How To Activate Material Ledger

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com/
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SAP FI SPRO For Dummies

How to activate Material Ledger in S4HANA in 4 Easy Steps
Activating the Material Ledger in S4HANA involves configuring your system to track material
values. Here's a breakdown of the key steps:
1. Assign Material Ledger Type:

o Use transaction code OMX3.
o Assign a Material Ledger type (usually "0001") to your valuation area. This
defines the valuation approach.
o Ensure the "Status" shows a green checkmark, indicating successful
assignment.
2. Activate Valuation Areas:

o The exact transaction code might vary, but common options include OMXY or
OKEY.
o Locate the relevant valuation area and activate the Material Ledger flag. This
enables material ledger functionality for that specific area.
3. Assign Currencies:
o In transaction OMSK, define which currency types will be used with your
Material Ledger.
o Assign the desired currencies to the Material Ledger type you're using (often
"0001"). This allows you to track material values in multiple currencies.
4. Production Start-up:
o Use transaction CKMSTART to perform test runs and finally activate the
Material Ledger for production use in your valuation area. This ensures
everything is working smoothly before going live.
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Activation of Material Ledger is mandatory in S4 HANA.
Material Ledger in S4 HANA serves two purposes of Actual Costing & Parallel
currencies/Valuation. The objective of parallel currencies or valuation makes the
material ledger in S4 HANA as a sub-ledger for inventory valuation. To achieve this
objective material ledger is a mandatory in SAP S4 HANA
4 Steps to activate Material Ledger in SAP S4 HANA
Time needed: 5 minutes.
How to activate Material Ledger in S4 HANA in 4 easy steps
1. Assign Material Ledger Type to Valuation Area

2. Activate Valuation Areas for Material Ledger
3. Assign Currency Types to Material Ledger Type
4. Production Start-up of Material Ledger
Step 1: Assign Material Ledger Type 0001 to Valuation Area
We must assign one material ledger type to each valuation area (Plant) which must
contains currency type 10.
If we have different currency on client level and company code level, then we need to
have currency type 30 also assigned to ML type.
In STD system ML type 9000 is given for currency type 10 so we have configured our
ML type as “0001” to have both currency type 10 & 30. Create this through OMX1 “Define
Material Ledger Type”
If we have more than one plant assigned to a single company code (as in our case we
have plants M* assigned to one company Code MF01), we have to assign all valuation
areas in this company code to the same material ledger type.
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Assign Material Ledger Types to Valuation Area
In this step, you allocate material ledger types to the valuation areas.
You can only allocate one material ledger type to each valuation area. This must contain the
currency type 10.
You can allocate the same material ledger type to several valuation areas. If you have several
valuation areas within a single company code (that is, when the valuation area corresponds to
a plant), you must assign all valuation areas in this company code to the same material ledger
type.
Requirements
• You have defined the relevant valuation areas.
• You have created the relevant material ledger types.
Further notes
Before you convert data for production start-up, make sure that the currency settings in
Financial Accounting and in the Material Ledger are correct. Once production has been started,
you cannot change currencies, currency types and material ledger types.
Activities
To assign material ledger types to a valuation area, proceed as follows:
1. Choose the function New entries.

2. Enter a valuation area.
3. Enter a material ledger type.
4. Save your entries.
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Step 2 : Activate Valuation Areas for Material Ledger
We shall activate material ledger here for all our valuation areas. If the material ledger
is active for a particular valuation area, all materials in the valuation area are valuated
using the material ledger.
Activate Valuation Areas for Material Ledger
In this step, you activate the material ledger for one or more valuation areas.
If the material ledger is active for a particular valuation area, all materials in the valuation area
are valuated using the material ledger.
Standard settings
In the standard system, the material ledger is not activated for any valuation area.
Recommendation
If you activate the material ledger for a plant, you should also activate it for all the other plants
in the company code. This ensures that the accounts in Financial Accounting and Materials
Management are reconciled.
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Damage caused to data by errors
It is currently only possible to deactivate the material ledger if no material movement data
exists in the valuation area.
Activities
You can transfer settings between systems (for example, from a test client to a target client).
If you wish to do this, the system must check the data that exists there, to determine whether
the material ledger can be activated. This check does not take place in Customizing, you have
to trigger it in the application menu when you convert data for the material ledger as part of
production start-up.
If you want to activate the material ledger, proceed as follows:
1. Decide on the valuation areas in which the material ledger is to be activated.

2. Set the Material ledger active indicator for the relevant valuation areas.
3. Set the indicator Material ledger settlement: control in the material master and, if
necessary, the indicator Settlement control mandatory in valuation area
5. If you use the parallel currency valuation functions, check that the settings are
consistent in Customizing:
Check settings
6. Transport the settings to the target client.
7. Check the settings in the target client by choosing Accounting -> Controlling
-> Actual costing/material ledger, then Tools -> Check Customizing.
8. Convert the data in the target client for all active valuation areas by choosing
Accounting -> Controlling -> Actual cost/material ledger, then Tools ->
Production Startup -> Production Startup.
Further notes
For further information on the material ledger and production startup, see Actual
costing/material ledger.
In Global Settings, check:
• Which currencies are defined

Check Currency Codes
• Which currencies are assigned to the respective company code as index-based

currencies or as hard currencies for the individual countries/regions, if currencies
of this type have been assigned.
Define Countries/Regions
In Financial Accounting, check:
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• The currencies for the company code

Define Additional Local Currencies
• The exchange rates

Maintain Exchange Rates
In Controlling, check whether the Var. CCode currency indicator is selected for the controlling
area:
Maintain Controlling Area
In Logistics - General, check:
• Whether the company code was initialized for Materials Manangement

