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Last updated: 2nd December 2024
Today, I would like to introduce you to an amazing solution that you as our customer have desired for a long time, the Advanced Intercompany Processes. If you cannot wait, then check out the magic in this system demo here already.
Table of content (for quick access, just click on one of the business area links):
Overview
- Business Reasons for Intercompany Processes
- Financial Drivers
- New Best Practice Processes
- Process Activation and Restrictions
- Release Information
- Outlook
Intercompany Sales
- Classic Intercompany Sales - Single Level / Single System
- Advanced Intercompany Sales - Single Level / Single System
- System Demo - Advanced Intercompany Sales
Intercompany Stock Transfer
- Classic Intercompany Stock Transfer - Single Level / Single System
- Advanced Intercompany Stock Transfer - Single Level / Single System
Value Chain Monitoring Framework (VCM)
More Information / Additional links
Overview
Business Reasons for Intercompany Processes
A split between the entities handling sales and production is often needed for various reasons. This leads to the need to support Intercompany Sales:
- Separate risks between domestic and international sales and production
- Easier local and regional sales
- Tax advantages
- Safeguarding of brand
- …
Intercompany supply chains are spread across various localizations and lead to the need of Intercompany Stock Transfer between group legal entities to run company value chains
- Production plants close to raw materials
- Leverage local advantages on company group level (labor costs, free trade, and industry zones, …)
- Tax advantages
- …
Most SAP customer companies with two or more company codes need Intercompany Processes.
Intercompany processes are a must for:
- All manufacturing industries
- All companies running on a dedicated internal supply chain
The Advanced Intercompany (ICO) processes
- Supports first E2E SAP standard processes for ICO
- Supports process automation
- Reduces TCO for customers as this standard process relieves them of custom developments, maintenance and upgrades
Financial Drivers
Classic intercompany processes (such as scope items 1MX, 1WO, 1P9) are in maintenance and the advanced processes are the clear way forward. Especially from a financial perspective, there are compelling benefits that every CFO should be aware of:
Must-have for Group Valuation (5W2) and End-to-End Value Chain Analysis
- The advanced intercompany processes make use of valuated-stock-in-transit goods movements. It therefore supports
- Financial value chain integrity and transparency
- Supports automatic, event-based COGS and revenue recognition in line with IFRS15 matching principle
- Real-time consolidation between the affiliated companies with the margin eliminated at group level
- Includes actual freight costs with integrated transportation management (TM)
- Enables cost components split with Universal Parallel Accounting (UPA)
- Important: Technically, if you have activated scope item 5W2 (Group Valuation) the system will not allow you to activate classic intercompany processes in Public Cloud.
For more information watch the video:
New Best Practice Processes
With the continuous feature delivery 2202.3 for SAP S/4HANA Cloud Public Edition we launched two new scope items for the Advanced Intercompany processes:
With the 2022 release for SAP S/4HANA Cloud, private edition and SAP S/4HANA we launched the new scope item
- Advanced Intercompany Sales (5D2)
- For SAP S/4HANA Cloud, private edition and SAP S/4HANA there is no scope item for Advanced Intercompany Stock Transfer available
Process Activation and Restrictions
The Advanced Intercompany Sales process is per default disabled for the standard document types and item categories.
To activate the Advanced Intercompany Sales process, specific configurations must be enabled through an expert configuration request. Some configurations have to be done by the customer.
For further details read the Set-Up Instructions document that you will find in the details section of the scope item Advanced Intercompany Sales (5D2).
Currently the process can be activated for item categories TAN and CBXN.
The release restrictions for Advanced Intercompany Sales are described in SAP note 3192584.
Also the scope item Advanced Intercompany Stock Transfer (5HP) provide a Set-Up Instructions document.
Regarding SAP S/4HANA Cloud Private Edition and SAP S/4HANA read the great blog posts from Kazuhisa Iwamoto with detailed information about the set up:
Release Information
Advanced Intercompany Processes are available with
- 2202.3 release for SAP S/4HANA Cloud Public Edition
- 2022 release for SAP S/4HANA Cloud Private Edition and SAP S/4HANA (see blog post Highlights for Supply Chain in SAP S/4HANA Cloud, private edition and SAP S/4HANA | 2022 Release)
So this blog post is relevant for SAP S/4HANA Cloud Public Edition, SAP S/4HANA Cloud Private Edition, and SAP S/4HANA (on premise).
Further developments since first launch of the Advanced Intercompany Processes:
With the 2308 release, the new configuration activity Configure Posting Date for Advanced Intercompany Invoices (ID 106441) is available (see blog post Supply Chain in SAP S/4HANA Cloud, Public Edition 2308).
For more information read the PDF documents that you will find under 'Attachments' in the SAP Notes listed at the end of this blog post in chapter More Information / Additional links. These documents are kept constantly up to date.
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Outlook
The first launch of the Advanced Intercompany processes covers the scenario for Single Level / Single System that is explained below. In addition, it is planned to extend the Advanced Intercompany processes also to cover the scenario for Multi Level / Single System with one or more additional Intermediate Companies between the Selling Company and the Delivering Company. This is a subject to be changed.
With the 2502 release in Q1 2025 it is planned to support basic advanced intercompany sales processing with make-to-order (MTO) and advanced variant configuration (AVC). For more details check out the roadmap item Advanced intercompany sales: basic make-to-order process with variant configuration.
Intercompany Sales
Classic Intercompany Sales - Single Level / Single System
First let us have a look on the classic intercompany sales process. For example, a local sales office sells to a customer and the goods are delivered from a plant, which is assigned to another company code, directly to the customer as shown in the next figure.
