SD Foreign Trade

SD2015 – SD Foreign Trade v 1.0

India SAP CoE, Slide 1

Foreign Trade…? Exchange of Goods and Services across the international boundaries and territories

Significant Share of GDP Increase in Foreign Trade is basic to Globalization.

India SAP CoE, Slide 2

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Purpose Manage import and export processes, integrating them efficiently into the supply chain Automatically identify licensing requirements for importing and exporting goods based on current regulations Simplify reporting with automatic procedures for creating, printing and submitting declarations. Determine which of your products qualify for preference handling. Provide an active interface for sending or retrieving data via internationally available EDI systems and other electronic media Update or change data in all relevant foreign trade documents at any time prior to the final goods issue. Even after you have posted the goods issue, you can still change data in the invoice India SAP CoE, Slide 5

Use •Cost Effective •Easy to Use •Integrated with total SAP system

India SAP CoE, Slide 6

Challenges General Processing Periodic Declarations

Data Service

Preference Processing

Foreign Trade

Communication & Printing India SAP CoE, Slide 7

Legal Control

Documentary Payments

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Foreign Trade •

As countries move increasingly toward a global market economy, businesses become more involved in and influenced by foreign trade. This affects not only the vendor and customer relationship, but that of foreign subsidiaries within a single company. With this opening of market opportunities come regulations, licenses, import tariffs, and an increasing amount of paperwork required by government agencies and other legal entities.

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SAP’s R/3 Foreign Trade application enables you to: – Manage import and export processes, integrating them efficiently into the supply chain – Automatically identify licensing requirements for importing and exporting goods based on current regulations – Simplify reporting with automatic procedures for creating, printing and submitting declarations – Determine which of your products qualify for preference handling – Provide an active interface for sending or retrieving data via internationally available EDI systems and other electronic media – Update or change data in all relevant foreign trade documents at any time prior to the final goods issue. Even after you have posted the goods issue, you can still change data in the invoice. India SAP CoE, Slide 9

Foreign Trade The Foreign Trade/Customs (FT) application component is integrated with Materials Management for handling imports and with Sales and Distribution for exports. In the area of documentary payments, it is also integrated closely with the Financial Accounting application. The below shows where FT data is integrated into the R/3 environment

India SAP CoE, Slide 10

Import Processing

•This scenario describes the processes involved in importing goods into your country from a third country. In this sense, a "third country" is defined as the country of export when no trade agreement exists between your country and the exporter. In this case, you are responsible for compliance with the import laws of your own country. India SAP CoE, Slide 11

Reasons for Importing Goods There are three primary reasons for importing goods. 1. Trade 2.Production 3.Transit 4.Trade There are three main reasons why you may want to import for trade purposes: • • •

Comparative advantage – Some foreign manufacturers can make products more cheaply. Availability – Some products are only available in foreign markets. Marketability – A product may be new and you want to market it in your entire country or in a region of your country.

Production It is sometimes advantageous to import raw or semi-finished materials to be used in a manufacturing process. Transit Foreign merchandise with the status "in transit" is exactly that – passing through your country on the way to another. At the plant level in the SAP System, this refers to a goods receipt that immediately becomes a goods issue to a country other than the location of your plant. A carnet TIR (document which allows passage of foreign merchandise through a customs territory) may be required for the transfer of goods under bond in your country. India SAP CoE, Slide 12

Import Process •

You (the importer) first request a quote (generally, EXW or CIF) for the merchandise. This may or may not include transportation and insurance costs.

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You prepare a purchase order based on the offer (quotation) received from the exporter.

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The exporter creates a sales order based on your purchase order and sends it to you.

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(Optional) The exporter creates an advanced shipping notification to inform you of the date and quantities to be delivered.

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The exporter ships the merchandise.

India SAP CoE, Slide 13

Import Process (continued) •

Also at the time of shipment, the exporter provides you with required documentation depending upon the terms of sale and your agreement with the exporter.

• 1. 2. 3. 4.