Maintain Company Codes for Materials Management
• Whether the attributes for the material types contain updates for values
Define Attributes of Material Types
In Materials Management, check whether the method for dealing with exchange rate
differences in invoices is configured appropriately:
Configure How Exchange Rate Differences Are Treated
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Material Price Determination: Control

Use
You have the following options:
• In Transaction-Based material price determination (option 2 in the material

master), with price control V the material is valued at the moving average price.
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With price control S, the material is valued at the standard price. The moving
average price is calculated for information purposes.
• In Single-/Multilevel price determination (option 3 in the material master), the

valuation price (standard price) remains unchanged and a periodic unit price is
calculated for the material valuation of the closed period.
This option is only possible for materials with price control S (standard price),
and is only recommended if, in addition to multiple currencies and/or valuations,
you use Single-/Multilevel material price determination.
With Single-/Multilevel material price determination, a periodic unit price is
updated for information purposes but can only be used for material valuation in
the closed period.
Dependencies
The indicator is only relevant if the material ledger is active.
When you activate the material ledger for a valuation area in Customizing, you can specify
what type of material price determination will be proposed when a material is created in that
valuation area. This proposal will be ignored at production startup: the system automatically
sets the indicator to 2 in the material master for all materials present.
If you want to change the indicator for a particular material later, go to the SAP Easy Access
menu and choose Accounting > Controlling > Product Cost Controlling > Actual
Costing/Material Ledger > Environment > Change Material Price Determination.
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Material Ledger Activated in Valuation Area
Indicates that the material ledger has been activated for the valuation area in question.
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Step 3 :Assign Currency Types to Material Ledger Type
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We have activated ML type 0001. In this config we will set the currency type associated
with this ML type.
Assign Currency Types and Define Material Ledger Types
In this step, you create material ledger types and allocate up to three currency types to each
of these material ledger types.
Standard settings
The standard system contains the material ledger type 0000, which uses currency types from
Accounting.
Activities
1. Specify which currency types you want to use for the respective material
ledger type.
2. If you require material ledger types with other currency types, choose the
function New entries.
3. Enter a four-digit identification code in the field ML type. The first character of
this identification code must be a letter.
4. Specify which currency types you want to use for the respective material
ledger type. You have the following options:
o If you want to use the currency types that are defined in Financial
Accounting, you set the indicator Currency types from Financial
Accounting. In this case, the currency types are automatically derived
from Financial Accounting. This setting is covered by the material ledger
type 0000 in the standard system.
o If you want to use currency types defined in the currency and valuation
profile, set the indicator Currency types from CO. In this case, the
currency types are derived automatically from the currency and valuation
profiles.
o If you want to use a combination of the currency types from both

Controlling and Financial Accounting, set the indicator Currency types
from FI and Currency types from CO. In this case, you must check the
settings manually:
Check Material Ledger Settings
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o If you want to use other currency types, set the Manual indicator and
select Define individual characteristics. As well as the currency type for
the company code currency, you can enter (up to 10) more currency types.
Further notes
Before converting data for production startup, make sure that the currency settings in Financial
Accounting and in the Material Ledger are correct. You cannot change the currencies,
currency types and material ledger types after production startup.
In Customizing for Financial Accounting, you can display the currency types that belong to a
certain company code.
Define Additional Local Currencies.
In the currency and valuation profile, you can display the currency types that belong to a
particular controlling area.
Currency and Valuation Profile
Recommendation
To ensure that information is consistent across Materials Management, Financial Accounting

and Controlling, ensure that the group currency is used as the controlling area currency
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Step 4 :Production Start-up of Material Ledger
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In this step we will start Material Ledger in our three plants
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Mickael QUESNOT © https://s4hclub.

SAP FI SPRO For Dummies

1. Assign Material Ledger Type:

2. Activate Valuation Areas:

Activation of Material Ledger is mandatory in S4 HANA.

4 Steps to activate Material Ledger in SAP S4 HANA

Time needed: 5 minutes.

How to activate Material Ledger in S4 HANA in 4 easy steps

1. Assign Material Ledger Type to Valuation Area

Step 1: Assign Material Ledger Type 0001 to Valuation Area

Assign Material Ledger Types to Valuation Area

• You have defined the relevant valuation areas.

• You have created the relevant material ledger types.

To assign material ledger types to a valuation area, proceed as follows:

1. Choose the function New entries.

Step 2 : Activate Valuation Areas for Material Ledger

Activate Valuation Areas for Material Ledger

Damage caused to data by errors

If you want to activate the material ledger, proceed as follows:

1. Decide on the valuation areas in which the material ledger is to be activated.

In Global Settings, check:

• Which currencies are defined

• Which currencies are assigned to the respective company code as index-based

In Financial Accounting, check:

• The currencies for the company code

• The exchange rates

Maintain Controlling Area

In Logistics - General, check:

• Whether the company code was initialized for Materials Manangement

Configure How Exchange Rate Differences Are Treated

Material Price Determination: Control

You have the following options:

• In Transaction-Based material price determination (option 2 in the material

• In Single-/Multilevel price determination (option 3 in the material master), the

The indicator is only relevant if the material ledger is active.

Material Ledger Activated in Valuation Area

Step 3 :Assign Currency Types to Material Ledger Type

Assign Currency Types and Define Material Ledger Types

o If you want to use a combination of the currency types from both

5. Save your entries.

To ensure that information is consistent across Materials Management, Financial Accounting

Step 4 :Production Start-up of Material Ledger

In this step we will start Material Ledger in our three plants

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