Global Trade

Purpose In the trading environment, it is necessary to control and organize the flow of materials and services from vendors to customers. The principle of the business is to match demand from the customer with supply from the vendor. This type of business is known as triangular business, principal business, or back-to-back business. The industry defines this type of business as business where purchasing and sales are carried out in parallel, in the same trading department. For example, you get a sales order from a customer, search for the best vendor to fulfil the customer's requirements, and issue a purchase order, all in one transaction. You coordinate shipping, transportation, and customs clearance for the goods. The vendor then delivers the goods directly to the customer. The trading company gets an invoice from the vendor, and bills the customer. Finally, you receive payment from the customer and make a payment to the vendor.

In the SAP system, this type of business process, in which sales and purchasing processes are carried out simultaneously, is defined as Trading Business. SAP Global Trade's new object, Trading Contract, is used to handle this ordering process.

There are several types of procurement and sales expenses associated with trading business, such as inland freight, ocean freight, insurance, duty, and so on. Trading charges linked to the Trading Contract can be processed by a new component, Trading Expense. The Trading Expense component is fully integrated with the Trading Contract so that you can maintain purchase related expenses and selling related expenses centrally. Planned expenses can be entered in the Trading Contract and accrued. Unplanned expenses can be linked to Trading Contract at a later stage when you receive invoices from service providers, freight forwarders, insurance companies and customs offices. It is thus possible to assess accurate profitability as costs and revenue elements are linked to the Trading Contract. Subsequent transactions such as goods receipt, inventory management, goods issue, invoice verification, and customer billing are maintained in the standard SD/MM components.

Implementation Considerations
The Global Trade component is a part of the standard SAP system and can be used in all business transactions, independent of the line of business. Since Trading Business initiates both Sales and Purchasing processes, it is mandatory to maintain both SD and MM settings and Customizing.

Integration
The vendor and customer master, material master, conditions, sales transactions, and purchasing transactions must be in use if you want to use the Trading Contract component. For further information, see ;

Sales orders Purchase Order

Features The Global Trade component provides: Trading Contract Trading Execution Workbench (TEW) Position Management Trading Expense

Trading Contract
Purpose Trading contracts are documents in the SAP System that integrate multiple legal contracts between customers and vendors. With the trading contract, both sales and purchase orders can be maintained using a single transaction. Usually in a trading company, one person or department carries out both buying and selling procedures. The simultaneous sales and purchasing data entry screen is necessary to avoid redundant data entries and reduce missed operations. With one trading contract document, the system creates follow-on sales side document and purchase side document after releasing. In the contract document header, you can maintain sales side data that is copied to each item line. Then you maintain purchasing data in each item line. You can create multiple purchase orders to fulfill one sales order if necessary. Trading contracts are, therefore, sales-order-driven documents. Trading contract can be used as one-sided contract such as purchase side only contract and sales side only contract. Using position management function, you can manage the material position and subsequent process of one-side contract item. The Trading Contract component enables you to implement various different business transactions for integrating sales documents and purchase documents. You can, for example, create the following type of the trading contract:

Domestic trading contract Import trading contract

Export trading contract Off-shore trading contract (third-country deal)

Integration
The vendor and customer master, material master, conditions, sales transactions, and purchasing transactions must be in use if you want to use the Trading Contract component. For further information see Features The Trading Contract component is a center of trading business. It incorporates sales orders, purchase orders, and vendor billing documents for trading expenses. Users can monitor the processing status of all subsequent transactions associated with the trading contract via extended document flow. It also provides accurate profit simulation report, including all the costs and revenue elements, when you enter data in the trading contract. After the deals are completed and all the data is transferred to Accounting, you can use the trading contract number to check the actual profit. The Trading Contract component provides support for the following:

Purchasing and

Sales & Distribution

Multiple units of measure Multiple currencies Trade pricing Partner functions Portfolio assignment Open order/Delivery control Incompleteness check Status control and release check Copy control Text Control Contract closing Quantity-matching check Risk management check Document flow Central output control Vendor evaluation TradingContract@net

Tradin g Execution Workbench (TEW)

Purpose In global trade, you often need to process several different kinds of transactions at the same time. The Trading Execution Workbench (TEW) provides a central cockpit where traders can process trading contracts and their subcomponents, such as purchase orders and sales orders and follow-on documents. In addition, TEW automates a large part of the data entry, making processing quicker, easier, and more error-free. Integration You must install SAP Global Trade in order to use TEW. In addition, you must also customize the standard functions of SD/MM that are needed for background processing. You can call the Position Management and Trading Expense functions directly from the TEW. The following illustration gives an overview of how various global trade functions fit together with the TEW.

Features

Role-based layout of TEW is highly customizable to support different lines of business (for example, steel, oil, food).

Smart functions anticipate which tasks you want to perform and suggest the appropriate source and target documents automatically. You can process multiple documents on one screen (including creating deliveries, shipping notifications for customs clearance, posting goods issue, and so on). A document flow diagram helps you keep track of what follow-on documents you have already processed and what remains to be done. The system remembers your selection settings from one session to another so you dont have to reenter them. A message area on the screen displays all errors, warnings, and information messages that you have received during the current session.

Constraints If you process a document in the TEW, you cannot use standard SD/MM transactions to make changes to it, as this could lead to data inconsistency. See also: Trading Contract Trading Expenses

Position Management
Purpose Position Management is the function for reducing inventory risk and selling loss. There are two main functions of position control. The first is to control the values entered during contract creation. The second is to create links between sales and purchasing data at the item level. Supporting this, two main functions have been created: Portfolio Management Association Management Portfolio Management A special key is assigned to the contract item dynamically. This is used for optimizing the balance of sales and purchasing. For more information, see Portfolio Management.

Association Management The system tracks item position information, and creates links between sales and purchasing based on the key information, portfolio. This link can be maintained flexibly. You create/change/delete this relationship logistics document maintenance. For more information, see Association Management

Trading Expenses
Purpose
The Trading Expense function in SAP Global Trade enables you to handle various kinds of costs and commissions incurred by a trading business. There are various types of expenses in the trading environment, all of which are realized at different times and posted to different accounts, and these are often not synchronized with the main flow of a trading contract. Trading companies must control trading-related expenses, such as freight, loading charges, storage costs, insurance, customs duty and commission efficiently. It is important to accurately assess costs, including purchasing costs and all trading charges associated with the trading contract.

The above figure describes the relationship between the trading contract process and the trading expense process.

The new process flow gives you more flexibility in maintaining expenses data. In trading contract processing, you can maintain planned expenses, which are treated as pricing conditions in the contract pricing schema. You can reference them when you post expenses in other processes. When logistics documents are being processed you can post expenses to a specific account. The vendor billing document is used for posting expenses. It has an additional function that enables you to post expenses to both Accounts Payable and Accounts Receivable.

Implementation Considerations
Since planned expenses are included in contract pricing, you must ensure that the contract pricing schema is customized properly. If you process trading contracts using the Trading Execution Workbench (TEW), you can also use it to process expenses. For more information see: Trading Contract

Discussed above