Preference processing is part of the Risk Management module in SAP BusinessObjects Global Trade Services. This functionality helps you maintain compliance with all the legal requirements for customs preferences so your goods are eligible for preferential treatment. Preferential treatment allows customers to import goods duty free or at a reduced rate of import duty, giving a great advantage to the exporter.

SAP BusinessObjects Global Trade Services also helps you efficiently comply with trade agreements such as the North American Free Trade Agreement (NAFTA) or the European Union (EU). For example, you can manage the supplier’s declarations of origin more effectively in SAP BusinessObjects Global Trade Services. You can automatically upload complex rules of origin from third-party providers and easily print them. SAP BusinessObjects Global Trade Services complies with trade preference by maintaining and requesting vendor declarations, determining eligibility of products for preferential treatment, and issuing certificates of origin to the customers.

I will explain the enhanced archiving capabilities for preference processing in audits, the different configuration settings for preference processing, and how to check the preference log in a customs document for export and import processes. This article applies to SAP BusinessObjects Global Trade Services 8.0 as well as to prior versions.

Process Flow for Preference Processing

Here’s how the process flow works for preference processing. First, you classify your products in accordance with the international trade agreements to uniquely identify the goods. The customs authorities store information about preferential treatment in the tariff numbers and the rules with which a product must comply to obtain preferential treatment.

You can obtain a preference document from your vendors for externally procured product components. The long-term vendor declarations (LTVD) serve as preference documents. You can request them from your vendors and record them for the products you receive from these vendors.

Preference processing allows you to calculate the preference eligibility of products that are manufactured in house and products that are of mixed origin with fixed bills of materials (BOMs). Here, the preference processing applies the rules for a product and its materials. The relationships between a product and its primary materials are established by means of BOMs.

Finally, you can issue LTVD for the customers and print other preferential documents such as certificates of origin so the customers can benefit from reduced import duties.

Preference Processing Steps in SAP BusinessObjects Global Trade Services

Preference processing in SAP BusinessObjects Global Trade Services mainly starts upon transferring master and transactional data from SAP ECC to SAP BusinessObjects Global Trade Services. Once the data is in the system, you can request for LTVD. After requesting, you can receive those vendor declarations from your vendors in SAP BusinessObjects Global Trade Services. Based on the preference rules and calculation criteria that you define in the configuration, SAP BusinessObjects Global Trade Services performs preference processing to the products. You can then issue LTVD or certificates of origin to your customers. Here are the steps in more detail:

Step 1. Data flows from SAP ECC to SAP BusinessObjects Global Trade Services in the form of master data (e.g., material masters, vendor masters, and customer masters) and transactional data (e.g., materials management [MM] documents and sales and distribution [SD] documents) for preference processing. Transfer the material documents for filling the worklist to request LTVD. Reach the initial transfer screen by executing transaction /N/SAPSLL/MENU_LEGALR3 in SAP ECC (Figure 1). Enter the material document number to transfer to SAP BusinessObjects Global Trade Services.

Figure 1

Transfer material documents from SAP ECC to SAP BusinessObjects Global Trade Services

Step 2. Transfer the billing documents for filling the worklist to issue LTVD for the customer’s purposes in SAP BusinessObjects Global Trade Services. Perform the initial transfer of billing documents from transaction /N/SAPSLL/MENU_LEGALR3 in SAP ECC (Figure 2). Enter the billing document number to transfer to SAP BusinessObjects Global Trade Services.

Figure 2

Transfer billing documents from SAP ECC to SAP BusinessObjects Global Trade Services

Step 3. Transfer the purchase orders from your feeder system to SAP BusinessObjects Global Trade Services by using transaction /N/SAPSLL/MENU_LEGALR3 and entering the purchase order number (Figure 3). Select the SAP Risk Management check box for the preference processing service.

Figure 3

Transfer purchase orders from SAP ECC to SAP BusinessObjects Global Trade Services

Step 4. Transfer vendors, customers, and material masters from SAP ECC to SAP BusinessObjects Global Trade Services using transaction /N/SAPSLL/MENU_LEGALR3 (Figure 4). Click the execute icons next to Transfer Vendors, Transfer Customers, and Transfer Material Masters and enter to vendor number, customer number, and material master, respectively. This transfer happens through RFC.

