Advanced Intercompany Sales & Stock Transfer in SAP S/4HANA Cloud

[Gerhard_Welker]

Last updated: 18th October 2023

Today, I would like to introduce you to an amazing solution that you as our customer have desired for a long time, the Advanced Intercompany Processes. If you cannot wait, then check out the magic in this system demo here already.

Table of content (for quick access, just click on one of the business area links):

Overview

Business Reasons for Intercompany Processes

New Best Practice Processes

Process Activation and Restrictions

Release Information

Outlook

Intercompany Sales

Classic Intercompany Sales - Single Level / Single System

Advanced Intercompany Sales - Single Level / Single System

System Demo - Advanced Intercompany Sales

Intercompany Stock Transfer

Classic Intercompany Stock Transfer - Single Level / Single System

Advanced Intercompany Stock Transfer - Single Level / Single System

Value Chain Monitoring Framework (VCM)

 

 

Overview

 

Business Reasons for Intercompany Processes

A split between the entities handling sales and production is often needed for various reasons. This leads to the need to support Intercompany Sales:

• Separate risks between domestic and international sales and production


• Easier local and regional sales


• Tax advantages


• Safeguarding of brand


• …

Intercompany supply chains are spread across various localizations and lead to the need of Intercompany Stock Transfer between group legal entities to run company value chains

• Production plants close to raw materials


• Leverage local advantages on company group level (labor costs, free trade, and industry zones, …)


• Tax advantages


• …

Most SAP customer companies with two or more company codes need Intercompany Processes.
Intercompany processes are a must for:

• All manufacturing industries


• All companies running on a dedicated internal supply chain

The Advanced Intercompany (ICO) processes

• Supports first E2E SAP standard processes for ICO


• Supports process automation


• Reduces TCO for customers as this standard process relieves them of custom developments, maintenance and upgrades

 

New Best Practice Processes

With the continuous feature delivery 2202.3 for SAP S/4HANA Cloud, public edition we launched two new scope items for the Advanced Intercompany processes:

• Advanced Intercompany Sales (‏5D2‏)


• Advanced Intercompany Stock Transfer (‏5HP‏)

With the 2022 release for SAP S/4HANA Cloud, private edition and SAP S/4HANA we launched the new scope item

• Advanced Intercompany Sales (‏5D2‏)


• For SAP S/4HANA Cloud, private edition and SAP S/4HANA there is no scope item for Advanced Intercompany Stock Transfer available

 

Process Activation and Restrictions

The Advanced Intercompany Sales process is per default disabled for the standard document types and item categories.

To activate the Advanced Intercompany Sales process, specific configurations must be enabled through an expert configuration request. Some configurations have to be done by the customer.
For further details read the Set-Up Instructions document that you will find in the details section of the scope item Advanced Intercompany Sales (‏5D2‏).

Currently the process can be activated for item categories TAN and CBXN.

The release restrictions for Advanced Intercompany Sales are described in SAP note 3192584.

Also the scope item Advanced Intercompany Stock Transfer (‏5HP‏) provide a Set-Up Instructions document.

Regarding SAP S/4HANA Cloud, private edition and SAP S/4HANA read the great blog posts from kazuhisa.iwamoto with detailed information about the set up:

• Advanced Intercompany Sales in SAP S/4HANA OP/Private Cloud


• Advanced Intercompany Stock Transfer in SAP S/4HANA OP/Private Cloud

 

Release Information

Advanced Intercompany Processes are available with

• 2202.3 release for SAP S/4HANA Cloud, public edition 


• 2022 release for SAP S/4HANA Cloud, private edition and SAP S/4HANA (see blog post Highlights for Supply Chain in SAP S/4HANA Cloud, private edition and SAP S/4HANA | 2022 Release)

So this blog post is relevant for SAP S/4HANA Cloud, public edition, SAP S/4HANA Cloud, private edition, and SAP S/4HANA (on premise).

Further developments since first launch of the Advanced Intercompany Processes:

With the 2308 release, the new configuration activity Configure Posting Date for Advanced Intercompany Invoices (ID 106441) is available (see blog post Supply Chain in SAP S/4HANA Cloud, Public Edition 2308).