Starting point of the process is the purchase order of an US customer (step 1) that triggers the creation of a sales order in the US selling company (step 2). The US selling company triggers directly the outbound delivery in the German delivery company (step 3). The US customer receives the goods directly from the physical warehouse in Germany, but the invoice is issued by the US selling company. During the process no valuated stock is created in the US selling company and business documents like the purchase and sales order between the affiliated companies are missing.
Fig. 1: Classic Intercompany Sales - Single Level / Single System
Advanced Intercompany Sales - Single Level / Single System
The process for advanced intercompany sales provides functions that allow two affiliated companies to participate in a single intercompany process, such as the following:
- A local sales office sells to a customer. The producing company delivers the goods directly to the customer.
- A local sales organization sells to a customer. A central warehouse delivers the goods.
A standard sales order can initiate the entire process, which is integrated into the value chain monitoring framework. To orchestrate and monitor each process step, this business processes makes use of the Monitor Value Chains app.
Fig. 2: Advanced Intercompany Sales - Single Level / Single System
What are the key features of the Advanced Intercompany Sales process?
It is a seamless E2E process that is highly automated and embedded into the following areas:
- Product Compliance
- Trade Compliance
- Profitability Reporting across legal entities
- Support of IFRS 15 compliant revenue recognition and COGS postings
- Product Costing
- Group Reporting / Consolidation
Changes in customer-facing sales order are possible and automatically managed by the system.
Valuated Stock in Transit in the Selling Company allows seamless change of control between affiliates and customer.
Purchase Order in the Selling Company enables landed cost in product costing.
E2E value chain and process monitor allows issue detection and posting services.
System Demo - Advanced Intercompany Sales
My colleague Markus Oertelt has recorded the Advanced Intercompany Sales process for you. Watch the next video by clicking on the video figure or the video link below!
Video link: https://sapvideo.cfapps.eu10-004.hana.ondemand.com/?entry_id=1_2ultb4ci
The system demo is structured into the following sections:
| Video time / min | Topic |
| 00:39 | How to create a sales order? |
| 02:48 | How to monitor your value chains after the sales order is created? |
| 04:22 | How to check automatic creation of intercompany purchase and sales order? |
| 05:30 | How to create delivery documents? |
| 07:19 | How to check transfer control of goods? |
| 07:58 | How to pick the delivery goods? |
| 09:20 | How to post goods issue? |
| 10:16 | How to create billing document? |
| 11:45 | How to monitor your value chains? |
openSAP Microlearning
In addition, watch the new openSAP Microlearning from Seyba Elik about Advanced Intercompany Sales Value Chain Analysis for SAP S/4HANA Cloud .
Intercompany Stock Transfer
In analogy to the chapter above, let me also briefly compare the process of Classic Intercompany Stock Transfer and Advanced Intercompany Stock Transfer with the help of process flow diagrams:
Classic Intercompany Stock Transfer - Single Level / Single System
Fig. 4: Classic Intercompany Stock Transfer Process - Single Level / Single System
Advanced Intercompany Stock Transfer - Single Level / Single System
Fig. 5: Advanced Intercompany Stock Transfer Process - Single Level / Single System
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Value Chain Monitoring Framework (VCM)
The Value Chain Monitoring Framework (VCM) is a generic framework for designing, running and monitoring business processes within SAP S/4HANA that supports pre-configured SAP standard E2E processes. The benefits are:
- Increased end-to-end process visibility, efficiency, and collaboration
- Issue detection providing posting services
- Tightly integrated into relevant business applications
Fig. 6: Value Chain Monitoring Framework
The Monitor Value Chains app enables you to track all steps of the Advanced Intercompany Sales, Advanced Intercompany Stock Transfer, and Sell from Stock with Valuated Stock in Transit (VSiT) business processes. This app provides you with a detailed overview of all relevant steps and documents in these processes. In addition, it directly integrates these processes with other business applications. The business benefits are increased transparency, efficiency, and cross-team collaboration.
Fig. 7: Monitor Value Chains app
(🔙Table of Contents)
More Information / Additional links
SAP Community Call
Also check out the recording of the SAP Community call with my colleague Bernd Strecker (SAP Product Manager for Advanced Intercompany Sales). First, Bernd explains Advanced Intercompany Sales in SAP S/4HANA via his slide deck that is available here. I would especially like to draw your attention to the topic "Planned Features" at 28:46 min with an interesting outlook. The "Q&A" that answers a lot of interesting questions starts at 30:30 min. At 40:57 min Bernd shows a live system demo and finally at 49:13 min he answers some more questions.
For more information on Advanced Intercompany Sales, check out the detailed descriptions from Bernd Strecker and Felix Senger:
- SAP Learning: Advanced Intercompany Sales (from May 2022)
- Advanced Intercompany Sales & Stock Transfer in SAP S/4HANA Cloud and SAP S/4HANA - Process Overview (from October 2023).
SAP Notes
Find more information on current features (Restrictions and General Information) in SAP Notes:
- 3192584 - SAP S/4HANA Cloud: Restrictions and General Information for Advanced Intercompany Sales
- 3192546 - SAP S/4HANA Cloud: Restrictions and General Information for Advanced Intercompany Stock Transfer
- 3226683 - SAP S/4HANA 2022: Restrictions and General Information for Advanced ICo Sales
- 3226677 - SAP S/4HANA 2022: Restrictions and General Information for Advanced ICo Stock Transfer
- 3366067 - SAP S/4HANA 2023: Restrictions and General Information for Advanced ICo Sales
- 3366080 - SAP S/4HANA 2023: Restrictions and General Information for Advanced ICo Stock Transfer
For more information on SAP S/4HANA, check out the following links:
Thanks for reading this blog. Stay tuned!
Follow us via @SAP and #S4HANA, or myself via LinkedIn and @GerhardWelker.
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