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Former Member

Capture packing material and packing operation cost of a SF for Intercompany-STO?



  • A component (Semi1) that is manufactured is also used in manufacturing other Finished Goods in Plant 1000
  • This component (Semi1) is also sent to a subsidiary(Plant 2000) using Inter-Company STO from Plant 1000
  • The receiving Plant 2000 also uses the same component Semi1 in another Finished Good, thus the part number requested by Plant 2000 is the same (i.e. Semi1)

  • Requirement:

    Packaging material cost and the packing operation cost is variable but sums up to be a significant amount. Finance team requires this to be captured accurately.


    How can I capture the packing and operation cost in Plant 1000?

    The packing of the Semi1 is driven by the requirement coming from Inter-company STO sent by Plant 2000. What can kind of shop-floor paper can drive the packing operation?

    Thank you,


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    3 Answers

    • Posted on Feb 02, 2018 at 04:17 PM

      In my words: the material that you use in production is not really equal to the material that you use for a stock transfer.

      In my business (chemicals) is a material the chemical substance including its packaging.

      This means a material that is produced and just stored in a tank is the bulk material and has material number 1000, if we pack it into drums of 200 kg each then it is another material with number 1001, and if we also sell in pails then it would be material number 1002.

      This also means I have Boms for each material number.

      Material number 1000 has all the raw materials in the BoM

      Material 1001 has the bulk material 1000 and the drum in the BoM.

      Material 1002 has the bulk material 1000 and the pail in the BoM.

      So it always clear which costs a material has, of course are the costs higher if the material is packed as it includes the costs of the packaging and the costs for the time and machine to pack it.

      Transport packaging like palettes and wrapping foil are consumables and not included in the costs of the material.

      Without following this example I see not really a chance how to get the packaging costs included into the material costs when you ship it to your sister plant with a STO.

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    • Posted on Feb 02, 2018 at 06:24 AM

      Why is this only need for STO?

      If you have high packaging costs then put the packaging as item into the BOM and consume it like any other raw material.

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      • Former Member

        Good question.

        We only package it when we need to ship it but most of the time we use this Semi1 to build other FG. When the PO comes for STO, we want to use the items in stock to pack and ship.

        Thank you.


    • author's profile photo Former Member
      Former Member
      Posted on Feb 02, 2018 at 08:09 PM

      I agree that it is not the same material anymore. Thank you for taking the time to explain your scenario as well.

      Currently we are using different part numbers for packed material and "pre-packed" material. Example: When the FG of sister plant drives the requirement for the component Semi1, a PO is generated for Semi1. Then based on this PO, a Sales Order is generated(manually) for Semi1-Packed. We at Plant 1000 produce Semi1-Packed and ship it against the Sales Order but eventually the Original PO with Semi1 from sister plant gets neutralized as well. With this process things are less complicated.

      With the introduction of Intercompany STO however, PO/STO is generated by sister plant for Semi1 and we have to drive our packing operation based on the request coming from STO. Sister plant should be able to receive Semi1 (with packing).

      Any creative ideas will be highly appreciated. Thank you again.


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