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Imports Procurement - Procurement Processes - SAP Implementation

Imports Procurement The imports process differs from regular procurement, as it follows a series of steps which are not applicable to... thumbnail 1 summary

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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