Here in this post we will configure SAP consignment & explain the consignment process in detail.

1. What is Consignment

Consignment is a business arrangement where vendor left the goods in the possession of an authorized third party to sell.

Consignment involves a consignor, who is the owner of the goods and provides items to a third party (who is called consignee) to sell on their behalf. 

The consignor retains ownership of the goods until they are sold

2. SAP Consignment Process

If we transform the consignment process from the business language to the SAP language, below will be the salient point of the SAP consignment process

• In the SAP Consignment process, suppliers delivers the goods at the buyer location, but retains ownership until goods are consumed.
• Since ownership is retained by the suppliers at the time of goods delivery, so no financial obligation of the buyer for the goods supply into their premises by seller.
• Buyers take the ownership of the goods when goods is removed for consumption.
• Since in the vendor consignment process we (our car company) is buyer so if we want to withdraw the vendor consignment stock, there are subsequent two processess
  • Transfer the goods from the consignment stock to our own stock through MIGO/411K. This is the step when ownership of the goods is transferred and we are financially liable to pay the supplier for the goods.
  • Now the goods are issued further to process , for example- issue to cost center (201) or issue to production order (261) etc.

3. Configuration of Consignment Process

We will configure the consignment process in SAP. Lets first see what are the steps involved in the configuration of SAP consignment process.

3.1 Consignment Info record Creation

Since stock is owned by supplier so there is no connection between consignment stock and the purchase order

Hence the info record is the only master data from where process get the valuation

Start T-Code ME11

Input Supplier, Material, Purchasing Organization & Plant. Select the category as “Consignment”

Input the tax code & Price negotiated with supplier.

Save & purchasing info record is created.

3.2 Consignment Purchase Order Creation

Now we will create Consignment Purchase Order.

To create Consignment PO, have to use item category as “K”

--> Item category defines how the procurement of a material or service item is controlled.

--> The item category determines whether below are mandatory or admissible for an item:
      • Material number
      • Additional account assignment
      • Inventory management in the SAP system
      • Goods receipt
      • Invoice receipt

Let’s see the characteristics of Item Category “K”

Follow the below Path

SPRO –> Materials Management –> Purchasing –> Define External Representation of Item Categories

Select “K” and click on details

Consignment PO is created

Note : Please check the below post to check the creation of BP vendor used in the consignment Purchase order

Creation of BP Vendor for Vendor Consignment

3.3 Goods Receipt of the Consignment PO

Now we will GR of consignment PO by MIGO

GR done and as described above , no financial postings are done at GR

3.4 Consignment Stock

As described after GR, Non-Valuated Vendor consignment stock owned by Supplier is generated.

Check the stock in MMBE

3.5 Stock Transfer to Own

Now to use the stock we need to first transfer the stock to our own stock through 411K.

Once we execute this , The Ultimate Guide to Master SAP MM-FI Integration

--> We can directly issue the stock production order or cost center, if we know the details and ready to use the stock. Thus we can eliminate the step of transferring the stock from consignment stock to own stock

We have received the OBYC error

Please check the below post to resolve this error

The Ultimate Guide to Master SAP MM-FI Integration –  Scenario 4 :Transfer from Consignment Stock to Own

3.5.1 FI Document Generated

As stated above, FI document is not generated

3.5.2 Transfer Posting of stock

Stock is now available in the ownership of our company

Before this transfer stock was under a special stock category “K” i.e. “Consignment Stock”, check HERE

3.6 Consignment Invoice

Consignment invoice is done through a special process called ERS i.e. “Evaluated Receipt Settlement” instead of normal invoking through MIRO

Please check the below post for the details

How to Configure Logistics Invoice Verification in SAP S4 HANA – Invoicing for Consignment (ERS)

This completes the consignment Process.

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The post SAP Consignment: Configuration Guide and Process Overview appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

SAP MM deals with the procurement of material & services.

Mastering MM-FI integration is crucial in SAP financial control. Mastering MM-FI integration helps to ensure that financial statements accurately reflect the true cost of materials and inventory.

With this Ultimate Guide to Master SAP MM-FI Integration, we will help businesses to make informed decisions about procurement, production, and overall financial health.

Note: This post is solely for automatic determination of GL in MM (OBYC). To check the configuration of SAP MM-FI integration other than the OBYC, please see the below post

Ultimate guide to configure S4 HANA MM-FI Integration

--> When we procure material or services, we need to pay to the supplier of material or services. 

--> to pay to supplier correctly & timely it is very crucial to record the amount to be paid correctly & on time.

--> In simple terms, MM-FI Integration orchestrates the posting of values in tandem with different quantity movements.

SAP MM FI integration does this crucial work of keeping the correct & on time record of amount to be paid to the suppliers.

1. How MM-FI Integration Works

MM FI integration keeps records of values on the GL (General Ledgers)

Before we go into the detail , we need to first examine what are the expectations from the SAP MM FI integration in order to pay suppliers correctly & on-time.

1.1 Expectations & Solutions from MM-FI integration

Below are the typical characteristics of the business which should be taken care by MM FI integration.

1.1.1 Keep Record as Material Moves

in an organization, material moves due to several reasons. For example-

• Receipt of the material from external vendor
• Receipt of the material from production
• Issue of the material for production
• Scrapping of the materials

MM FI integration should capture this movement & record the values on GLs in real time as soon as material moves.

Below are the Elements used by SAP to fulfill this requirements

a) Movement Type

A movement type is a three digit/character identification key for a
goods movement. for example – 101 for Goods receipt, 201 for goods issue against cost center , 261 is goods issue against order etc.

b) Value String

Value string is assigned to each relevant movement type in inventory management. Value strings contain keys for relevant posting transaction such as BSX, WRX etc. For Example – movement type 101 contains the value string WE01

c) Transaction/Event keys

Transaction event key is to determine different GL for different business transactions. For example- BSX is used fort stock posting & BSV for change in stock value.

1.1.2 Keep Record for Materials having Different business Characteristics

Organizations has different type of materials like -Raw materials which are used as input for production process.

Semifinished materials might be produced in a production process which can be further consumed to produce final finishes product

MM FI integration should record the values on GLs according to the characteristics of the materials. For example – values for the Raw materials should be captured on the different GL account compare to the semi finished materials for the goods receipt against production order.

or value of the scrapping of the raw material should be captured on different GL account compare to the scrapping of the finished material.

Below are the Elements used by SAP to fulfill this requirements

a) Valuation Class

Valuation class if like further extension of material types.

For example – Material Type – RAW can have two valuation classes as 3100 – Raw material Domestic & 3110 Raw material Imported.

b) Account Modifier / Account Grouping Code

Account Modifier or Account Grouping Code is a three-character code used to differentiate the offsetting accounts

For example- Event is goods issue . But this goods issue can be for goods issue to a production order or for a scrapping etc.

So Account modifier or account grouping code is used for different scenarios like goods issue, scrapping, physical inventory to assign different accounts (for example, consumption account, scrapping etc.)

Another example

Business wants to post price differences to difference accounts in case of goods receipts for purchase orders compare to goods receipts for production orders.

--> Account grouping is used only for offsetting entries, consignment liabilities, and price differences.

1.1.3 Post Values as per the Org Structure

The two main organization structure elements in FI & MM are Company code & Plant.

Below elements are used by FI MM integration to post correct values here.

a) Valuation Area

Materials are valuated at plant level or at company code level.

• If valuation is at plant level, then valuation area is plant.
• If valuation is at company code level, then valuation area is company code.

Hint : Generally Valuation area should be plant otherwise it will be difficult to control the costing of the product.

b) Valuation Area Grouping

Valuation grouping code is used to determine the GL code for more than one valuation areas similar or different.

Our Car business has three plants -PA10, PA20 & PP10 (Valuation Area is plant).

Though PA10 & PA20 plants belongs to different company code compare to PP10, but they use the same chart of account.

We want to post transactions for these plants to the same accounts so we will group these three valuation areas under a single valuation grouping code.

We will group together all our three valuation areas. We will group our valuation areas (plants) PA10, PA20 & PP10 to 0001

This will avoid to configure account determination separately for all plants as shown below

Below is the path to group the valuation areas

SPRO –> IMG –> Materials Management –> Valuation and Account Assignment –> Account Determination –> Account Determination Without Wizard –> Group Together Valuation Areas

2. Configure SAP MM FI Integration

Now we are ready to configure the automatic account determination (SAP MM FI integration) by using the elements explained above

• Material Movement
  • Movement Type
  • Value String
  • Transaction/Event keys
• Different Material Type
  • Valuation Class
  • Account Modifier / Account Grouping Code
• Organization Structure
  • Valuation Grouping Code

To configure start transaction “OBYC”

Please note that for each business scenario we will explain

• Transaction/event keys associated with the business scenario.
• Account Modifier/Account grouping code (if relevant).
• GL used (click against each scenario to check the GL creation in detail).
• We have already configured Valuation grouping code as “0001”. Please click HERE to see the details

3. MM FI Integration Configuration for Different Business Scenarios

Now we will configure FI-MM integration (Automatic account determination) for different business scenarios

3.1 Scenario 1 :Goods Receipt Against Standard Purchase Order

Below are the values of the five elements to configure the FI MM Integration (automatic account determination) for the different events which happens as a result of Goods receipt against purchase order.

3.1.1 Increase in Inventory Value

The first event is – inventory value is increased by the value of the goods purchased. Increase in Inventory Value is posted on the GL accounts through Key BSX. This increase is value is captured & post as shown below.

a) For Raw Material (ROH)

Since the inventory value is increasing so it will be a debit (Dr) transaction

• Transaction Key – “BSX”
• Valuation Class – “3000”
• Account Modifier/Grouping Code – Not Applicable
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “113100000” (PPIN-Inventory – Raw Material). Click HERE for detail.

b) For Trading Material (HAWA)

Since the inventory value is increasing so it will be a debit (Dr) transaction

• Transaction Key – “BSX”
• Valuation Class – “3100”
• Account Modifier/Grouping Code – Not Applicable
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “113600000” (PPIN-Inventory – Trading Goods). Click HERE for detail.

c) For Semi-Finished Material (HALB)

Since the inventory value is increasing so it will be a debit (Dr) transaction

• Transaction Key – “BSX”
• Valuation Class – “7900”
• Account Modifier/Grouping Code – Not Applicable
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “113300000” (PPIN-Inventory – Semi-Finished Goods). Click HERE for detail.

d) For Finished Material (FERT)

Since the inventory value is increasing so it will be a debit (Dr) transaction

• Transaction Key – “BSX”
• Valuation Class – “7920”
• Account Modifier/Grouping Code – Not Applicable
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “113400000” (PPIN-Inventory – Finished Goods). Click HERE for detail.

e) FI MM Integration Configuration for Increase in Inventory Value

Start OBYC and select Transaction as “BSX”.

Input Chart of Account as “PPIN”

Now configure as per the values given above

Since Valuation Modifier 0001 is a grouping of our all three plants (Valuation area PA10, PA20 & PP10) so this configuration is completed for all the three plants.

Note

Please click HERE to check the creation of GL account 113600000

3.1.2 GR/IR Posting

In accounting if there is a Positive (+ve) entry then there has to be a negative (-ve) entry to clear it in further transaction.

