SD Foreign Trade

Foreign Trade…?

Exchange of Goods and Services across the

international boundaries and territories

Significant Share of GDP

SD Foreign Trade

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SD Foreign Trade

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Purpose

Manage import and export processes, integrating them efficiently into the

supply chain

Automatically identify licensing requirements for importing and exporting

goods based on current regulations

Simplify reporting with automatic procedures for creating, printing and

submitting declarations.

Determine which of your products qualify for preference handling.

Provide an active interface for sending or retrieving data via internationally

available EDI systems and other electronic media

Update or change data in all relevant foreign trade documents at any time

prior to the final goods issue. Even after you have posted the goods issue,

you can still change data in the invoice

Use

•Cost Effective

•Easy to Use

•Integrated with total SAP

system

Challenges

Data

Service

Preference

Processing

Communication

&

Printing

Documentary

Payments

Legal

Control

Periodic

Declarations

General

Processing

Foreign

Trade

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Foreign Trade

•

As countries move increasingly toward a global market economy,

businesses become more involved in and influenced by foreign trade.

This affects not only the vendor and customer relationship, but that of

foreign subsidiaries within a single company. With this opening of

market opportunities come regulations, licenses, import tariffs, and an

increasing amount of paperwork required by government agencies

and other legal entities.

•

SAP’s R/3 Foreign Trade application enables you to:

– Manage import and export processes, integrating them efficiently

into the supply chain

– Automatically identify licensing requirements for importing and

exporting goods based on current regulations

– Simplify reporting with automatic procedures for creating, printing

and submitting declarations

– Determine which of your products qualify for preference handling

– Provide an active interface for sending or retrieving data via

internationally available EDI systems and other electronic media

– Update or change data in all relevant foreign trade documents at

any time prior to the final goods issue. Even after you have posted

the goods issue, you can still change data in the invoice

.

Foreign Trade

The Foreign Trade/Customs (FT) application component is integrated

with Materials Management for handling imports and with Sales and

Distribution for exports. In the area of documentary payments, it is also

integrated closely with the Financial Accounting application.

Import Processing

•This scenario describes the processes involved in importing goods into your

country from a third country. In this sense, a "third country" is defined as the country of export when no trade agreement exists between your country and the exporter. In this case, you are responsible for compliance with the import laws of your own country.

Reasons for Importing Goods

There are three primary reasons for importing goods. 1. Trade 2.Production 3.Transit 4.Trade

There are three main reasons why you may want to import for trade purposes:

• Comparative advantage – Some foreign manufacturers can make products more

cheaply.

• Availability – Some products are only available in foreign markets.

• Marketability – A product may be new and you want to market it in your entire

country or in a region of your country. Production

It is sometimes advantageous to import raw or semi-finished materials to be used in a manufacturing process.

Transit

Foreign merchandise with the status "in transit" is exactly that – passing through your country on the way to another. At the plant level in the SAP System, this refers to a goods receipt that immediately becomes a goods issue to a country other than the location of your plant. A carnet TIR (document which allows

passage of foreign merchandise through a customs territory) may be required for the transfer of goods under bond in your country.

Import Process

• You (the importer) first request a quote

(generally, EXW or CIF) for the merchandise. This may or may not include transportation and

insurance costs.

• You prepare a purchase order based on the offer

(quotation) received from the exporter.

• The exporter creates a sales order based on your

purchase order and sends it to you.

• (Optional) The exporter creates an advanced

shipping notification to inform you of the date and quantities to be delivered.

Import Process

(continued)

• Also at the time of shipment, the exporter

provides you with required documentation depending upon the terms of sale and your agreement with the exporter.

• Documents may include some or all the following

1. Bills of lading

2. Commercial invoice 3. Export packing list

4. Shipper's Export Declaration (SED) (Required in the USA for goods valued at $2501 or more) 5. Shipper's Letter of Instructions (SLI) (applies

only to the USA)

6. Single Administrative Document (SAD) (applies only to the EU)

7. Certificate of Origin 8. Insurance certificates

Import Process Involving Letter

of Credit

• You (the importer) first

request a quote for the

merchandise. This may or may not include transportation and insurance costs.

• You prepare a purchase order

based on the offer received from the exporter.

• The exporter creates a pro

forma invoice and sends it to you.

• You open a letter of credit with

the opening bank in the country of import.

Import Process Involving Letter

of Credit

(continued)

• This involves advising the bank of the

documents required from the exporter. As an importer, you not only need the

documents required by customs, but also the documents that are required by any other agency regulating your commodity. These may include

1. Bills of lading

2. Commercial invoice 3. Export packing list

4. Shipper's Export Declaration (SED) (Required in the USA for goods valued at $2501 or more)

5. Shipper's Letter of Instructions (SLI) (applies only to the USA)

6. Single Administrative Document (SAD) (applies only to the EU) 7. Certificate of Origin

8. Insurance certificates

Export Processing

•This scenario describes the processes involved in exporting goods from your

country to an independent country (third country) where no trade agreement exists between your country and the importer. In this case, you are responsible for compliance with the export laws of your own country .

