| Status | |
| Owner | |
| Stakeholders | The persons consulted or otherwise involved in making this decision. Type @ to mention people by name |
Issue
Syensqo has multiple intercompany processes implemented across the GBU's with manual tracking of stock in transit. There are also multiple custom applications/reports to track the stock in transit. This KDD is to assess the options to harmonise the intercompany processes.
Recommendation
Advance Intercompany Sales and Advance Intercompany Stock Transfer Processes will be implemented in Syensqo
Background & Context
Following are all the processes that are treated as intercompany processes Syensqo and the corresponding steps.
| Process | Description | Logistics Flow | Transport Management | Transfer Price | QM | Returns |
|---|---|---|---|---|---|---|
| Stock Replenishment | Standard Intercompany | Purchase Order: Standard purchase order Logistics: GI/GR Invoice: Posted with EDI | Separate service purchase order: Multiple shipment cost documents are raised | Cost+ Trading price | ||
| Direct Shipment (Drop Shipment / Intercompany Sales) | Sales done by the selling entity to customer with sending entity's plant, Goods are shipped from the sending entity | Sales Order: Standard sales order with sending entity plant Purchase Order: No Logistics: GI/GR Invoice: Automatic invoice is generated on the back of customer billing (EDI) Transportation Invoice : | Separate service purchase order: Multiple shipment cost documents are raised Service purchase order raised in the delivering company code?? | Cost+ Trading price Transfer price is determined and stored in the Sales Order | ||
| Direct Trading (Third Party Sales) | Sales done by Syensqo and the sale is fulfilled using an external purchase order. The goods are shipped directly from the vendor | Sales Order: Standard sales order with a third-party item category Purchase order: Created from Sales Order Logistics: Customer inbound / GR(auto) Invoice/Billing: Generated on back of customer inbound. | Separate service purchase order: Multiple shipment cost documents are raised shipment cost is captured against inbound delivery Note : Multiple trading plants are created to cater to the transportation and taxes for this scenario | ?? | ||
| Indirect Trading (Buy - Sell) | Sales done by Syensqo and the sale is fulfilled using an external purchase order. The goods are shipped to the warehouse and then sent to the customer | Sales Order: Standard sales order with a third-party item category Purchase order: Created from Sales Order Logistics: GI / GR Invoice/Billing: Standard PO invoice and Sales order billing | Separate service purchase order for PO and SO: Multiple shipment cost documents are raised | Cost+ Trading price | ||
| Customer Consignment | Goods are sent to the customer and stored in customer site. Customer is billed only when the goods are consumed | Sales Process: Consignment process Note: There are virtual plants created in the countries where Syensqo presence is not there. The movement of the stock to the virtual plant will follow the stock transfer process / Stock Replenishment process | Separate service purchase order: Multiple shipment cost documents are raised The shipment cost is captured against the SO inbound delivery | ?? | ||
| Stock Transfer | Transfer goods between plants in the same legal entity | |||||
| Sample / Free goods | ||||||
| Intercompany Returns | ||||||
| Intercompany Recharges |
Still need to confirm some of the intercompany processes in EAM - Equipment Transfer , Spares movement , Repairs etc.. - LEIGHTON-ext, Dean to confirm
Intercompany services - Are there any scenarios @Antonio , @Cindy
Assumptions
- Cross system intercompany processes are considered as External Purchases and External Sales
- Valuated stock in transit will be implemented for Syensqo
- Do we need at least one plant to exist in the selling company code??? TBD
- All direct materials use Outbound / Inbound delivery process - To reference the KDD
Constraints
N/A
Impacts
Change Management
- Change in the process will largely impact the logistics / Sales / Finance teams. Additional training required for Business / IT to understand the new process, automation (value chain) and error handling
- Finance / Accounting team to cater for the change in the valuated stock in transit approach from the As-Is and update the current accounting principles/treatment
- The process to be verified and signed off by Legal / Audit / Regulatory teams to make sure that the proposed process fulfils all the regulatory requirements
Business Rules
The decision may translate into business rules which enforce the decision and will require configuration. List these business rules here. For example, "An Outline Agreement cannot be created via the RFQ process. An awarded RFQ can only result in a Purchase Order".
Options considered
Following are the options considered for the evaluation
Option A: Classic Intercompany Sales / Classic Intercompany Stock Transfer
Below is an overview of the Classic intercompany sales process. As Part of this process, the Sales Order is created in the system by the selling entity with the plant from the sending/delivery company. All the logistics transactions are carried out on the Sales Order which is created. There is no Stock in Transit for the selling company once the GI is done by the Delivering company
Below is an overview of the Classic intercompany sales process. As Part of this process, Purchase Order is created in the system by the Receiving entity with supplier as the sending/delivery entity. All the logistics transactions are carried out on the Purchase Order which is created. The POD process is used to transfer the SIT stock from sending/delivery entity to receiving entity.