Here since increase in stock value was a +ve entry , so -ve entry will be on GR/IR account

3.1.2.1 FI MM Integration Configuration for GR/IR Postings.

WRX is the accounting key to post on GR/IR

WRX is maintained at client level . It means it is same GL for all valuation class, valuation grouping code etc.

• Transaction Key – “WRX”
• Valuation Class – Not Applicable (but we can use)
• Account Modifier/Grouping Code – Not Applicable
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “221120000” (PPIN-Goods receipt/Invoice Receipt). Click HERE for detail

3.1.3 Price Difference Posting

How Price difference is posted

• For materials with price control indicator as ‘V’, while posting invoices, the difference will go to Price Difference A/c if the stock is not there.
• For materials with price control indicator ‘S’, while making GR (either against Purchase Order or otherwise), the difference between the PO price and the standard price will go to Price Difference.
• Production Order variances also gets posted to Price Difference A/c, with offset to COGM A/c.

--> We have created two Price variance (Difference) accounts

     552041000 - PPIN-LOSS PRICE VARIANCE
     552541000 - PPIN-GAIN PRICE VARIANCE

3.1.3.1 FI MM Integration Configuration for Price Difference.

For price difference we work with & without account modifier

Below are the rule for OBYC settings for PRD

• Account modifier is not used for Goods & Invoice receipts against Purchase Orders
• PRF for GR against Product Order & Order Settlement
• PRA for Goods Issues
• PRU for transfer postings.

Please see below the OBYC configuration screenshot for our car business

3.1.4 Freight Posting

If we use delivery cost in the PO price schema then we need to post the fright charges to the relevant GL accounts.

System will search the GL account corresponding to the posting key which is used against freight condition type.

Here system is searching GL account for Key FR1 because in our pricing schema we have used key FR1 for condition “FRC1”. And in PO we have used condition “FRC1″for freight charges. Please check in detail HERE

Please check the pricing schema from the link to the post given below

Ultimate Guide to MM Pricing in 5 Easy Steps

3.1.4 FI MM Integration Configuration for Freight Charges.

We will use GL 221730000-PPIN-Freight Clearing Account (MM)

Please click HERE to check the creation of GL account 221730000 step by step

3.1.5 Scenario 1: Testing

Now we will test for the FI-MM integration configuration as done above for scenario 1

3.1.6 PO Price Detail

We have posted goods receipt for a PO of Finish Material number 12 (Finished Car Model D)

Below is the detail Price break up of the 10 EA in PO

Base Price (from Info Record) =99900 USD
Surcharge (Manually Entered)  =9909 USD 
                                --------------------
Net Value (Base for Taxes)        = 109890 USD
                              ---------------------
A/P Sales Tax 1 Inv.	6.000 %	= 6593.40 USD
A/P Sales Tax 2 Inv.	3.000 %	= 3296.70 USD
A/P Sales Tax 3 Inv.	1.000 %	= 1098.90 USD
                              --------------------   
Total Tax                                   = 10989 USD                                 
                              --------------------
Net Value (Including Taxes)      = 120879 USD
                              --------------------  
Freight (Manually Entered)       = 1000 USD 
            _______________________________________________
Actual Price                            = 121879 USD 
            _______________________________________________

3.1.7 Posting on the GL in FI Document

After GR system has posted FI document as shown below

3.1.7.1 Analysis of FI Document GL Postings

• Amount posted on the inventory is exactly same as material value in material master due to standard valuation
• The difference in the total value (minus freight) and material value is posted on the Price variance loss account as explained HERE
• Freight amount is posted to a separate Freight clearing account as explained HERE

3.2 Scenario 2: Initial Stock Load

Below are the values of the five elements to configure the FI MM Integration (automatic account determination) for initial stock load.

3.2.1 Increase in Inventory Value

Due to stock load inventory value will be increased. This increase is value is captured through transaction key “BSX” & post same as shown above in goods receipt against purchase order.

Click HERE to go to the relevant section

3.2.2 Offsetting entry to increase in Inventory Value

GBB is the accounting key for “Offsetting entry for inventory posting”. Further as explained previously account modifiers are used to tell the system against which account the offsetting entry to inventory should be accounted. Some example are -VAX: for goods issues for sales orders, VBR: for internal goods issues (for example, for cost center), VNG: for scrapping/destruction etc.

a) For Raw Material (ROH)

• Transaction Key – “GBB”
• Valuation Class – “3000”
• Account Modifier/Grouping Code – “BSA”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “339911000” (PPIN-Inventory – Initial Entry of Raw Material Balances). Click HERE for detail

b) For Trading goods (HAWA)

• Transaction Key – “GBB”
• Valuation Class – “3100”
• Account Modifier/Grouping Code – “BSA”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “339912000” (PPIN-Inventory – Initial Entry SF & Finish Goods Balances). Click HERE for detail

c) For Raw Material (HALB)

• Transaction Key – “GBB”
• Valuation Class – “7900”
• Account Modifier/Grouping Code – “BSA”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “339912000” (PPIN-Inventory – Initial Entry SF & Finish Goods Balances). Click HERE for detail

d) For Finished Material (FERT)

• Transaction Key – “GBB”
• Valuation Class – “7920”
• Account Modifier/Grouping Code – “BSA”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “339912000” (PPIN-Inventory – Initial Entry SF & Finish Goods Balances). Click HERE for detail

e) FI MM Integration Configuration for Initial Stock Load

As usual start OBYC. Select the account key GBB

3.3 Scenario 3 :Goods Issue Against Sales Order

When goods are issues against sales order, inventory is decreased and offsetting entry is posted against COGS (Cost of goods sold)

3.3.1 Decrease in Inventory

Due to goods issue, inventory value will be decreased. This is captured through transaction key “BSX” & post same as shown above in goods receipt against purchase order. The only difference is now it is credit (-ve) against earlier debit (+ve) in goods receipt.

Click HERE to go to the relevant section

3.3.2 Offsetting entry to decrease in Inventory Value

GBB is the accounting key for “Offsetting entry for inventory posting”. Further as explained previously account modifiers are used to tell the system against which account the offsetting entry to inventory should be accounted.

Here account modifier will be VAX: for goods issues for sales orders.

a) For Raw Material (ROH)

• Transaction Key – “GBB”
• Valuation Class – “3000”
• Account Modifier/Grouping Code – “VAX”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “550100000” (PPIN-Cost of Goods Sold Raw Material). Click HERE for detail

b) For Trading Material (HAWA)

• Transaction Key – “GBB”
• Valuation Class – “3100”
• Account Modifier/Grouping Code – “VAX”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “550200000” (PPIN-Cost of Goods Sold Trading Material). Click HERE for detail

c) For Semi-Finished Material (HALB)

• Transaction Key – “GBB”
• Valuation Class – “7900”
• Account Modifier/Grouping Code – “VAX”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “550300000” (PPIN-Cost of Goods Sold Semi-Finished Material). Click HERE for detail

d) For Finished Material (FERT)

• Transaction Key – “GBB”
• Valuation Class – “7920”
• Account Modifier/Grouping Code – “VAX”
• Valuation Grouping Code – “PPIN”
• Posting on General Ledger – “550300000” (PPIN-Cost of Goods Sold Finished Material). Click HERE for detail

e) FI MM Integration Configuration for Sales Order Goods Issue

3.4 Scenario 4 :Transfer from Consignment Stock to Own

When we transfer the consignment stock, a financial document is generated and we are financially liable to pay the supplier for the goods.

To determine the GL accounts for this scenario we need to configure the OBYC for transaction key “KON”

3.5 Scenario 5: Subcontracting Purchasing FI Integration

Subcontracting Process is a Special Procurement Process where a company outsources certain Manufacturing Processes to produce Sami fished or finished material to a Subcontracting Vendor.

Please check the below post for detail subcontracting process configuration & Testing

a) GBB+VBO

VBO is used to post GL for consumption of Stock material to vendor (543) – Receiving of material from subcontractor RM consumption

We have configured GL 551900000 (PPIN-Consumption – Subcontracting, w/o CE) for all the material types (Valuation Class 3000 for Raw Materials, 3100 for Trading goods, 7900 for Semifinished Goods & 7920 for Finished Goods

Configure GBB+VBO as per below

b) BSV

This key is used to configure Change in stock account – Subcontracting

We have configured GL 550200000 (PPIN-Cost of Goods Sold (Trade w/o Cost Element)

c) FRL

Accounting key FRL is used to post outside Processing Charges – subcontracting charges GL account

We have configured GL 665008500 (PPIN-Subcontracting Services)

3.6 Scenario 6 : Expense/Revenue from Material in Stock Transfer

we are transferring stock from one plant (PA10) to another (PA20). The material is valued at 1000 USD in PA10 while 1010 USD in plant PA20.

a) AUM

Material will be transfer with the valuation of sending plant . The difference in the price will be recorded in the separate account

We have configured as per below

• GL 552011000 (PPIN-Loss Inventory Transfer (Raw & Trade) for loss in transfer of Valuation Class 3000 (Raw Materials) & 3100 (Trading Goods)
• GL 552511000 (PPIN-Gain Inventory Transfer (Raw & Trade) for gain in transfer of Valuation Class 3000 for Raw Materials & 3100 (Trading Goods)
• GL 552013000 (PPIN-Loss Inventory Transfer (SF & Finish Goods) for loss in transfer of Valuation Class 7900 (Semi-Finished) & 7920 (Finished Goods)
• GL 552513000 (PPIN-Gain Inventory Transfer (SF & Finish Goods) for gain in transfer of Valuation Class 3000 (Raw Materials) & 3100 (Trading Goods)

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The post The Ultimate Guide to Master SAP MM-FI Integration appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

A Purchase Order (PO) in SAP MM (Materials Management) is one of the most crucial documents in procurement and supply chain management, ensuring seamless transactions between buyers and vendors.

In today’s fast-paced business environment, optimizing purchase order processing can lead to cost savings, improved vendor relationships, and streamlined supply chain operations.

This guide will cover everything you need to know about SAP MM purchase orders, including PO creation, types, approval workflows, integration with accounts payable (AP), and best practices for automation.

Whether you’re an SAP consultant, procurement manager, or business analyst, understanding purchase orders in SAP MM can help enhance procurement efficiency, reduce maverick spending, and improve inventory management.

Additionally, we’ll explore how automating POs in SAP MM can reduce errors, ensure compliance, and optimize cash flow—key factors that drive enterprise profitability and cost optimization.

1. Why Purchase Orders Matter for Businesses

• For companies leveraging SAP ERP, a well-defined purchase order process is essential for:
• Reducing procurement costs through better vendor negotiations
• Avoiding duplicate purchases and ensuring accurate invoice matching
• Ensuring compliance with contract terms and supplier agreements
• Enhancing cash flow management through optimized payment terms

With SAP S/4HANA, businesses can further improve their procurement automation, invoice reconciliation, and supplier collaboration—making it easier to manage direct and indirect procurement processes effectively.

Purchase Order is a part of Procure to Pay (P2P) cycle of SAP

Procure to Pay (P2P) cycle starts from Purchase Requisition (PR) and finish with payment to the vendor.

Below are the components of P2P Cycle

Purchase Requisition --> Purchase Order --> Good Receipt --> Invoice Receipt --> Vendor Payment

We will start with configuration of Purchase Order in this post.

