# SAP Engineering Change Obsolescence Exposure Calculator: Stock, WIP and Open POs at Risk

> Source: https://netray.co/tools/sap-engineering-change-obsolescence-exposure-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Quantify the write-off risk of replacing a component and estimate when old stock runs out so you can set the right effectivity date.

## Category

engineering-plm

## Erp

SAP S/4HANA

## Audience

- Engineering change manager
- SAP PLM consultant
- Materials planner

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Stock on hand

**Key:** stock_qty

**Type:** number

**Default:** 4200

**Min:** 0

**Step:** 10

**Unit:** units

#### Quantity in WIP and subassemblies

**Key:** wip_qty

**Type:** number

**Default:** 800

**Min:** 0

**Step:** 10

**Unit:** units

#### Open purchase order quantity

**Key:** po_qty

**Type:** number

**Default:** 3000

**Min:** 0

**Step:** 10

**Unit:** units

#### Unit cost of old component

**Key:** unit_cost

**Type:** number

**Default:** 14.5

**Min:** 0

**Step:** 0.1

**Unit:** $

#### Quantity that can be reworked or used elsewhere

**Key:** rework_pct

**Type:** slider

**Default:** 35

**Min:** 0

**Max:** 100

**Step:** 1

**Unit:** %

#### Rework cost as share of unit cost

**Key:** rework_cost_pct

**Type:** number

**Default:** 20

**Min:** 0

**Max:** 200

**Step:** 1

**Unit:** %

#### Salvage value of the remainder

**Key:** salvage_pct

**Type:** number

**Default:** 10

**Min:** 0

**Max:** 100

**Step:** 1

**Unit:** %

#### Cancellation charge on open POs

**Key:** cancel_pct

**Type:** number

**Default:** 15

**Min:** 0

**Max:** 100

**Step:** 1

**Unit:** %

#### Weekly consumption

**Key:** weekly_use

**Type:** number

**Default:** 450

**Min:** 1

**Step:** 10

**Unit:** units/week

**Outputs:**

#### Quantity on hand and in WIP

**Key:** on_hand_total

**Expr:** stock_qty + wip_qty

**Format:** integer

#### Gross inventory exposure

**Key:** exposure

**Expr:** (stock_qty + wip_qty + po_qty) * unit_cost

**Format:** currency

#### Recovered value

**Key:** recovered

**Expr:** on_hand_total * unit_cost * (rework_pct / 100 * (1 - rework_cost_pct / 100) + (1 - rework_pct / 100) * salvage_pct / 100)

**Format:** currency

#### PO cancellation cost

**Key:** po_cost

**Expr:** po_qty * unit_cost * cancel_pct / 100

**Format:** currency

#### Estimated net loss

**Key:** net_loss

**Expr:** on_hand_total * unit_cost - recovered + po_cost

**Format:** currency

**Primary:** true

#### Weeks to consume stock and WIP

**Key:** weeks_to_run_out

**Expr:** on_hand_total / weekly_use

**Format:** weeks

**Primary:** true

**Description:** Candidate for a run-out effectivity instead of an immediate cut-in.

**Chart:**

#### Net loss vs share reworked or reused

**Type:** line

**X:** rework_pct

**From:** 0

**To:** 100

**Steps:** 20

**Series:**

- net_loss

**Disclaimer:** Planning model. Accounting treatment of write-downs, scrap and supplier settlements depends on your policies and local rules.

## Content

**Intro:** Before an engineering change is released, someone has to answer a simple question: what do we lose if the old component stops being used today? This calculator turns stock, WIP and open order quantities into a net loss estimate and a run-out time.

**Sections:**

#### How to use the calculator

**Body:** Take stock on hand from MMBE, WIP from your production orders and open quantities from the purchase order list. Enter the unit cost and estimate what share can be reworked or consumed in other products. Rework has a cost and the remainder has a salvage value, which may be zero. Add a cancellation charge for open purchase orders from supplier terms.

**Bullets:**

- Use plant level quantities, not company totals
- Check consignment and vendor owned stock separately
- Enter a conservative salvage value

#### The method

**Body:** Recovered value equals the reworked share times unit cost net of rework cost, plus the remaining share times salvage. Net loss is the book value of stock and WIP minus recovered value, plus the cost of cancelling open orders. Weeks to consume divides on-hand quantity by weekly consumption, and tells you whether a run-out date is realistic instead of an immediate cut-in.

#### Using the result in an ECN

**Body:** In SAP an engineering change number controls a date effectivity, so you can often pick the date at which the old component stops being used. If weeks to consume is short, set the effectivity to match and avoid the loss. If the part is safety critical or a regulatory change forces a hard date, the net loss is the cost of that decision and belongs in the approval record.

#### Common mistakes

**Body:** Forgetting subassemblies and finished goods that contain the old part is the most common error. Others include ignoring supplier cancellation windows, forgetting field stock held by distributors, and double counting open orders already reflected in expected receipts.

**Bullets:**

- Missing parts embedded in stocked subassemblies
- Ignoring supplier lead time that makes cancellation free
- Using standard cost when actual cost differs

**Cta:** Netray can help extract stock, WIP and open order quantities for every affected part of a change, so the exposure is calculated from live data instead of spreadsheets.

**Faq:**

#### Is this an accounting write-off calculator?

**Answer:** No. It estimates economic exposure to support the change decision. Accounting for inventory write-downs follows your policies and the applicable reporting standard, so confirm treatment with finance.

#### How do I handle a phase-in rather than a hard cut?

**Answer:** Use the weeks to consume figure to choose an effectivity date that lets the old component run out. The loss then falls close to the open purchase order cost only.

#### Does this cover finished goods?

**Answer:** Add the quantity of old component embedded in finished goods that cannot be reworked to the WIP field. Customer shipped units usually need a separate service decision.

#### What if the old part can return to the supplier?

**Answer:** Model it by raising the salvage percentage to the credit you expect, net of restocking fees. Treat it as an assumption until the supplier confirms in writing.

## Search terms

engineering change obsolescence cost, sap engineering change inventory impact, eco obsolete inventory calculator, sap ecn effectivity date, phase out stock calculator, component change write off, sap change number cost impact, engineering change financial exposure

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