 

Outlook

The first launch of the Advanced Intercompany processes covers the scenario for Single Level / Single System that is explained below. In addition, it is planned to extend the Advanced Intercompany processes also to cover the scenario for Multi Level / Single System with one or more additional Intermediate Companies between the Selling Company and the Delivering Company. This is a subject to be changed.

 

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Intercompany Sales

Classic Intercompany Sales - Single Level / Single System

First let us have a look on the classic intercompany sales process. For example, a local sales office sells to a customer and the goods are delivered from a plant, which is assigned to another company code, directly to the customer as shown in the next figure.
Starting point of the process is the purchase order of an US customer (step 1) that triggers the creation of a sales order in the US selling company (step 2). The US selling company triggers directly the outbound delivery in the German delivery company (step 3). The US customer receives the goods directly from the physical warehouse in Germany, but the invoice is issued by the US selling company. During the process no valuated stock is created in the US selling company and business documents like the purchase and sales order between the affiliated companies are missing.

Fig. 1: Classic Intercompany Sales - Single Level / Single System

 

Advanced Intercompany Sales - Single Level / Single System

The process for advanced intercompany sales provides functions that allow two affiliated companies to participate in a single intercompany process, such as the following:

• A local sales office sells to a customer. The producing company delivers the goods directly to the customer.


• A local sales organization sells to a customer. A central warehouse delivers the goods.

A standard sales order can initiate the entire process, which is integrated into the value chain monitoring framework. To orchestrate and monitor each process step, this business processes makes use of the Monitor Value Chains app.

Fig. 2: Advanced Intercompany Sales - Single Level / Single System

 

What are the key features of the Advanced Intercompany Sales process?

It is a seamless E2E process that is highly automated and embedded into the following areas:

• Product Compliance


• Trade Compliance


• Profitability Reporting across legal entities


• Support of IFRS 15 compliant revenue recognition and COGS postings


• Product Costing


• Group Reporting / Consolidation

Changes in customer-facing sales order are possible and automatically managed by the system.

Valuated Stock in Transit in the Selling Company allows seamless change of control between affiliates and customer.

Purchase Order in the Selling Company enables landed cost in product costing.

E2E value chain and process monitor allows issue detection and posting services.

 

 

System Demo - Advanced Intercompany Sales

My colleague Markus Oertelt has recorded the Advanced Intercompany Sales process for you. Watch the next video! The system demo is structured into the following sections:

Video time / min	Topic
00:10	How to create a sales order?
02:09	How to create a sales order with SAP Fiori?
03:43	How to monitor your value chains after the sales order is created?
04:47	How to check automatic creation of intercompany purchase and sales order?
05:56	How to create delivery documents?
07:46	How to check transfer control of goods?
08:16	How to pick the delivery goods?
09:37	How to post goods issue?
10:39	How to create billing document?
12:08	How to monitor your value chains?

 



Video: Advanced Intercompany Sales  (system demo without voice demo)

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Intercompany Stock Transfer

In analogy to the chapter above, let me also briefly compare the process of Classic Intercompany Stock Transfer and Advanced Intercompany Stock Transfer with the help of process flow diagrams:

Classic Intercompany Stock Transfer - Single Level / Single System

Fig. 4: Classic Intercompany Stock Transfer Process - Single Level / Single System

 

Advanced Intercompany Stock Transfer - Single Level / Single System

Fig. 5: Advanced Intercompany Stock Transfer Process - Single Level / Single System

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Value Chain Monitoring Framework (VCM)

The Value Chain Monitoring Framework (VCM) is a generic framework for designing, running and monitoring business processes within SAP S/4HANA that supports pre-configured SAP standard E2E processes. The benefits are:

• Increased end-to-end process visibility, efficiency, and collaboration


• Issue detection providing posting services


• Tightly integrated into relevant business applications

Fig. 6: Value Chain Monitoring Framework

 

The Monitor Value Chains app enables you to track all steps of the Advanced Intercompany Sales, Advanced Intercompany Stock Transfer, and Sell from Stock with Valuated Stock in Transit (VSiT) business processes. This app provides you with a detailed overview of all relevant steps and documents in these processes. In addition, it directly integrates these processes with other business applications. The business benefits are increased transparency, efficiency, and cross-team collaboration.