Also we will have a look on different types of Purchase Orders, their goods receipt as well as respective invoice receipt.

2. What is Purchase Order in SAP

Purchase order in sap is a type of legal contract which binds the supplier to supply the described materials or services & purchaser to pay after receiving the described materials or services.

So purchase order should contain

• A Vendor/Supplier.
• Purchase Organization structure like -Who is the contact (Purchasing group/Purchasing organization etc).
• Material details.
• Delivery date.
• Quantity
• Price
• Delivery cost
• Taxes.
• Delivery address

2.1 Different Purchasing Scenarios in SAP

There are different types of purchase orders in SAP.

• Scenario 1: Standard Purchase Order
• Scenario 2: Consignment Purchase Order
• Scenario 3: Third Party Purchasing
• Scenario 4: Stock Transport Order (STO)
• Scenario 5: Subcontracting Purchase Order

3. Scenario 1: Standard Purchase Order

Standard purchase order specifies the materials being procured, their quantity, agreed price and delivery date.

Standard PO does not has and type of special purchasing like subcontracting or consignment purchasing where purchaser is not charged till they withdraw the materials for actual consumption.

Configuration of standard purchase order

3.1 Define Document Types for Standard Purchase Orders

Purchase Orders are managed as document types in SAP

Document types decides a lot of factors.

For our car business, we will use standard document type “NB” for standard purchase orders

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Define Document Types for Purchase Orders

Select “NB” and click on “Allowed Item Categories”

3.2 Item Category

Item category defines how the procurement of a material or service item is controlled.

For example – Item category determines the field selection or determines whether a goods receipt or invoice receipt is to follow.

There are below item categories available

• Standard
• Consignment
• Subcontracting
• Third-party
• Stock transfer
• Service
• Material unknown
• Material group
• Text

Examples

Some Examples of Item category control
--> "Standard" Item Category requires goods receipts and invoice receipts.
--> In "Consignment" item category, invoice receipts are not allowed.
--> For item category "Subcontracting", components to be provided are presented on a screen.

We have selected three item categories which are allowed with our standard purchase order document type “NB”

Note : Item Categories can not be configured. These are maintained by SAP, therefore we cannot change them. However, we can change the “External Representation” of PO item categories in IMG.

3.3 Confirmations

Confirmations represents the notification from the vendor to the purchaser regarding the status of a purchase order.

Confirmation covers all types of communications sent by a vendor (external supplier) to the purchaser.

A vendor confirmation

• Can be an order acknowledgment,
• Can be a loading or transport confirmation
• Can be a shipping notification.

Confirmations enable the purchaser to plan more exactly due to receipt of up-to-date information the expected delivery. from the vendor.

3.3.1 Define External Confirmation Categories

Extenal confirmation categories are sent by the vendor through EDI etc.

Example of confirmation categories sent by vendor

• AB-Order Acknowledgment
• CH-PO change
• GW-Rough GR
• LA-Inbound Delivery

3.3.2 Define Internal Confirmation Categories

In this step, an external confirmation category is assigned to each internal confirmation category.

This assignment is required for system to be able to recognize which confirmation category represents order acknowledgments and which one represents shipping notifications.

This is configured as per below screenshot

SPRO –> Materials Management –> Purchasing –> Confirmations –> Define Internal Confirmation Categories

Please note the different delivery types

3.3.2.1 YEL – Inbound Delivery Customized for PPL

So if the vendor is sending confirmation of type “LA” then system will create an inbound delivery of delivery type “YEL”

Note : Please check the inbound delivery type configuration in detail

SAP Delivery Guide: Outbound to Inbound

3.3.3 Set Up Confirmation Control

Confirmation control in the form of Confirmation control key for PO items can be defined with just one confirmation category (e.g. shipping notification) or a confirmation control key covering several confirmation categories (order acknowledgment, loading confirmation, shipping notification).

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Confirmations –> Set Up Confirmation Control

Now select Confirmation control key “0004” and click on confirmation sequence.

So as per above configuration, if we assign confirmation control key "0004" in our PO item, we must create inbound delivery to do the goods receipt instead of MIGO.

3.4 Create Standard Purchase Order

We will create a standard purchase order now

Start ME21N

3.4.1 PO Header

First fill the PO header fields as shown in the below screenshot

• Purchasing Document Type – NB (Standard)
• Vendor-PA01VEN03 (Levine Auto Parts Norwalk).
• Purch.Org-PA10
• Purchasing Group -PA
• Company Code -PA10

Note :

Please click HERE to check the step by step BP vendor creation in detail

Please click below link to check the MM Organization structure used in PO creation- Configure SAP S4 HANA Material Management Organization Structure in 5 Minutes

3.4.2 PO Line Item

Below main fields are available to input in PO line item

• Item Category – Blank as we are creating standard PO as described above.
• Material -66
• Plant -PA10
• SLOC-PP1A (Defaulted from Material Master)
• PO Quantity – 1 PC
• Price – 14 USD/PC (From info record)

Note :

Please click HERE to check the step by step material creation in detail

3.4.3 PO Line Item Details

There are several tabs giving different details for PO line item.

We can select the line item in drop down for which we are checking the details as shown in the below screenshot

Let,s see one by one

3.4.3.1 “Material Data” Tab

Main information in this tab are batch & “Info-update” indicator

3.4.3.2 “Quantities/Weight” Tab

In this tab material information related to weight and volume flows from the material master records.

Also system multiplies weight & volume from the material master by the PO quantity to show the total PO weight & volume.

3.4.3.3 “Delivery Schedule” Tab

In this tab , system shows delivery date and related information. for STO this tab shows schedule line type information with committed quantity as per the availability check.

3.4.3.4 “Delivery” Tab

In this tab system shows further information related to delivery like what is the under-delivery or over-delivery tolerance, reminders etc. All these information flows from the purchasing value key.

Some very important information is shown in this tab as described below

a) Stoke type

The goods will be receipt in “Unrestricted” or “QI” or “Blocked stock” as per the selection here.

Stock Type  can be manually selected or if configured, flows from the QM view of the material master.

b) Goods Receipt Indicator

This indicator specifies if goods receipt is expected.

GR Indicator comes as active by default based on the Item Category and Account Assignment Category.

--> In case of Standard Item Category w/o Account Assignment Category, GR Indicator comes by default 

--> In case of Account Assigned POs, default settings depends on the configuration of Account Assignment Category

c) Goods Receipt, Non-Valuated

Specifies that the goods receipt for this item is not to be valuated at GR. If selected then valuation for this item will be done at the time of invoicing.

This flows from account assignment category configuration

d) Delivery Completed” Indicator

if this is selected then it means system is not expecting further delivery for this item i.e this item is closed.

3.4.3.5 “Invoice” Tab

This tab has very important information.

a) Invoice receipt indicator

This indicator specifies if an invoice receipt is expected for the purchase order item.

If  Invoice receipt indicator is not set, the goods are to be delivered free of charge

This indicator flows from
--> Define External Representation of Item Categories , under Control invoice receipt section.

--> For account assigned PO it will come from account assignment category.

b) Final Invoice Indicator

Indicates that the last invoice from a supplier has been received for an item with no further invoice is expected.

c) GR-Based Invoice Verification Indicator

This Indicator specifies goods-receipt-based invoice verification for a purchase order item or invoice item.

If this indicator is selected, that means invoice for the order item can be entered with reference to a GR document or a delivery number entered at GR.

Setting of GR-Based Invoice Verification Indicator means a separate invoice item is created for each goods receipt. 

That means checking of price and formal accuracy of the invoice is performed at this item level.

d) Tax Code

Here tax code which is unique per country is specified. For each tax code, tax rate is stored and calculation is done.

Note :

Tax code is automatically determined in this PO tab depending upon the configuration done. Similarly system calculate the tax amount too automatically.

Please check the below post for step by step details of MM input tax

How to configure SAP S4 HANA MM Tax in 7 Easy Steps

3.4.3.6 “Conditions” Tab

In this tab system calculates landing cost of the material depending upon the base price, discount/surcharges, tax, delivery cost etc.

Please click HERE to see PO Price components in details

3.4.3.7 “Delivery Address” Tab

In this tab, delivery address which is generally plant address is copied from the plant configuration and presented.

Please note highlighted "Supplier" with "SC Supp" fields in the above screenshot, which can eliminate one step from the subcontracting purchasing cycle. 

If we select this indicator and input subcontracting supplier , then system directly provide the purchased materials to the subcontractor , which can be seen as special stock "O" in the stock reports of the plant.

3.4.3.8 “Confirmations” Tab

Here confirmation control in the form of Confirmation control key for PO items is defined with just one confirmation category (e.g. shipping notification) or a confirmation control key covering several confirmation categories (order acknowledgment, loading confirmation, shipping notification).

As configured earlier, we have assigned confirmation control key “0004” in our PO item.

So we have to create inbound delivery to do the goods receipt instead of MIGO.

PO is created now

3.4.3.9 Expected Error in PO Creation & Resolution

• Error M8215 -Maintain tolerance limits for tolerance key PE while creating PO. Please click HERE to check how to resolve this error.
• Error KI102-Control indicators for controlling area PPIN do not exist. Please click HERE to check how to resolve this error.

3.5 Goods Receipt

Since we have assigned confirmation control key to our PO line item , therefor we can not do the goods receipt by MIGO.

We have to create inbound delivery and do the goods receipt based on the inbound delivery.

3.5.1 Inbound delivery creation

To create inbound delivery start VL31N

Please note Item category is determined as “YELN” in the above inbound delivery.

Input the batch number.

Click on Header details and select “Administration” tab. You will note that delivery type is “YEL” as specified in “Confirmation Control Key”

Note

--> Please click HERE to check "Receiving Point" determination configuration in Inbound Delivery

--> Please click HERE to check Item category "YELN" determination in Inbound Delivery

save the inbound delivery

3.5.2 Display Inbound Delivery

you can display inbound delivery through VL33N

or alternatively Inbound delivery number is updated in the “Confirmation” tab of the PO line item as shown in the below screenshot

Double click on the inbound delivery and system will take you to display inbound delivery VL33N.

3.5.3 Good Receipt 1st Step -Inbound Delivery Put-away

Inbound delivery based goods receipt is done in two steps. First step is put away of the goods and second step is Goods Receipt.

Start VL32N & input you delivery number . Press enter

Click on “Stock Placement” tab

input put-away qty as 1

--> Please note that you need to put-away full delivery quantity in order to be able to do goods receipt.

--> If lesser quantity from delivery quantity is available then change the delivery qty equal to the qty available for put-away.

3.5.4 Good Receipt 2nd Step -Inbound Delivery GR

As soon as inbound delivery put-away quantity is entered , put-away status is changed from “A-For put-away” to “C-Compl. put away”

Now press on “Post Goods Receipt”. Goods Receipt is completed

Document flow as well as PO history is updated.

Note

With the goods receipt completion, Stock is posted in the inventory with automatic FI postings in the background to the relevant accounts. Please see the below post to check in all the consequences of goods receipt in detail.

