Free Goods

For Free goods determination in sales order 1.The entire img settings under ---sd---basic functions---free goods (i think next to pricing control) all entire settings to be done(i am not with SAP system today so the img path you have to correct it) Mainly there is one sales area DPP and CPP assignment like pricing procedure assignment is there That has to be done 2.Free goods condition records should be there in VBN1 3.The most important thing your Pricing procedure should have R100 condition type with requirement 55 and alternate base value 28 Without this condition type free will not come in sales order Free goods are determined by R100 or NRAB condition types R100 is with requirement 55 and alternate base value 28 NRAB is with requirement 59 and alternate base value 29 Both inclusive and exclusive types are picked by R100 10+1 free (exclusive) for a sales order of 10 9+1 free (inclusive) for a sales order of 10 Both these uses R100 10+1 free (exclusive) for a sales order of 10 There will be two line items in sales order one with TAN for 10 units and another with TANN for 1 unit 9+1 free (inclusive) for a sales order of 10 There will be two line items in sales order one with TAN for 9 units and another with TANN for 1 unit and inclusive without item generation is also there This is picked by condition type NRAB In this case against a sales order for 10 units say each Rs 10 the total value of that sales order will be 90 for 10 items (there wont be any extra item with tann) There will be only one line item in the sales order for 10 units and there wont be any TANN but the nett value will be Rs 90 that means 10 % discount spread over the all ordered items without any free item generation This is inclusive without item generation

While creating condition records in VBN1 we will specify whether it is inclusive or exclusive or inclusive without item generation Based on this differentiation this will be picked in sales order provide you have maintained both these condition types in your Pricing Procedure with their routines and alternate base values since you said that you have made all the settings for free goods determination,check for item category determination. In VOV4 for your item category determination, maintain the value "FREE" in the field usage. i.e. OR+NORM+FREE+TAN=TANN. Now try, free goods will be determined. Free goods Implementation Options In many sectors of industry it is common to provide products free of charge, or not to charge the customer for some of the goods sold when a customer purchases certain goods. The following forms of free goods exist: •

Inclusive The customer only pays for a part of the goods required. The rest of the goods are free. This is called Inclusive free goods and means that part of the purchase quantity is designated as free goods and is not billed. The material supplied as free goods always has the same unit of measure as the purchased quantity.

Of ten bottles of wine, two are designated as free goods. If you order ten bottles, then ten are delivered but you are not billed for two of them. You have received inclusive free goods. •

Exclusive agreement, The customer pays for the goods ordered and receives additional goods. This is known as exclusive free goods and means that free goods is granted for an additional quantity to that in the purchase order. More is delivered than was ordered and the additional quantity is not billed. The goods delivered as free goods do not have to be the same as material ordered.

When four coffee machines are ordered, the vendor supplies a packet of coffee as free goods. Therefore, if you order four coffee machines, you receive a free packet of coffee.

Features You create a free goods agreement in the same way as you do a condition. You can set the requirements governing when free goods are granted at as many levels as required, e.g. at customer/material level or customer hierarchy/material level. The standard system provides for customer/material level. The free goods agreement has a validity period. In the free goods agreement you can save different rules for determining the free goods quantity. You can determine a minimum amount for the sold material. The free goods only then apply from this minimum amount. The free goods quantity can be defined proportionally to the quantity of the material sold. Another rule defines the free goods quantity per full unit of the material sold. I.e., free goods might be granted only for a certain number of full pallets and not for partially loaded pallets. Free goods processing is supported in the sales order for direct sales. When creating the sales order, the free goods items are created automatically according to free goods agreement. The free goods are represented as an item. The free goods item is a subitem of the originating item. The free goods items are relevant for delivery and are copied to the delivery. The free goods item can be copied to the billing document. It is possible to have the free goods in the invoice as free of charge items. In the sales order and in the billing document, pricing can be carried out for a free goods item. An automatic discount of 100 percent at the end of pricing ensures that the item is free of charge. This facilitates representation in the statistics and in the Profit Analysis. The free goods can be represented there not only as manufacturing costs but also as a special type of sales deduction.

Constraints Free goods is currently only supported on a 1:1 basis. This means that an order item can only be the source of one free goods item. This means that agreements involving relationships such as 'Buy material 1 and get material 2 and material 3 free of charge' or 'Order material 1 and material 2 together and get material 3 free of charge' are not supported. Free goods is not currently supported in combination with material structures (e.g. product selection, bills of material, variants with BOM explosion). Free goods is currently only supported for sales orders with document category C (not for quotations, for example). Free goods is not currently supported for deliveries without reference to a sales order. Free goods is not currently supported for make-to-order production, third-party order processing and scheduling agreements. Free Goods Determination In many sectors of industry it is common to provide products free of charge, or not to charge the customer for some of the goods sold when a customer purchases certain goods. Two types of free goods exist in SAP. They are

1. 2.

Inclusive free goods. Exclusive free goods.

