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Imports Procurement
The
imports process differs from regular procurement, as it follows a series of
steps which are not applicable to materials procured locally.
Imports
procurement incorporates the placement of a purchase order, recording of
shipping details, establishing LCs and Bill of Ladings. Generation of pay order
request will be catered through down payment request.
The
materials purchased are subject to landed costs and other clearing charges which
are to be included in the material price. Due to these differences this process
has been dealt with separately and is illustrated below.
In
SAP, the additional costs incurred
for any purchases can be valuated as part of the material cost. These costs are
referenced as delivery cost in the SAP
context.
These
costs can be planned at the PO stage. In the
standard system, there are the following types of delivery costs:
- Freight costs
- Customs charges
- Bank Charges
- Miscellaneous costs
Additional
costs can be configured in the system according to the users’ requirement. The
costs conveyed by the power user are Customs duty, FED, Miscellaneous, CED,
Sales Tax, Extra Duty, Income Tax, Wharf-age, Civil Aviation
charges, Warehousing Rent, Handling, Crane
Bill, Customs Examination test, Cartage, Porter-age,
Service charges, GST, DTRE, Delivery order, ETO Stamp Duty, E-filling and Agency.
These
additional costs are represented by the pricing condition in the SAP system. These pricing conditions are assigned
to the PO during creation to determine the
estimated cost of landing for the consignment.
SAP Recommended Process: Imports Procurement
In
view of the difference in accounting treatment of the material valuation, the
‘actual’ costs to be captured for the material can be calculated automatically
by the system as follows:-
·
The
PR is created based on the requirement generated by MRP run.
· RFQ
is raised to obtain the relevant pricing especially for requests created
manually if there is no source of supply available in the system.
·
A
pro-forma invoice will then be received from the vendor.
·
The
PO is created with reference to the successful
quotation.
·
In
each line item of the PO, the delivery costs
are estimated. These will represents the costs that are to be valuated as part
of the material costs. A detailed list will be available in the Realization
phase.
· On
establishment of the Letter of Credit (LC) or contract with the banks, charges
incurred are prepared to be absorbed into the material costs via the Logistic
Invoice Verification entry. A liability is created in Accounts Payable to
enable payment and a Clearing Account is updated financially.
·
Subsequent
invoices for delivery costs are posted in Finance.
Any
foreign exchange gain / loss to be recognized as expense / income in the Profit
& Loss account without affecting the material valuation.
The
purchase order will be approved online using a two level release strategy
depending on the total value of the purchase order, if it is less than one
million the Purchase Manager and if it is exceeding one million the Head of
Supply Chain. The release strategy will be applied at the overall value of the
purchase order and will not be open to editing once it has been approved.
- Additional information related to LC/BC not mentioned. All these information recorded for tracking of shipment and reporting purpose. List provided by the Power Users is Indent Number, Indent Date, Performa Invoice Number, LC Number, LC Date, AWB Number, AWB Date, IGM Number, IGM Date, AFE Number, ADC applied, ADC obtained, Pay Order Request Date, Pay Order Receiving Date, Endorsement applied and Endorsement received.
- Information related to import taxes and charges will be displayed in purchase order as reference data.
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