Overseas Trade
Transacting business with overseas trade partners introduces a new level of complexity to the distribution channel. The vast distances and time considerations require that buyers and inventory managers must find a way to track inventory in production overseas. They must also manage in-transit inventory, manage product lead time, monitor multiple purchase orders contained within a shipping container, and minimize the docking and demurrage fees encountered with overseas trading. Additional costs not normally relevant with domestic purchasing, such as tariff charges, and port and container fees, necessitate the automation of landed costs allocation.
The Overseas Trade (OT) module provides a method of tracking purchase orders for an overseas vendor from the start of production, to in-transit, to when the order is received in port, and finally, when the order is received in your warehouse. This close monitoring is possible with the use of two documents: tracking and vessel.
To create a tracking document, you pull individual purchase order lines or entire purchase orders into OT Transaction Entry, and use this document to monitor the entire path the inventory takes from production at the manufacturer’s location to receipt in the warehouse. The tracking document stores numerous dates to show exactly where the inventory is in the journey from the overseas manufacturer or distributor to your door. These dates include production start, dock arrival, and warehouse unload. The Overseas Trade module serves as an extension of the purchase order functionality for users that acquire goods from overseas manufacturers or vendors and require a way to track each shipment.
The second document is the vessel document. This document is a collection of tracking documents that represent all inventory in containers on a single ship or carrier. This document is used as a single entry point for accessing each of the tracking documents associated with a carrier and is created in OT Vessel Entry.
Stages of a tracking document
The dates you specify in OT Transaction Entry-Totals govern the stages of the tracking document. After you specify a date, the stage of the tracking document moves forward. This is a list of tracking document stages:
- 0 Entered: The stage the tracking document is in when you first create the document, before any actual dates are specified.
- 1 Production: Tracking document moves to this stage when the Production Start-Actual date is updated.
- 2 Complete: Tracking document moves to this stage when the Production Complete-Actual date is updated.
- 3 Shipped: Tracking document moves to this stage when the Departure-Actual date is updated.
- 4 Arrived: Tracking document moves to this stage when the Arrival-Actual date is updated.
- 5 Demurrage: Tracking document moves to this stage when the Demurrage-Actual date is updated.
- 6 At Whse: Tracking document moves to this stage when the Warehouse Received-Actual date is updated.
- 7 Received: This is the only stage that is not controlled by an Actual date entry. After the Tracking # is received in Purchase Receipt of Inventory Entry, the Warehouse Unload-Actual date and the stage are updated.
- 8 Empty: Tracking document moves to this stage when the Empty-Actual date is updated, if in Received stage.
- 9 Closed: Tracking document moves to this stage when the Container Out-Actual date is updated, if the order has been received.
Some dates can also be maintained in OT Vessel Entry details if you have created a vessel document for one or more containers on a single vessel in transit. You can maintain the Departure, Arrival and Unload dates here. The OT Transaction Entry-Totals is updated automatically.
Avoid the Demurrage stage [5]. This stage is encountered when your container has arrived on the dock and is being held by the shipping company beyond the date scheduled for the container to be picked up and moved onto a truck or rail car. The import|export company is charged a daily rate until the container is picked up. These charges will most likely be passed on to you. Ideally, you should ensure that the container is picked up before the Demurrage-Estimated date, and received in your warehouse before the Demurrage-Actual date.
Additional addons
Standard purchase order entry limits you to four addons for each purchase order. When you use Overseas Trade, you can enter up to 99 addons for each purchase order. This permits handling the numerous charges and tariffs encountered with overseas purchasing.
The workflow assumes that, if you are involved in overseas trading, you capitalize your addon costs, rather than expensing them. In standard purchasing and replenishment, you can set your SA Administrator Options to capitalize or expense addons costs. Capitalized addon amounts are included with your inventory as an asset. They become part of the landed cost of the product you offer for sale. With the Overseas Trade module, tracking receiving populates capitalized addons in Purchase, regardless of your setting in SA Administrator Options.
Receiving containers in a TWL warehouse
The process for receiving POs on a tracking document is supported for both regular and TWL-controlled warehouses. The tracking document is processed as normal through Purchase Receipt of Inventory Entry or EDI Entry Processing Ship Notice Report (EDI 856i ASN). If the product is received in a TWL warehouse, Advance Ship Notice (ASN) documents are created and sent to TWL to allow for manual or automatic receiving. When you run WL Entry Batch Receiving Report, any addons entered for the container in OT Transaction Entry are allocated properly to the purchase order.
- If the Create TWL ASN option is selected for an overseas vendor in Vendor Setup-Ordering, ASNs are sent to TWL immediately upon receipt in Purchase Receipt of Inventory Entry. If this option is not selected, you can hold the ASNs for review using the Load ASN function on the RF. Then use Shipment ASN to receive the ASN.
- To enable automatic receipt of ASNs in TWL, select Yes for the TWL system parameter 6264-Auto Receive ASN. Then, select WL Auto Receive ASN for each overseas vendor in Vendor Setup-Ordering. If you do not use auto receiving of ASNs in TWL, you must manually receive each ASN or receive line by line against the purchase order. You must also manually allocate any PO addons against the OT tracking document.
- Select the Block POs option to block individual purchase orders that are associated with an ASN from being sent to TWL in a receipt transaction (RT) when the PO is printed in Distribution SX.e. Instead, all POs for the vendor are contained in the ASN and the receiving is done against this ASN.
Foreign currency
Set up overseas trade-related vendors as foreign vendors in Vendor Setup. Amounts shown on the purchase orders that are attached to a tracking document will be reflected in the domestic currency. Before you enter purchase orders from these vendors, ensure the correct records are set up to do business with foreign vendors. These record setups should be conducted in a certain order:
- Foreign currency codes should be set up in SA Currency Setup. Optionally, you can may also set up a foreign language code in SA Table Code Value Setup.
- Banks should be set up in CR Bank Setup and assigned the appropriate currency type.
- Foreign vendors should be set up in Vendor Setup and the appropriate bank assigned. If you set up a foreign language code, you can assign that to the vendor record. Any foreign currency amounts on purchase orders will be converted to domestic amounts in the Overseas Trade module.
The domestic currency addon amount, when the addon is a percentage, is calculated in Purchase Receipt of Inventory Entry using the exchange rate at the time the purchase order is received. If the exchange rate changes after the Overseas Trade tracking document is created and before the order is received, the tracking document addon amount also changes to reflect the new exchange rate.