KBACE Intra-Inter Company within Complex Supply Chains...

1 © 2009 KBACE Technologies, Inc.

Intra-Inter Company Ordering and Billing within Complex Supply Chains

Larry Talbot, Enterprise Solution Director

July 21, 2009

© 2009 KBACE Technologies, Inc.2

Introductions

•Larry Talbot – Enterprise Solution Director


Agenda

•Review of Basic Intra-co & Inter-co Functionality

•Layering Intra and Inter-co Processes for Complex Supply Chain Networks

•Key Configurations

•Review of Accounting

•Other Considerations

•Questions and Wrap-up


Review of Basic Intra-co and Inter-co Functionality


Chronology 11.03 – 11.5.7

•Internal Ordering • Transfer of goods between two inventory organizations residing in same OU

• Supply chain solution 1st and foremost – driven by internal replenishment triggers

• Intra-company solution limits financial impacts to GL only (typically Balance Sheet)

• Fully automated process relies on Shipping Network

•Inter-company Procurement and Ordering• Very manual process (unless customized/extended)


Internal Ordering Flow (Intra-co)

Order Import

Order Management

Receiving

Inventory

Scheduling & Shipping

Order Management

OF1071Schedule

Sales Order Ship Date

OF1071Schedule


• The planner schedules sales order lines ship dates.

MM1149Ship

Material

MM1149Ship

Material

• Shipping Clerk packs,weighs, counts, ships and records shipments

• Material goes intransit

MM1090Pick

Material

MM1090Pick

Material

• Shipping Clerk picks and transfers orders to Staging

Internal Requisitioning


Create and Approve Internal Requisition


• Generated by Mix Max, Planning System, Manual,

Automated RequestImport Order


• Resp: OM for Shipping Org

• Source = Internal

Automated RequestRun Create Internal Order conc request


• Resp = Purchasing in Destination Org

Receive Internal Req/Internal SOReceive Internal Req/Internal SO

• Receiving clerk scans the inbound material against the Internal Requisition

Start Here

End Here


Chronology 11.5.8

•Introduction of Inter-Company Relationships (Inventory Function)

• Inter-company Procurement and Ordering delivered; a more comprehensivefinancial solution for Interco

• Transfer of goods between two inventory organizations residing in different OU’s

• Designed predominantly for Inter-co Direct Ship Processes; driven directly through Order Management

• More robust transfer pricing simplifies the order processing and inter-company transactions where ‘arms-length transactions’ and hard documentation is required

•Internal Ordering (through Supply Chain) not compatible initially, however remained an option (w/caveats)


Shipping (Shipping OU)

Process Intercompany Transactions

Background Intercompany Processing

Order Entry & Scheduling (Selling OU)

Order Management

OF1069Manage

CustomerOrders

OF1069Manage

CustomerOrders

• Enter Customer Order where Selling OU is different from Shipping Warehouse OU.

OF1071Schedule


OF1071Schedule


• Order Entry schedules sales order lines ship dates based on ATP.

MM1149Ship

Material

MM1149Ship

Material


• Shipment is to End Customer• Allow transaction to COST

MM1090Pick

Material

MM1090Pick

Material

• Shipping (OU) Clerk picks and transfers orders to Staging

11.5.9 BFA v2.0

Automated RequestCreate AR Invoices

Automated RequestCreate AR Invoices

• Responsibility OU = Shipping OU

• Shipping OU = OU for Warehouse on SO

Automated RequestCreate Intercompany

Invoices


Invoices


• Source = Intercompany

Automated RequestCreate AP Invoices

Automated RequestCreate AP Invoices


• Selling OU = OU in which order was entered.

Automated RequestImport Payables

Interface(Expense Report Import)



• Responsibility OU = OU in which order was entered.

