL Account :
SD D&T Module Calculate the Shipment Cost for each shipment and post the Accrual entry on daily bases.
Non D&T Market, Carrier Invoices are posted through FI/AP Module.
No Need for the Accrual Entry at the MEND for those Markets which implemented SD’s D&T Module

44. Customer Freight – ‘Actual’
At the MEND
Total Customer Freight will be Allocated to TDC Val CC using a Distribution Cycle .(Bases – Trade Shipment M3)
ZKXX0115 (D&T Mkt) or ZKXXR059 for Others Mkt

45. Customer Freight –Monthend
MEND (Cont)
Mix Adj Std will be posted for the Customer Freight recovery based on the COPA Report ( Customer Freight rate x Shipment)
Dr . Std FPLC
Cr. Customer frt Mix Adj Std
Variance will be calculated and MEND tool will pass following Accounting entry
Dr. Customer Freight Variance
Cr. Frt Var Offset Account

46. Freight Reclass to MSA
Some time P&G ship Free Goods along with normal Goods to the customer.
Total Cost of Shipment is charged to the Customer Freight Account
Monthend Process is to reclass the Freight cost associated to Free Goods to MSA Account .

47. Freight Reclass to MSA
Monthend tool (ZKXX0115) provides details of Cross charge to MSA
Cost Accounting pass the following entry
Dr : MSA
Cr : Customer Frt Reclass (MSA)

48. FPLC P/L View P/L as Release P/L Generated Cust Frt Var (TDCv)
FPLC Var tr toP/L
TDCv
FPLC STD
CATPC YY YY XX
P/L as Release
FPLC STD
CATPC
P/L Generated YY
Note : YY = AA +BB

49. FPLC Rate “Inter-site Freight”

50. FPLC Components Inter-site Freight
Transportation cost to ship finished product from the producing plant to a different ship point or between ship points (e.g., between distribution centers). This is a P&G to P&G transportation cost but only in the same country (boarder = Official National Boarder).

51. FPLC Rate “Inter-site Freight”
Cost of transporting the finished product from the initial local P&G shipment site to the DC that sells the product.
Drivers:
route to the shipment site (or plant/DC combination)
transportation means (Truck/Train)
product type (Bulky, Heavy)

52. “Inter-site Freight” Actual
Actual Cost will be posted to High Level transportation Cost center.
Cost Center : Ppppp810
GL Account :
SD D&T Module Calculate the Shipment Cost for each shipment and post the Accrual entry on daily bases.
Non D&T Market, Carrier Invoices are posted through FI/AP Module.
No Need for the Accrual Entry at the MEND for those Markets which implemented SD’s D&T Module

53. “Inter-site Freight” Monthend
At the MEND
Total Intersite Freight will be Allocated to TDC Val CC using a Distribution Cycle .(Bases – Trade Shipment in M3)
ZKXX0115 (D&T Mkt) or ZKXXR059 for Others Mkt

54. “Inter-site Freight”-Variance
MEND (Cont)
Mix Adj Std will be posted for the Intersite Freight recovery based on the COPA Report ( Inter-site Freight rate x Shipment)
Dr . Std FPLC
Cr. Inter-site frt Mix Adj Std
Variance will be calculated using MEND tool ,which will pass following Accounting entry (ZKXXME20)
Dr. Inter-site Freight Variance
Cr. Frt Var Offset Account

55. FPLC Rate “Export Freight”

56. FPLC Rate “Export freight”
Cost of transporting the finished product from the Plant/DC to Exporting Port
Drivers:
route to the shipment site (or plant/DC combination)
transportation means.
Container Size
product type
“ZIFR” Condition Type is used for the Export Freight

57. Affiliate Freight Accounting Sale at ICBP
Affiliate Freight include the Frt. from Plant to Port
Actual Frt will be posted to be Posted to High Level Cc
Cost Center : Ppppp810
GL Account :
Ocean Frt / Insurance / Accessorial Cost will be posted to a different Cc ( Harbor Plant Tpt cc or Export Tpt Cc Ppppp830)
At the MEND
Total Affiliate freight will be Allocated to TDC Val CC using a Distribution Cycle. (Bases :Aff Shipment in M3)

58. Affiliate Freight Accounting Sale at ICBP
MEND (Cont)
Mix Adj Std will be posted for the Export Freight recovery based on the COPA Report ( Affiliate Freight rate x Shipment)
Dr . Std FPLC
Cr. Aff / Export frt Mix Adj Std
Variance will be calculated and MEND tool will pass following Accounting entry
Dr. Affiliate/Export Freight Variance
Cr. Frt Var Offset Account
Actual Ocean Frt , Insurance , Accessorial Cost will be reclassed to I/C COPS Frt Reclass Account .

59. FPLC Rate “GLC”

60. FPLC Components Local General Logistics Charges
Miscellaneous costs incurred in conjunction with the process of warehousing and distributing of finished products.
Key GLC cost lines for EE:
FP Losses, Manipulation cost, Scrapping cost, Taxes on currency purchase. .

61. GLC
There will be peg-rates for GLC, developed as part of the annual standard setting process.
Peg-rates are charged to the P&L on a shipment volume basis throughout the year with the residual versus actual held on the balance sheet until year-end when it is cleared to the P&L at the end of June.
Peg-rates can only be adjusted once mid-year.

62. General Logistic Cost
Actual will be posted to the Cost element which is part of EPGLC Grp at TDC Val Cc.
5296xxxx - Rework FP
5296xxxx – Pallets
5296XXXX – FADO Gain/Loss
– Trf to SC GLC(GLC Cost)
Inventory Related GLC Cost will be posted directly to PC Accounting through Movement Type in IM Module
Any Cost that can not be identified upfront to any one of the TDC Val Cc is posted to GGLC Cc.
At the MEND
Total in GGLC Cc will be Allocated to TDC Val Cc using the Distribution Cycle .

63. General Logistic Cost MEND (Cont.)
Mix Adj Std will be posted for the GLC recovery based on the COPA Report ( GLC rate x Shipment)
Dr . Std FPLC
Cr. GLC Mix Adj Std
Variance will be calculated and MEND tool will pass following Accounting entry (ZKXXME03)
Dr. GLC Variance (BS)
Cr. GLC Variance Trf to BS Account

64. GLC-Year End Variance Release
BS Variance will be Trf to P/L
Dr . FPLC Variance to P/L
Cr. GLC Variance (BS)

65. KEY FPLC Reports COPA Reports for Mix Adj Std
CC Report for Warehouse Spending and Recovery Variance
ZKXX0115 Tpt Variance Analyses

66. Questions ?