SAP S/4 HANA | Why is Material Ledger Mandatory?

I have recently received an inquiry on why material ledger is mandatory in SAP S/4HANA in my previous post. Here are my inputs below:

1. ACDOCA or Universal Journal Structure
2. Significant enhancement of Material Ledger (ML) architecture and processing logic – it is the foundation for material valuation inventory in SAP S/4HANA

ACDOCA or Universal Journal Structure

First, we can consider the structure of ACDOCA or Universal Journal. SAP has made some significant changes as this table should cover fields in General Ledger Accounting, Asset Accounting, Profitability Analysis, and the Material Ledger.

That in itself says that there are attributes in the material ledger data model that is present in ACDOCA. You can refer to the image below where the orange box is highlighted as INV or Inventory.

Significant Enhancement of Material Ledger (ML) Architecture and Processing Logic

Second, one key note in the latest trend of material management is that it aims to improve and provide flexible valuation methods in parallel accounting and even multiple currencies (all the while improving system performance).

As such, SAP has enhanced the architecture and processing logic of the material ledger for S/4HANA.

It is considered to be a significant change. You can also refer to SAP Note 2354768.

Due to these changes, there is no general backwards compatibility. This is also the reason why no compatibility views exist on table level for material ledger actual costing. Therefore, any sort of add-ons, custom codes, and analytical content must be adapted to consider the changes.

Recall as well that in ECC, the inventory valuation tables contain both transactional and master data attributes (EBEW, EBEWH, MBEW, MBEWH, OBEW, OBEWH, QBEW, and QBEWH). These tables still exist in S/4HANA but they will only store material master data attributes. The transactional fields such as LBKUM, SALK3, and VKSAL are now found in ACDOCA. Since those tables will no longer be updated with transactional data, the material ledger has to be activated.

ADDITIONAL NOTE

Actual Costing is Still Optional in SAP S/4HANA

Material Ledger is a basic prerequisite for the utilization of actual costing. Recall that it is with actual costing that you can value your material inventories, work in process, cost of goods sold (COGS) with weighted average unit costs at period end.

I would also like to add that there are some misconceptions with S/4HANA Actual Costing. Even though activation of Material Ledger is now mandatory it is good to note that activation of Actual Costing is still optional with SAP S/4HANA.

SUMMARY

ACDOCA or Universal Journal Structure	There are now attributes in the material ledger data model that is present in ACDOCA.
Significant enhancement of Material Ledger (ML) architecture and processing logic – it is the foundation for material valuation inventory in SAP S/4HANA	Refer to SAP Note 2354768. To accommodate flexible valuation methods in parallel accounting and even multiple currencies Due to changes, there will be no backwards compatibility. Inventory valuation tables will no longer be updated with transactional data. LBKUM, SALK3, and VKSAL are now found in ACDOCA.

Overall, the statement stands firm that ML is required in S/4HANA due to the significant architecture and processing logic change.

I hope this helps. Good luck! 😊