• Source = Intercompany

Inter-Company Procurement and Ordering(Direct Ship)

Invoicing (Selling OU)

Receivables

Create End Customer AR

Invoice


Invoice

• Standard AutoAccounting


Chronology 11.5.9 - 12

•Enhanced to support Internal Ordering and Inter-company Procurement and Ordering

• “Dual” accounting eliminated (Interco AR & AP) from within Shipping Network functionality

• Transfer Pricing based on Source Org Cost or on Price List

•11.5.10 –> No Change in 12


Supply Chain Layered Flow (Intra-co and Inter-co) Order Import (US)

Order Management

Receiving (GmbH)

Inventory



Scheduling & Shipping (US)

Order Management

OF1071Schedule


OF1071Schedule



MM1149Ship

Material

MM1149Ship

Material



MM1090Pick

Material

MM1090Pick

Material


Automated RequestCreate Interco AR

Invoices


Invoices

• Creates Interface Records for AR



Invoices(US/GmbH)


Invoices(US/GmbH)

• Create actual invoice in AR

• Resp OU = Shipping OU• Source = Intercompany

Automated RequestCreate Interco AP

Invoices


Invoices

• Creates Interface Records for AP

• Selling OU = Destination OU



(US/GmbH)



(US/GmbH)

• Creates AP Invoice• Resp OU = Destination OU• Source = Intercompany

Internal Requisitioning (GmbH)





• Responsibility: Selling OU• Destination = Selling OU• Source = Shipping OU



• Resp: OM for Shipping OU




• Resp = Purchasing in Destination OU



Start Here

End Here

End Here


Layering Intra-co and Inter-co Processes for Complex Supply Chain Networks


Complex Supply Chains

Customer Customer OrderOrder

Customer Customer ShipmentShipment


Complex Supply Chain (Intra-co and Inter-co) Flows




Invoices


Invoices

• Creates Interface Records for AR



Invoices(US/UK/NE)


Invoices(US/UK/NE)

• Create actual invoice in AR

• Resp OU = Shipping OU• Source = Intercompany


Invoices


Invoices

• Creates Interface Records for AP

• Selling OU = Destination OU



(US/UK/NE)



(US/UK/NE)

• Creates AP Invoice• Resp OU = Destination OU• Source = Intercompany

Create Order for End Customer (ITL)

Quoting/Order Management

Create Quote and Order

Create Quote and Order

• Enter Quote/Order where shipping warehouse is Org that will ship to end customer.

Start Here

Internal Requisitioning (NE/UK/US)





• Responsibility: Selling OU• Destination = Selling OU• Source = Shipping OU



• Resp = Purchasing in Destination OU

Order Import (NE/UK/US)

Order Management



• Resp: OM for Shipping OU


Scheduling & Shipping (US/UK)

Order Management

OF1071Schedule


OF1071Schedule



MM1149Ship

Material

MM1149Ship

Material



MM1090Pick

Material

MM1090Pick

Material


Receiving (UK/NE)

Inventory



Scheduling & Shipping (UK/NE)

Order Management

MM1149Ship

Material

MM1149Ship

Material



MM1090Pick

Material

MM1090Pick

Material


AR (ITL)

Receivables


Invoice


Invoice

• Standard AutoAccounting

End Here


Key Configurations


Key Configurations

Internal Order Transfers across operating Units – Implemented using Shipping Network and Intercompany RelationsShipping Network with Internal Order Enabled

• Define the shipping inventory organization and receiving inventory organization

Profiles Set Up• CST: Transfer Pricing Option: Yes (Price as Incoming/Price Not as Incoming)

• INV: Intercompany Invoicing for Internal Orders: Yes

Intercompany Relations Definition• Operating unit belonging to sending organization as ‘Shipping OU’

• Operating unit belonging to receiving organization as ‘Selling OU’

Price List association in ‘Bill To’ relationship for Internal Customer is defined in Intercompany Relations


Review of Accounting


Accounting Considerations • Transfer Pricing (TP) must be set properly in System Profiles

• Yes, Price Not As Incoming Cost: The incoming cost to the Receiving organization is the Shipping organization’s inventory cost.