Ultimate guide to configure S4 HANA MM-FI Integration

3.6 Invoice Verification

After PO & Good receipt, the next step in P2P cycle is invoice verification

Since invoice receipt indicator is selected in PO (flowing from item category) so invoice is expected for this PO (item).

Please check the below post to see the configuration & testing of Invoice verification

How to Configure Logistics Invoice Verification in SAP S4 HANA

4. Scenario 2: Consignment Purchase Order

Consignment is a business arrangement where vendor left the goods in the possession of an authorized third party to sell.

Please check the below post for set by step configuration of consignment purchasing

SAP Consignment: Configuration Guide and Process Overview

5. Scenario 3: Third Party Purchasing

In the third party Order processing , our business outsource the final product to a third party to sell it to customer.

There are two type of third party processess

5.1 Scenario 3.1: Third Party Sales

Upon receiving third party order order from the customer, business passes it to the third party vendor who delivers the goods to the customer, and invoice to our business. Our business bills the customer for the goods supplied.

5.2 Scenario 3.2: Third Party Sale with Individual PO

Third-party with Individual Purchase Order is like Third Party Sales but with a difference. The difference is vendor sends the Finished materials to the Business instead of directly sending to the customer. After that our business sends the FG to the customer and send the invoice to the customer.

In this scenario, vendor does not send the invoice immediately with delivering the goods to customer. We ask vendor to send shipping notification after delivering the goods to customer. When we receive the shipping notification then we do MIGO and basing on MIGO quantity we raise invoice to Customer. Without vendor invoice we cannot raise billing to our customer.

Below is the process flow for SAP Third Party Sales with Individual Purchase Order

Please check the below posts to check both the third party sales process step by step in detail

The Ultimate Guide to SAP Third Party Sales

An Ultimate Guide to SAP Third Party Sales with Individual Purchase Order

6. Scenario 4: Stock Transfer Order (STO)

tock transfer in SAP play a crucial role in effective inventory management by enabling the seamless movement of goods between storage locations, plants, or even company codes.

Whether we are transferring stock within the same plant, across different plants, or between different organizational units, SAP stock transfer solutions like 1-step and 2-step transfers, offers flexible and robust solutions to manage these transactions efficiently.

SAP provides multiple stock transfer methods, including one-step and two-step transfers, stock transport orders (STO), and intercompany transfers, each catering to specific business needs.

Stock transfer in SAP can be classified into two types from a broader prospective. These can be further divided into several other types.

Please see below this in pictorial form

6.1 Stock Transfer with MIGO (Without STO, Delivery & Billing)

This is the simplest form of stock transfer in SAP.

In this scenario, no stock transfer order or purchase order is created.

Stock transfer is directly initiated in MIGO without any predecessor document like STO or PO.

Please see below these types of stock transfer in pictorial form.

6.2 Stock Transfer With Stock Transport Order/Purchase Order (STO/PO)

Here stock transfer process starts with a document i.e. stock transport order, which is a kind of purchase order.

There are several types of Stock Transfer With Stock Transport Order/Purchase Order (STO/PO)

All types of Stock Transfer With Stock Transport Order/Purchase Order (STO/PO) is given below in pictorial form

Stock Transfer With Stock Transport Order/Purchase Order (STO/PO) can be further divided into three parts

6.2.1 Stock Transfer with STO but without Delivery & Billing

This type of STO is used when transferring stock between two plants within the same company code. It ensures better inventory tracking and valuation compared to a standard transfer posting.

Below is the pictorial representation of this type of STO

Please see the below post for the details of configuration & testing of STO without Delivery & Billing

SAP Stock Transport Order Without Delivery: Process, Configuration & Guide

6.2.2 Stock Transport Order with Delivery (STO with SD Delivery Process)

This STO type is used when stock transfers require a delivery document generated via SAP SD (Sales & Distribution Module). This is common when warehouse teams handle goods movement through outbound deliveries.

This setup is particularly useful for intra-company transfers where financial transactions are not required

Please see the below picture to see the pictorial representation of this stock transfer method

Please see the below post for the details of configuration & testing of STO without Delivery & Billing

SAP Stock Transport Order with Delivery: Setup, Execution & Key Insights

6.2.2.1 Special Scenario

We have configured a Special Scenario for Stock Transfer with STO/PO – STO with delivery – Configuring 1-step & 2-step between the same plants

Please see the details of this scenario in the below post

Maximize SAP Efficiency: Configure 1-Step STO with Delivery Alongside 2-Step STO Between the Same Plants

6.2.3 Inter-Company STO with Delivery & Billing

Intercompany STO is used when transferring stock between plants in different company codes. It requires a more complex process as it involves intercompany billing and affects financial accounting entries.

Please see below the pictorial representation of this method of stock transfer

Please see the below post for the details of configuration & testing of SAP Intercompany STO Process with Delivery & Billing

How to Configure SAP Intercompany STO Process with Delivery & Billing

Business card photo created by ijeab – www.freepik.com

The post All About Purchase Orders in SAP MM appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

Logistics Invoice Verification in SAP S4 HANA is the last step in MM Procure to pay cycle.

In this post

• We will first see in detail How to Configure Logistics Invoice Verification in SAP S4 HANA .
• Then we will post the invoice depicting different practical scenarios.

Under Logistics Invoice Verification, we will configure system  required for the following areas

-->Processing invoice receipts for different practical scenarios like with Freight, with Taxes etc.

-->Posting to Financial Accounting for different practical scenarios like with Freight, with Taxes etc.

1. Logistics Invoice Verification Configuration

Below configuration is a minimum required configuration to process the invoice receipts.

Note : If you receive below error while creating PO, this indicates missing logistics invoice configuration.

We will start now logistic Invoice related Configuration.

Please check the below post for Purchase Oder & Goods Receipt related configuration & process.

All About Purchase Orders in SAP MM

1.1 Tax Treatment in Invoice Reduction

In this step we configure how taxes are to be posted for invoice reduction.

In case of complaint, system creates two accounting documents for invoice reduction. The first document (original document) contains the invoice data sent by the supplier. The second document (complaint document) contains information about the invoice reduction.

• If the tax reduction is carried out in the complaint document, the taxes in the original document correspond to those in the supplier invoice. The tax amount for the invoice reduction is credited in the complaint document.
• If the tax reduction is carried out in the original document, the taxes in the original document are reduced by the tax amount for the invoice reduction. In this case, the complaint document does not contain any tax postings.

Below is the setting for our company codes

SPRO –> Materials Management –> Logistics Invoice Verification –> Incoming Invoice –> Tax Treatment in Invoice Reduction

1.2 Maintaining Default Values for Tax Codes

Here we define for each company code which tax code(s) the system suggests when incoming invoices are entered.

Default value is maintained as “I0”

Similarly it is maintained for PP10 Company code

1.3 Configure How Exchange Rate Differences are Treated

Here we define how exchange rate differences are to be calculated for incoming invoices in foreign currencies.

We can choose either the value of the exchange rate as the calculation method

• Either at the time of goods receipt
• Or at the time of the invoice receipt

For our company codes we have chosen at the time of invoice receipt

1.4 Set Tolerance Limit

In this activity, we specify the tolerance limits for each tolerance key for each company code.

When processing an invoice, the system checks each item for variances between the invoice and the purchase order or goods receipt. The different types of variances are defined in tolerance keys

Tolerance limit maintained for the below keys for both the company codes

• AN Amount for item without order reference
• AP Amount for item with order reference
• BD Form small differences automatically
• BR Percentage OP Un variance (IR before GR)
• BW Percentage OP Un variance (GR before IR)
• DQ Exceed amount: quantity variance
• DW Quantity variance when GR qty = zero
• KW Var. from condition value
• PP Price variance
• PS Price variance: estimated price
• ST Date variance (value x days)
• VP Moving average price variance

1.5 Setting Check for Duplicate Invoices

In this step, we configure if the system is to check for duplicate invoices for each company code upon entering invoices. This check is to prevent incoming invoices being accidentally entered and paid more than once.

The accounting documents are checked first, followed by documents from Logistics Invoice Verification (only invoices that are incorrect, on hold, or parked, or those entered for verification in the background). The system only checks for duplicate invoices if a reference document number is specified upon entering the invoice.

Below settings are made for our PA10 & PP10 Company codes

1.6 Setting Configure How Unplanned Delivery Costs Are Posted

Here we specify how the system posts unplanned delivery costs amount the below given two options.

• Distributed among the individual items in proportion to the item amounts invoiced so far and the item amounts in the current invoice.
  • The amounts determined are added to the respective item amounts.
  • The amounts determined are posted in a separate line for each item.
• Posted in a separate line to a separate general ledger account. We must enter a specific tax code for the posting. We can define a default value in the Maintain Default Values for Tax Codes activity.

For our company codes, unplanned delivery costs are to be distributed among invoice items

1.7 Amount authorization for Customers/Vendors in company code

To resolve this issue,

Financial Accounting -> Accounts Receivable and Accounts Payable -> Business Transactions -> Outgoing Payments -> Manual Outgoing Payments -> Define Tolerances (Vendors)

Define tolerance for company code PA10

Financial Accounting -> Accounts Receivable and Accounts Payable -> Business Transactions -> Incoming Payments -> Manual Incoming Payments ->Define Tolerances (Customers)

Logistics Invoice verification settings are completed. Now we will post the invoice in the system for different scenarios

2. Invoice Posting for the Different Scenarios

We will now post invoice fist for main material. As vendor is responsible to collect the A/P sales tax , so at the time of incoming invoice posting in SAP S4 HANA MM module , Vendor Account will be debited cost of material + Applicable A/P Sales tax (MM input Tax). You can Check the post for detail How to configure SAP S4 HANA MM Tax in 7 Easy Steps

2.1 Invoice for Material &Non-Deductible Tax

Go to MIRO and take reference to your PO

Please check the below post for the PO price components

Ultimate guide to configure S4 HANA MM-FI Integration

Base Price (from Info Record)  =14 USD / PC
Surcharge (Manually Entered)  =1.4 USD / PC (10%)
                                --------------------
Net Value (Base for Taxes)        =15.4 USD / PC
                              ---------------------
A/P Sales Tax 1 Inv.	6.000 %	= 0.92 USD
A/P Sales Tax 2 Inv.	3.000 %	= 0.46 USD
A/P Sales Tax 3 Inv.	1.000 %	= 0.15 USD
                              --------------------   
Total Tax                                   = 1.53 USD                                 
                              --------------------
Net Value (Including Taxes)      = 16.93 USD / PC
                              --------------------  
Freight (Manually Entered)       = 1 USD / PC
            _______________________________________________
Actual Price                            = 17.93 USD / PC
            _______________________________________________

Note

As vendor is responsible to collect the A/P sales tax , so at the time of incoming invoice posting in SAP S4 HANA MM module , Vendor Account will be debited cost of material + Applicable A/P Sales tax (MM input Tax).

So as per the above PO price components Material price + Taxes i.e. 16.93 USD should be debited to vendor

If everything is OK then Balance should be in green and 0.00 shown in above screenshot

Click on “Simulate” and system will show the FI Postings.

Post the invoice and PO history will be updated

2.2 Invoice for Planed Distribution Cost

We have entered Planned delivery cost (Freight) in our purchase order. At goods receipt, a provision is posted to a freight or customs clearing account. This account is cleared when the invoice is posted.

