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Former Member

Customer Billing but keeping inventory to deliver to their customers

Dear Experts:

We have the next scenario:

  1. We sell material to one Customer (this material is only for them, we don't sell this item to anyone else)
  2. Customer ask us to keep inventory in our storage.
  3. Customer ask for invoice to keep control of "how much material" they have with us. (They pay this material, even if the material is still in our facilities).
  4. Later, we need to ship the material (at this moment, really Customer ´s inventory) from our storage location to their customers.

Right know, what we are doing is bill to customer with a service material (LEIS) for the first invoice, and when we ship to their customer, we create another invoice with the FERT material, and then we create a credit note to cancel the first invoice....

But we don't know how much of my stock is really ours, and how much is already billed to our customer.... Also, customer isn't very happy with the credit notes....

We don't know the correct manner of doing this in SAP, and I can't find a similar scenario neither in SCN or in SAP Help....

Any help would be apreciated!...

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6 Answers

  • Oct 17, 2015 at 10:21 AM

    This is an interesting process, which deserves to turn into a blog post after a successful implementation.

    If my understanding is correct, it can happen that you transfer the ownership of the products in one month and physically transport them to the customer premises in a different period.

    A couple of questions arise because of that - do you also charge separately the customer for storing the goods at your permises after he purchases them - after all he uses your resources to save storage space? If yes - what is the agreement on calculating and invoicing the stockkeeping fee? This might seem an unrelated question, but it means that you also have additional reporting requirements for this process to create debit memos for the stockkeeping service.

    I suppose that it is possible to physically separate or at least to label the stocks that the customer bought from you - otherwise you will have problems with inventory counting. Do you know if this is how warehouse people currently handle the situation?

    Next question - do you calculate transportation costs when shipping the products and if yes - who and when is supposed to pay for that - the company or the customer? Based on that you can determine whether you need to adapt your pricing procedure/cost calculation setup.

    For the present I assume no localization packages and no specific local legislation requirements. If this is not the case, please provide feedback on these topics - after all, the process should not cause additional audit problems.

    From my perspective you need to update profitability and post revenue with an invoice containing the FERT material that the customer purchases from you in the same way as you proceed with all your other customers. Since the ownership of the sold material quantity is changed, they cannot remain a part of your own unrestricted ATP stock - you have to reduce the inventory levels. If you fail do this, you can promise to deliver the same products more than once and it can be embarassing to discover that you do not have sufficient quantity at the time of shipping.

    The sold products can be managed as externally-owned special stocks - it is like the other company acts as a vendor and provides you with finished goods on consignment, that you do not actually intend selling to others and you return them after some time. Which means these quantities should not be considered for ATP and MRP - there are methods to exclude certain stocks from ATP and planning.

    How is the following scenario handled presently - a warehouse worker damages already invoiced products that you keep in your premises - who and how is charged, are you supposed to 'buy' these back from the customer at a specific price (if you have no stock from this material) or you simply take from your own warehouse stocks (in case you produced sufficient quantity of it) - out of the system and replace them?

    Do you have a requirement in your industry for product traceability - SSCC+BBD/batches? This can be important if the customer specifically requests which packed products of his own need to be shipped.

    I have not encountered your scenario during implementation, so it would be irresponsible from my side to comment on 'best practices', but I hope that this information can give you some ideas for process design/change management.

    @TW Typewriter

    @' MoazzaM '

    the discussion can really improve its quality if you could participate in it.

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    • Former Member

      Thanks for your response and sorry for the delay in my answers:


      If my understanding is correct, it can happen that you transfer the ownership of the products in one month and physically transport them to the customer premises in a different period.

      Yes, this could happen...

      do you also charge separately the customer for storing the goods at your permises after he purchases them

      Not directly, lets say that this charge is included in the sales price.

      it is possible to physically separate or at least to label the stocks that the customer bought from you - otherwise you will have problems with inventory counting. Do you know if this is how warehouse people currently handle the situation?

      As I know, they keep them physically separated, but not really sure about that...

      do you calculate transportation costs when shipping the products and if yes - who and when is supposed to pay for that - the company or the customer? Based on that you can determine whether you need to adapt your pricing procedure/cost calculation setup.

      Yes, we are responsible for the shipping... we pay the service to our vendors, and some of them are charged later to our customer. I said some, because that depends of the distance of the shipmment, there's a comercial agreement.

      a warehouse worker damages already invoiced products that you keep in your premises - who and how is charged, are you supposed to 'buy' these back from the customer at a specific price (if you have no stock from this material) or you simply take from your own warehouse stocks (in case you produced sufficient quantity of it) - out of the system and replace them?

      Yes, we need to replace it... the customer should receive all the material that we already invoiced to them.... I mean, all the responsability of the inventory is still mine.

      Do you have a requirement in your industry for product traceability - SSCC+BBD/batches? This can be important if the customer specifically requests which packed products of his own need to be shipped.

      No, we don't.

      I hope i clarify your question, if not, please let me know.

      Thanks in advance.