Reasons for Exporting Goods

Three primary reasons for exporting goods include

1.Increase profit 2.Consistency in sales profits 3.Extension of the product cycle

• Consistency in Sales

Peaks and valleys in the business cycle are inevitable. When the economy of one country is on an economic downturn, the economy in other nations may be in a relatively prosperous phase. If you have customers in countries other than your own, your business profits tend to become more consistent from year to year.

• Product Cycle Extension

When you export your product, the end of the product cycle is postponed. When the market in your own country is saturated, exporting allows you to introduce your product into other countries.

Export Process

• The importer first requests a

quotation for the desired merchandise.

• You (the exporter) provide a

quotation for the merchandise to the importer including costs

based on the terms of sale requested by the importer (usually, EXW or CIF).

• The importer sends you a

purchase order based on your offer.

• You issue a sales order based on

the purchase order and send it to the importer.

• (Optional) You may also send an

advanced shipping notification to inform the importer of the exact date and quantities of

merchandise to be delivered.

• You ship the merchandise to the

Export Process

(continued)

• Also you need to provide

documentation based on the terms of sale and your agreement with the importer. Documents may include some or all the following:

1. Bills of lading

2. Commercial Invoice 3. Export packing list

4. Shipper's Export Declaration (SED) (Required in the USA for formal entry valued at $2501 or more) 5. Shipper's Letter of Instructions (SLI) (applies only to the USA) 6. Single Administrative Document

(SAD) (applies only to the EU) 7. Certificate of Origin

8. Insurance certificates

Document Requirements

•Certificate of Origin:

manufactured. In most cases, the importer and exporter must keep this document on file and provide it to the government only if requested.

•Shipper's Export Declaration (SED):

•Export vessel movement summary sheet:

Foreign Trade Data in Master

Records

•Master data relevant to foreign trade that is used throughout the entire

logistics chain in Materials Management (MM) and Sales and Distribution (SD) documents.

Material Master Record

To go to a material master record from the SAP standard menu, choose Logistics ® Materials Management ® Material Master ® Material.

You can display or enter data relevant to foreign trade in the following views of the material master record:

•Basic data 1

•Base unit of measure •Material group

•Division •Net weight •Gross weight •Weight unit

•Sales organization data 1 and 2 •Tax category/classification

Foreign Trade Data in Master

Records

(continued)

•Transportation group •Loading group

•Foreign Trade: Export data

•Commodity code (or Import code number) •Country of Origin

•Region of Origin

•Legal (export) control information

•Preference information (when applicable) •Foreign Trade: Import data

•Import Code number (or commodity code)

•Export/import group (a grouping of similar materials for

export or import transactions)

•Country of origin •Region of origin •Accounting 1 •Valuation class •Price control •Price unit

Foreign Trade Data in Master

Records

(continued)

Customer Master Record

To go to a customer master record from the SAP standard menu, choose Logistics ® Sales and distribution ® Business partners ® Sold-to-party. You can maintain data relevant to foreign trade data on the following screens of the customer master record:

•General data •City •Country •Region •Transportation zone •Postal code •Language

The customer’s country helps indicate export transactions in sales and

distribution (SD) documents. You need the customer’s region for declarations to the authorities.

To go to the Shipping and Billing information screens from the General data screen, choose Goto ® Sales area data.

•Shipping •Shipping conditions •Delivering plant •Billing •INCOTERMS •Terms of payment

•Payment guarantee procedures •Licenses (legal control data)

Foreign Trade Data in Master

Preference Handling

There are several possibilities for qualifying your

product as originating in your country or economic zone. For example, these methods include:

Tariff shift (rules of origin)

Tariff shifting means you apply enough labor to the product or its components to change its commodity code.

De minimus rule (maximum of 7% non-originating goods)

The de minimus rule allows a product to qualify for preference if no more than 7% of the product is composed of non-originating goods.

Certificate of origin (vendor declaration)

Your vendors give you a document certifying that the product or its components originate in your country or economic zone.

Customs Data

•This task enables you to transfer foreign trade data objects from your

SD Foreign Trade

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Customizing

Incompleteness Schemas for

Foreign Trade Data

Sales and Distribution



Foreign Trade/Customs



Control Foreign

Trade Data in MM and SD Documents



Incompleteness Schemas for

Foreign Trade Data

In this IMG activity, you

define the incompletion

procedures that you want

to use at header and/or

item level.

You assign valid foreign

trade fields to each

Foreign Trade Data in MM and SD

Documents

Sales and Distribution



Foreign Trade/Customs



Control Foreign

Trade Data in MM and SD Documents



Foreign Trade Data in MM

and SD Documents

Assign the relevant

incompletion procedure for header and/or item data to the import and export

country.

You also define how the system reacts when data is incomplete.