Details of planned delivery cost in our PO are given in Ultimate guide to configure S4 HANA MM-FI Integration

From PO

From GR FI document

Now post the invoice for planned delivery cost

Go to MIRO and select Planned delivery cost

Balance is zero & in green. Now click on “Simulate”

As soon as we post the invoice PO history is updated once again.

2.3 Invoicing for Consignment (ERS)

Since for consignment PO, agreed rate is in info record so it can not be different in invoice.

Please check the below post to know the consignment process in detail

SAP Consignment: Configuration Guide and Process Overview

So in the consignment process instead of vendor raising& sending invoices to you, vendor will receive a settlement from us based on the consumption (Withdrawal from the consignment stock)

--> So for the reasons given above, consignment process completes by a special invoicing process called "ERS" i.e. "Evaluated Receipt Settlement" through MRKO instead of invoicing through MIRO

First check with display radio button that all is OK

Now settle and System will give the document number as well as the message describing “Document Created”

Check the Financial document created

2.3 Invoicing for Subcontracting

We will post the invoice from subcontracting for their service charges for providing the subcon services

Start MIRO and refer Subcon PO as shown in the below screenshot

Since balance is zero so all OK and post the invoice

It has created the below finance document

2.4 Invoicing for Third Party Sales

As soon as invoice from the vendor arrives, The invoice verification with reference to purchase order is created. The value and quantity (if GR is done) is proposed by the system.

Below Accounting Document is created

Please check the detail step by step end to end third party process in the below post

The Ultimate Guide to SAP Third Party Sales

2.5 Invoicing for Third Party sales with individual PO

Since in this scenario GR is done as standard PO, so invoice will be done as standard GR.

Below Accounting Document is created

Please check the detail step by step end to end third party sales with individual PO process in the below post

2.6 Invoicing for Inter-Company STO with Billing

In the process of “Inter-Company STO with delivery & Billing”, the billing of the sender plant will be as vendor invoice in the receiving plant.

Start MIRO and take reference of the intercompany STO

Below accounting document will be posted at the time of invoicing

Image Courtsey : Templates vector created by freepik – www.freepik.com

The post How to Configure Logistics Invoice Verification in SAP S4 HANA appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.

In this post we will configure all aspects of SAP S4 HANA MM Pricing Procedure. Before starting S4 HANA MM pricing procedure , we will have a look at the pre-requisite configuration, which is required before configuring Pricing Procedure in SAP S4 HANA

1. Pre-Requisite Configurations

Below diagram is showing the configuration (& related posts) required to complete before starting configuration of S4 HANA pricing procedure.

Link to each post is given below

• 1. Configure SAP Finance Organization Structure in 5 Minutes
• 2. Configure SAP S4 HANA Material Management Organization Structure in 5 Minutes

Once we have completed all the above configurations, we are ready to configure MM Pricing Procedure.

2. Understanding of SAP S4 HANA MM Pricing Procedure

SAP S4 HANA MM Pricing Procedure can be Bifurcated in Two Parts

2.1 Technique behind S4 HANA MM Pricing Procedure (Condition Technique)

To understand SAP S4 HANA MM Pricing Procedure, We need to first have an overview of the working of the pricing conditions in the MM. To understand this we need to understand condition technique. Pricing is broadly used to describe the calculation of price & costs. During Purchase Order processing, the system uses the condition technique to determine automatically the various cost components like discounts, surcharges, freight etc.

2.2 Determination of Pricing Procedure

Let’s start with technique behind working of pricing procedure

3. Condition Technique in S4 HANA MM Pricing Procedure

Condition technique involves the following below elements in sequence.

• Condition Types
• Access Sequences
• Condition Tables
• Calculation Schemas

Let,s review all the four elements of condition technique one by one

4. Condition Type

In SAP S4 HANA MM Pricing Procedure, the first step in defining pricing is configuration of condition types.

We create different type of condition types representing discounts, surcharges, freight, cost, taxes etc. to complete our pricing schema.

Let’s review the configuration of condition type and all the fields associated with it.

4.1 Fields in “Control Data 1” Section of Condition Type Configuration

Below fields are available in control data 1 section of condition type configuration

4.1.1 Condition Class

This field determines the category of condition type like : Price, Tax. Discount or surcharge etc.

The most common classes are as follows

4.1.1.1 Condition Class “B”

If a condition type is being configured for gross pricing then condition class “B” will be used.

4.1.1.2 Condition Class “A”

If a condition type is being configured for Quantity or weight discount then condition class “A” will be used.

4.1.1.3 Condition Class “D”

If a condition type is being configured for taxes then condition class “D” will be used.

4.1.2 Calculation Type

This field determines how the condition type will be calculated.

The most common used calculation types are

“B”-For Fixed Amount,

“A”-For percentage

“C”-For quantity

“G” for our own formula

if we use calculation type “G” in a pricing procedures, a condition basis formula and a condition value formula must be assigned to this calculation type.

Note : The formula define here (in MM pricing procedure) works the same way in SD. We use VOFM for the same.

4.1.3 Condition Category

Condition Category is the classification of condition types such as FREIGHT, TAX, PRICE, DISCOUNT.

The condition categories are always hardcoded.

4.1.3.1 Condition Category “F -Freight” vs “B -Delivery costs”

If the vendor is same for Main Purchase Order & Freight then we can select the F category

But if the transportation vendor is different then the Purchase order vendor then we need to select the “B” delivery cost condition category

With condition category “B – Delivery Cost”, we will have the option of entering delivery vendor (other than main vendor) for that condition type in PO and also option of posting this cost to different G/L account based on account key setting in Accrual column in MM pricing procedure and G/L account assignment in OBYC for that account key.

Hint

Condition types are differentiated broadly using the condition class and more definitively using the condition category.

4.1.4 Rounding Rule

Rounding rule determines the rounding up value of the condition type. If the value is set up as “Commercial” then value is rounded off, for example $9.364 round off to $9.36

4.1.5 Plus/Minus Value

This configuration determines if condition type value is treated as positive value or negative value.

Negative values are discounts and positive values are surcharges.

Note : A blank value represents a positive.

4.2 Fields in “Group Condition” Section of Condition Type Configuration

Below three fields are present in this section of condition type configuration

4.2.1 Group Condition

if this field is checked , then such condition type is determined based on the cumulative value of the line item. for a group condition, all the values of the relevant items (price, order quantities etc) are added and then total is used as condition bases.

For example : a PO has several line items . There is a discount group condition in our PO which gives 10% discount if PO value is exceeds by 1000$ for a particular material group items. in this case if total value of this material distributed in several line item is calculated and compared against 100$ in order to arrive on discount decision, though individually such PO line item may not qualify for discount being less than $1000 order value.

4.2.2 Rounding Difference Comparison

if this field is checked then system compares the total of line items condition values to the condition value at the header level and difference is added to the largest item.

4.2.3 Group Condition Routine

This is used to calculate any alternative value as base to determine the scale value. For example – Group condition base can be a total of all line items weight which belongs to a particular material groups.

4.3 Fields in “Changes which can be made” Section of Condition Type Configuration

Below fields are given in this section of condition type configuration. Let’s review all the fields one by one

4.3.1 Manual Entries

This fields controls the priority of a condition type between manual entries and determined automatically .

Options available are “No Limitations”, or “Automatic entry has priority” which means cannot be entered manually, or “Manual Entry has priority” which means if entered manually, system does not check if a condition record exists and final option “Can not be processed manually”.

4.3.2 Header Condition/Item Condition

The selection of these checkbox determines if the condition type is a header condition type or item condition type.

4.3.3 Delete

This specifies if deletion of this condition type is allowed from the documents

4.3.4 Value

This field controls whether the value can be overwritten on the sales/purchase documents

4.3.5 Calculation Type

This field controls whether we can change the calculation type while processing the document

4.3.6 Amount/Percentage

Controls whether amount or percentage can be changed during document processing.

4.3.7 Quantity Relation

This field controls if conversion factor for the unit of measure of this condition type can be changed during document processing.

4.4 Fields in “Master Data” Section of Condition Type Configuration

This section has below fields.

4.4.1 Ref. Condition Type, Ref. Application & Pricing Procedure

A pricing condition type sometimes can have a reference to another pricing condition type. We will understand the use of all the above fields through a real scenario

Our requirement is that a pricing condition should flow from PO to Billing for a STO.

In Billing Type, the Pricing Procedure will be SD Pricing Procedure with normal Price Determination settings. But we will not maintain condition Records (through VK11) but we will set Reference Condition , Reference application & reference pricing procedure while configuring this Condition Type (V/06) under “Master Data” Section of Condition Type Configuration as shown in above screenshot.

Now System will access the Condition Record of the Referred Condition Type & reference Application (M – Purchasing).

The other example is a requirement that the Freight paid to Shipment Vendor should be exactly same as one charged to Customer in Sales Order / Invoice. Thus we will use Reference Condition to fulfil this requirement.

4.4.2 Condition Index

This field controls if condition index will be updated or not. we can select this for faster searches.

4.5 Fields in “Scales” Section of Condition Type Configuration

This section of the condition type configuration has several scales related fields. We will review all the fields here.

4.5.1 Scale Basis

if no scale type is entered (if this field is blank then it means Scale “Can be maintained in condition record”), then we can specify scale related to money value (scale basis B) or qty (scale basis C) or a weight (Scale basis D or E).

4.5.2 Check Value

This field controls if the scale can be maintained in ascending or descending order.

4.5.3 Scale Type (with Real time examples)

The possible values for scale type are

Blank-Can be maintained in condition records

4.5.3.1 A : Base Scale

Example of Scale type A

From 1 Unit Price is $10

From 11 units price is $9

From 21 price is $8

So if we create a PO for 30 unit then per unit price would be at a discount of $8

4.5.3.2 B : To Scale

Example of Scale type B

Up to 10 Unit Price is $10

Up to 20 units price is $9

Up to 30 unit price is $8

So if we create a PO for 30 unit then per unit price would be at a discount of $8

C : Not Used

4.5.3.3 D : Graduated Scale

in normal scales , system determines one price. while in graduated scale, multiple prices are possible in the pricing screen of an individual item.

Example of a graduated scale

From 1 unit to 10 Unit Price is $10

From 11 to 20 units price is $9

From 21 to 30 unit price is $8

So if we create a PO for 30 unit then first 10 units will be$100, next 10 units will be $90 and the last 10 units will be $80 so PO value will be $270.

4.5.3.4 Scale Routine

if standard scale bases are not sufficient then we can write our own formula to determine alternate scale basis value. Scale formulas are created through VOFM.

4.5.3.5 Scale Unit (Unit of Measure)

This unit of measure is used for group conditions that are weight or volume dependent.

4.6 Fields in “Control Data 2” Section of Condition Type Configuration

There are several important fields in “Control Data 2” Section of Condition Type Configuration. Let’s review them

4.6.1 Currency Conversion

If we select this indicator then currency conversion happens after the multiplications of the quantity.

Example – Our company is purchasing some components from abroad, main PO is in INR but freight is in USD so to avoid rounding errors, freight condition type will have this indicator checked so that freight is calculated after the quantity is multiplied.

