In today’s digital world, companies are constantly seeking solutions to enhance operational efficiency, make better decisions, and respond more agilely to changing market conditions. SAP S/4HANA stands out as the ERP system of choice for countless companies worldwide. The system offers excellent functionality and capabilities to digitally map the organization and its processes, enabling successful transformation. According to the SAP S/4HANA Study 2022 by CIO, CSO, and Computerwoche, “87 percent of the surveyed companies expect a ‘very high,’ ‘high,’ or ‘rather high’ business value as a result of implementing SAP S/4HANA.”
Even in the execution of transactions between different subsidiary companies, one often faces complex challenges. The effective reconciliation of transactions between company codes is a crucial aspect for companies operating with distinct legal entities. Traditional methods of intercompany sales can be inefficient, time-consuming, error-prone, and often require extensive efforts in intercompany clearings. This is where the new solution of “Advanced Intercompany Sales” in SAP S/4HANA comes into play. With this innovative solution, companies can optimize their intercompany clearings to ensure seamless and efficient business processes. In this blog article, we will take a closer look at what Advanced Intercompany Sales is and how it helps companies elevate their intercompany sales to the next level.
What is Advanced Intercompany Sales and Stock Transfer?
Advanced Intercompany Sales is a new solution in SAP S/4HANA that helps companies simplify and automate their intercompany sales processes. It enables seamless exchange of goods and services between different subsidiary companies of the same organization, fostering improved collaboration and optimized inventory management.
What is the advantage of Advanced Intercompany Sales?
- Efficiency Enhancement: By automating processes such as order processing, invoicing, and shipping, efficiency is improved. Manual tasks and time-consuming coordination are largely eliminated, leading to faster and more accurate transactions.
- Optimized Inventory Management: Advanced Intercompany Sales enables real-time synchronization of inventory between subsidiary companies. This leads to improved planning and avoidance of shortages or excess inventory. Companies can forecast demand more accurately and adjust inventory accordingly.
- Transparent Reporting: The feature provides comprehensive reporting capabilities on intercompany transactions. Companies can gain detailed insights into revenue, profits, and inventory at the subsidiary level, leading to improved financial control and planning.
- Standardized Processes: By standardizing intercompany processes on a centralized platform, companies can ensure a uniform approach. This simplifies collaboration between subsidiary companies and minimizes errors or inconsistencies. It also eliminates the need for extensive reconciliation efforts between the entities.
- Compliance and Audit Trail: Advanced Intercompany Sales offers a gap-free tracking of all intercompany transactions. This facilitates compliance with regulatory requirements and simplifies the execution of internal or external audits.
What does the process look like in S/4HANA?
The following describes the two new processes, Advanced Intercompany Sales (cross-company code sales) and Advanced Intercompany Stock Transfer (cross-company code stock transfer), in more detail.
Process Flow of Advanced Intercompany Sales (Cross-Company Code Sales):
- Sales Order
- The selling company code initiates the process by creating a sales order.
- The delivering company code is specified in the sales order item.
- Internal Purchase Requisition
- Automatically, the system generates an internal purchase requisition addressed to the delivering company code.
- The internal purchase requisition includes all the relevant information from the original sales order.
- Internal Sales Order
- In the delivering company code, an internal sales order is automatically generated based on the internal purchase requisition.
- Create Delivery
- The delivering company code creates a delivery document.
- Book Outgoing Goods
- The delivering company code prepares the goods for shipment to the end customer.
- The goods are physically assembled and prepared for delivery.
- The outgoing goods are booked in the system, resulting in a reduction of the inventory.
- The goods are delivered to the end customer by the delivering company code.
- Issue customer Invoice
- The selling company code generates an invoice for the goods delivered to the end customer.
- Create Internal Invoice
- An internal invoice is created by the delivering company code to the selling company code.
- The system automatically generates an internal supplier invoice.
Process Flow of Advanced Intercompany Stock Transfer (Cross-Company Code stock transfer):
- Create Purchase Requisition
- The receiving company code creates an internal purchase requisition.
- Internal Sales Order
- The delivering company code creates an internal sales order.
- This sales order is automatically generated after the purchase requisition.
- Create Delivery
- The delivering company code creates a delivery document.
- Goods Issue
- In the delivering company code, the goods are prepared for delivery and the goods issue is booked.
- An outgoing goods document is automatically generated.
- Afterwards, the goods are delivered.
- Goods Receipt
- The receiving company code receives the goods and records the goods receipt.
- An incoming goods document is automatically generated.
- Internal Invoice
- The delivering company code invoices the goods to the internal customer.
- This results in an incoming invoice in the receiving company code.
What is the difference compared to the traditional solution?
The new solution has been available since December 2022 and offers several advantages compared to the traditional SAP solution:
- The automatically generated documents such as internal sales order, internal purchase requisition, and internal supplier invoice ensure a streamlined and efficient process flow. Manual tasks and extensive reconciliation efforts are eliminated.
- The evaluation of key metrics such as order entry and order backlog in both company codes is possible.
- The transfer of ownership is automated, ensuring transparent ownership of the goods.
- Once the selling company creates the delivery document, the system automatically generates the material movement document, which clearly establishes the ownership of the goods between company codes until reaching the customer.
- The introduction of transit stock in the selling company code provides high transparency regarding the current inventory situation.
- For end users, the new processes bring minimal changes to their daily activities since the additional documents are automatically generated. However, they have the opportunity to monitor the process more closely and detect and resolve errors early through new FIORI apps. There is increased transparency for all stakeholders regarding the process flow and current status.
The FIORI app “Monitor Value Chain” provides an overview of all process steps and their statuses, including any errors that occurred during the process flow.
What are the prerequisites for using the new processes?
- You are using SAP S/4HANA OP2022 FPS00 version or SAP Private Cloud.
- All company codes are operating in the same system/client.
- The material master data must be available in both the supplying and receiving plants.
- The company codes must be assigned to the same controlling area.
- To ensure that liabilities are booked on the purchasing company’s financial accounts, the supplying company must be set up as a vendor.
Conclusion:
Advanced Intercompany Sales and Stock Transfer is an extension of the traditional SAP solution that automates the process of intercompany reconciliations to a greater extent. This leads to improved efficiency and reduces manual interventions and potential errors. You gain enhanced transparency across the entire intra-company sales process and can better monitor costs and improve information flow through real-time data exchange. With seamless integration into all modules, data consistency is ensured, and smooth collaboration between different departments is guaranteed. Tedious reconciliations are eliminated.
However, please note that the benefits of the solution depend on the specific requirements of your organization. We recommend conducting a thorough analysis and seeking a demo or consultation from an SAP expert to determine if the solution is the right fit for your organization.
If this blog article has sparked your interest or if you would like further information, please do not hesitate to contact us. We would be happy to assist you and demonstrate the benefits for your company.
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