Stock in Transit process sales &

distributions

Enhancement package 5 for Procurement business function “LOG_MM_SIT” allow to control goods
movements both for sales to external customers and for stock transfer processes between plants
belonging to the same or different company codes within the same company. Using valuated stock in
transit and new movement types, we can specify the time of the transfer of title precisely. Throughout
the process, material quantities and material values are recorded transparently and can be displayed
in the stock overview, the purchase order history, and the individual stock accounts. The functions are
also available for the corresponding intra-company-code and cross-company-code return stock
transfers.

This document covers the customer delivery with transfer of title at customer location. The
customer deliveries with valuated stock in transit, is used to pin point the exact time of the transfer of
title. The transfer of title depends on the delivery type. The system determines this based on the sales
document type. The system finds the item categories and thereby the corresponding schedule line
categories, using Customizing for item category determination in the delivery. The process is
controlled by the movement types that are assigned to the respective schedule line categories.

Client Requirement

The requirement for our project was to recognize the COGS & Sales revenue at the same time
based on the Incoterms. Incoterms were divided into two categories as ‘Immediate Risk transfer’ &
‘Delayed risk transfer’. ICC Incoterms like EXW & FCA were classified as immediate risk transfer as
the risk transfer lies with ‘Buyer’ once the Goods are loaded onto carrier from plant. The other
incoterms like FOB, CPT, CIF, etc.. were classified are Incoterms with Delayed Risk Transfer.

Based on the Delayed Risk Transfer Incoterms, the item category in the sales order would get
determined. This was one of the key developments of the project. Based on the item category the
posting to COGS / SiT account would happen at the time of PGI.

The Requested delivery date would be maintained by the Customer Service Representative while
processing the Sales Order. Based on the
RDD & route information in the sales order, the PoD is carried out through a program scheduled
automatically.

Features of Business Function LOG_MM_SIT

Business Function LOG_MM_SIT covers below business processes. In the following processes,
valuated stock in transit specifies the exact time of the transfer of title.

 Intra Company Code Stock Transfer: Transfer of title at goods issue / goods receipt /
during transit.
 Cross Company Code Stock Transfer: Transfer of title at goods issue / goods receipt /
during transit.
 Delivery with transfer of title at the customer location.

In a cross-company-code or intra-company-code stock transfer, valuated stock in transit allows you to

retain the quantity and value of a material that has already left the issuing plant but has not yet
reached the receiving plant. The functions are also available for the corresponding intra-company-
code and cross-company-code return stock transfers. In addition, in sales processes to external
customers, you can post the quantity and value of a material to issuing valuated stock in transit
initially and then remove it when proof of delivery arrives.

Pre-Requisites

A. SD Customizing requirments:

i. Defining new Sales Order Type

IMG Menu path: IMG –> Sales and Distribution –> Sales –> Sales Documents –> Sales Document
Header –> Define Sales Document Types

Create the new sales document type Delivery from Issuing Valuated Stock in Transit (ORNC) as a
copy of the sales document type Standard Order (TA/OR).
ii. Defining new Delivery Type

IMG Menu path: IMG –> Logistics Execution –> Shipping –> Deliveries –> Define Delivery Types
 Create New Delivery Type (NCCU – Delivery from Issuing Valuated Stock in Transit) for the
process Outbound Delivery with Transfer of Title at Customer Location.

Note: Creating a new order type/delivery types are optional. You can use the existing order
types & assign the item category for this functionality to work.

iii. Assigning the New Delivery Type to New Sales Order Type

IMG Menu path: IMG –> Sales and Distribution –> Sales –> Sales Documents –> Sales Document
Header –> Define Sales Document Types

In the Shipping section of the detail view, assign the appropriate delivery type, NCCU to the sales
document type Outbound Delivery from Issuing Valuated Stock in Transit (ORNC).
 iv. Defining new Item Categories

IMG Menu path: IMG –> Sales and Distribution –> Sales –> Sales Documents –> Sales Document
item –> Define Item Categories

For this solution, the item category is important configuration. Item category is assigned to
schedule line category which has movement type. We can define new item categories or use
the existing item categories as per the client’s requirement. But it has to be ensured that proper
schedule line category is determined.

Ensure that the new item category Delivery from Issuing Valuated Stock in Transit (NCCU) has
been created as a copy of the item category Standard Item (TAN).

v. Defining Item Categories in Deliveries

 IMG Menu path: IMG –> Logistics Execution –> Shipping –> Deliveries –> Define Item Category
Determination in Deliveries

When the item category is copied from reference & if made relevant for copy control i.e., “Is this
entry also relevant for copying control?” – If yes, then the delivery item category will be created,
else define delivery item category manually.

Ensure that for all entries with delivery type Outbound Delivery (LF), a copy has been created
and altered as follows:

Delivery type LF has been changed for each entry to delivery type Delivery from Issuing
Valuated Stock in Transit (NCCU).

