Cut Logistics Costs by Enhancing Inter-Company Procurement

  • by Sanjeev Thakur, Senior Member, Technical Staff, HMSHost
  • February 15, 2009
Discover how to extend and automate inter-company procurement so it meets business needs that require the use of more than two company codes.
Key Concept
Standard inter-company procurement refers to the cross-company movement between two companies, such as a large corporation with different holding companies in various parts of the world doing in-house movement of stocks. Inter-company procurement differs from intra-company stock transfer because it involves two unique company codes.

A corporate group that has multiple companies in different parts of the world must meet export and foreign trade laws, pay local taxes, and follow the regulations of special economic zones. Sometimes meeting those requirements is costly. For example, say the group does not have a manufacturing plant in a country where it must book inter-company sales to abide by local laws. It could procure the goods from another company in the corporate group, store the goods at a local warehouse, and then ship them to the ordering company. This method involves logistics costs, people to do the goods receipt, and investment in setting up a warehouse.

Instead you could set up a virtual plant, which requires use of three company codes. Although standard inter-company procurement in R/3 or SAP ERP Central Component (SAP ECC) involves only two company codes, I have devised a seven-step process to customize inter-company procurement for use in scenarios that require procurement to flow through three company codes. My design uses standard SAP output determination and Business Application Programming Interfaces (BAPIs). You can automate the process so that all related system transactions and postings happen in the background without human intervention. Based on my experience, the implementation should take one to two weeks for development, and two weeks for testing.

Sanjeev Thakur

Sanjeev Thakur is a senior technical analyst for SAP NetWeaver BW with HMSHost, based out of Bethesda, MD. For past seven years he has led SAP implementations, upgrades, and support projects for various retail and CPG companies. He is an expert in CPM/scorecards, third-party BI integration, and cost-effective BI solutions.

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