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Author's profile photo Gerhard Welker

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

Last updated: 15th July 2022

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
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 delivery 2202.3 for SAP S/4HANA Cloud we are launching two new scope items for the Advanced Intercompany processes:

 

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.

 

Outlook

It is planned to deliver the Advanced Intercompany processes also in SAP S/4HANA on premise with upcoming releases. So this blog post is relevant for both deployment types, SAP S/4HANA Cloud, and SAP S/4HANA on premise.

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!

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

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      19 Comments
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      Author's profile photo Franck Zerman
      Franck Zerman

      Hello,

      Thanks for bringing this new concept.

      Great to see this Monitoring of Value Chains oppurtunity along with the business process.

      Is there any planning about a scneraio in which multi systems involved for an intercompany case by chance?

      e.g Distributor - Plant - Selling Entity - After Sales Service  ... spread over different landscapes

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hello Franck,

      Yes, as mentioned in the blog 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.

      Best regards,
      Gerhard

      Author's profile photo Nadesh Kumar
      Nadesh Kumar

      Hi Gerhard ,

       

      Really a Nice Concept and thanks for Sharing.

      Is this also integrated with GTS Module as we have faced many issues during Import / Export

      GTS Checks .

       

      Thanks and Regards

      K.Nadesh Kumar

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hi Nadesh,

      1. Trade Compliance is fully integrated with Advanced Intercompany Sales & Stock Transfer from an e2e process view.
      2. Technically, the documents handled by Advanced Intercompany Sales & Stock Transfer are integrated in SAP Global Trade Services (GTS).
      3. GTS is responsible to consider these documents so that the process view is consistent.

      Best regards,
      Gerhard

      Author's profile photo Tom Käser
      Tom Käser

      Hi Gerhard,

      thank you very much for the overview!

      Do I understand it correctly that the outbound delivery in the supplying plant is created with reference to the IC STO and on top referenced in the document flow of the IC SD Order in the supplying plant (dotted line)?

      Because this would be a difference to the on premise IC STO process with a IC sales order created via IDoc where the outbound delivery is created based on the sales order instead of the purchase order,

      Keep up the good work!

      Tom

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hi Tom,

      Yes, the outbound delivery is created with reference to the IC Purchase Order (we’re using purchase orders and not stock transfer orders).
      In the document flow we show the reference to the IC Purchase Order, only. We have drawn a dotted line from the sales order to the outbound delivery as the FI data being used in the outbound delivery is copied from the sales order.
      The E2E document flow is shown nicely in the Value Chain Monitor app.

      The approach of Advanced ICo Sales differs significantly from the approach where the delivery is created with reference to the sales order. In Advanced ICO Sales the IC purchase order is deeply integrated into logistics, (e.g. MRP, ATP, Transportation Mgt, Product Compliance, Trade Compliance) and on the other hand the Sales Order is used for commercial, tax and FI integration reasons mainly.

      Best regards,
      Gerhard

      Author's profile photo Tom Käser
      Tom Käser

      Hi Gerhard,

      thank you very much for the clarification!

      Are you planning 'transfer' this functionality to on-premise with one of the next releases? Would love to get my hands on this process.

      Best regards

      Tom

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hi Tom,

      Yes, we plan to make this solution also available with SAP S/4HANA 2022 OP (on-premise) and 2022 PCE (private cloud edition) release.

      Best regards,
      Gerhard

      Author's profile photo J. van den Wittenboer
      J. van den Wittenboer

      Hello Gerhard,

       

      Thanks for the clear explanation and demo.

      As stated "Currently the process can be activated for item categories TAN and CBXN.", any ideas if this will be extended in the future for other itemcategories ?

      Thanks and Regards,

      Joos

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hello Joos,

      In future releases we plan to support more scenarios like order related customer invoicing, sales bill-of-materials, WBS elements, make-to-order, configurable materials etc.

      Best regards,
      Gerhard

      Author's profile photo Olaf Hassel
      Olaf Hassel

      Hello Gerhard,

      great solution. Waiting for multi level processes, to be able to design direct delivery processes with more than 2 company codes.

      Keep Going,

      Olaf

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hello Olaf,
      Thank you very much for your nice feedback. Yes, we keep going and working on the multi level processes.
      Best regards,
      Gerhard

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Blog updated:

      Today I have added the following sentence at the end of the blog post:

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

      The given link guides you to the Stay Current Material about Advanced Intercompany Sales that provides a detailed process flow in its appendix.

      Author's profile photo Timo Robens
      Timo Robens

      Hallo Gerhard,

      thanks a lot for adding the detailed description of the Advanced Intercompany Sales process. I just have a short question refer to slide 55 where it is said that the invoice to the external customer is now independent from the intercompany invoice. Therefore now it will be possible to create external customer invoice independently from the intercompany invoice? So no need anymore to wait for the creation of the intercompany invoice before customer invoice?

      For your help thanks a lot.

      Best regards

      Timo

       

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hi Timo,

      Regarding your question 'So no need anymore to wait for the creation of the intercompany invoice before customer invoice?'

      -> Yes, that’s correct. Intercompany invoice can be created before the customer invoice has been created.

      Best regards,
      Gerhard

      Author's profile photo Timo Robens
      Timo Robens

      Hi Gerhard,

      thanks a lot for your great support and the really good answer. This is indeed a great Innovation for one of our customers working intensively with intercompany sales processes.

      So then we can also be rid of the MM-SD connection via ALE in one ERP approach😉

      Great Solution!

      Author's profile photo Ivan Ramirez
      Ivan Ramirez

      Hi Gerhard,

       

      Very nice blog! thanks for sharing!! do you know if this best practice will be released as well on-premise?

       

      Best regards,

       

      Ivan

      Author's profile photo Agnieszka Hrybkowska
      Agnieszka Hrybkowska

      Hi Gerhard,

      thank you very much for this interesting post.

      Is there any quidance how this process will look like with integration to other ECC systems? Example: selling company in S/4 HANA and delivering company in ECC, selling company in ECC and delivering company in S/4 HANA?

      Is the activation of advanced Intercompany enabling usage of only this process for IC?

      Best regards,

      Aga

      Author's profile photo Gerhard Welker
      Gerhard Welker
      Blog Post Author

      Hi Aga,

      Advanced ICo Sales is a one system scenario only. Both companies need to run in the same client.

      SAP is working on 2-tier scenarios (SAP S/4HANA Cloud for Hybrid Deployment), too. More information on 2-tier scenarios can be found via this link.

      Best regards,
      Gerhard