Item category Standard Item (TAN) has been changed for each entry to item category
Delivery from Issuing Valuated SiT (NCCU).

vi. Defining Schedule Line categories

IMG Menu path: IMG –> Sales and Distribution –> Sales –> Sales Documents –> Sales
Document item –> Define Item Categories
 One of the important configurations of this solution is defining the Schedule line category.
When you define the schedule line category, you see the changes in the screen with
addition of fields MvT Iss. Val. SiT & Spec. Iss. Val. SiT. Ensure that for the process Outbound
Delivery from Issuing Valuated Stock in Transit the new schedule line category NU has
been created as a copy of schedule line category Material Requirements
Planning (CP), detailed data:

Movement type = 687 (Goods Delivery to Issuing Valuated Stock in Transit)

Movement Type for Issuing Valuated Stock in Transit = 601 (Goods Issue for Delivery)

Specification for Issuing Valuated Stock in Transit = 3 (Sales-Order-Related Goods Issue

from Issuing Valuated Stock in Transit).

vii. Assigning New Schedule Line Categories to the New Item Category

IMG Menu path: IMG –> Sales and Distribution –> Sales –> Sales Documents –> Schedule
Lines –> Define Schedule Line Categories

Ensure that a new entry has been created as a copy of the entry with item category Standard
Item (TAN) and schedule line category Material Requirements Planning (CP) with
the following changes:
 Item category TAN has been changed to item category Delivery from Issuing Valuated Stock
in Transit (NCCU).

Schedule line category CP has been changed to schedule line category Delivery from Issuing
Valuated Stock in Transit (NU).

viii. Assigning New Item Categories to the Sales Document type

IMG Menu path: IMG –> Sales and Distribution –> Sales –> Sales Documents –> Sales Document
item –> Assign Item Categories

Normally when the Sales Order type OR is copied & item category is copied from TAN all the
related settings are copied & the assignment will take place. In case, if the item
category is created newly without any reference, then maintain the assignment to the Order
Type.

ix. Assign PoD relevance to the Delivery Item Category

IMG Menu path: IMG –> Logistics Execution –> Shipping –> Deliveries –> Proof of Delivery –
> Set POD-Relevance Depending on Delivery Item Category

Maintain the PoD relevance for the delivery item categories which are created.
B. MM & FI Customizing requirments:

i. Create G/L account

The necessary G/L accounts has to be created by FI team for posting of the Stock in Transit
Account.

ii. Define Valuation Class

IMG Menu path: IMG –> Materials Management –> Valuation and Account assignment –> Account
Determination –> Account determination without wizard –> Define Valuation classes

The valuation class is a group of materials with the same account determination. If a transaction is
to be posted to different accounts depending on the valuation class. The valuation classes
allowed depend on the material type. Several valuation classes are generally allowed for one material
type. A valuation class can also be allowed for several material types. The link between the
valuation classes and the material types is set up via the account category reference.

iii. Automatic Postings – BSX & GBB

IMG Menu path: IMG –> Materials Management –> Valuation and Account assignment –>
Account Determination –> Account determination without wizard –> Configure Automatic
Postings
 These settings are required for automatic posting of the Stock in Transit account & the Cost of
Goods Sold at the time of PGI & POD respectively.

C. Master Data requirments:

i. Customer Master

The Customer Master Data has to have the PoD relevance for this solution. This can be
maintained by using Transaction Code XD02 / VD02. Go to the Sales Area Data, under
the shipping tab, you find the Relevant for PoD checkbox as shown below. Check the box, to
make the customer relevant for PoD.
or bp

ii. Material Master

Based on the requirement of the client to identify the stocks & for their reporting purposes, the
valuation class can be maintained against the VC:Sales Order Stk field as shown below. The
maintenance of this Valuation Class is to account for separate G/L when the Goods issue is done &
the stock is moved to Stock in Transit
material master maintain valuation class -.7900 & vc :sales order stock -7998

Process Demo

We will create the sales order and delivery to check the process flow. The following values
are used for this:

SalesArea 10/00

Material:JPTA0207PM Plant:2021

Order Type: ORNC

Create the Sales order & save the order.

Now, create the delibery (VL01N).

Now, go to VL02N & do the Post Goods Issue (PGI)

Check the document flow once the PGI is done.

Check the posting, the finished goods inventory has been credited & Stock in Transit G/L has
been debited.

Now, carry out Proof of Delivery (PoD) – Transaction VLPOD

Once the PoD is saved, another material document gets posted, as you could see above.

Now, we shall look into the document flow again.

Now, the Stock in Transit G/L has been credited & Cost of Goods Sold (Inventory change –fin)
has been debited.
 In this way, based on the requirement of the client, the posting to the COGS & thereby Sales
revenue (at the time of billing) can be controlled using the Proof of Delivery.

vf01 -invoices

prepared by-chandrakant patil (chinmay )