Setup example of external material delivery sales and freight

Situation
  • Organization X is represented by logistical company X.
  • Sales office S1 and warehouse W1 are part of organization X.
  • Sales office S1 is located in Germany and is part of the German division of organization X.
  • Warehouse W1 is located in The Netherlands and is part of the Dutch distribution center of organization X.
  • Shipping office SHP1 is also part of the Dutch distribution center of organization X.
  • Warehouse W1 is responsible for freight planning, but transport planning and all transport related matters are delegated to shipping office SHP1.

  • The Dutch and the German branches of organization X have their own profit and loss registration.

  • The German branch, with sales office S1, is represented by financial company XF1

  • The Dutch distribution center, with warehouse W1 and shipping office SHP1, is represented by financial company XF2.

To fulfill a sales order to an external customer, S1 instructs W1 to deliver the goods to the customer. W1 sends an internal invoice to S1 to cover the costs for the goods and the delivery. The amount of the internal invoice is based on the gross sales order price. SHP1 invoices S1 for freight costs. The freight costs are based on the actual costs.

Setup
Step 1. Enterprise modeling

The following enterprise building blocks are implemented in logistical company X:

  1. The German division of organization X is defined as enterprise unit X-GER.
  2. Enterprise unit X-GER is linked to financial company XF1.
  3. Sales office S1 is defined as an entity and is linked to enterprise unit X-GER.
  4. The Dutch distribution center of organization X is defined as enterprise unit X-NL.

  5. Enterprise unit X-NL is linked to financial company XF2.

    The German and the Dutch enterprise units are linked to different financial companies to keep separate accounts.

  6. Warehouse W1 and shipping office SHP1 are defined as entities and are linked to enterprise unit X-NL.
Step 2. Freight

In the Warehouses by Shipping Office (fmfmd0185m000) session in Freight, warehouse W1 is linked to shipping office SHP1.

This is to accomplish that freight orders involving warehouse W1 are grouped into loads and shipments with W1 as the ship-from entity.

Step 3. Intercompany trade agreements

In the Intercompany Trade Agreement (tcitr1600m000) session, these intercompany trade agreements are set up:

  1. EMDS-1
    • The Internal Invoice check box is selected.
    • Applicable intercompany trade scenario External Material Delivery Sales.
    • Price origin Sales Order Price (Gross), with a 5% markdown. This means that the sales office receives 5% of the revenue.
  2. FRGT-1
    • The Internal Invoice check box is selected.
    • Applicable intercompany trade scenario Freight
    • Price origin Cost-Plus, with a 3% markup.
Step 4. Internal Freight responsibilities

In the Internal Freight Responsibilities (tcitr2130m000) session, the following relationship is specified:

  • From warehouse W1 To sales office S1.
  • In the Responsible for Planning field: to specify that warehouse W1 is responsible for freight planning, From is selected.
  • In the Freight Costs Paid By field: to specify that sales office S1 must pay the freight costs, To is selected.
Step 5. Intercompany trade relationships

In the Intercompany Trade Relationship (tcitr2600m000) session, intercompany trade relationship X1 is defined:

  • From Enterprise unit X-NL To Enterprise unit X-GER.

    Note: To cover a wider range of enterprise units, you can define a trade relationship from and to the financial companies to which the enterprise units X-NL and X-GER belong.

  • On the Agreements tab, these scenarios and agreements are selected:

The from-part of the relationship applies to the entities that belong to enterprise unit X-NL. These entities are warehouse W1 and shipping office SHP1. Warehouse W1 represents the from-part for the External Material Delivery Sales scenario, and shipping office SHP1 represents the from-part for the Freight scenario.

The to- part of the relationship applies to the entities that belong to enterprise unit X-GER. This is entity sales office S1.

If an intercompany trade relationship is defined, LN creates internal cost and revenue transactions. For the from-part, LN registers costs incurred on behalf of the to-part. For the to-part, LN registers these costs as payable costs, because the to-part is indebted to the from-part.

According to trade agreement EMDS-1, LN registers these costs if based on external sales orders. The amounts are based on the gross sales order price.

According to trade agreement FRGT-1, LN registers these costs if based on freight orders. The amounts are based on the actual freight costs.

The to-part of the relationship is invoiced for these costs, because internal invoicing is specified in both trade agreements.

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