GI process and incoterms

[Former Member]

Colleagues,

We have a sales order process that somtimes involves incoterms in which the transfer of ownership is done at the receiving port.

As an example goods are produced in Canada but incoterms for shipping to the customer implies transfer of ownership in India.

Today the process that was put in place by our Finance/sd/mm team is that the GI from the manufacturing mill is not done until the goods arrive at the destination port. Then once done the invoice is created.

This works for finance but creates lots of issues on the logistic side. We are in a mills environment producing rolls of paper every 40secs and a roll is a batch (standard is-mills) now you can imagine that if we delay the GI for a couple of weeks (products are on a vessel) till final destination our inventories at the manufacturing mill are very high and this is making reports such as inventory turn over completely false.

What is the proper process for this ? is it not to GI when goods leave the mill and only invoice when it arrives at the other end. This would imply a report on the FI side to remove the stocks not billed yet from the cost of good sold.

Thanks in advance

eric

[fortian · Accepted solution]

Hello Eric,

At EHP6, there is a business function called: MM, cross-company-code stock transfer & actual costing.

"This business function allows you to control goods movements both for sales to external customers and for stock transfer processes between plants belonging to the same or different company codes within the same company."

Check this link: http://help.sap.com/erp2005_ehp_05/helpdata/en/E7/C2C7B22E4749E09F6E6D57794F8EC1/frameset.htm

Regards,

Fortian

[former_member182378]

Eric,

Today the process that was put in place by our Finance/sd/mm team is that the GI from the manufacturing mill is not done until the goods arrive at the destination port. 

I am not clear why the GI is done when the goods arrive at the destination port?

Is destination port same as the SH? (delivery address)

[Former Member]

Thanks

[Lakshmipathi]

Today the process that was put in place by our Finance/sd/mm team is that the GI from the manufacturing mill is not done until the goods arrive at the destination port. Then once done the invoice is created.

Predominently, this issue would be there in exports scenario.  The process what your client follow is wrong.  Either, you can generate a delivery without doing PGI for which, a proforma can be generated.  Once the shipment is confirmed, post the goods issue and generate a commercial invoice and debit the end customer.  Alternatively, do PGI at the time of goods leaving the factory and generate proforma.  Once your client decides to debit the customer, a commercial invoice can be generated. 

G. Lakshmipathi

[Former Member]

Thanks for the information

[eduardo_hinojosa]

Hi Eric,

There is process for mining called contract to invoice coal FOB, but I don't know if it's available in Mills. Check it in this link: http://help.sap.com/saap/sap_bp/BBLibrary/html/d52_ERP606_EN_AU.htm

I hope this helps you

Regards

Eduardo