Issue

Syensqo currently uses GTS for a number of compliance related capabilities. Some parts are fit for purpose and used comprehensively while others are not used consistently, have significant gaps or not use at all. This KDD provides the options for 

1) Standardize the usage of GTS globally

2) Implement those functional capabilities that are not used today

Recommendation

Background & Context

1. Inconsistent Application of Compliance Processes:
   The lack of standardized usage of GTS across all regions and GBU's results in varying levels of compliance management maturity. Some processes are using the system effectively for activities such as trade compliance screening, license determination, and product classification, while others are not, leading to uneven risk exposure and inefficiencies.
2. Gaps in Functional Capabilities Utilization:
   Several GTS functionalities, including automated Sanctioned Party List (SPL) checks, export control checks, and license management, are either partially used or not utilized at all. This underutilization creates gaps in compliance coverage, increasing the risk of non-compliance with global trade regulations, potential penalties, and reputational damage.
3. Manual Processes and Operational Inefficiencies:
   Due to the incomplete use of GTS capabilities, many compliance tasks are handled manually, such as customs value adjustments and license determination. This not only increases the workload on staff but also introduces the potential for human error, delays in processing, and higher operational costs.
4. Lack of Global Standardization and Training:
   There is no globally standardized approach for using GTS, resulting in inconsistent data quality, varied compliance practices, and suboptimal use of resources. Additionally, the absence of comprehensive training and guidelines on the effective use of GTS across all regions contributes to these discrepancies.

In order to address these challenges, following are the key activities that are proposed:

1. Standardize the Usage of GTS Globally:
   Establish a consistent, organization-wide approach to utilizing GTS for all compliance-related activities. This includes creating standard operating procedures (SOPs), consistent master data standards and implementing governance mechanisms to ensure uniformity and accountability.
2. Implement and Expand Unused GTS Functionalities:
   Identify and integrate those GTS features that are currently not in use but are critical for comprehensive compliance management. This involves assessing current gaps, customizing functionalities as needed, and rolling out these enhancements incrementally to ensure smooth adoption.

This KDD looks at the options for implementing both the activities.

Below table is the current status of the GTS integration in the current system. Green indicates that the process is currently active in GTS and yellow indicate a newer functionality with a potential opportunity to implement as part of ERP rebuild program

There are 2 options considered as part of the KDD

Option 1: Implement the As-Is GTS solution scope 

Option 2: Implement the additional GTS solution scope 

Assumptions

• It is assumed that GTS for HANA suite will be available to deliver the TO-BE E2E solutions for each of the scenario's/ Integration documented in this KDD.
• It is also assumed that the TO-BE GTS instance can be integrated with multiple ERP system.
• NextLabs will be integrated to GTS and therefore the ITAR related access requirements can be fulfilled via NextLabs

Constraints

Not Applicable

Impacts

• Data Cleansing:
  • Product classification
  • Tax registration information
  • Country of Origin
• Change management
• Upstream / Downstream systems
• Integration with 3rd party data providers

Business Rules

Options considered

Following are the options considered for the GTS integration

Option 1: Implement the As-Is GTS solution scope 

As a part of this option, the As-Is GTS scope is implemented. There are also some small improvements to the existing processes in scope are included in this option, ex: Optimisation of the SPL check algorithm, improving the master data integrations, including country of origin at batch level etc..

Option 2: Implement the additional GTS solution scope 

As a part of this option, the new functionality of GTS is evaluated along with the improvements to the existing process. As part of this option, multiple sub options analysis is done.

Following are the new functionality that is to be implemented as part of this option

Implement Compliance in GTS S/4 HANA

Following are the key issues identified in compliance process and the proposal to remediate the same. 

Proposal to implement compliance for new objects in GTS

Implement Customs in GTS in S/4 HANA

Following are the key issues identified in customs process and the proposal to remediate the same. 

