In many sectors of industry it is common to provide products free of charge, or not to charge the customer for some of the goods sold when a customer purchases certain goods.
The following forms of free goods exist:
Inclusive
The customer only pays for a part of the goods required. The rest of the goods are free. This is called Inclusive free goods and means that part of the purchase quantity is designated as free goods and is not billed.
The material supplied as free goods always has the same unit of measure as the purchased quantity.
Of ten bottles of wine, two are designated as free goods. If you order ten bottles, then ten are delivered but you are not billed for two of them. You have received inclusive free goods.
Exclusive agreement,
The customer pays for the goods ordered and receives additional goods. This is known as exclusive free goods and means that free goods is granted for an additional quantity to that in the purchase order. More is delivered than was ordered and the additional quantity is not billed.
The goods delivered as free goods do not have to be the same as material ordered.
When four coffee machines are ordered, the vendor supplies a packet of coffee as free goods. Therefore, if you order four coffee machines, you receive a free packet of coffee.
Features
You create a free goods agreement in the same way as you do a condition. You can set the requirements governing when free goods are granted at as many levels as required, e.g. at customer/material level or customer hierarchy/material level. The standard system provides for customer/material level. The free goods agreement has a validity period. In the free goods agreement you can save different rules for determining the free goods quantity. You can determine a minimum amount for the sold material. The free goods only then apply from this minimum amount. The free goods quantity can be defined proportionally to the quantity of the material sold. Another rule defines the free goods quantity per full unit of the material sold. I.e., free goods might be granted only for a certain number of full pallets and not for partially loaded pallets.
Free goods processing is supported in the sales order for direct sales. When creating the sales order, the free goods items are created automatically according to free goods agreement. The free goods are represented as an item. The free goods item is a subitem of the originating item. The free goods items are relevant for delivery and are copied to the delivery. The free goods item can be copied to the billing document. It is possible to have the free goods in the invoice as free of charge items.
In the sales order and in the billing document, pricing can be carried out for a free goods item. An automatic discount of 100 percent at the end of pricing ensures that the item is free of charge. This facilitates representation in the statistics and in the Profit Analysis. The free goods can be represented there not only as manufacturing costs but also as a special type of sales deduction.
Constraints
Free goods is currently only supported on a 1:1 basis. This means that an order item can only be the source of one free goods item. This means that agreements involving relationships such as 'Buy material 1 and get material 2 and material 3 free of charge' or 'Order material 1 and material 2 together and get material 3 free of charge' are not supported.
Free goods is not currently supported in combination with material structures (e.g. product selection, bills of material, variants with BOM explosion).
Free goods is currently only supported for sales orders with document category C (not for quotations, for example).
Free goods is not currently supported for deliveries without reference to a sales order.
Free goods is not currently supported for make-to-order production, third-party order processing and scheduling agreements.
Free goods master data must be maintained before automatic free goods determination can be carried out. The condition technique is used for free goods in the same way as for pricing.
Features
The free goods master data has the following features:
Free goods can be maintained as either inclusive or exclusive.
You can set the requirements governing when free goods are granted at as many levels as required, e.g. at customer/material level or customer hierarchy/material level. Just as in pricing, condition tables are used for this which you can enhance according to your own requirements.
You can specify a validity period for the free goods agreement.
You can specify a minimum quantity for which free goods is to be granted.
Stages can be defined with regards to the minimum quantities and their dependent free goods.
For exclusive free goods, you can define a material other than the material sold to be granted as free goods.
You can define different rules for determining the free goods quantity:
proportional (rule 1)
related to number of units (rule 2)
only for whole units (rule 3)
You grant 10 pieces of a material as exclusive free goods for an order of 100 pieces.
A customer orders 150 pieces.
Depending on the rule used, the customer receives the following free goods quantity:
Calculation rule
Free goods quantity
Rule 1
Rule 2
Rule 3
15 pieces
10 pieces
0 pieces
You can enhance the rules for determining the free goods quantity with your own routines (Transaction VOFM in menu point Formulas).
Delivery controlling
For the delivery you can control whether the free goods are processed independently or whether they are only copied to the delivery for partial delivery or
full delivery.
you grant free goods to a customer, you can implement automatic free goods determination. The system automatically create a free goods item in the sales order. The item is free of charge. For inclusive free goods, the main item is automatically reduced by the free goods quantity. For exclusive free goods, the quantity of the main item remains the same.
You grant 2 pieces of a material as free goods when the customer orders 100 pieces. For inclusive free goods, the two pieces are deducted from the quantity of the sales material and created as a separate free of charge item. For exclusive free goods, the customer receives two additional pieces as an additional free of charge item
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