Companies that have global operations increasingly use stock transport orders (STOs) to move goods across their network. For example, when you configure the plant abroad functionality, you define a plant that is physically located in different country than the company code. So, you must perform an export check when you create an STO to move goods between a plant located in the same location as company code assigned to it (or with a country key that is the same as that of the company code) and another plant that is designated as a plant aboard (or the plant is located in a different location than the company code). This involves shipping goods across international borders, but standard R/3 does not provide foreign trade and export checks for STOs (plant-to-plant transfer within the company code or across company codes).

By "borrowing" the key sales order export checks functionality available in the R/3 Sales and Distribution (SD) module, however, you can mimic these export checks in R/3 Materials Management (MM) for STO purposes. First, it is important to understand the key parameters that drive export checks for sales orders before you build the logic for the export checks.

The approach I take here is to reverse-engineer SD's export check functionality and apply it to the STO document through a user exit. I will also explain how to extend the application for license assignment (using the same capability as sales orders) for these export shipments through deliveries (using the SD shipping function for STOs) and enabling the export document printing. This solution has been successfully deployed with R/3 4.5B at a high-tech company in Silicon Valley. Along with the sales order exports compliance checks, this approach also allows a business to monitor and manage STOs.

Export Check Background

Export compliance checks and printing the related documents apply when goods leave a country's border. When receiving the goods on the other side of the border, the import declaration and relevant duties apply. Export requirements depend on the laws and regulations of the country exporting and differ for each country. In general, export compliance checks are validated against the destination country for any embargo, customers on government-published boycott lists, usage or application of the goods, or classification of the products.

Import requirements depend on the laws and regulations of the importer's country. To receive government authorization, the importer may have to obtain a permit or license before the entry. At entry, a customs official requires the importer to present documents describing the goods and indicating that all entry requirements have been met. To impose duties uniformly, most countries classify imported goods using categories on a duty schedule. For this purpose, many countries have adapted a version of the international Harmonized System (HS), dividing nearly all products into about 100 product groups.

Technology (SAP R/3)

Figure 1 is a high-level view of a typical SAP-standard export control process for sales orders. In the export control module (Figure 2), the sanction list screening (SLS) functionality checks the customer master for any relevant blocks or embargo. An export sales order document or an outbound delivery is processed through the customer master or SLS and is validated for any potential blocks or restrictions. An embargo is defined in the SAP configuration per country, and the customer blocks, such as for boycotts, table of denial orders, or specially designated nationals, are indicated in the customer master record.

Figure 1

Export module or components are triggered by the country key of the line item plant and the customer country keys associated with customer partner functions such as sold-to, ship- to, bill-to, or payer

Figure 2

The export control module

Figure 3 explains the logic behind the license determination. The legal control component of export module or foreign trade gets the export control class number (ECCN) and the ECCN grouping from the material master. The legal regulation from the country key of the shipping plant determines the suitable license based on the destination country and the system assigns the license available for the sequence defined in the configuration.

Figure 3

License determination logic

Another important component in a sales order export control is the redetermination of sales documents in the sales order change mode. This allows the latest export-related data to be validated against the shipment. This functionality in turn triggers the above-mentioned components for export compliance checks. The reporting tools and form printing for the export document and declaration make up the last export control component. Figure 4 explains document printing and declarations.

Figure 4

Export document printing

Gaps in MM's STO Export Checks

If the cross-border material movements are between plants located within company code, normal STOs are used. In the case of plants located in different company codes, cross-company transport orders (CCTOs) are used with a standard purchase order document type. In these transactions, the outbound deliveries are used to ship the goods out. After the goods reach the receiving destination, they are received by making a goods receipt transaction in the SAP system.

STOs fall under R/3 MM, which triggers the import process for purchasing documents if the related configuration and master data is maintained. Even though export checks are carried out during the outbound delivery of STOs, provided the legal control configuration for the relevant delivery type and item category are maintained, they only prevent the delivery creation or change for pick and pack with an error log. They are not a complete export solution like the one in sales order processing. MM's STO export checks have gaps in areas such as sanction list screening, legal control and license determination, manual license assignments for export shipments and associated reporting tools, printing the export document, file declaration, and preference determination for the outbound deliveries for these transactions or shipments. Figure 5 gives a high-level view of the material or goods movement and the associated standard MM legal process and the gap in export compliance check with STO scenarios or material movements.