Furthermore, you define in the "consistency check" section whether the system only allows valid

combinations of modes of transport and customs offices during document processing.

Import Screens In Purchasing

Document

Sales and Distribution



Foreign Trade/Customs



Control Foreign

Trade Data in MM and SD Documents



Import Screens In Purchasing

Document

Set the system to propose

import screens for the

subsequent maintenance

of purchase orders and

purchasing outline

Define Default Business Type (SD)

Sales and Distribution



Foreign Trade/Customs



Basic Data for

Foreign Trade



Define Business Transaction Types And Default

Value



Define Default Business Type (SD)

Define the business

transaction type designated

by the authorities and assign

it as the business

transaction type proposal for

Sales and Distribution (SD)

as well as Materials

Management (MM)

documents

Define Default Export Procedure

Sales and Distribution



Foreign Trade/Customs



Basic Data

for Foreign Trade



Define Procedures and Default Value



Define procedure default

Define import/export procedures and

determine defaults for Sales and

Distribution (SD) and Materials

Management (MM).

SD Export/Dispatch:

---

The proposal depends on the

following criteria:

Country

Sales organization

Distribution channel

Division

Export/import material group

Item category

Default Values For Foreign Trade

Header Data

Sales and Distribution



Foreign Trade/Customs



Transportation

Data



Default Values For Foreign Trade Header Data

Define default values for

foreign trade header

data. Note that this

object only supplements

vendor master data. It

does not overwrite it.

If you maintain mode of

transport '4' in the

vendor master and

mode of transport '3' in

this object, the system

will propose mode of

transport '4' in the

materials management

document

Allowed Business Transaction Type

Sales and Distribution



Foreign Trade/Customs



Basic Data for Foreign

Trade

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Define Combinations Allowed: Business Transaction Type - Procedure

Define the combinations of business Transaction types and procedures that are permitted

Business Transaction Type

The business transaction type classifies the type of business transaction which is performed. In the European Union (EU), this information is required for the

reporting of import and export data to INTRASTAT. Additionally, it is used by the system during export control

Export/Import Procedure Code

The export/import procedure code for foreign trade uniquely identifies an

export/import procedure. For business transactions in the EU, the procedure code is part of the information that you submit in monthly reports to INTRASTAT.

The system proposes procedure codes, based on the country of export/import, the sales area, material groups and item categories. For example, the procedure code can distinguish between goods that are shipped temporarily for further

manufacture by a subcontractor and goods that are shipped to their final destination after processing by a subcontractor.

Material Master Data

Commodity Code/Import Code Number for Foreign

Trade

Customer Master Data

Use

In Customizing for Export Licenses you can determine that certain license types will be used for customers with mainly military use. When defining export licenses, the system can assign license types valid for military use only to those customers that have been marked as mainly for military use.

Periodic Declarations

•Foreign Trade's Cockpit for Periodic Declarations is designed to

provide you with a quick, easy-to-use overview of the most important functions in the area of declarations to the customs authorities.

•To go to the Cockpit for Periodic Declarations from the SAP main

menu, choose Logistics ® Sales and Distribution (or Materials

Management) ® Foreign Trade/Customs ® Periodic Declarations ® Cockpit – Periodic Declarations.

•Choose Sales and Distribution (or Materials Management ®

Purchasing) ® Foreign Trade/Customs ® Periodic Declarations

Screen Section

Function

Operations Create periodic customs declarations

Maintain declaration data Perform archiving tasks

Monitoring Display and update foreign trade data in material

master records

Goods catalog Create and display goods catalogs

Settings Make relevant settings in the Implementation

Guide (IMG)

Additional Declaration Germany Create declaration for foreign trade in Germany

Prohibitions And Restrictions

•Foreign Trade's Legal Control

Cockpit is designed to provide you

with a quick, easy-to-use overview of the most important functions in the area of Legal Control. These functions assist you in checking your business transactions for compliance with several foreign trade laws and regulations (for example, the export of weapons-related products).

•To go to the Legal Control Cockpit

from the SAP main menu, choose

Logistics ® Sales and distribution (or Materials management) ®

Foreign Trade/Customs ®

Prohibitions and Restrictions ® Cockpit – Legal Control.

Licenses Creation, display or modification of license master records

License data Assignment of licenses to documents Alert reporting Display of sales

documents and licenses

Controlling Check of customer master records and material master records Simulation Simulation of Legal

Control transactions Settings Check of

Customizing settings Declarations Disk creation for

SD Foreign Trade

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MM01

Maintain Material Master

XD01

Maintain Customer Master

VI29

Incompleteness Schemas for Foreign Trade Data

VI49

Foreign Trade Data in MM and SD Documents

VI95

Default Values For Foreign Trade Header Data

VI52

Define Forms of Payment Guarantee

VX11N

Create a Financial Document to the Customer

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Additional Info

http://help.sap.com/saphelp_erp2004/helpdata/EN/d8/2585347860ea

35e10000009b38f83b/frameset.htm