Option B: Advanced Intercompany Sales / Advanced Intercompany Stock Transfer
Below is an overview of the Advanced intercompany sales process. As Part of this process, the Sales Order is created in the system by the selling entity and the system then creates a corresponding Purchase Order and Sales Order to support the end-to-end process automatically. All the logistics transactions are carried out on the relevant sales / purchase order. Stock in transit is available in both Selling and Delivery companies
Evaluation
| Criteria | Classic Intercompany Sales / Classic Intercompany Stock Transfer | Advanced Intercompany Sales / Advanced Intercompany Stock Transfer | ||
|---|---|---|---|---|
| Process Completeness | Low: Process has gaps and manual steps / customisations are required to patch the gaps |
| High: Seamless intercompany stock transfer between affiliated organizations |
|
| Document Flow | Simple Intercompany Sales: All the transactions are based on the Sales Order Intercompany Stock Transfer: All the transactions are based on the Purchase Order |
| Complex There are extra sales orders and purchase orders created to support the process. The logistics / finance documents are posted against the relevant Sales Order / Purchase Order These extra documents are created automatically in the background |
|
| ATP fulfilment / Prioritisation | The changes in the customer sales order are not automatically applied across the document. Custom enhancements are required for the same |
| Changes in a customer-facing sales order are consistently applied by the system throughout the end-to-end document flow |
|
| Usability | Multiple Fiori apps to support the process |
| Multiple Fiori apps to support the process |
|
| Valuated Stock in Transit (SIT) | There are gaps in the SIT process. Intercompany Sales: The valuated stock can be posted against the sending entity and not the selling entity. |
| SIT is supported Eliminate existing custom reports |
|
| Transportation | Incoterms: Not all combinations of Incoterms can be used due to the issue with the SIT Issues with Freight settlements, cost accruals and distributions |
| All the incoterm combinations can be used Freight settlements, cost accruals and distributions will always be in the right company code |
|
| Actual Costing | The costs are | The actual costs are accurately captured in the selling / sending / receiving entities due to the presence of multiple documents |
| |
| Margin Analysis | Intercompany Sales: Margin analysis is available only at the selling company |
| Intercompany Sales: Margin analysis is available at both selling and sending entity |
|
| Automation | No out of the box automation |
| Automation available via process value chains which can be configured as per the requirement |
|
| Legal / Regulatory | Doesn't fulfil all the legal compliance requirements ex: IFRS15 |
| Legal compliance with the IFRS 15 matching principle with EBRR Audit transparency |
|
| Reporting | Reports and KPI's are available only for the Sending / Receiving entities. Some additional reports required to be built for Margin analysis and SIT |
| Reporting and KPI's are available in Selling / Sending / Receiving entities Out of the box reports to support the operations and error management |
|
| Implementation Complexity | Medium Complex |
| Complex |
|
| Recommendation | Recommended |
Recommendation
Based on the above evaluation criteria, it is recommended to implement Advanced Intercompany Sales / Advanced Intercompany Stock Transfer processes for Syensqo. Follwoing are the different intercompany processes for Syensqo and the corresponding recommendation
| Process | Description | Recommendation |
|---|---|---|
| Stock Replenishment | Standard Intercompany | Advanced Stock Transfer |
| Direct Shipment (Drop Shipment / Intercompany Sales) | Sales done by the selling entity to customer with sending entity's plant, Goods are shipped from the sending entity | Advanced Intercompany Sales |
| Direct Trading (Third Party Sales) | Sales done by Syensqo and the sale is fulfilled using an external purchase order. The goods are shipped directly from the vendor | Advanced Intercompany Sales (To validate once) |
| Indirect Trading (Buy - Sell) | Sales done by Syensqo and the sale is fulfilled using an external purchase order. The goods are shipped to the warehouse and then sent to the customer | Advanced Intercompany Sales (To validate once) |
| Consignment | Goods are sent to the customer and stored in customer site. Customer is billed only when the goods are consumed | Consignment Sales Process |
| Stock Transfer | Stock is moved to different plants within the same entity | Intracompany Stock Transfer |
| Sample / Free goods | TBD ( Sales Process / R&I process / Returns process) | |
| Intercompany Returns | Returns | Standard Intercompany returns process |
See also
Insert links and references to other documents which are relevant when trying to understand this decision and its implications. Other decisions are often impacted, so it's good to list them here with links. Attachments are also possible but dangerous as they are static documents and not updated by their authors.