4.6.2 Promotion Condition

Specifies that the condition type is valid only for promotions. Conditions for which this indicator has been set can only be maintained via the ‘Promotion’ menu – not via the Purchasing menu.

4.6.3 Accruals

This field controls if Condition is Relevant for Accrual (e.g. Freight)

Indicates that the system posts the amounts resulting from this condition to financial accounting as accruals. This appears as statistical on documents i.e. not taken into account in the calculation of net price.

4.6.4 Used for Variant Configuration

This indicators indicates that condition is relevant for variant configuration.

4.6.5 Inter-company Billing

Indicator that defines a condition as relevant for the inter-company process.

Inter-company conditions are usually statistical in the sales order and the customer invoice and not statistical in the inter-company invoice.

4.6.6 Condition Exclusion Indicator

This field controls whether the system automatically excludes the discounts that are proposed during pricing. For example- if a customer is already receiving a favourable price then the discount should be excluded.

We can use exclusion for a particular condition record or for all records of a particular condition type (the field appears on the screen where you define the condition type).

4.6.7 Relevant for Acct. Assignment

If field is blank then condition type is relevant for account assignment.

If “B” is chosen , then the accounting indicator is taken into account for the account assignment.

4.6.8 Condition for Invoice List

Indicates that the condition type is relevant for internal costing

4.6.9 Quantity Conversion

This field controls the quantity conversion during determination of the condition basis.

The field is only relevant for calculation rule ‘C’ (quantity- dependent).

It is relevant if the sales quantity unit and the condition quantity unit are identical (and is different to the basis quantity unit).
–> Deactivated: The condition basis quantity is converted via the quantity to the stock keeping unit. This means that the condition quantity is determined for planned factors. This means that a change to the conversion factors in the delivery or the order are not taken into account.
Rounding errors can occur during quantity conversion.
–> Activated: If the sales quantity unit and the condition quantity unit are identical, the quantity of the document item is used, i.e. the actual quantity.

4.7 Fields in “Sales Pricing” Section of Condition Type Configuration

This section has two fields as given below.

4.7.1 Relevant to Pricing

Indicates that a condition is taken into account during purchase price determination in the sales price calculation function.

The indicator can be maintained during definition of condition types and is taken as a default value when condition records are generated. This default can be changed when the “Pricing relevance can be changed” indicator is set.

In scales, the indicator is used to select the scale line used for price determination in Sales Price Calculation.

4.7.2 Pricing On/Off

If this indicator is set, whether each individual condition record is to be taken into account in the sales price calculation function.

Click HERE to read more on condition technique on SAP help

5. Access Sequence

An access sequence may be assigned to a condition type. The access sequence is a search strategy that enables you to specify the order in which condition tables are to be searched for relevant entries for a condition type.

5.1 Silent features of Access Sequence

• The order of the accesses is determined by the order of the condition tables in the access sequence.
• The Exclusive indicator determines that the search for further valid entries in (other) condition tables is interrupted if an access was successful and a relevant entry was found.
• A condition type must have an access sequence assigned to it if you want to maintain conditions with their own validity periods(for example, condition type PB00).
• No access sequence assigned to header conditions, discounts, or surcharges

5.2 Requirements in Access Sequence

An access sequence is a search strategy to find the valid data for a condition type. Access sequence outlines the sequence in which system searches for the data.

Every access has a requirement associated with it and every requirement has a routine associated with it. Routines are ABAP codes that perform validation when the particular condition type is associated.

5.3 Exclusion Indicator

If we check this indicator then as soon as valid condition record is found , system stop the further searches for condition records.

6. Condition Table

In a condition table, we specify the combination of fields for which we create condition records.

6.1 Screenshot of a condition table

Note : Field catalog consists of all the available fields , from which condition table is created.

7. Calculation Schema

Calculation schema is used to calculate costs, prices, period-end rebates, and taxes. This concept is referred to in the Sales and Distribution (SD) area as a pricing procedure.

Calculation schema (pricing procedure) specifies which condition types are to be taken into account in which sequence.

Standard settings

Follow the below path for configuring the pricing schema

SPRO –> Materials Management –> Purchasing –> Conditions –> Define Price Determination Process –> Set Calculation Schema – Purchasing

or use t-code M/08

In the standard system RM0000 and RM1000 calculation schemas are predefined

We have copied RM0000 and created below schema for our car company.

Similar schema is configured for Elect car company too.

Let,s review all the components of calculation schema

7.1 Manual

We check this checkbox if we need to input the value of a pricing condition manually. For example – unplanned freight or a special discount based on the quality complaint of the customer.

7.2 Required

This field is selected if a condition is mandatory i.e. document (sales order/purchase order)should not be completed if this pricing condition is not entered.

7.3 Statistics

This is used when this pricing condition is not required to be included in total value of PO, but only displayed in PO. For example – Rebate condition types. The rebate value is calculated but does not add to the value of PO. When rebate agreement is settled at that time these conditions are used.

7.4 Subtotals

This configuration Controls whether and in which fields condition amounts or subtotals are stored. For example-a customer discount or the cost of a material.

Example

These condition amounts or subtotals are used as a starting point for further calculations. For example – a subtotal of all the discounts included in the pricing of a sales order.

7.5 Requirements

Most of the time pricing needs can not be met by just defining condition type, access sequence, condition table & condition records.

For this SAP has given VOFM routines. These routines are customizable if standard routine is not capable of meeting the requirements. For example – distribution of discount among line item according to the volume instead of value.

Requirements in pricing procedures are used to validate certain conditions before a condition type is activated. For example – a condition need to be activated only if material belongs to a specific material group. We can define our own requirements starting from 900.

7.6 Alternative Calculation of Condition (Formula Condition Value)

Sometimes pricing conditions needs to be calculated by special formula. We can do this through small ABAP code and inputting this routine into the pricing procedure here.

7.7 Alternative Calculation of Condition Base Value

Routine for determining the condition basis as an alternative to the standard.

For Example : An absolute header discount is, for example, distributed in the standard system according to the cumulative value of the items.

7.8 Account Key

Through this key , pricing condition type is linked to GL account. We use this key in OBYC transaction to link this to the respective GL where the value of this condition type need to be posted. This represents MM-FI integration.

7.9 Account Key – Accruals / Provisions

With this account key, the system can post amounts to certain types of accruals accounts. For example, rebate accruals

8. Pricing Procedure Determination

In this section we will see how pricing procedure is determined in our purchasing documents. Pricing is determined by a combination of schema groups defined by vendors & purchasing organizations.

We need to understand Purchasing info record (PIR) to understand the pricing determination.

8.1 PIR

PIR maintains the relationship between material and vendor. Prices in PIR are defined at material level or purchase organization level. Prices from the last created PO stored in PIR is automatically proposed in the PO.

8.2 Configure MM Pricing determination in 5 easy steps

Below are the steps in brief to determine pricing procedure in 5 easy steps

Step 1 : Define Schema Group for Purchasing Organizations

These allows us to group together purchasing organizations that use the same calculation schema.

|Here SAP has given flexibility if we want to have separate scheme for different purchase org like service purchase organization & Material purchasing organization or export purchasing organization

|for our car business, we have created two Schema groups for both the Purchasing Organization

Step 2 :Assignment of Schema Group to Purchasing Organization

Step 3 :Define Schema Group for Suppliers

Here through this we can assign different pricing determination procedure to different suppliers.

Step 3.1 :Define Supplier Schema Group for Inter-company STO Process with Delivery & Billing

|For Inter-company STO Process with Delivery & Billing, we have defines a separate supplier schema group called “02 -SPL Sch.Grp IC STO Dlv Billing”

This supplier schema group “02 -SPL Sch.Grp IC STO Dlv Billing” is inputted in the Supplier BP to be able to determine the correct Pricing Schema in pricing schema determination configuration

Please see the below post to check the BP supplier creation

How To Configure S4HANA BP and CVI In 7 Easy Steps – Creation of BP Supplier for Inter-Company STO with Delivery & Billing

Step 4 :Define Calculation Schema for Standard Order

We will copy Big schema RM0000 and rename to use for our car business. This schema already has all the necessary condition types required for our car business.

Step 4.1 :Define Calculation Schema for Inter-company STO Process with Delivery & Billing

for for Inter-company STO Process with Delivery & Billing, we will use SAP standard Schema “A17011”- Intercompany Stock Transfer (US)

Step 5 : Define Schema Determination for Standard PO

We will define Standard Purchase Order Schema determination. For STOs we will do it later in special post.

At present we are assigning same schema for the vendors of PA10 & PA20 Plants. Please note that, if require, we have made provisions to have separate schema for the vendors of PA10 or PA20 through different vendor schema group as per above step

Step 5.1 : Define Schema Determination for Inter-company STO Process with Delivery & Billing

To determine Calculation Schema for Inter-company STO Process with Delivery & Billing, we use the schema group for supplier as “02”

Note: We have user Schema for Purchasing organization “PP10” because in our Inter-company STO Process with Delivery & Billing scenario, Ordering plant is PP10 .

So supplying plant PA10 will be created as supplier in the PP10 purchasing organization PP10 with schema group for supplier as “02”.

8.3 Pricing Schema for Stock Transport Orders

We will first configure the pricing schema for stock transport order . Once configured we will then determine the pricing schema for stock transport order.

8.3.1 Configure Pricing Schema for Stock Transport Orders

To configure price schema for STO, follow the below path

SPRO –> Materials Management –> Purchasing –> Conditions –> Define Price Determination Process –> Set Calculation Schema – Purchasing

or use t-code M/08

We will use standard pricing schema RM2000 for STO

8.3.2 Determine Pricing Schema for Stock Transport Orders

To configure price schema determination for STO, follow the below path

SPRO –> Materials Management –> Purchasing –> Conditions –> Define Price Determination Process –> Define Schema Determination –> Determine Schema for Stock Transport Orders

For stock transport orders, pricing schema is determined depending on the supplying plant, the document type and the schema group of the purchasing organization.

This completes the configuration of SAP S4 HANA MM Pricing Procedure

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In this post we will unlock the complexities of accounting entries in the SAP Intercompany STO Process with Delivery & Billing with this comprehensive guide.

We will discover the accounting entries for both moving average price (MAP) and standard price materials.

--> This post is to explain the accounting entries in the SAP Intercompany STO Process with Delivery & Billing

--> To check the details of configuration & testing of "SAP Intercompany STO Process with Delivery & Billing", please check the below post

How to Configure SAP Intercompany STO Process with Delivery & Billing

1. Components of the intercompany STO Accounting

The business scenario for “SAP Intercompany STO Process with Delivery & Billing” involves two separate company codes within the same corporate group.

Plant PP10 orders 1 PC of a material from plant PA10.

The system uses the following prices:

• Valuation price of material (Plant PA10): $1000
• Order price (Plant PP10): $1060
• Price for intercompany billing (Plant PA10): $1071

To understand easily, Prices are given in the pictorial form below

1.1 Material Valuation in Supplying Plant

Material valuation in the supplying plant is picked up from the material master data

As shown above, We have set it at $1000 at Moving Average Price (MAP)

Check the price in MM03 “Accounting View”

1.2 STO Order Price

Order price is determined through info records in the ordering plant (PP10) for the supplying vendor (PA10_PLANT) in the ordering plant Purchasing Organization (PP10).