  • Oct 20, 2015 at 08:05 AM

    Hi

    Thank you Veselina Peykova for tagging me here and I am also convinced with your idea of posting this as blog after mapping the scenario.

    What I understood from this post is that this is two steps sales process. Company is selling products+services. Product is physical material and services is the service of keeping customer's stock in company's own premises. For this service I assume company must have some separate warehouse or space for customer's stock where they can differentiate in normal stock and customer's stock.

    For product sale it is simple sales process. You create sale order > delivery > PGI > Invoice. Revenue + cost booked in same accounting period.

    Now for keeping this stock in company's own premises for some certain time period we can use some additional line item in same sale order with DIEN material or we can create debit note w.r.t original invoice. This is only required if we are charging customer for keeping stock in our premises. If we are not charging customer then there is no need of it.

    Now the question is how do we manage customer's stock in our stock. For this I must say that company must have separate space for such products. Printed labels with invoice details should be pasted on products or lot whatever suits as per physical materials.

    If company doesn't have separate space for such sold products then it is very difficult to handle such materials physically and systematically. If you are willing to handle this in standard SAP then you should have dedicated separate space for sold materials.

    This is the way we can map this keeping the accounting aspects. If company can manage revenue posting and COGS posting in different periods than you can have another solution. You create sale order, delivery but don't PGI it. It will save material under Schedule for delivery in MMBE and this material can't be sold in some other delivery. You create invoice w.r.t sale order or if you wanna create w.r.t delivery you delete the PGI check. When customer asks you to send material you PGI this delivery.

    You can also use another mapping if customer and client is ok with custom invoice process. When you create delivery you reserve stock under this delivery. Invoice is required only to intimate customer that how much stock is sold on what price etc. For this purpose you create custom invoice with no accounting document. When customer asks to send material you PGI the deliver and post accounting invoice with some separate document type. Here you can also use same document type with posting block. With this there will be only one invoice.

    There are multiple ways to do this. Select the best suitable as per your client's requirement.

    I'd like to ask @Veselina Peykova to comment on this.

    Thank$

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    • Hi

      Make to order is not suitable here. In make to order process is totally different. We have to produce material specially for this customer and order and requirements are transferred in PP but in this post the OP wants to keep material in inventory after sale. MTO will not be suitable here in my opinion.

      Thank$

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    Former Member
    Oct 18, 2015 at 07:06 AM

    i hope this scenario can be covered with the mapping of Consignment Sales.

    Consignment Stock Processing - Sales (SD-SLS) - SAP Library

    Thanks & Regards,

    Md Faiz Abbas

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    Former Member
    Oct 19, 2015 at 06:58 AM

    Hi,

    I think you can use Consignment sales, this enables how much stock is being reserved for customer and how much is lying in your plant.

    Thanks & Regards,

    Sreekanth

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    • Former Member Veselina Peykova

      From what I know, we aren't using retail solution.

      (I'm not sure if we have the pertinent configurations for that scenario ....)

  • avatar image
    Former Member
    Oct 24, 2015 at 06:23 AM

         First I believe that is possible. Imagine that you are using Contracts process for only this sale scenario;

    It's impossible to create delivery doc. from contracts (anybody who read this correct me if i'm wrong).

    So you have to define sales order type and connect it with your contract then delivery doc type and connect it with your sales order.

    Btw you have to define connection billing with contracts in copy control screen. If you search in copy control about this scenario you can do it without using 501 mov. type or etc.

         First create billing (i know its seems impossible but u can customize it in VOV7 item type and material type FERT or u can use LEIS but u have to customize in it.)Then create sales order reference to same contract. Also if u maintain ctz. in copy control you can see all document process view in one screen.. 

    Good luck.

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    • Could you please provide details on the inventory management part of the solution, please?

      What kind of goods movement documents will be created, at which point?

      How the company will manage its own and the vendor stock separately?

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    Former Member
    Oct 07, 2016 at 08:47 AM

    Hi,

    I have implemented this scenario to my client and it wasn't pretty good whenever i tried to fit this into one of our SAP Std business scenarios. So i opted for customization.

    My solution basically involved a user exit, a z table, a z transaction and a report.

    User Exit at the time of PGI:

    user exit that gets triggered when PGI is performed in VL01n, updates a Z Table (i.e in the background with the help of an ABAPer) with desired quantity that needs to be put aside. I personally named this table as "Customer stock held by ABCXXX (org name)". And i asked my ABAPer to generate a report for the end user along with all the document numbers as references. 

    Report:

    S.No   /  Customer   /   SO number  /   Deliv Doc no /    Material code   /    IN Cust Quantity   /     So far Delivered Qty    / Pending for delivery.

    This report helps the end user to see how much stock is lying within the company's premises on any given date.

    Z transaction:

    This is a simple screen that we have developed to just execute the delivery when it actually goes out of the premises. this further updates the "so far delivered Qty" column in the report.

    Steps:

    SO --> Delivery --> PGI (Z table updated in the background bcz of the user exit) --> Billing w.r.t to Delivery num

    Execute partial or full quantity using Z transaction which inturn updates the report.

    User can run the Z report and know how much stock is still lying within the company and how much i sent.

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