For which processes is material valuation at plant level mandatory in SAP Materials Management?

Material valuation at the plant level is integral to the product costing process in SAP Materials Management because it directly influences the determination of production costs for manufactured goods. Accurate valuation at the plant level ensures that all costs associated with materials, including procurement, storage, and any overhead, are appropriately allocated and reflected in the overall cost of goods sold. This is critical for financial reporting and profitability analysis, making it essential for product costing purposes.

In contrast, while physical inventory, production planning, and invoice verification are also important functions within SAP, they do not strictly require plant-level material valuation in the same way that product costing does. Physical inventory primarily focuses on counting and verifying stock, and while it benefits from accurate valuation, it is not mandatory at the plant level for the process to occur. Production planning deals mostly with resource allocation and scheduling rather than direct cost assignment, though material dependency plays a role. Invoice verification ensures that invoices reflect the ordered costs and contract terms but does not necessitate plant-level valuation as a prerequisite for processing.