Capture the Value of Stock in Transit Using a New Business Function in Enhancement Package 5

  • by Janet Salmon, Product Manager, SAP AG
  • December 7, 2011
The classic sales process is a three-step procedure: create a sales order, create a delivery with reference to the sales order, and invoice for the delivered goods. Handling the potential time gap between the goods issue and the invoice has long been an issue for organizations trying to keep their financial accounts and Profitability Analysis (CO-PA) in sync. SAP has provided a solution to the timing gap with enhancement package 5 for SAP ERP 6.0. It provides a way to value goods that have left the sending company but that have not arrived at the receiving company. Learn about this new function for capturing the goods movements and values associated with stock in transit and for handling the transfer of ownership between the selling and buying companies or plants.
Key Concept
Stock in transit is a special stock type to handle goods that have been issued from the factory and are en route either to another factory or to the final customer. Its purpose is to provide visibility into the quantities of goods en route and the value of this inventory, to handle the ownership of the stock (sender plant or receiver plant), and to support the process of returning damaged goods at the correct value. To fulfill this requirement, SAP has provided functionality in enhancement package 5 for SAP ERP 6.0 that allows you to handle such stock transfer processes regardless of whether they are intracompany (between plants in the same company code), are cross-company (between affiliated companies in the same group), or involve the end customer. The only prerequisite is that the time that the stock is in transit should be significant, which in accounting terms generally means it spans more than one accounting period.

Real-life delivery processes can involve goods crossing China by truck or being shipped from the Far East to the United States. That means the goods can be en route for weeks or even months before they reach their final destination. They are considered stock in transit, and from an accounting point of view, their journey time was a black hole until enhancement package 5 for SAP ERP 6.0. The enhancement package includes a new special stock type (T) and new movement types designed to value stock that is in transit for a lengthy period.

I introduced the idea of stock in transit in my article for Financials Expert titled “Calculate Actual Costs Across Multiple Company Codes Using a New Business Function in SAP Enhancement Package 5 for SAP ERP 6.0.” In that article I included a diagram showing the main options for stock in transit. Another figure that I included in that same article includes two items: TF cross company and TF to Receiving CST. In this article I explain how to perform cross-company stock transfers (CST) and intracompany stock transfers (IST). Let’s look first at how the basic stock transfer process works without stock in transit:

  1. The purchasing company creates a stock transfer order using a purchase order (transaction code ME21N) to request goods from the sending company.
  2. The sending company creates an outbound delivery (transaction code VL01N) to document the delivery of goods to the sending company.
  3. The receiving company records the receipt of the goods (transaction code MIGO).The sending company performs a goods issue (transaction code VL02N) with reference to the delivery.
  4. The receiving company records the receipt of the goods (transaction code MIGO).
  5. The sending company creates a billing document (transaction code VF01) with reference to the delivery.
  6. The receiving company creates an invoice (transaction code MIRO).


Janet Salmon

Janet Salmon joined SAP in 1992. After six months of training on R/2, she began work as a translator, becoming a technical writer for the Product Costing area in 1993. As English speakers with a grasp of German costing methodologies were rare in the early 1990s, she began to hold classes and became a product manager for the Product Costing area in 1996, helping numerous international organizations set up Product Costing. More recently, she has worked on CO content for SAP NetWeaver Business Warehouse, Financial Analytics, and role-based portals. She is currently chief product owner for management accounting. She lives in Speyer, Germany, with her husband and two children.

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4/5/2013 10:11:22 AM
Vinod Ramchandani

Good Article !!

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