Figure 5

The material movement, the associated import check, and the gap in export compliance check

In more detail, the business would look for the following functionality in these types of cross-border goods movements:

• STOs or CCTOs create or change export check documents for sanctioned party screening based on customer number of the receiving plant, embargo validation against the receiving plant's country key, classifications validation in the material master for ECCN and ECCN grouping, legal regulations validation against the supplying plant's country key and license determination based on the legal regulation, receiving or destination country, and ECCN grouping and license type
  
  
• Delivery note creation or change and post goods issue for shipment export checks of STOs or CCTOs, as mentioned in the above bullet point
  
  
• Export issue blocked document visibility reports
  
  
• Redetermination of STO or CCTO PO documents to validate the current export data changes
  
  
• Printing export documents or file declarations and preference determinations

The major export check can be classified into the following categories (as carried out by the standard SAP logic with sales orders):

• Customer under block, sanctioned-party screening for table of denial order, specially designated nations, boycott, special usage, classification such as missile technology or biochemical
  
  
• Country under embargo
  
  
• Legal regulation specific to shipping or supplying plant's country key
  
  
• ECCN and grouping per legal regulation
  
  
• License determination based on the parameters and quantity, value, and validity
  
  
• Commodity code or Harmonized Tariff System (HTS)

Extending Export Checks

The approach I use to get around these limitations in MM is to extend the SAP standard configuration for export. These are the steps you can take to incorporate an export compliance solution for STOs.

1. Use the transaction CMOD to identify the user exit for PO document create or change (MM06E005), which in turn triggers a function call. This function call incorporates the SAP function module RV_EXPORT_CONTROL for sales order export check rules or logic.
   
   
2. Appropriate information such as the plant, customer, departure country, and destination country from the address; ECCN from material master; and embargo, legal regulation, and license determination from the configuration is passed on to the user exit, which determines the output based on this input data. The above enhancement requires that you understand these parameters and translate them appropriately for input validation to the function call.
   
   
3. Use the copy routine in the configuration table T606M (destination country of export transaction for export control) for the commodity code (HTS) check.
   
   
4. Based on the above check, the international shipment STOs or CCTOs update the status table (custom build). The key statuses identified are customer under block, embargo, legal regulation, ECCN, license, and commodity code.
   
   
5. Use the copy routine from STOs or CCTOs to create delivery notes for checking the custom table (as described in the above step) for any entry and to block the delivery creation.
   
   
6. Apply SAP note 175632 (not a released version), which modifies the delivery type being checked. This is to carry out export checks on deliveries and enable assignment of licenses to deliveries created against STOs or CCTOs. Also, this SAP note needs bug fixes in terms of the relevant value population and code changes for consumption of license value or quantity based on the shipments.
   
   
7. Make the item category used in CCTO or STO deliveries relevant for proforma. Modify the copy routine to do the validation and creation of the new partner profile, and assign item categories to these delivery types and the associated pricing procedure.

Figure 6 provides a high-level view of this process, while Figure 7 shows it in more detail.

Figure 6

Overview of the process to extend export checks

Figure 7

Process flow detail

This approach offers other benefits such as lead-time reduction in the export compliance checks and the generation of related documents or declarations. This tool helps companies or corporations to actively monitor and plan these transactions without losing control over the document shipment deadlines.

As this solution makes use of standard SAP configuration and reporting tools, it enables you to use any future feature additions in upgrades. It also provides the scope for extending it to other process areas such as subcontracting POs, returns, and reversals for both vendors and customers.

Rajen Iyer

Rajen Iyer is the cofounder and CTO at Krypt, Inc. Rajen has written several in-depth, best practice articles, white papers, patents, and best-selling books on SAP Logistics and SAP Global Trade Services, including Effective SAP SD and Implementing SAP BusinessObjects Global Trade Services. He is also an invited speaker at industry conferences.

You may contact the author at Rajen@kryptinc.com.

If you have comments about this article or publication, or would like to submit an article idea, please contact the editor.