Proposal to implement GTS customs integration to new object

Detailed analysis for Goods Receipt integration with GTS

Implement Preference in GTS in S/4 HANA

Following are the key issues identified in customs process and the proposal to remediate the same.

Proposal to implement GTS customs integration to new object

Implement Intrastat in GTS in S/4 HANA

Intrastat functionality though required is not being used currently.

Evaluation

See also

Change log

Workflow history

Integration Elements in Details - Including TO-BE Process Flow

Overview

Integration between Feeder System and GTS happens due to compliance, customs, preferential and statistical reporting activities.

The following functions in GTS are supported and performed due to these integrations.

Note : All these activities in GTS are statutory and obligatory (except intrastat reporting which can be done via HANA international trade module).

• Master Data’s
• Sanction Party list Screening (Compliance Management)
• Legal control Activities including ITAR compliance ( Compliance Management)
• Embargo Screening (Compliance Management)
• Export and Import Declaration Activities both E-Filing and Broker enablement (Customs Management).
• Preference Calculation (Risk Management)
• Intrastat Reporting (Enterprise Compliance Reporting)

MASTER DATA (Continuation of AS-IS)

Additional Master Data Integration Requirement

CUSTOMS EXCHANGE RATES

In selected country’s the exchange rates are required to be updated in the system from their designated financial authorities. These exchanges are required to be periodically updated in the S4 HANA system and a standard SAP supported batch job will update them in GTS.

Failing to update have them correctly updated will create disparity between origin curreny (Invoice currency) and Customs Currency during customs filing ( For imports). This might lead to Show Cause or Penalty from customs authorities.

Some Reference Links are shared below

Germany (offers multiple formats for download): http://www.zoll.de/SiteGlobals/Forms/KursSuche/KurseSuche_Formular_NotierteWaehrung.html;jsessionid=AD1637C99B2440FF0596E59C35C0FF7F

Netherlands :https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/customs/reference_books_and_other_information/currency_exchange_rate/currency_exchange_rate

Note :Entry Added to Custom Development Register.

SANCTION PARTY LIST SCREENING (COMPLIANCE MANAGEMENT)

Legal Control and Embargo Checks

E2E Integration for Customs (Export/Imports)

Overview

For Customs Management, you can transfer four categories of feeder system documents to SAP GTS: The replicas of purchasing documents and material documents are referred to as customs declarations in SAP GTS. Inbound deliveries and billing documents can be transferred as both customs declarations and customs shipments.

• Purchasing documents
• Sales Documents
• Logistics and Transportation Documents
• Material documents
• Billing documents

TO-BE EXPORT PROCESS AT A GLANCE

IMPORT PROCESS

Overview

Unlike Export the import processing has more variations depending on type of import (Duty Paid/Duty Unpaid/ Process Reliefs/Foreign Trade Zone etc) and Customs Territories (US, EU, Non-EU, China, India etc). Each of these flows will also impact the document integration and data exchange between SAP GTS and S4 HANA.

Import Declaration Prior To Goods Receipt (Duty Paid)

Customs declarations prior to goods receipt let you to declare imports to the customs authorities before you take physical possession of the goods. This lets you start the customs declaration process for the transfer of third-country goods to free circulation directly at the border, for example, and complete it with verification of the declared data after goods receipt. This procedure is needed, for example, to obtain a release from the customs authorities for goods that have arrived at a port or airport and have to be placed into a customs status before transportation further inland is possible.

Import Declaration After Goods Receipt (Duty Un-Paid/Bonded Warehouse)

Overview

Special customs procedures, such as customs warehousing and outward processing are some of the scenario's where a material document from feeder system is used to create the import declaration with the customs authorities. In such cases,you have to post the goods receipt directly from the inbound delivery and the inbound delivery must have a purchase order reference.

PREFERENCE PROCESSING

Overview

Preference Processing supports an exporter to meet the legal requirements for preferential customs treatment and document your products as eligible for preferential treatment.Based on this documented eligibility for preferential treatment, the exporter's customers can import these products duty-free or at a reduced rate of import duty, giving the exporter a decisive competitive advantage.