Documents may include some or all the following Bills of lading Commercial invoice Export packing list Shipper's Export Declaration (SED) (Required in the USA for goods valued at $2501 or more) Shipper's Letter of Instructions (SLI) (applies only to the USA) Single Administrative Document (SAD) (applies only to the EU) Certificate of Origin Insurance certificates Licenses (when necessary)

5. 6. 7. 8. 9.

India SAP CoE, Slide 14

Import Process Involving Letter of Credit •

You (the importer) first request a quote for the merchandise. This may or may not include transportation and insurance costs.

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You prepare a purchase order based on the offer received from the exporter.

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The exporter creates a pro forma invoice and sends it to you.

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You open a letter of credit with the opening bank in the country of import.

India SAP CoE, Slide 15

Import Process Involving Letter of Credit (continued) •

This involves advising the bank of the documents required from the exporter. As an importer, you not only need the documents required by customs, but also the documents that are required by any other agency regulating your commodity. These may include 1. Bills of lading 2. Commercial invoice 3. Export packing list 4. Shipper's Export Declaration (SED) (Required in the USA for goods valued at $2501 or more) 5. Shipper's Letter of Instructions (SLI) (applies only to the USA) 6. Single Administrative Document (SAD) (applies only to the EU) 7. Certificate of Origin 8. Insurance certificates 9. Licenses (when necessary) India SAP CoE, Slide 16

Export Processing

•This scenario describes the processes involved in exporting goods from your country to an independent country (third country) where no trade agreement exists between your country and the importer. In this case, you are responsible for compliance with the export laws of your own country .

India SAP CoE, Slide 17

Reasons for Exporting Goods Three primary reasons for exporting goods include 1.Increase profit 2.Consistency in sales profits 3.Extension of the product cycle •

Consistency in Sales

Peaks and valleys in the business cycle are inevitable. When the economy of one country is on an economic downturn, the economy in other nations may be in a relatively prosperous phase. If you have customers in countries other than your own, your business profits tend to become more consistent from year to year. •

Product Cycle Extension

When you export your product, the end of the product cycle is postponed. When the market in your own country is saturated, exporting allows you to introduce your product into other countries.

India SAP CoE, Slide 18

Export Process • •

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The importer first requests a quotation for the desired merchandise. You (the exporter) provide a quotation for the merchandise to the importer including costs based on the terms of sale requested by the importer (usually, EXW or CIF). The importer sends you a purchase order based on your offer. You issue a sales order based on the purchase order and send it to the importer. (Optional) You may also send an advanced shipping notification to inform the importer of the exact date and quantities of merchandise to be delivered. You ship the merchandise to the customer. India SAP CoE, Slide 19

Export Process (continued) •

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Also you need to provide documentation based on the terms of sale and your agreement with the importer. Documents may include some or all the following: Bills of lading Commercial Invoice Export packing list Shipper's Export Declaration (SED) (Required in the USA for formal entry valued at $2501 or more) Shipper's Letter of Instructions (SLI) (applies only to the USA) Single Administrative Document (SAD) (applies only to the EU) Certificate of Origin Insurance certificates Licenses (when necessary)

India SAP CoE, Slide 20

Document Requirements •Certificate of Origin: The certificate of origin is an official declaration, which certifies the country in which a commodity originated or was manufactured. In most cases, the importer and exporter must keep this document on file and provide it to the government only if requested.

•Shipper's Export Declaration (SED): In the USA, the SED is only required for shipments valued at more than US$ 2500 (formal entry). If you are shipping goods out of the USA, the SED does not go to the importer. You must send it to the US Government before the shipment leaves the US. With the Automated Export System (AES), you can file this document electronically.

•Export vessel movement summary sheet: If you export by ocean from the USA, you must file this document with the Customs Service.