Inclusive free goods agreement: The customer pays only for a part of the goods required. The rest of the goods are for free. This is called inclusive free goods which mean that part of the purchased quantity is designated as free and not billed. The unit of measure for the inclusive free goods is same as the purchased quantity. e.g.:- of the ten bottles of wine ordered two are designated as free goods. If we order ten bottles of wine then ten bottles of wines are delivered to us as ordered but we are billed only for the eight bottles and two bottles are given as free. We have received inclusive free goods. Exclusive free goods agreement: The customer pays for the goods ordered and receives some additional goods. This is known as exclusive free goods and means that free goods is granted for an additional quantity to that in the purchase order. More is delivered than was ordered and the additional quantity is not billed. The goods delivered as free do not have to be the same as the material ordered. e.g.:- When four coffee machines are ordered, the vendor supplies a packet of coffee as free goods. Therefore, if we order four coffee machines, we receive a free packet of coffee. Condition Technique:

In SAP free goods are determined using the condition technique. A condition table defines the combination of fields (the key) that identifies an individual condition record. Path for condition table (T- Code V/N2): Img -> Sales And Distribution ->Basic Functionà Free Goods ->Condition Technique For Free Goodsà Maintain Condition Tables. A condition record is how the system stores the specific condition data that you enter in the

system as condition records. Path for Condition Records (T- Code VBN1): Display Img ->Sales and Distribution -> Basic Functionà Free Goods > Free Goods Determination. The access sequence determines the sequence in which the condition records for a condition type are found and read. It contains the selected condition tables in the required order. The order in which the condition tables are placed in access sequence is important. Generally it is most specific to most generic. Path for access sequence: Img -> Sales And Distribution -> Basic Function -> Free Goods -> Condition Technique For Free Goods Maintain Access Sequence. After creating the access sequence, it is assigned to a condition type. A condition type is a representation in the system of some aspect of your daily pricing activities. The Standard condition type used in Free Goods Determination is NA00. The path for the condition type: Img -> Sales And Distribution -> Basic Function -> Free Goods Condition Technique For Free Goods -> Maintain Condition Types. Pricing in free goods: The pricing procedure for the free goods should contain the condition type R100 which is the free goods condition type. This condition type in the pricing procedure has requirement as 55 and base type 28. 55 means only if the item is Free Goods then only value of R100 to be used in Calculation. Value = Controlled by ALT Condition Base Value 28 which states that discount should be 100%. Path for pricing: Img -> Sales And Distribution -> Basic Function -> Free Goods -> Condition Technique For Free Goods -> Maintain Pricing Procedure. Activating free goods determination: In activating free goods determination the Pricing procedure is assigned to the combination of the Sales Area, the Customer Pricing Procedure and the Document Pricing Procedure. Path for activating free goods determination: Display Img ->Sales And Distribution àBasic Function -> Free Goods -> Condition Technique For Free Goods -> Activate free goods determination. Maintaining free goods: Path for maintaining the free goods is (T-Code VBN1) SAP Easy Access Logistic -> Sales and Distribution -> Master Data -> Conditions -> Free Goods -> Create. Enter the discount type as NA00 and to give inclusive free goods enter Inclusive in Free Goods view.

Some of the important fields on screen (free goods inclusive). Min qty: This is the minimum Quantity which should be ordered so that the order is eligible for free goods From: From give the quantity after which the free goods will be given. Are free goods: This number shows the number of quantity which should be given as free goods to the customer e.g.: let us assume min qty is maintained as 1000 and from value is 100 and are free goods value is 10. If the customer places the order for 1200, since the ordered qty is more than the min qty (1000) the customer will get 10 qty as free for every 100 qty. i.e. the customer will receive 120 qty as free and is billed only for 1080 qty. Calculation rule: This Rule Tell that on what basis the amount of free goods which are to be given to the customer. The Calculation Rule can be any of the following 1. Proportional 2. Unit Reference 3. Whole Unit Free Goods Category: This tell that whether the free goods is Inclusive or Exclusive Free Goods Delivery Control: This Controls the delivery of free Goods. This tells that whether the free goods are delivered in conjunction with the main Item or are delivered alone. If we want to the inclusive free goods to be displayed without new item generation in the sales order then select 3 in the free goods category. In free goods master data maintenance, this new free goods type is dealt with in the same way as the inclusive free goods procedure except that in sale order no sub item is created. Condition type NRAB is included in the pricing procedure to provide 100% Discount for Inclusive free goods without item generation of having condition base value 29 and requirement 59. In the exclusive free goods determination only one field differs from the Inclusive free Goods Determination and that is Additional Material for free Goods: It is the material which is different from the original material and is given as a free good E.g. A customer buys 100 books and gets a pencil box free. Free goods have the following limitations: 1. Free goods can only be supported on a 1:1 ratio. This means that an order item can lead to a free goods item. Agreements in the following form are not supported: ‘With material 1, material 2 and material 3 are free of charge’ or ‘If material 1 and material 2 are ordered at the same time, then material 3 is free of charge’. 2. Free goods are not supported in combinations with material structures (for example, product selection, BOM, variants with BOM explosion).

