Intercompany trade scenario Freight - process and setup

Freight costs are invoiced by a shipping office to a warehouse, sales office, or other department.

If a freight order is created for an order, such as a sales order, transfer order, or purchase order, the shipping office pays the freight costs. If specified, to be compensated for the freight costs the shipping office sends an internal invoice to the sales office, warehouse or purchase office on whose behalf the freight costs are incurred. The shipping office and the other departments are defined as entities.

In this scenario, a shipping office is the selling entity and a warehouse, sales office or other department is the buying entity on the intercompany trade order.

The originating order is a freight order. When the freight order is created, the application checks the entity responsible for freight planning and the entity that must pay the freight costs. If an intercompany trade relation is defined between the shipping office that incurs the freight costs and the entity that must pay the freight costs, an intercompany trade order is created. The transaction lines are created when deliveries are made for the freight orders. In the Freight scenario, related orders are not defined.

Internal Freight setup

To use the Freight scenario, some specific setup is required. This entails defining:

• The entities responsible for freight planning
• The entities that must pay the freight costs
• An intercompany trade agreement, transfer pricing rules, and an intercompany trade relation.

The entities responsible for freight planning

If an order requires transportation, one of the entities involved in the fulfillment of the order is responsible for freight planning. For example, for a warehouse transfer, two warehouses are involved.

In the Responsible for Planning field of the Internal Freight Responsibilities (tcitr2130m000) session, you can specify which of the entities (warehouses in the previous example) is responsible for freight planning.

In Freight, shipping offices are linked to warehouses and - through the originating order types - to other entities.

When the freight order creation process is started, the shipping office linked to the entity responsible for planning is used to create freight orders, shipments, and loads in Freight.

If an order requires transportation, and a single warehouse is involved, this warehouse is responsible for freight planning in Freight. For example, this applies to a sales order in which a warehouse and a sales office are involved. In this situation, no further setup is required.

However, for warehouse transfers two warehouses are involved and for direct delivery, no warehouse is involved. By default, in these situations the from-entity is responsible for freight planning. For warehouse transfers, the from-entity is the issuing warehouse. For direct delivery, this is the purchase office. If this default setup is not required, you must specify the responsible to-entity in the Internal Freight Responsibilities (tcitr2130m000) session.

The entities that must pay the freight costs

If a warehouse and a department are involved in an order that requires transportation, by default, the department must pay the freight costs. For warehouse transfers, the issuing warehouse must pay by default, and for direct delivery this is the purchase office. If this default setup is not required, you must specify the responsible to-entity in the Freight Costs Paid By field of the Internal Freight Responsibilities (tcitr2130m000) session.

Intercompany trade agreement, transfer pricing rules, and trade relationship

You must also define an intercompany trade relation with intercompany trade scenario Freight in the Intercompany Trade Relationship (tcitr2600m000) session. In this relationship, the from-part is the shipping office that sends the freight invoice, and the to-part is the party that pays the freight costs. This is the default party described in the previous section or the party that you select in the Freight Costs Paid By field of the Internal Freight Responsibilities (tcitr2130m000) session.

Supported price origins

• Cost-Plus
• Commercial Price