• Costs - Based on Inventory Cost• Yes, Price As Incoming Cost: The incoming cost to the Receiving organization is based on

the transfer price.• Costs - Based on Price List

• Shipping Network – Used Primarily for Inter-Organization Transfers• Caveat – certain accounting setups are used by Inter-Company Relationships• “Transfer pricing” exclusively based on (inventory) “at cost” – Org to Org relationships • 11.5.9 to 11.5.10 functionality changes have simplified

• Inter-company Relationships – Provides alternate accounts to capture accruals & transfer profit

• Some Shipping Network accounts used – but extremely limited


Accounting – Transfer @ Transfer PriceRepresents valuation of the transfer @ transfer price in the receiving org

Order Shipment

CST: Transfer Pricing Option: 'Yes, Price as incoming cost':Standard Cost

Transfer Price = Rcv Org Cost


Inter-company Invoicing

CST: Transfer Pricing Option: 'Yes, Price as incoming cost':Standard Cost

Accounting – Transfer @ Transfer PriceRepresents valuation of the transfer @ transfer price in the receiving org


Order Shipment

CST: Transfer Pricing Option: 'Yes, Price not as incoming cost':Standard Cost

Accounting – Transfer @ Transfer PriceRepresent valuation of the transfer @ cost of sending org in the receiving org and the difference between

Transfer Price and Cost going into 'Profit in Inventory' Account defined in shipping network

Transfer Price = Price List


Inter-company Invoicing

CST: Transfer Pricing Option: 'Yes, Price not as incoming cost':Standard Cost

Accounting – Transfer @ Transfer PriceRepresent valuation of the transfer @ cost of sending org in the receiving org and the difference between

Transfer Price and Cost going into 'Profit in Inventory' Account defined in shipping network


Accounting Sources

YesInter-co RelationsInter-company Expense

YesInter-co RelationsInventory Profit

YesAP/ARInvoices (AR & AP)

ConditionallyShip NetworkIn-transit

YesAP/ARFreight/Tax

UsageSourceAccount Description

No

No

Conditionally

No

Ship NetworkInter-Org AP Clearing (Secondary)

Ship NetworkInter-Org AR Clearing (Secondary)

Ship NetworkPurchase Price Variance

Ship NetworkTransfer Charges


Other Considerations


Gotcha’s• May require modifications to Standard Cost of Goods WF• May require additional auto-accounting for Supplier (AP side

transaction) • May require additional auto-accounting for Customer (AR side

transaction)• Does GL Chart of Account structure have a distinct inter-company

segment?• Typically xxx-xxx-xxxx-xxx-xxxx-iii

• These examples don’t take into account additional Elemental Accounting implications for Inventory (Issue & Receiving)

• More entries generated• Transfer Price (Ship Org) = Material Element (Rcv Org)

• Currency translation loss/gain compounds complexity/analysis• Configured Products pushed through the supply chain• Revenue Recognition and Differed COGs implications


Questions


Contact InformationFor more information, please contact:

Enterprise Solution DirectorCell: (617) 803-1443 Phone: (781) 631-3194

Email: [email protected] Technologies, Inc.6 Trafalgar Square Nashua, NH 03063

Enterprise Solution DirectorCell: (617) 803-1443 Phone: (781) 631-3194

Email: [email protected] Technologies, Inc.6 Trafalgar Square Nashua, NH 03063

Larry TalbotLarry Talbot

Sales Director – North CentralKBACE Technologies, Inc.Cell: (414) 801-4684 Office: (262) 593-2210

Email: [email protected] Technologies, Inc. Milwaukee, WI 53549

Sales Director – North CentralKBACE Technologies, Inc.Cell: (414) 801-4684 Office: (262) 593-2210

Email: [email protected] Technologies, Inc. Milwaukee, WI 53549

Doug McMahonDoug McMahon

KBACE Intra-Inter Company within Complex Supply Chains...

Documents

Transcript of KBACE Intra-Inter Company within Complex Supply Chains...