3. Free goods are only supported for sales orders with document category C (for example, not quotations). 4.

Free goods are not supported for deliveries without reference to a sales order.

5. Free goods cannot be used in make-to-order production, third-party order processing and scheduling agreements. 6. If you defined a free goods for variants in a generic article (only SAP Retail), you can only process the variants in the purchase order and goods receipt individually (as single articles). In other words, you cannot process them using the generic article matrix

Whatever is the Free goods determination Procedure, that must contain your Free goods condition type.

So, your Custom free goods condition type must be available in your Procedure NA0001. ( The standard Procedure is NA0001 and not NA0000).

You need to activate free goods determination,

IMG > Sales & Distribuion > Basic function > Free goods > Condition technique for free goods > activate free goods determination .

Go to new entries, Specify Sales Area, Doc Pricing procedure, Customer pricing procedure and specify your Free goods determination Procedure NA0001. Save it.

Now create a Condition record in VBN1 for your free goods condition type. Choose "Inclusive".

Specify Material Number, Minimum order quantity (e.g, 10), specify "From" the free goods quantity (e.g, 10), Unit of measure (E.G, pc), Free goods as "2".

I hope you have not specified the data correctly in condition record like above. From the above record, system will understand that for every 10 pieces, 2 pieces are free.

In Inclusive, system will calculate price for 8 pieces and 2 pieces will be shown as sub item with Item category TANN, which will be 100% free.

PPPPP

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You need not to give manually TANN as Item Category.It should come automatically as per the Condition Records maintained in VBN1.

Check V/N6 settings.Here assign the Free Goods Procedure to the Sales Area.

After this configuration ,the system will pick the Free Item automatically with Item Category as TANN.

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Constraints in R3 Free goods can only be supported on a 1:1 ratio. This means that an order item can lead to a free goods item. Agreements in the following form are not supported: u2018With material 1, material 2 and material 3 are free of chargeu2018 or u2018If material 1 and material 2 are ordered at the same time, then material 3 is free of chargeu2018.

Free goods are not supported in combinations with material structures (for example, product selection, BOM, variants with BOM explosion). Free goods are only supported for sales orders with document category C (for example, not quotations). Free goods are not supported for deliveries without reference to a sales order. Free goods cannot be used in make-to-order production, third-party order processing and scheduling agreements. If you defined a free goods for variants in a generic article (only SAP Retail), you can only process the variants in the purchase order and goods receipt individually (as single articles). In other words, you cannot process them using the generic article matrix.

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For free goods, Pls check if you have maintained Req 55 and Alt calculation 28 for discount condition R100.

Now this condition type R100 can be maintained after the assessable value / sale price condition type.

Since it is 100% discount, this should set off the assessable value / Sale price which ever will actually configured to post to accounting, accordingly you have to configure the pricing.

The tax condition should be maintained in pricing in such a way that it is calculated on assessable value / Sale price condition type.

What this does is the sale price will get set off with R100, so VBAP-NETWR will be zero, and since tax is getting calculated on sale price only tax can be posted o GL account. We have a requirement where the client wants only VAT to be posted in GL accounts and not the price.For this I tried free goods condition type R100 with AltCBV 28.But the VAT value is also coming zero. I want the VAT to be calculated on Pricing condition and then give 100% discount.

Apart from this I also tried to make pricing condition statistical and calculate VAT on it but then also system gives zero value for VAT.

Also wondering if the scenario can be addressed with Free of Change Dellivery.

Ppppp

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Thanks everybody.

Actually scenario worked fine when I entered VAT condition above Discount Condition above discount condition.I even did not require to enter dummy base price for it.The accounting part is also fine since the net amount is set off in accounting by the discount and taxes are posted in g/l account. Even profitability accounts are perfect. To book the cost I have included VPRS condition type in procedure.

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I had a similar problem while configuring Free goods in Ceramic Industry(Sanitaryware division). For Eg: In the case of wash-basins, basins of different colors are defined as different materials, an the requirement was to

2 Black & 2 red = 1 tap free or 1 red, 1 white & 1 black = 2 taps free.

We did a lot of R&D considering std SAP free goods scenario, out of which I can conclude the following:

1) Std SAP allows only 1 + 1(Same material, inclusive) or 1 + 1(different material, exclusive) to be configured as free goods. In your case if the main material and the free goods are defined as two different materials and there is no 3rd material coming into picture only then free goods config will work.

For Eg: For 10qty Material A, 1 qty of material A free - possible For 10qty of material A, 1qty of material B free - possible

For 10qty of Material A, 5 qty of Material B, 1qty of Material C free- not possible in std SAP.

You can convince this to your client, but if they still insist on having the same, you will have to develop a custom 'Z' application which will control the same. However, the same might turn out to be very complex, since pricing, COGS of the free material has to be taken care of along with a lot of other factors. Also the delivery and billing has to go through std SAP, mapping of which will be complex again.