Scrap sales

[Former Member]

1.what is Scrap Sales

2.What is the role of Scrap sales in sd

3.what are the configuration and setting that has to be done in sd relating to Scrap sales

[Former Member]

Hi

What is Scrap sales - Normally Scrap Materials are the ones which cannot be sold either as Finished Goods or Seconds, and has no storage value or internal usage value to the organization. The organisation then needs to sale off the scrap at a specially discounted rate, to recover some value.The selling of scraps decreases the Storage costs and increases the Cost efficiency of the Warehouse/Storage locations.

Role of scrap sale in SD - The scrap sales is treated in SD in a similar way as we treat normal sales.i.e Sale order -- Delivery PGI Invoice --accounting. But , the sales area for scrap sales should be different.

3. Configuration - For this the Division is defined for Scrap sales and assigned accordingly. (refer set up sales area -- OVXG). Separate Sales Order type + Delivery + Billing is defined. The scrap material master is defined by assigning the division to the materials.Revenue account determination is set up for scrap sales G/L accounts.( VKOA).Customer master to be created for Scrap sales area.All other SD relevant seetings to be maintained. But the transaction process to be followed as per normal SD process.

[Former Member]

Hi,

<b>Scrap Sales:</b>

In a manufacturing industry say for example machine components are manufatured from steel bars. So during machining / turning of the raw material turning scrap is generated in the form of <b>"chips"</b>. Again you will have scrap for stationary which is used, then scrap in the form of <b>"used coolant oil"</b>, <b>"cotton waste"</b>, <b>"defective packing material"</b>, etc.

The scrap also generates revenue as it is saleable in the scrap market. When we sell the scrap it is called as scrap sales.

<b>Role of scrap sales in SD:</b>

The scrap material is also considered as finished goods with no <b>MRP</b>. As and when a suficient qty is generated then the management can decide to sell it. <b>A sales order is generated, delivery + PGI and then invoice and excise invoice if the scrap material is excisable.</b>

<b>Configuration & settings:</b>

<b>Material type</b> - It should be <b>FERT</b> only with no <b>MRP</b> settings, <b>no quality, no forecasting. Accounting & Costing will be there as well as plant stock</b>.

<b>Pricing</b> - The pricing procedure will be the same except for scrap sales you have an extra condition type for <b>"TCS - tax deducted at source"</b>. The rate of this is may be <b>"1.133%"</b>

So in your pricing procedure you will have to include an extra condition type say for eg:<b>ZTCS</b>.

Rest everything is the same.

Reward points if solution helps.

Regards,

Allabaqsh G.Patil.

[Former Member]

Hi Sai,

Scrap sales is predominantly used for selling of scrap materials which are not part of standard finished products of the company. i.e. the original Finished Product might be scrapped due to bamage or it could be some machinary in plant that may be scrapped and then sold etc..

You can configure a separate Sales order to billing cycle witha separate pricing procedure as pricing conditions for selling of scrap material may be different from their normal products. Also check on what movemnt type to use in the schedule line cat. If it is different from 601, then determine a newly created SLC with the required Movement type assigned.

C.Karthik.