India SAP CoE, Slide 21

Foreign Trade Data in Master Records •Master data relevant to foreign trade that is used throughout the entire logistics chain in Materials Management (MM) and Sales and Distribution (SD) documents. Material Master Record To go to a material master record from the SAP standard menu, choose Logistics ® Materials Management ® Material Master ® Material. You can display or enter data relevant to foreign trade in the following views of the material master record: •Basic data 1 •Base unit of measure •Material group •Division •Net weight •Gross weight •Weight unit •Sales organization data 1 and 2 •Tax category/classification •Sales: General/Plant Data India SAP CoE, Slide 22

Foreign Trade Data in Master Records (continued) •Transportation group •Loading group •Foreign Trade: Export data •Commodity code (or Import code number) •Country of Origin •Region of Origin •Legal (export) control information •Preference information (when applicable) •Foreign Trade: Import data •Import Code number (or commodity code) •Export/import group (a grouping of similar materials for export or import transactions) •Country of origin •Region of origin •Accounting 1 •Valuation class •Price control •Price unit •Moving average price India SAP CoE, Slide 23

Foreign Trade Data in Master Records (continued) Customer Master Record To go to a customer master record from the SAP standard menu, choose Logistics ® Sales and distribution ® Business partners ® Sold-to-party. You can maintain data relevant to foreign trade data on the following screens of the customer master record: •General data •City •Country •Region •Transportation zone •Postal code •Language •VAT registration number

India SAP CoE, Slide 24

Foreign Trade Data in Master Records (continued) The customer’s country helps indicate export transactions in sales and distribution (SD) documents. You need the customer’s region for declarations to the authorities.

To go to the Shipping and Billing information screens from the General data screen, choose Goto ® Sales area data. •Shipping •Shipping conditions •Delivering plant •Billing •INCOTERMS •Terms of payment •Payment guarantee procedures •Licenses (legal control data)

India SAP CoE, Slide 25

Preference Handling There are several possibilities for qualifying your product as originating in your country or economic zone. For example, these methods include: Tariff shift (rules of origin) Tariff shifting means you apply enough labor to the product or its components to change its commodity code. De minimus rule (maximum of 7% non-originating goods) The de minimus rule allows a product to qualify for preference if no more than 7% of the product is composed of non-originating goods. Certificate of origin (vendor declaration) Your vendors give you a document certifying that the product or its components originate in your country or economic zone. India SAP CoE, Slide 26

Customs Data •This task enables you to transfer foreign trade data objects from your database to another system. Currently these objects include the following

India SAP CoE, Slide 27

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Customizing

IMG  Sales and Distribution  Foreign Trade/Customs India SAP CoE, Slide 29

Incompleteness Schemas for Foreign Trade Data In this IMG activity, you define the incompletion procedures that you want to use at header and/or item level. You assign valid foreign trade fields to each incompletion procedure.

Sales and Distribution  Foreign Trade/Customs  Control Foreign Trade Data in MM and SD Documents  Incompleteness Schemas for Foreign Trade Data India SAP CoE, Slide 30

Foreign Trade Data in MM and SD Documents

Assign the relevant incompletion procedure for header and/or item data to the import and export country. You also define how the system reacts when data is incomplete. Furthermore, you define in the "consistency check" section whether the system only allows valid combinations of modes of transport and customs offices during document processing.

Sales and Distribution  Foreign Trade/Customs  Control Foreign Trade Data in MM and SD Documents  Foreign Trade Data in MM and SD Documents India SAP CoE, Slide 31

Import Screens In Purchasing Document Set the system to propose import screens for the subsequent maintenance of purchase orders and purchasing outline agreements

Sales and Distribution  Foreign Trade/Customs  Control Foreign Trade Data in MM and SD Documents  Import Screens In Purchasing Document India SAP CoE, Slide 32

Define Default Business Type (SD) Define the business transaction type designated by the authorities and assign it as the business transaction type proposal for Sales and Distribution (SD) as well as Materials Management (MM) documents

Sales and Distribution  Foreign Trade/Customs  Basic Data for Foreign Trade  Define Business Transaction Types And Default Value  Define Default Business Type (SD) India SAP CoE, Slide 33

Define Default Export Procedure Define import/export procedures and determine defaults for Sales and Distribution (SD) and Materials Management (MM). SD Export/Dispatch: ------------------The proposal depends on the following criteria: Country Sales organization Distribution channel Division Export/import material group Item category

Sales and Distribution  Foreign Trade/Customs  Basic Data for Foreign Trade  Define Procedures and Default Value  Define procedure default India SAP CoE, Slide 34

