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Returnable Packaging

In this post, I would like to explain the process of returnable packaging.

Definition and Scope:
Returnable Packaging is a packaging material that can be returned to Vendor for reuse several times or for legal reasons against which a deposit is collected and refunded. It always remains Company’s ownership, as it is not the part of a pool owned by a specific legal company.

The Returnable Packaging solution covers the following points:

Deposit management
Monitoring and track of Returnable Packaging at Customer location
Planning and manufacturing requirements
Stock handling requirements
Finance and control requirements

It is possible to sort Returnable Packaging in two categories:
The “tied Returnable Packaging” make a first category. It gathers all Returnable Packaging that are consumed during the manufacturing process (like bottles or crates). These Returnable Packaging follow the full Supply Chain process along with the finished goods to which they are tied to.
The “untied Returnable Packaging” creates a second category. Air cushions or isothermal covers may be considered as examples of material belonging to this group. They follow specific business processes that are not specifically linked to finished goods processes.

Process:

In the complete process, we will consider the following objects,

The BOM Header, is the reference number that identifies the return and that will be used to enter in the retrieval order

The components are attached to the header via the BOM and are automatically populated into the retrieval order of the header. Components of retrieval BOM Header are subject to deposit.

– The untied are not part of the header BOM but can be received with the load and need to be registered because subject to deposit. It is for example air cushions or isothermal covers.

The pallets. If the pallet is subject to deposit, it will be part of the retrieval BOM and consider as a component.

The Extra Lines, are extra components that are not following the BOM structure. It is typically extra stand-alone empty crates or empty pallets.

The process begins when a truck arrives to the warehouse with returnable materials (empties bottles and crates on pallets) from customer.

The warehouse clerk will capture the quantity of bottles, crates and pallets using the Standard SAP Sales Order creation transaction (VA01)

Due to billing deposit to the customer, it is necessary to capture the received quantities at bottles, crates and pallets level, but the stock is handled as a group of bottles and crates.
In order to satisfy both requirements (SD and MM), an automatic “transformation” process called Combination program will occur in background on to group received quantities of bottles and crates under a common quantity for a material defined “combine”.

The process describes as follows:

Create Order VA01 > Create Delivery > Material Document Creation > Bottles XX EA, Crates XX EA
Delivery > Output > Combine material Stock Update > Combined Materials XX

Steps:
Capture the received Returnable packaging goods using standard SAP transaction VA01.Based on the BOM (Bill of material) it gets exploded Automatically.
Create Delivery based on the sales order created.
If there is any difference between the received goods quantities and Master
BOM quantities then create Debit Note so that customer pays for the missing
Quantities.
Receive the goods in warehouse against the Inbound Delivery using the transaction VL02N.
Once the Goods has been received Output type gets triggered which will
execute a report program. This Report program will create a Process Order and against this Process Order Goods issues of the components and GR of the Combine Material takes place. Please note that Combine Material which gets created is different from what we specify during the creation of the Sales Order.
(Logic behind it is quite simple. If we take example of Cold Drink then in that case Company sells Fresh Cold Drink Bottles along with the Crate. Customer returns Crate along with the Cold Drink Bottles. Now these bottles needs to be washed so it needs to be represented by new Material Number)
Stock of the combined material gets increased. These Materials then after its complete processing of washing is converted to actual Material using Standard SAP Product Transformation method.

Master Data Settings
The identification of the materials is an important step on the processes for the Waters Business.
A finished good will be represented by one material code, the material code representing the finished good will be the header of a Sales BOM (outbound) in order to link the returnable materials associated.

The used returnable packaging materials will represent the empties bottles, empty crates, not rented pallets or the grouping of them through a Sales BOM (Inbound).  The header of this Sales BOM also will be a material defined as returnable.
The material code defined as a combine will represent the group of bottles and crates in order to optimize the stock management in the warehouse.

The new bottles are purchased as VERP but with a different material number than the re-used bottles. New bottles are batch managed. The new bottles are part of the manufacturing BOM, and the actual consumption of new bottles is recorded against the Process order.

I hope, it will be useful information on the returnable packaging process. Thank You for reading it.

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