How to manage excess stock / damaged stock at the time of GR?

[former_member1256834]

Dear Gurus,

For our business esp. Imports, we frequently have scenario's where we either recieve more stock or less stock (cause of damage) from the vendor. Let me try to explain the scenario's.

Scenario 1: PO for Qty 100 PC is placed. The vendor sends 102 PC (expecting losses in transit). When we recieve the goods all 102 PC are intact. Since this is import, we cannot send back the goods and the vendor is paid for 100 PCs. No adjustments are made in future. The 2 PCs are gain for the business.

Scenario 2: PO for Qty 100 PC is placed. The vendor sends 100 PC, 5 of which get damaged in transit. We still have to pay the vendor for 100 PCs. We ask for replacement. The vendor may or may not give replacement. If the vendor decides to give replacement, it will be with the next order. If not, that is a loss to the company as full price has already been paid to the vendor.

Scenario 3: PO for Qty 100 PC. The vendor decides to give replacement pieces for previous order, so dispatches 105PCs. Here we pay the vendor for only 100 as the payment for 5 PCs was done before.

My concern is that these are raw materials and are generally valuated at MAP. This quantity variance impacts the price and the profitability of the particular month/ quarter cannot be captured correctly.

Can you please suggest how to work around this?

Thanks,

Ritesh

[kunal_ingale]

Hello ,

you need to see what quantity you are going to bill

if you receving less goods due to Lost in transit then just receive less goods in unrestricted stock. remaining keep as it is and short close the PO if you are paying for less quantity.

if you will be paying for full Quantity then just recieve less quantity and bill for full and lost goods will be received with the open PO when vendor send it next time.

if the vendor sending more quantity then receive the actual quantity and for excess quantity check with finance person what they wanna do. if they need to be updated in the inventory then receive it. if not then receive it as free goods , but in this case MAP will be updated as per total quantity.

thanks

kUnal

[former_member486559]

Hi,

These process scenarios of import procurement of materials can be resolved by two ways in SAP system-

solution 1# Make setting for GR based IV indicator in PO tcode ME21N.At the time of GR posting in SAP system ,select tab non-ordered items and enter the excess qty. in required field . Post the GR .Obviously inventory will update for GR qty only.Then IV can be posted in a system.

Solution#2 : Award a Quantity contract for supply of import items to a Local Importer with your terms & conditions.Local vendor will supply only PO quantity.Actual GR can be posted in SAP ERP system.

Thanking you.

Jayant Garg

[kunal_ingale]

Hey , I never seen the tab you are tlaking about. any chnace you can elobarate more on it?

[former_member183424]

If your business process is like that, then you should accept whatever system is doing.

If you receive more than order quantity, then your material valuation should have been carried out as per the GR quantity, not the PO quantity.

For another scenario, if vendor gives a replacement, then there is no issue with valuation as you are deducting the same extra amount from another invoice. But if not, then it’s a call from business point of view, whether they want to bear the loss or they want to post a subsequent credit to vendor which affects material valuation.

[mohsinabbasi007]

Dear Ritesh,

Scenario 1: PO for Qty 100 PC is placed. The vendor sends 102 PC (expecting losses in transit). When we receive the goods all 102 PC are intact. Since this is import, we cannot send back the goods and the vendor is paid for 100 PCs. No adjustments are made in future. The 2 PCs are gain for the business.

Option No.1: To me you have 2 option to handle this i.e. GR with 102 but at the time of invoice you should pay only for 100, as this will ultimately become the part of your current stock.

Option no. 2: You should do GR 100 and add two pieces via 501(it will increase your inventory with MAP) or FOC i.e. 511 (It will adjust your MAP i.e. decrease MAP, as 2 pieces are added to inventory as a FOC)

Scenario 2: PO for Qty 100 PC is placed. The vendor sends 100 PC, 5 of which get damaged in transit. We still should pay the vendor for 100 PCs. We ask for replacement. The vendor may or may not give replacement. If the vendor decides to give replacement, it will be with the next order. If not, that is a loss to the company as full price has already been paid to the vendor.

If vendor agree to replace, then you make GR for 100, and invoice for 100, after that you should scrap it. When next time you receive, you should receive it via 511(FOC) movt type.

If vendor not agree to replace: Then same process as it is loss for you but your company should pay for it, so you should scrap it after invoicing for 100 Qty.

Scenario 3: PO for Qty 100 PC. The vendor decides to give replacement pieces for previous order, so dispatches 105PCs. Here we pay the vendor for only 100 as the payment for 5 PCs was done before.

You should receive 100 and invoice for 100 qty but extra qty will be receive via movt type 511, so that you can get the report via movt type 511 for how many qty you received as a FOC.

Best Regards

Mohsin Abbasi

[former_member775644]

Have you got solution? If yes please help me

[JL23]

Not really sure what you expect, if you are not satisfied with moving average price evaluation then your only alternative is standard price. Nobody forces you to evaluate raw materials with MAP this is a pure business decision.

But your overall real profitability is anyway effected with this business model of "The vendor may or may not give replacement"