SAP GTS Identity-Based Preference Processing (IBPP) is an add-on for SAP Global Trade Services (GTS) which brings additional functionality to it’s trade preference processing capabilities. The general purpose of trade preference is to leverage customs preferences, which are mainly represented in less or zero customs duties during importing of goods. 

Let’s provide a deeper look at further extension of SAP GTS IBPP capabilities. As it was mentioned in our previous blog, with the help of IBPP, it is possible to configure determination of preferential stock during picking in SD process. But what if we operate large warehouse with the help of SAP Extended Warehouse Management (EWM) where we want to perform more complex determination to decide what stock and from which precise location to pick. Then, the determination of preferential stock should be performed in SAP EWM.

SAP EWM is a warehouse management system, which helps us to operate complex warehouses and their outbound, inbound and internal processes. SAP EWM supports standard integration with SAP GTS in the context of foreign trade processing. More information about standard SAP EWM and SAP GTS integration can be found in EWM-GTS integration blog.

Replication of preferential characteristics from IBPP

When we receive goods from our customers which have specific identifier assigned (i.e., batch number in case of batch-managed materials), we can maintain or determine their preferential status with the help of IBPP:

After preferential status was maintained or updated, changes are replicated to the corresponding ERP and EWM system. This is how maintained batch for material can look like in the ERP system:

Here, preference indicator is set to positive value, and in case of trading goods, preferential threshold is not calculated, but set to the lowest possible value, so actual selling price will be always higher in case of preferential stock.

Batch in EWM system looks identical to the corresponding batch in the ERP system:

To connect batches in ERP and decentralized EWM system, we setup integration model in APO core interface (CIF). Then, whenever batch is created/updated in ERP, it will be replicated to the corresponding EWM system.

Determination of preferential stock

At the moment that we have all the preferential characteristics maintained in IBPP and replicated to ERP and EWM systems, we can configure preferential stock determination based on IBPP-relevant batch characteristics.

Batch determination is performed in outbound process when planning of stock picking is happening. When we perform outbound process from  EWM-managed storage location, outbound delivery is replicated from ERP to EWM system and actual picking is performed on EWM side.

The basic principle of preference-stock determination during picking could consist of several steps, among them are:

1.   Checking of relevance or batch determination based on defined conditions (i.e. material, materials/customer combination).
2.   Checking of the applicable free trade agreements.
3.   Considering batches with preferential status for particular free trade agreement.

In this blog three options of preferential batch stock determination for EWM-managed storage location will be proposed and explained:

1. Determination of batch number in ERP and its replication to the EWM system.
2. Determination of batch selection criteria in ERP and transferring them to the EWM system.
3. Determination of batch in EWM system exclusively.  

Determination of batches in the ERP system

This option can be also used in case of non EWM-managed storage locations since complete stock determination is performed in the ERP system.

To perform batch determination, we should proceed to the following steps:

1. During creation of sales order determination can be performed and batches can be assigned to the sales order item:

2. After creation of sales order in ERP, we proceed with the outbound delivery. Instead of running determination in sales order, we can perform it in outbound delivery as well.

3. Next, the document is transferred to the EWM system. Two items were created where one item holds batch number determined by ERP system. Only item with batch number assigned will be relevant for creation of picking warehouse task.

Pros:

• Setup relevant materials for batch determination can be done with standard transactions based on various conditions in the ERP system.
• List of active FTAs and configuration of IBPP characteristics are available in ERP system and can be used for determination of relevant batches.

Cons:

• Since batches are determined on the ERP side, EWM constraints such as warehouse layout are not considered.

Determination of batch selection criteria in the ERP system

On the other hand, we can configure two-step batch determination, which begins in ERP system and then continues in EWM system. To do so, we set relevance of material or combination of material and customer for batch determination in ERP system again. But this time we do not determine batches in ERP system, but only selection criteria for batches are determined.

Here, we can configure selection criteria according to our custom requirements. Batch selection criteria can be determined either on sales order level or on outbound delivery level.

On the following screenshot, we can see how batch selection criteria were determined on outbound delivery level. System has proposed us batch number, which corresponds to the selection criteria.

During confirmation of batch split in outbound delivery, system first offers us to copy selected batches which does not suit our requirement. Then the system offers us to only copy batch selection criteria, which works for us.

In current system setup, automatic batch determination during outbound delivery creation only replicate the batch selection criteria to SAP EWM where then a batch search is performed. Here we can see how selection criteria assigned to the EWM delivery can look like:

These selection criteria will be used during picking warehouse task creation and determination of relevant stock.

After creation of warehouse task, selection criteria are taken into account and corresponding batch-managed stock is chosen to be picked:

Pros:

• Setup of relevance of materials for batch determination can be done with standard transactions based on various conditions in ERP system.
• List of active FTAs and configuration of IBPP characteristics are available in ERP system and can be used for determination of batch selection criteria.
• The determination of batch itself is performed on EWM side based on ERP selection criteria, which brings more flexibility during determination.

Cons:

• Higher configuration effort is required to setup selection criteria in both systems.

Batch determination in EWM exclusively  

Batch determination runs in EWM system exclusively. Current option does not require batch selection criteria or batch numbers to be transferred to EWM system.

Such option has some drawbacks, though. Here, we might want to have access to the mapping of IBPP characteristics to batch attributes based on particular legal regulation (Free Trade Agreement) and list of active legal regulations in GTS. All these information are available in ERP system, but not in standard EWM system.  

Since no determination is performed on ERP side this time, then no selection criteria and no batch assigned to item is available:

The whole determination is performed based on custom EWM logic which check IBPP-relevant batch criteria in EWM. Here is how the result of preference-relevant batch stock determination during creation of picking warehouse request can look like:

Even though no information about batch determination from ERP is provided, it is possible to run the determination on EMW exclusively.

Pros:

• Flexibility in determination of batches within custom-defined logic.

Cons:

• Higher development effort is required to implement complete logic on the EWM side exclusively.
• No information about active FTAs and mapping of IBPP characteristics are available in standard EWM solution.

Conclusion

All three proposed solutions require custom developments to be implemented in order to perform determination based on IBPP-relevant batch characteristics. In case we use EWM solution in our infrastructure, we can adjust determination not only based on IBPP preference statements, but on  complex warehouse layout as well.

According to the aforementioned information, the optimal solution for IBPP-relevant batch stock determination could be hybrid determination between ERP and EWM systems. First, relevant batch selection criteria are prepared in the ERP system and then transferred to the EWM system where actual determination of batch-managed stock can be performed.

References

1. Trade preference with SAP GTS Identity-based Preference Processing (IBPP)
2. HOW TO | EWM & GTS Integration