Fig. 7: Monitor Value Chains app

 

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Thanks for reading this blog. Stay tuned!

[Update 20221207]: Also check out the recording of the SAP Community call with my colleague Bernd Strecker (SAP Product Manager for Advanced Intercompany Sales). First, Bernd explains Advanced Intercompany Sales in SAP S/4HANA via his slide deck that is available here. I would especially like to draw your attention to the topic "Planned Features" at 28:46 min with an interesting outlook. The "Q&A" that answers a lot of interesting questions starts at 30:30 min. At 40:57 min Bernd shows a live system demo and finally at 49:13 min he answers some more questions.

For more information on Advanced Intercompany Sales, check out the detailed description here.

For more information on SAP S/4HANA, check out the following links:

• SAP S/4HANA release info: sap.com/s4hana


• SAP S/4HANA Community here


• SAP S/4HANA Cloud for Manufacturing & Supply Chain – The Link Collection here


• Help Portal Product Page here


• What’s New here


• Best practices for SAP S/4HANA here

[berndstrecker]

Hi Xavier,

ICo subcontracting is an own and complex E2E process that is not directly covered by an SAP standard process.

As a product manager for advanced ICo sales I'm not able to provide a proposal on the best workaround to cover your requirements.

To design and implement workarounds you should contact SAP consulting.

Best regards,
Bernd

[berndstrecker]

Hi,

Advanced ICo Sales can be executed with or without active UPA.

Group Valuation is available with or without active UPA.

Classic ICO Sales is not and won’t be enabled for Group Valuation with active UPA.

Value Chain Analysis is not and won’t be enabled for classic ICo Sales, therefore for VCA you need to use Advanced ICo Sales.

UPA is always active in S/4HANA Public Cloud.

For more information see Univeral Parallel Accounting.

For more information about group valuation, see SAP Note  3325873 - SAP S/4HANA Cloud: Release Restriction Note for Group Valuation - only to be released as o...

Fore more information about migration to UPA, see SAP Note 3327778 - Migration to Universal Parallel Accounting (SAP S/4HANA 2023): Scope Information.

For more information about UPA, see SAP Note 3191636 - Universal Parallel Accounting: Scope Information.

Best regards,
Bernd

[FrankJacobs]

Many thanks Bernd for this clarification!

[Rtimmers]

Dear Gerhard,

I appreciate your comprehensive blog post. I have a question regarding the Advanced Intercompany Sales Process.

Our client primarily works with Scheduling Agreements, because the Automotive Industry mainly works with Scheduling Agreements. Unfortuntely, it seems that this process is not applicable to scheduling agreements. Are there any plans to include this in the roadmap?

Thank you in advance.

Best regards,

Randy

[Gerhard_Welker]

Dear Randy,

For your information: I forwarded your request to the responsible product manager. He will be back in the office next week.

Best regards,
Gerhard

[berndstrecker]

Hi Randy,

in the moment we don't have a concrete plan when we will enable schedudling agreements in the Advanced ICo Sales process.

Some more background information:

Our highlevel concepts for scheduling agreements in the Advanced ICo Sales process are done and have been aligned with customers:

Only the sales order in the selling company will be a scheduling agreement. The purchase order in the selling company and the sales order in the delivering company will be a "normal" PO and SO with scheduling information. We plan to use the same PO and the same SO that are used for the advanced ICo sell-from-stock items for scheduling agreements, too

To support scheduling agreements in the Advanced ICo Sales process we need to implement a function that maps complex scheduling information from the scheduling agreement into "flat" confirmed quantities that are copied into the PO and SO.
The rest of the Advanced ICo Sales process should run in the same manner as for sell-from-stock items.

Best regards,
Bernd

[emersonalvarez]

Dear Gerhard,

 

Does the advanced intercompany sales process support group valuation between different companies, with price transfer?

Best Regards

 

Emerson Alvarez

[teodora_popova]

Hello Gerhard,

Our current understanding indicates that the Advanced Intercompany customer consignment feature is not yet available in S4HANA 2023 on-premise.

