Material variants are widely used with variant configuration to stock individual configuration of a configurable product. As anything in SAP can be made as complex as possible, material variants can also be setup as a simple stock part with non-configurable materials as part of its BOM. They can also be setup as a multi-level material variant with KMATs as part of its BOM structure at lower levels.
In order for a material variant to be setup with KMATs as part of its BOM structure, and also to enter or pass configuration to lower levels, SAP requires an user exit to be implemented first. EXIT_SAPLCUKO_009 has to be implemented to enable the multi-level configuration of material variants. This functionality is preferred where the product structure is a multi-level KMAT, but this functionality causes issues with production planning and execution when they need to be planned as stock parts or when they need to be part of inter-company transfers.
This functionality works as expected during the order entry process if the material variant is entered as is or variant matching functionality is utilized to replace configurable material with a material variant during order entry. As long as the material variant is manufactured as a true MTO process, lower level KMATs can be manufactured as they have access to CUOBJ of parent. But it defeats the purpose of material variants as most companies want to plan material variants so that they can be manufactured ahead of time to reduce lead times.
In order to plan and manufacture material variants with multi-level KMATs at lower levels, such as stock parts, SAP requires lower level KMATs to be flagged as Direct Production (Special Procurement 52), which gives them access to CUOBJ of material variant. If lower level KMATs are not flagged for Direct Procurement, BOM explosion for KMATs will fail as they cannot gain access to CUOBJ of the material variant.
Example 1: KMATs not setup for Collective Production orders or Direct Production (Special Procurement 52). As shown below, all KMATs will not be able to perform a BOM explosion as the demand for KMAT is being generated from a stock planned order for material variant.
Example 2: KMATs setup for Collective Production orders or Direct Production (Special Procurement). In this scenario all KMATs planned or production orders have access to leading/superior order which is stock planned order for material variant and consists of CUOBJ.