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Author's profile photo Bin Li

Non-Valuated Stock (with Special Stock Indicator) and Valuated Stock in Customer Returns

If you use Customer Returns in S/4HANA Cloud, it is useful and important to understand how it is designed for inventory management (See online documentation). In this blog, the concept of Non-valuated stock (with special stock indicator) and valuated stock in Customer Returns, are introduced with details.

Use case:

There are both legal and company-internal requirements that stipulate that the returns stock may not be valuated until you decide that the material is to change ownership from the customer to your company.

Change in Ownership: A change in ownership occurs when you (as supplier)

  • Grant the customer a refund or replacement for the returned material (a credit memo, credit memo request, or subsequent delivery free of charge).
  • Specify a logistical follow-up activity signaling that you intend to take on ownership, such as by transferring the material to unrestricted-use stock.

This ownership change applies during Customer Return Order phase, or Inspection phase.

 

How it works for S/4HANA Cloud

Customer return in S/4HANA Cloud, controls the goods receipt posting for returned materials to non-valuated stock by requirement type MSR which is assigned to item categories used in return orders.

Requirement Type MSR is the standard delivered setting and not configurable by customer.

The non-valuated returns stock is implemented as non-valuated special stock ‘E’ (Sales Order Stock) for the returns order – also called non-valuated returns order stock.

The posting to special stock ‘E’ for the returns order is reflected both in the return delivery document and in the material document for goods receipt posting.

Change from Non-valuated stock to valuated stock

Example 1: Return a product with follow up activity: receive into plant WITHOUT immediate refund in Return Order

Customer Return Order: Create an accelerated return (renamed to standard return) via Manage Customer Returns App – using follow up activity: 0001 receive into plant.

Check the requirement type in WEBGUI App, under the Procurement tab, requirement type MSR is determined.

Return delivery document and post good receipt: The special stock E is show in return delivery document. Movement type 657 is used for block stock.

The special stock E is also shown in Good Receipt document. Return Order is used to carry the inventory.

 

During inspection, the logistic follow up needs to be set. Further material document will be generated depending on follow up activities. With below logistic follow up activity in inspection, the non-valuated stock is changed to valuated stock.

· Transfer to Free Available Stock

· Transfer to Scrap

· Transfer to Specified Stock

· No Further Activities

 

Take follow up activity:Transfer to Free Available Stock as example (two-steps scenario),

It firstly, transfer from special (customer own, with return order) block stock to supplier own (without special stock) block stock

 

Secondly, it transfers from block stock to un-restricted-use stock, there is no special stock indicator.

 

Scenario 2: Return a product with follow up activity: receive into plant WITH immediate refund in Return Order

If you decide to refund customer during Customer Return Order Phase, then the return stock is posted to valuated stock, the requirement type is blank in such case, and there is no special stock indicator ‘E’ in return delivery and good receipt material document.

Scenario 3: Return a product with follow up activity: 0002 Immediately Move to Free Available Stock in Return Order

if you intend to take the return product ownership, and use follow up activity like 0002 Immediately Move to Free Available Stockthen the return stock is posted tovaluated stock, the requirement type is blank in such case, and there is no special stock indicator ‘E’ in return delivery and good receipt material document.

 

Summary

In S/4HANA Cloud, with current configuration for customer return, the return product by default is posted to non-valuated stock firstly.

When follow scenarios are occurring, return product is posted or changed to valuated stock.

Phase Process Variant Variant Value Stock Valuation
Customer Return Phase Logistic Follow Up

0002 Immediately Move to Free Available Stock

0003 Immediately Move to Scrap

0014 Immediately Move to Specified Stock

Valuated Stock
Customer Return Phase Refund Control When the Refund Type is Credit Memo
Refund Control – Create Credit Memo Request
Refund Control – Create Credit Memo

When the Refund Type is Replacement Product
Refund Control – Create Replacement Order
Refund Control – Immediate Delivery

Valuated Stock
Inspection Phase Logistic Follow Up

0011 Transfer to Free Available Stock

0012 Transfer to Scrap

0015 Transfer to Specified Stock

0031 No Further Activities

Valuated Stock

 

In future, more logistic follow up activities and refund control values will be enabled in Manage Customer Returns Fiori App in S/4HANA Cloud, such blog will be timely updated.

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      7 Comments
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      Author's profile photo Vijayendra Tiwari
      Vijayendra Tiwari

      Thanks for this!

      Author's profile photo Kazim Rizvi
      Kazim Rizvi

      Thanks for sharing the Accelerated Customer Returns process. Would it be the same in On-Prem environment?

       

      Author's profile photo Bin Li
      Bin Li
      Blog Post Author

      Yes, They share the same design concept in On-Prem Environment.

       

      Author's profile photo Bin Li
      Bin Li
      Blog Post Author

      More Logistical follow up activities and refund control values are enabled Manage Customer Returns Fiori App in S/4HANA Cloud, Therefore, Update the content (table in the summary) accordingly.

       

      Author's profile photo Bin Li
      Bin Li
      Blog Post Author

      Update the new enabled logistical follow up activity - Immediately Move to Specified Stock (0014) - which leads the valuation of returned product.

       

      Author's profile photo Wouter Van den Branden
      Wouter Van den Branden

      Thanks for this explanation!

      I see that when using a Lean Return the stock is immediately posted into unrestricted stock. Here MSR is not determined as Requirement Type in the return order but 'KSV' coming from standard customizing. Is there a reason the 2 behave differently?

      Also in the CBAR flow, is there a way to keep it as non-valuated stock? For example we are looking at using the returns in a repair flow: Customer would send damaged product back to us and the product would then be repaired by us and sold back to customer as a finished product. The damaged product comes in as a raw material and is taken into non-valuated stock and used in the production process as a component.

      All the while there is no transfer of ownership of the damaged good from the customer to to us.

      Thanks in advance

      Wouter

      Author's profile photo Bin Li
      Bin Li
      Blog Post Author

      Hi Wouter

      1. You observe the key information. as the lean return (scope item BDD) and customer return (scope item BKP), are both customer returns solutions, but with quite difference. BDD is a quite simple one (limited function), while the BKP is based on a returns management framework, it supports many process variants. it is more powerful and flexible.  This is the by design.  BDD - lean return, goes to unrestricted stock directly.  BKP standard customer return- it goes to blocked, non-valuated stock (customer asset) first, only after inspection, you can decide if it goes to your asset or not by choosing corresponding logistical follow up activities in material inspection.  please access this link

        Returns Logistics and Returns Stock

        for key returns stock concept for BKP - customer returns solution.

      2. Since CE2111, we have the customer returns (BKP) and inhouse repair (3XK) integration. During the returns and repairs whole end to end process, the returned stock is always kept as non-valuated stock, as it is customer's asset.  please check the scope item BKP/3XK for more information. Once the integration is enabled, you could find the logistical follow up 0026 inhouse repair (service) is enabled in material inspection and returns order item.

       

      I hope above information are useful.

       

      Best Regards,

      Bin