Master Data Integration Requirements (Pre-Requisites)

The following master data elements are transferred from the feeder system to GTS.

INTRASTAT _SAP S/4 HANA for International Trade and SAP GTS (Integrated Solution)

Introduction

Intrastat is a statistical reporting system used in the European Union (EU) to collect information on the movement of goods between EU member states. It is a means of monitoring and analyzing trade flows within the EU's single market. Intrastat is implemented in each EU member state and requires businesses to provide detailed data on their intra-EU trade activities.
The Intrastat system applies to businesses that exceed certain thresholds for the value of goods dispatched (sales to other EU member states) and the value of goods acquired (purchases from other EU member states). The thresholds vary by country.
Under Intrastat, businesses must report specific details about their cross-border transactions, including the commodity code, value, quantity, and partner country of the goods traded. These details enable national statistical agencies to gather data on intra-EU trade and compile statistics on imports and exports within the EU.

PROCESS FLOW

INTRASTAT ARRIVALS

Source Documents from Feeder System (ERP_S4 HANA)

• Purchase Orders
• MM Schedule Lines

INTRASTAT DISPATCHES

Source Documents from Feeder System (ERP_S4 HANA)

• Billing Documents

ADDITIONAL FUNCTIONALITIES RECOMMENDED ( SUBJECT TO TO_BE WORKSHOP)

There are 2 additional functional elements recommended to Syensqo based on GAP's identified during AS_IS workshops. Both of these 2 functionalities are supported by standard SAP and is available in GTS 4 HANA Business Suite. These 2 functionalities attract additional integration elements with S4 HANA hence it is included in this document.

1. IBPP (Identity Based Preference Processing)

Problem Statement

As of now, Syensqo experiences major issues with critical data elements such as ' Country of Origin' . Currently this information is mantained at the product level but there are challenges to store accurate COO information based on stock sourcing. There could be multiple origin for the same product or there could additional component utelized in producing the item, and both of these are reason that leads towards incorrect preference calculation. As a result there are significant amount of loss in trade savings.

Overview

identity-based preference processing supports exporters in fulfilling all legal requirements for customs preferences and identifying their goods as eligible for preferential treatment. Users can determine the preference status of production and process orders at an identifier (Batch) level. The application supports preference determination on production and process orders with static bill-of-materials (BoM) based on actual goods consumption.

The difference between IBBP and standard preference functionality is that instead of calculating configurable materials in sales documents, the system calculates process orders or production orders with the actually consumed components and quantities.

NOTE: IDENTIFIER IN IBPP = BATCH MASTER

Integration Elements

• Production /Service Orders (S4 HANA)
• Purchase Orders
• Goods Receipt

SAP TM Integration with GTS

To clear the shipment from Customs, SAP TM also sends the Freight Orders to SAP GTS that undergo the Screening and create Customs Declarations. They are in turn used to do filing with Customs Authorities. Items of Integration in SAP S/4HANA with SAP TM to SAP GTS:

• Master Data Transfer from SAP S/4HANA or SAP ECC to SAP GTS

• Integration of Forwarding Order in SAP TM to SAP GTS Compliance Document

• Integration of Freight Order from SAP TM to SAP GTS Customs Declaration

In terms of SAP TM Documents that integrate with SAP GTS standard out-of-the-box are following:

• Compliance Check for Sanctioned Party Screening on SAP TM Forwarding Order

• Compliance Check for Embargo Screening on SAP TM Forwarding Order • Export Declaration Creation in SAP GTS from SAP TM Freight Order

1. IBPP (Identity Based Preference Processing Vs Convetional GTS Preference)

RECOMMENDATION : (OPTION B) IBPP

2. Use GTS CWH Functionality

Recommendation:  Based on the evaluation table above using CWH solution with GTS 4 HANA.

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