Simplify Your Bonded Warehouse Reporting with SAP BusinessObjects Global Trade Services
- by Rajen Iyer, Cofounder and CTO, Krypt, Inc.
- May 4, 2009
Understand how to configure and set up bonded warehouse with SAP BusinessObjects Global Trade Services and SAP ERP Central Component. In doing so, you can meet the requirement of recording transactions and movement of goods within the free trade zone or bonded area with your logistics system.
When goods are imported into a country, the receiver pays a duty to clear customs if the goods are meant for consumption. Duties keep a check on the amount of goods being imported. On the other hand, goods could also be imported for the purpose of re-exporting, after some value addition. This brings in export revenue to the country. Bonded warehouse or free trade zone are some of the regulations concessions that allow companies to import goods into a country and defer the duty. These transactions or goods movements need to be tracked and reported back to the authorities.
Many countries’ customs authorities allow you to defer or eliminate duty payment if the goods imported into the country are meant for re-export after value addition rather than for consumption. For example, a company can subcontract some finishing work or testing on a particular good to a company in another country and then import it back. Another example — a company could receive semi-finished parts and after assembly would export the finished product back to a company in another country. The assembly, in this case, would be the value addition.
For companies to take advantage of this, they need to identify the goods that are meant for re-export, and track and report them to the customs authorities. Customs authorities might audit your company’s premises to see how you manage this process and if your reporting is accurate. In Asian countries, this process of managing your inventory and reporting is called a bonded warehouse. A similar process in Europe is called free trade zone and in North America is called foreign trade zone. In this article, I’ll use the term bonded warehouse for consistency.
I will walk you through the configuration settings for enabling a bonded warehouse within your SAP BusinessObjects Global Trade Services system. Bonded warehouse functionality is available with SAP BusinessObjects Global Trade Services 7.0 and higher. The first configuration setting involves understanding and setting up the organizational structure needed for your bonded warehouse to be represented in the system. Before SAP BusinessObjects Global Trade Services, you would have had to track the information in SAP ERP Central Component (SAP ECC) and report manually outside of the SAP system, either in Microsoft Excel or a non-SAP system.
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