Default Values For Foreign Trade Header Data Define default values for foreign trade header data. Note that this object only supplements vendor master data. It does not overwrite it. If you maintain mode of transport '4' in the vendor master and mode of transport '3' in this object, the system will propose mode of transport '4' in the materials management document

Sales and Distribution  Foreign Trade/Customs  Transportation Data  Default Values For Foreign Trade Header Data India SAP CoE, Slide 35

Allowed Business Transaction Type Define the combinations of business Transaction types and procedures that are permitted Business Transaction Type The business transaction type classifies the type of business transaction which is performed. In the European Union (EU), this information is required for the reporting of import and export data to INTRASTAT. Additionally, it is used by the system during export control Export/Import Procedure Code The export/import procedure code for foreign trade uniquely identifies an export/import procedure. For business transactions in the EU, the procedure code is part of the information that you submit in monthly reports to INTRASTAT. The system proposes procedure codes, based on the country of export/import, the sales area, material groups and item categories. For example, the procedure code can distinguish between goods that are shipped temporarily for further manufacture by a subcontractor and goods that are shipped to their final destination after processing by a subcontractor.

Sales and Distribution  Foreign Trade/Customs  Basic Data for Foreign Trade  Define Combinations Allowed: Business Transaction Type - Procedure India SAP CoE, Slide 36

Material Master Data Commodity Code/Import Code Number for Foreign Trade

Transaction Code : MM03 India SAP CoE, Slide 37

Customer Master Data

Use In Customizing for Export Licenses you can determine that certain license types will be used for customers with mainly military use. When defining export licenses, the system can assign license types valid for military use only to those customers that have been marked as mainly for military use.

Transaction Code : XD03 India SAP CoE, Slide 38

Periodic Declarations

•Foreign Trade's Cockpit for Periodic Declarations is designed to provide you with a quick, easy-to-use overview of the most important functions in the area of declarations to the customs authorities. •To go to the Cockpit for Periodic Declarations from the SAP main menu, choose Logistics ® Sales and Distribution (or Materials Management) ® Foreign Trade/Customs ® Periodic Declarations ® Cockpit – Periodic Declarations. •Choose Sales and Distribution (or Materials Management ® Purchasing) ® Foreign Trade/Customs ® Periodic Declarations

Screen Section

Function

Operations

Create periodic customs declarations Maintain declaration data Perform archiving tasks

Monitoring

Display and update foreign trade data in material master records

Goods catalog

Create and display goods catalogs

Settings

Make relevant settings in the Implementation Guide (IMG)

Additional Declaration Germany

Create declaration for foreign trade in Germany involving mineral oil products

India SAP CoE, Slide 39

Prohibitions And Restrictions •Foreign Trade's Legal Control Cockpit is designed to provide you with a quick, easy-to-use overview of the most important functions in the area of Legal Control. These functions assist you in checking your business transactions for compliance with several foreign trade laws and regulations (for example, the export of weaponsrelated products). •To go to the Legal Control Cockpit from the SAP main menu, choose Logistics ® Sales and distribution (or Materials management) ® Foreign Trade/Customs ® Prohibitions and Restrictions ® Cockpit – Legal Control.

India SAP CoE, Slide 40

Licenses

Creation, display or modification of license master records

License data

Assignment of licenses to documents

Alert reporting

Display of sales documents and licenses

Controlling

Check of customer master records and material master records

Simulation

Simulation of Legal Control transactions

Settings

Check of Customizing settings

Declarations

Disk creation for Export Office

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LetMe Transactions MM01

Maintain Material Master

XD01

Maintain Customer Master

VI29

Incompleteness Schemas for Foreign Trade Data

VI49

Foreign Trade Data in MM and SD Documents

VI95

Default Values For Foreign Trade Header Data

VI52

Define Forms of Payment Guarantee

VX11N

Create a Financial Document to the Customer

India SAP CoE, Slide 42

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Additional Info http://help.sap.com/saphelp_erp2004/helpdata/EN/d8/2585347860ea 35e10000009b38f83b/frameset.htm

India SAP CoE, Slide 44