As of now, the following key features are still missing:

• There is no movement type available for the stock transfer from valuated stock in transit to customer consignment stock in the transit plant
• The intercompany invoice relevance of the delivery item is based on the customer invoice relevance of the item

  We would appreciate it if you could advise us on the expected timeline for SAP to implement these features.

  Thank you

[berndstrecker]

Does the advanced intercompany sales process support group valuation between different companies, with price transfer?

If scope item 5W2 (“Group Valuation”) is active, an additional ledger (“4G”) is added to accounting that contains all financial postings valuated from a group perspective.

Group valuation is fully supported by the advanced intercompany sales process.

The intercompany goods movements and invoices are posted with transfer price (sales price) in legal valuation, at sender production cost (without margin) in group valuation. Additionally in group valuation, cost of goods sold (COGS) and revenues are eliminated in each of these transactions.

[AnkurGoyal]

Is multi-level tier Advanced Intercompany stock transfer process also supported where the intermediate company would be there between shipping and receiving companies? I tried and could not find any documentation.

[berndstrecker]

Hi,
the current version of advanced intercompany stock transer doesn't support multilevel.
Generally it's planned to extend the advanced intercompany processes also to cover the scenario for multi level / single system with one or more additional intermediate companies between the delivering and the selling / receiving company. Currently there is no timeline that can be communicated.
This is a subject to be changed.

Best regards,
Bernd

[berndstrecker]

@teodora_popova, 

Hi,

currently there is no concrete plan when an advanced version of intercompany customer consignment process will be available.

Part of our current backlog is enabling advanced intercompany sales for free-of-charge items without external customer invoice relevance.
If and when we will work on this backlog is not decided, yet.

Best regards,
Bernd

[ALICE2]

Hello Gerhard,

advanced intercompany sales in Intercompany Sales,

supplier invoice(Miro)  will be automatically created when IV2 billing is established,but for the miro heaer reference field we need to enter invoice number , not the standard billing number , so we want to create miro by manually.

Is it possible to disconnect miro for advanced intercompany sales in SAP S/4HANA?

[berndstrecker]

Hi,

currently the intercompany supplier invoice is always createdy by VCM automatically after the goods receipt has been posted in the selling copmany and the ICo customer invoice has been transferred to financial accounting.

We are aware that in some business scenarios it's necessary to stop this automatic creation of the ICo supplier invoice that is not possible in the moment.

We are working on a solution design that enables customers to decide if the automatic creation of the IC supplier invoice by VCM is enabled or disabled.

We plan to share more details in the coming months / quarters.

Best regards,
Bernd

[ALICE2]

Hello Gerhard,

Got it, thank you for your reply.

I have tested the shipment and posted it(PGI), and the system has automatically GR ( plant-1010) .

If I find that the shipment quantity is wrong, is there a way to cancel the shipment or receive the goods?
I am testing that I cannot cancel the shipment (via TCODE: VL09) and cancel the GR  (via TCODE: MIGO).

[berndstrecker]

Hi,

to cancel goods movement that are executed by VCM you use the Monitor Value Chain app.

Find some more information below I have copied from the SAP Note "3366067 - SAP S/4HANA 2023: Restrictions and General Information for Advanced ICo Sales":

• You can use the Monitor Value Chains app to cancel the automatic goods movement postings.
• The sequence of cancellations must follow the opposite direction of the automatic creation.
• Only if the intercompany supplier invoice has not been created or is cancelled it’s possible to cancel the goods issue from storage location in the transit plant.
• The user of the Monitor Value Chains app is used to create the cancellation documents.
• The user of the Monitor Value Chains app must have authorization to execute cancellations with the Monitor Value Chains app.
  • The user doesn’t need any authorization for the business application to execute cancellations.

Best regards,
Bernd Strecker

[Privete_member__1350193]

Hi Gerhard,

Currently as I understand based on the Incoterms stage building 2 stages are created in the FU e.g. Delivering plant to Port of loading and Port of Loading to receiving plant (depending on the Incoterms).

