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Author's profile photo Vamsi Kumar Reddy

Difference Between STO’S

Differences Between Inter, Intra and MM STO

Intercompany and intracompany stock transfers (STOs) in SAP MM, and MM STOs, are three common types of stock transfers, each with its own distinct characteristics.

  • Here’s a comparison of the key differences between these three types of STOs:
Aspect Intercompany STO Intracompany STO MM STO
Definition Goods are transferred between different legal entities or company codes within the same organization. Goods are transferred within the same legal entity or company code, often between different locations, departments, or cost centers. Goods are transferred within the same legal entity or company code, but the process is simplified compared to intracompany STOs.
Accounting Impact Significant accounting impact, including revenue recognition, tax implications, and intercompany billing. Minimal or no direct accounting impact; treated as an internal cost transfer. Accounting impact is moderate, often similar to intracompany STOs but with fewer legal and financial considerations.
Document Types Specific document types and processes (e.g., stock transport orders) designed for intercompany transfers. Document types and processes are often simpler and more flexible, may use standard STOs or other internal transfer processes. Similar to intracompany STOs but may be customized for specific requirements.
Tax Implications Complex tax implications, including transfer pricing rules, VAT, and customs duties, depending on regions and countries involved. Fewer tax implications since movements occur within the same legal entity, but local tax rules may apply. Tax implications are typically straightforward compared to intercompany STOs.
Complexity Generally more complex due to involvement of multiple legal entities and compliance with various regulations. Generally less complex, involves fewer compliance requirements, and is more straightforward. Falls between intercompany and intracompany STOs in terms of complexity and compliance.
Document Flow Often involves multiple purchase orders, delivery documents, and financial postings between entities. Typically involves simpler document flow with internal tracking and reporting. Document flow is simplified compared to intercompany STOs but may still involve purchase orders and goods movements.
Typical Use Case Used for transferring goods between legally distinct entities within the same organization group. Used for transferring goods within a single legal entity or company code. Used for transferring goods within the same entity but with a simplified process compared to intracompany STOs.

Advantages of Using STO Instead of Transfer Posting:

Using Stock Transport Orders (STOs) instead of transfer postings in SAP MM offers several advantages, particularly when you need to move materials between different plant locations or storage locations. Here are some key advantages of using STOs:

1. Traceability and Documentation: STOs provide a structured and traceable way to document material movements. They generate clear records of the entire process, including the creation of purchase orders, goods issue at the sending location, and goods receipt at the receiving location. This documentation is helpful for auditing and compliance purposes.
2. Inventory Management: STOs integrate with SAP’s inventory management functionality seamlessly. When you create an STO, it reflects the stock requirements in both the sending and receiving locations, ensuring accurate stock levels and visibility.
3. Procurement Integration: STOs can trigger the procurement process automatically. When stock at the receiving location falls below a predefined level, an STO can trigger the creation of a purchase requisition and subsequently a purchase order, streamlining the procurement process.
4. Goods Receipt Inspection: STOs support the inspection of goods received at the receiving location. Quality checks and inspections can be performed before the material is accepted into inventory, ensuring the quality and integrity of materials.
5. Transfer Pricing: In intercompany scenarios, STOs allow for the proper handling of transfer pricing. You can set up the pricing conditions in the purchase order, and the system will calculate the appropriate values for financial transactions between legal entities.
6. Document Flow and Tracking: STOs create a clear document flow within the system, making it easy to track the status of the transfer. Users can monitor the progress of the STO, from creation to completion, and identify any issues or delays.
7. Stock Reconciliation: STOs assist in stock reconciliation between plants or storage locations. The sending plant’s stock is reduced, and the receiving plant’s stock is increased only upon goods receipt. This ensures that the stock levels match the actual physical movements.
8. Consistency and Compliance: STOs help maintain consistency in the process. Transfer postings might allow for more ad-hoc movements, potentially leading to inconsistencies and difficulties in tracking the material flow.
9. Reporting and Analytics: The structured nature of STOs makes it easier to extract data for reporting and analytics. You can analyze historical STOs to make informed decisions about inventory levels, material flow, and procurement strategies.
10. Integration with Other SAP Modules: STOs are well-integrated with other SAP modules like Financial Accounting (FI), Controlling (CO), and Materials Requirements Planning (MRP), ensuring that all aspects of the business are synchronized.



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