To maintain the same, start ME11 and input the data as stated above

Input the ordering price as $1160

--> As soon as we input intercompany Price in the STO, This PPR0 value becomes inactive as explained HERE

1.3 Intercompany Price

To calculate the intercompany Price in the SAP Intercompany STO Process with Delivery & Billing, we use condition type PI01 & PIC1

1.3.1 Condition Type PI01

PI01 represents the intercompany base price or the cost price to transfer the material between the two company codes.

Intercompany base price is crucial because it forms the foundational value for pricing the material in the intercompany transactions.

--> The price derived from PI01 is set at the supplying plant's cost of goods or the agreed price for the goods being transferred to the receiving company code.

--> Intercompany conditions are usually statistical in the sales order/customer invoice but not statistical in the intercompany invoice.

1.3.2 Condition Type PIC1

The purpose of PIC1 is to ensure the selling company (the supplying plant) reflects a profit in its books from the intercompany sale.

PIC1 helps to adhere to transfer pricing policies often required for financial and tax reporting in multinational corporations.

--> When the billing is generated for the intercompany STO, PIC1 condition type determines the total amount to be billed from the supplying company to the receiving company.

PIC1 refers to PI01 to determine the transfer price.

1.3.3 Intercompany Price Determination

To determine the intercompany price start VK11

--> Intercompany price condition records are created based on sales organization of Order (PA10) & Receiving plant

Input the sales organization of order (PA10) & Ordering plant (PP10) along with intercompany prices $1071, and save the entries

Since condition type used in the intercompany STO PIC1 refers to the PI01 so maintaining PI01 through VK11 will automatically set the value of PIC1 in the corresponding Intercompany STO.

1.3.4 Intercompany Price Condition PIC1 in Intercompany STO

As soon as PIC1 is activated through condition record as explained above, system makes main condition type PPR0 inactive.

2. Accounting Integration Points in the SAP Intercompany STO with Delivery & Billing Process.

in SAP Intercompany STO Process with Delivery & Billing , there are four FI integration points

2.1 Accounting Integration at Goods Issue in the sending Plant

At the time of goods issue in the sending plant , accounting integration happens.

Below are the accounting entries at the time of Goods Issue in the sending Plant.

Debit (+) – Stock Account (Sending Company Code)

Credit (-) – Inventory Change Account (Sending Company Code)

For the above , Value is taken from Material Master as explained in Heading 1.1 Material Valuation in Supplying Plant

2.2 Accounting Integration at Goods Receipt in Receiving Plant

At the time of goods receipt in the receiving plant , accounting integration happens.

Below are the accounting entries at the time of Goods receipt in the receiving Plant.

Debit (+) – Stock Account (Receiving Company Code)

Credit (-) – GR/IR Account (Receiving Company Code)

For the above , Value is taken from the intercompany Price as explained in heading 1.3 Intercompany Price

2.2.1 Accounting Integration at Goods Receipt in Receiving Plant with Standard Material Price.

If material price is “S” then in the whole process of SAP Intercompany STO Process with Delivery & Billing, accounting entries are a bit different at the time of Goods Receipt in Receiving Plant

Below are the accounting entries at the time of Goods receipt in the receiving Plant with material price as “Standard” in receiving plant

Material valuation in receiving plant is $1100 and sending plant is sending the material at $1071.

So the gain of $29 will be posted to the Gain in Price variance

Debit (+) – Stock Account (Receiving Company Code)

Credit (-) – GR/IR Account (Receiving Company Code)

Credit (-) – Gain Price Variance Account (Receiving Company Code)

2.3 Accounting Integration at Intercompany Billing

The next accounting integration point is at the time of intercompany billing.

Below are the accounting entries at the time of Intercompany Billing in the sending Plant.

Debit (+) – Customer Account (PP10_CUST , Sending Company Code)

Credit (-) – Domestic Revenue Account (Sending Company Code)

For the above , Value is taken from the intercompany Price as explained in heading 1.3 Intercompany Price

2.4 Accounting Integration at Invoicing

The next accounting integration point is at the time of Invoicing in the receiving plant.

Below are the accounting entries at the time of Invoicing in the receiving plant.

Debit (+) – GR/IR Account (Receiving Company Code)

Credit (-) – Supplier Account (PA10_Plant, Receiving Company Code)

For the above , Value is taken from the intercompany Price as explained in heading 1.3 Intercompany Price

This completes the accounting Entries in the SAP Intercompany STO Process with Delivery & Billing

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Stock transfer in the SAP is a critical process which can be executed several ways.

From the bird eye view stock transfer can be bifurcated into two

• Stock Transfer with MIGO (Without STO, Delivery & Billing)
• Stock Transfer With Stock Transport Order, Purchase Order (STO/PO)

Please see below the pictorial representation of the stock transfer in SAP

Stock transfer with STO, delivery & billing is a part of Stock Transfer With Stock Transport Order, Purchase Order (STO/PO). This is shown more clearly in the below picture

This post is for Stock transfer with STO, delivery & billing

Please see below the posts related to the other stock transfer processes.

Stock Transfer with MIGO (Without STO, Delivery & Billing)

Stock Transfer in SAP: The Best Guide with All Scenarios Explained

Stock Transfer with STO/PO – STO without delivery

SAP Stock Transport Order Without Delivery: Process, Configuration & Guide

Stock Transfer with STO/PO – STO with delivery (1-step & 2-step)

SAP Stock Transport Order with Delivery: Setup, Execution & Key Insights

Special Scenario for Stock Transfer with STO/PO – STO with delivery – Configuring 1-step & 2-step between the same plants

Maximize SAP Efficiency: Configure 1-Step STO with Delivery Alongside 2-Step STO Between the Same Plants

Let’s see the step by step in detail Stock transfer with STO, delivery & billing

1. SAP Stock Transfer Order(STO) with Delivery & Billing

If you are a SAP consultant or business user looking to master the configuration of SAP Intercompany STO Process with Delivery & Billing, this is the right place.

The SAP Intercompany STO Process with Delivery & Billing is a crucial skill for managing inventory and optimizing supply chain operations between different company codes within an organization.

SAP Intercompany STO Process with Delivery & Billing is also called Cross company SAP Stock Transport Order with Delivery & Billing.

In this step-by-step guide, the entire process of “SAP Intercompany STO with Delivery & Billing” is breakdown into configuration of the STO, delivery, billing, and accounting entries.

Stock transport order with delivery and billing document is a combination of the standard purchase order and the stock transport order.

--> SAP Stock Transfer Order(STO) with Delivery & Billing is Similar to the stock transport order because
--> The requirement of the shipping data determination.                --> stocks in transit can be monitored.

--> SAP Stock Transfer Order(STO) with Delivery & Billing  is Similar to the standard purchase order because 
--> Pricing is configured same as in standard order(when items are entered). It is a switching between condition type PPR0 & PIC1 (Referencing PI01), active one condition type at a time.
--> There is no item category used, same as Standard Purchase order

1.2 Business Scenario

The business scenario for “SAP Intercompany STO Process with Delivery & Billing” involves two separate company codes within the same corporate group.

These companies need to transfer the stock between each other to meet the demand, while maintaining proper financial accounting and compliance.

1.2.1 Business Scenario Overview

We have our car business corporation with two entities (Company Code PA10 and Company PP10).

Company PA10 manufactures products 26.

To meet customer demand, Company PP10 needs to source products from Company PA10.

Instead of making an external purchase, Company PP10 initiates an inter-company stock transfer from Company PA10.

Below is the pictorial representation of Two Step Stock Transfer Order with Delivery & Billing

2. Configuration of Intercompany STO Process with Delivery & Billing

We will configure Inter-company STO Process with Delivery & Billing step by step

2.1 Configure PO Document Type

In this configuration

–> we Check and copy existing document types for purchase orders and

–> define allowed item categories for each document type

As we know now, for Intercompany STO Process with Delivery & Billing, we use standard PO document type “NB”

Please see below post to check “NB” Document type configuration

All About Purchase Orders in SAP MM – Define Document Types for Standard Purchase Orders

All About Purchase Orders in SAP MM – Item Category

2.2 Configure Pricing Schema.

We have configured Pricing schema for Inter-company STO Process with Delivery & Billing is as “A17011”- Intercompany Stock Transfer (US).

Please check the below posts for pricing schema configuration for Inter-company STO Process with Delivery & Billing

Ultimate guide to SAP S4 HANA MM Pricing Procedure – Define Calculation Schema for Inter-company STO Process with Delivery & Billing

Ultimate guide to SAP S4 HANA MM Pricing Procedure – Define Schema Determination for Inter-company STO Process with Delivery & Billing

2.3 Configure Delivery Type.

Delivery type “NLCC” is used for the Intercompany STO Process with Delivery & Billing.

Please see below post for delivery type “NLCC” configuration

SAP Delivery Guide: Outbound to Inbound –NLCC -Replenishment Cross-Company

2.4 Item Category Configuration & Determination.

For the Inter-company STO Process with Delivery & Billing, item category “NLC” is used.

Please check the below post for item category configuration & determination

Mastering SAP Sales Item Categories: A Comprehensive Guide – Item Category for the Inter-company STO Process with Delivery & Billing

Mastering SAP Sales Item Categories: A Comprehensive Guide – Item Category Determination for Inter-company STO Process with Delivery & Billing

2.5 Schedule Line Configuration & Determination.

For the Intercompany STO Process with Delivery & Billing, schedule line category “NC” is used.

Please see below post to check the Schedule Line Configuration & Determination for the Inter-company STO Process with Delivery & Billing.

SAP Schedule Line Categories Explained: Everything You Need to Know – Inter-company STO Process with Delivery & Billing “NC”

SAP Schedule Line Categories Explained: Everything You Need to Know – Schedule Line Category Determination for Inter-company STO Process with Delivery & Billing

2.6 Define Shipping Data for Plants

We have already Configured below when we configured “2-step STO with delivery”

--> Suppling Plant should be created as supplier in the receiving plant purchasing organization

--> Receiving plant should be created as customer in the sending plant sales organization & distribution channel.

But in this process of “Intercompany STO Process with Delivery & Billing” receiving plant is different & belonging to the different company code

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Set up Stock Transport Order –> Define Shipping Data for Plants

Here sending plant is PA10 & Receiving plant is PP10

2.6.1 Shipping Data for Sending Plant

Through this configuration, system needs to identify the sales organization, distribution channel & division of the supplying plant under which the receiving plant is created as customer

So as per this configuration receiving plant should be created as customer in Supplying plant sales organization “PA10” , Distribution Channel “PA” & Division “DC” (as shown above in the screenshot).

2.6.2 Shipping Data for Receiving Plant

For receiving plant, system identifies receiving plant customer number.

Receiving plant PP10 will be represented as a customer through customer number “PP10_CUST” as per this configuration.

Please see below the post to check the creation of receiving PP10 as customer PP10_CUST

How To Configure S4HANA BP and CVI In 7 Easy Steps – Creation of BP Customer & Supplier for Inter-Company STO with Delivery & Billing Scenario

2.7 Configure Stock Transfer Order

Here we will define delivery type and availability check for Inter-company STO Process with Delivery & Billing

Follow the below path

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Set up Stock Transport Order –> Configure Delivery Type & Availability Check Procedure by Plant

as configured above in the HERE , we use delivery type “NLCC” & PO document type NB for Inter-company STO Process with Delivery & Billing

2.7.1 Copying Control from STO to Delivery

For the Inter-company STO Process with Delivery & Billing, PO document type is “NB” & delivery type is “NLCC”.