But if the requirement here is to split the FU into 3 stages i.e 1. Delivering plant to Port of Loading 2. Port of loading to Port of Discharge 3. Port of Discharge to Receiving plant to capture since we can have different carriers managing Pre-carriage leg, Main-Carriage leg, and On-Carriage leg. Is there a way to manage such scenario in Advanced Intercompany STO process? Or is it going to be a manual activity? 

Thanks

[berndstrecker]

Hi,

stage building in TM is done for adv ICo stock transfers in the same manner as for other processes.
Stage building is done automatically (based on customizing of logistics integration profiles) and can be amended manually.
For adv ICo stock transfers freight costs are assigned to the respective company based on the intercompany Incoterms.

Best regards,
Bernd

[Jayshree_Ravi]

Hi Gerhard

It appears that 5D2 is not supported for MTO (Make to Order) scenario along with other restrictions as mentioned below.  Any idea when that will be available? 

• Event-based revenue recognition does not support advanced intercompany sales with WBS (work breakdown structure) elements
• Integration of IBP Response and Supply with advanced intercompany sales is not supported
• The intercompany supplier invoice is created without an attachment, for example, the intercompany customer invoice is not attached as pdf file.
• Sales bill of material (BOM) creating subitems
• Advanced ATP creating subitems
• Free goods creating subitems
• Service Materials
• Preliminary billing documents etc.

This means that we may need to stick with 1MX, From a future roadmap will SAP continue to support both 1MX and 5D2? Also many of the Documents and Notes are for versions 2022 and 2023. I am unable to find 2402 documents.

Can you please advise?

Jayshree

[berndstrecker]

Hi Jayshree,

Currently we are working on the enablement of changing the material number and to allow the deletion of sales order items in the selling company (as long as no outbound delivery has been created).
Both topics are a prerequisite to enable advanced ATP changing the material number, changing the plant, or creating subitems what is planned as a next topic afterwards.

Our plan is to deliver these topics with S/4HANA Private Cloud 2023 FPS03. If this timeline can be met is open.

We plan to deliver advanced ICo sales for make-to-order scenarios in 2025 in S/4HANA Public Cloud. Afterwards we need to transfer the S/4HANA Public Cloud implementation to S/4HANA Private Cloud. When this transfer is part of the portfolio is difficult to forecast.

Unfortunately, for the rest of the topics we don’t have any schedule in the moment.

You can use the customer influence portal to address and prioritize the topics.

Customer Influence Portal

• SAP S/4HANA Cloud for Sales, public edition
• SAP S/4HANA Cloud Private Edition, sales and distribution

Currently there is no plan to sunset 1MX (classic ICo Sales).

This is a list of links to the SAP notes on advanced ICo Sales and adv ICo stock transfers, including for S/4HANA Public Cloud:

• 3192584 - SAP S/4HANA Cloud: Restrictions and General Information for Advanced Intercompany Sales
• 3192546 - SAP S/4HANA Cloud: Restrictions and General Information for Advanced Intercompany Stock Transfer
• 3226683 - SAP S/4HANA 2022: Restrictions and General Information for Advanced ICo Sales
• 3226677 - SAP S/4HANA 2022: Restrictions and General Information for Advanced ICo Stock Transfer
• 3366067 - SAP S/4HANA 2023: Restrictions and General Information for Advanced ICo Sales
• 3366080 - SAP S/4HANA 2023: Restrictions and General Information for Advanced ICo Stock Transfer

Best regards,
Bernd

[Chris_Schutz]

Thank you . What about the reconciliation process for all the company code involved in Classical IC or Advanced Intercompany Sales & Stock Transfer . Any improvements and Best-Practices in S4 compare to ECC . 

[Jayshree_Ravi]

Thank you Bernd. Yes it is good to know that SAP is working on MTO for Advanced ICo Sales.

I am also concerned about the restriction for Advanced Intercompany Stock transfer that "Intercompany purchase order items with account assignment (account assignment category is filled)" is not supported. Do you have any idea when that will be supported?

We have a requirement that Stock be moved to a regional warehouse for a project i.e. into Q stock. Currently this works via 1P9 but not via 5HP.

While we want to use the Advanced Intercompany scenarios because of the event based revenue recognition, there are so many restrictions that it is becoming a roadblock.
FYI - We are on S/4 HANA Cloud 2402

Regards

Jayshree