Please check the below post for the detail of copy control configuration for this scenario

SAP Delivery Guide: Outbound to Inbound – Copy Control for Inter-company STO Process with Delivery & Billing.

2.7.2 Delivery Scheduling and Transportation Scheduling

We will configure the Delivery Scheduling and Transportation Scheduling for this scenario same as 2-Step SAP Stock Transport Order with Delivery.

Please check below post to see all the related configuration

2-Step SAP Stock Transport Order with Delivery: A Complete Guide – Delivery Scheduling and Transportation Scheduling in SAP S/4 HANA

All the lead times will be the same. only “Route” will be different as destination plant is PP10 instead of PA20.

Since “Route” is different so “Route Determination” configuration will also be different

2.7.2.1 Route Configuration

First we will configure a route to use for the transportation from plant PA10 to plant PP10

Follow the below path

SPRO –> Logistics Execution –> Transportation –> Basic Transportation Functions –> Routes –> Define Routes –> Define Routes and Stages

We will configure route “PAPP10”

For the route “PAPP10” we have configured–

• Transit time is 1 Calendar day.
• Transportation Lead Time is 2 Days

2.7.2.2 Route Determination Configuration Between Plant PA10 & PP10 (Route “PAPP10”)

Now we will configure the route determination for Route “PAPP10”

–> Outbound shipping point PA10 is assigned to the plant PA10, which has transportation zone assigned as “0000000001-Region East”

Please check the below post for detail

Configure SAP S4 HANA Logistics Execution Organization Structure in 5 Minutes – Define Shipping Points

–> Receiving point has transportation zone assigned as “0000000002-Region West”

To configure the route determination, follow the below path

SPRO –> Logistics Execution –> Transportation –> Basic Transportation Functions –> Routes –> Route Determination –> Maintain Route Determination

Route is determined based on the shipping type from the customer master & Transportation Group from the material master

2.8 Configuration of Intercompany STO Billing

Since Intercompany STO with delivery & billing involves billing by the sending plant, we need to configure all the billing components.

2.8.1 Billing Type Configuration

Intercompany STO with delivery & billing uses billing type “CBST”

Please see the below post for billing type CBST configuration

Master SAP SD Billing Configuration – Billing Type for Inter-Company STO

2.8.2 Copy Control for Billing.

In this process billing is generated with reference to outbound delivery

We need to maintain copy control from the Delivery type “NLCC” to the Billing type “CBST” for header as well as item category “NLC”.

Please see the below post for detail.

Master SAP SD Billing Configuration – Copy Control for Inter-Company STO with Delivery & Billing

2.8.3 Intercompany STO Billing Pricing Procedure.

We use Pricing Procedure “A17J11” for “inter-company STO with Billing

Please check the below post for configuration of pricing Procedure “A17J11”

The Ultimate SAP S4 HANA Sales Pricing Guide with FAQ – Pricing Procedure for Inter-Company STO Billing

Please check the below post for Determination of pricing Procedure “A17J11”

The Ultimate SAP S4 HANA Sales Pricing Guide with FAQ – Pricing Procedure Determination for Inter-Company STO Billing

This completes the configuration of SAP two step Stock Transport Order with Delivery.

3. Testing of Intercompany STO Process with Delivery & Billing

We will test now Inter-company STO Process with Delivery & Billing

There are certain data pre-requisites in order to be able to execute Stock transfer order with Delivery as given below

Step 1: Configure all the required Elements

First we need to configure all the necessary elements of the Inter-company STO Process with Delivery & Billing.

This is explained in detail in heading Configuration of Inter-company STO Process with Delivery & Billing

Step 2: Extend the Material in the Receiving plant

Here sending plant is PA10 & Receiving plant is PP10.

The material should be available in both sending & receiving plants. Please check the below post to see the step be step explanation of how to extend the material to another plant

2 Minutes Guide to Create your First Material in S4 HANA – Extension of Material to Other Plants

--> We must create the sales organization data for the sales organization/distribution channel of the supplying plant (PA10).

--> We must maintain the sales view (general plant data) for the supplying plant (PA10) 

Step 2.1: Material Value in Supplying Plant

Please keep in mind the valuation of the material in the supplying plant. This will play a crucial role in understanding the accounting entries in the inter-company STO process with Delivery & Billing

--> The Value of the material in sending Plant PA10 is "500" USD

Step 3: Create Suppling Plant as a Supplier BP

We will create the suppling plant PA10 as a supplier as “PA10_PLANT” Please check the below post in detail

How To Configure S4HANA BP and CVI In 7 Easy Steps – Creation of BP Supplier for Inter-Company STO with Delivery & Billing

Step 4: Create Receiving Plant as a Customer BP

We will create the Receiving Plant PP10 as a customer as “PP10_CUST”. Check the below post for details

How To Configure S4HANA BP and CVI In 7 Easy Steps – Creation of BP Customer for Inter-Company STO with Delivery & Billing

Step 5: Create the STO & check the Presence of “Shipping” Tab.

Create the STO now. Start ME21N , input all the data and press enter

“Shipping” tab with “Shipping” data should appear in the PO line item

--> Delivery type is "NLCC" as configured in the section Configure Delivery Type

--> Shipping Point is "PA10" as configured in the post Configure SAP S4 HANA Logistics Execution Organization Structure in 5 Minutes – Define Shipping Points

--> Route in STO is determined as "PAPP10" as configured in the section Route Configuration

Step 5.1: Value in the STO (Ordering value)

Please note that value in the STO is set through the info record for the material & supplier in the receiving plant purchasing organization.

Please note down the value of the PO as 520 USD.

This is crucial in understanding the financial entries.

Step 6: Create the Outbound Delivery

Create the outbound delivery through VL10B or create the delivery automatically through batch job.

We need to configure copying control in order to create “NLCC” delivery on the basis of “DL” document type. Please check the below post for the detail of copy control configuration for this scenario

SAP Delivery Guide: Outbound to Inbound – Copy Control for Inter-company STO Process with Delivery & Billing

Step 6.1 : Activate Automatic Delivery Creation

We configure this “Auto Delv. indicator”, If we want to create a replenishment delivery immediately after creation of the stock transport order.

Follow the below path for this

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Set up Stock Transport Order –> Activate Automatic Delivery Creation and CRM Billing

Now activate this for our shipping point

Follow the below path for this configuration

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Set up Stock Transport Order –> Activate Automatic Delivery Creation for PO Type and Shipping Point

Note :

If despite this configuration , Automatic Delivery is not generated for STO, Please go to the transaction VL10CUC select the delivery creation profile ‘STOA’ and uncheck the indicator ‘Georoute’

Now outbound delivery will be created automatically

Check the outbound delivery create and check the movement type & item category in the outbound delivery.

Movement type should be as “643” & Item category should be as “NLC”

--> Movement Type should be "643" & Item category should be "NLC" as configured for Inter-company STO Process with Delivery & Billing

--> Movement type comes from the scheduling line configuration as explained in the Heading Schedule Line Configuration & Determination

--> Item category "NLC" configuration & determination is explained in the Heading Item Category Configuration & Determination

Step 7: Pick/Pack & Goods Issue the Outbound Delivery

Now we do the pick pack & Goods issue to the outbound delivery

Upon PGI, the Below accounting document will be generated

Check the below post for FI Integration in detail at the time of Goods Issue in the Intercompany STO Process with Delivery & Billing

Mastering Accounting Entries in the SAP Intercompany STO Process with Delivery & Billing – Accounting Integration at Goods Issue in the sending Plant

Step 8: Create the inbound Delivery in the Receiving plant

Create inbound delivery through VL31N or configure SPED output type to create the inbound delivery automatically in the receiving plant as soon as goods issue is done in the sending plant.

Step 8.1 Output Type “SPED” configuration

We configure SPED output type to create the inbound delivery automatically in the receiving plant.

If material is handled in HUs then HUs are also transferred seamlessly from outbound delivery to inbound delivery through SPED. Please check the details of SPED configuration here.

for delivery type “NL”, we use OutputDet.Proc. “V10000” . Check the below post for this

SAP Delivery Guide: Outbound to Inbound – NL – Replenishment Delivery

Start transaction NACE & select application as V2 “Shipping” & click on “Procedures”

select procedure “V10000” and click on Control, make sure condition Type “SPED” should be available with Requirement as “1”

go back and select “output type” . Scroll down and select “SPED” from the list

Select Medium “8-Special function” & Function “SH -Ship-to-Party”

go back and click on condition record while selecting “V2-Shipping”

Select output type as “SPED” & create the condition record for our delivery type “NL”. alternatively we can create condition records through T-code VV21.

We have completed “SPED” configuration now

Because of triggering of output type “SPED” as soon as PGI will be done in issuing plant, system will create an inbound delivery in the receiving plant.

to check SPED trigger go to Extra –> Delivery Output –> Header as shown in the below screenshot

We can see that SPED is triggered successfully

It has created inbound delivery in the receiving plant successfully. Check the workflow of outbound delivery

Step 9: Post goods receipt in the receiving plant

Since this is 2 step delivery so movement type 101 will be used in the second step (goods receipt in the receiving plant).

Post Goods Receipt of the Inbound delivery

Check the accounting document generated

Check the below post for FI Integration in detail at the time of intercompany Billing in the Intercompany STO Process with Delivery & Billing

Mastering Accounting Entries in the SAP Intercompany STO Process with Delivery & Billing – Accounting Integration at Goods Receipt in Receiving Plant

Step 10: Billing of inter-company STO

To create billing select VF01 and post the billing based on the outbound delivery

Check the Accounting document. Below are the accounting entries

Step 10.1: Source of the Value in the inter-Company STO Billing

The value of the inter-Company STO Billing comes from the sales pricing condition records for the intercompany pricing conditions PI01.

--> Inter-company Pricing is maintained for the PI01 condition type for selling company sales organization & Ordering plant

run VK11 and maintain pricing condition for selling company sales organization PA10 & ordering plant PP10

Check the below post for FI Integration in detail at the time of intercompany Billing in the Intercompany STO Process with Delivery & Billing

Mastering Accounting Entries in the SAP Intercompany STO Process with Delivery & Billing – Accounting Integration at Intercompany Billing

Step 11: Invoicing in the Receiving Company Code

The billing of the sender plant will be as vendor invoice in the receiving plant.

Please see the below post for Invoicing for Inter-Company STO with Billing

How to Configure Logistics Invoice Verification in SAP S4 HANA – Invoicing for Inter-Company STO with Billing

This ends the Configuration & Testing of SAP Inter-company STO Process with Delivery & Billing

Check the below post for FI Integration in detail at the time of invoicing in the Intercompany STO Process with Delivery & Billing

Mastering Accounting Entries in the SAP Intercompany STO Process with Delivery & Billing – Accounting Integration at Invoicing

The post How to Configure SAP Intercompany STO Process with Delivery & Billing appeared first on Ultimate SAP Guides | S4 HANA Logistics Modules.