Figure 4

Transfer master data from SAP ECC to SAP BusinessObjects Global Trade Services

Step 5. Once you complete the data transfer from SAP ECC to SAP BusinessObjects Global Trade Services, go to the Preference Processing tab of the SAP BusinessObjects Global Trade Services cockpit (Figure 5).

Figure 5

Click the Preference Processing tab

Step 6. Click the appropriate legal regulation (EU or NAFTA) and then click the execute icon next to Display Worklist for Vendor Declaration to check whether the system has generated entries in the worklist for requesting certificates of origin (Figure 6).

Figure 6

Display the worklist for vendor declaration

Step 7. The system then displays the entries of your worklist, which you can view based on the administrative unit, business partner number, or product number. To request a vendor declaration from your suppliers, click the execute icon next to Request Vendor Declaration (Figure 7).

Figure 7

Enter the vendor declaration request screen

Step 8. Enter the number of the business partner to whom you want to send the request. Click the Request/Dun LVTD button (Figure 8).

Figure 8

Send a vendor declaration request

Step 9. The system displays the form (certificate of origin) for requesting LTVD for products having preferential origin status according to the NAFTA or EU legal regulations. Once you make the request and receive the declarations from your vendor, click the execute icon next to Maintain Vendor Declaration to maintain the preference status that your supplier sent to you (Figure 9).

Figure 9

Enter the vendor declaration maintenance screen

Step 10. Maintain the preference status received from your supplier for products under the Vdr Decl. tab (Figure 10). Example values include the vendor declaration validity period, partner (vendor) number, and status of the vendor declaration.

Figure 10

Maintain the preference status for products under the Vdr Decl. tab

Step 11. Once you maintain the preference status for the products, click the execute icon next to Perform Preference Determination (Figure 11). Enter a product number for which you want to perform preference determination on the resulting screen.

Figure 11

Perform preference determination of products

Step 12. The system displays the preference results for the selected product. You can see the determination results in the Preference Data section and the details of the calculated BOMs in the Components section (Figure 12). The screen verifies that the preference processing has been carried out to the material.

Figure 12

View the results of preference determination performed for your products by SAP BusinessObjects Global Trade Services

Step 13. Look at the product master to see whether the results of the preference determination run have been stored there. Click the pencil icon next to Maintain Products (Figure 13). Enter the material number in the resulting screen to view the product master. The system then displays the product master and you can see the preference statement so you can confirm the data is there (Figure 14).

Step 14. After completing the preference determination of the product, go back to the SAP BusinessObjects Global Trade Services cockpit (Figure 5) and select the Preference Processing – Master Data tab.

Figure 13

Enter the product master maintenance screen

Figure 14

View the preference statement of your products in the product master

Step 15. Go back to the SAP BusinessObjects Global Trade Services cockpit and to the Preference Processing tab to issue vendor declaration (i.e., issue a certificate of origin document) (Figure 15).

Figure 15

Enter the screen from where you can issue the vendor declarations to your customers

Step 16. View and print the certificate of origin document (Figure 16). Select the customer (business partner) to whom you want to issue the certificate of origin document and click the print preview icon. Print the document so you can send a manual copy of the certificate of origin along with your export shipments.

Figure 16

View the certificate of origin by clicking the print preview icon

Update the Preference Information 

Once you have performed the preference determination to your products, you can view the preference statuses of those products in the customs document. You can update the preference information in the customs document with the preference price after you carry out the preference determination. This helps you view the preference status in your customs document while exporting, as the preference data is updated in the customs document and you don’t need to view the product master for checking the preference status and the vendor declaration for checking the preference price. You save considerable time because you don’t need to look for this data elsewhere. Now I’ll show you the steps for updating the preference information.

Step 1. From the SAP Compliance Management section of the SAP BusinessObjects Global Trade Services cockpit, click the Legal Control - Export tab (Figure 17).

Figure 17

View the customs document

Step 2. Enter the sales order number from the SAP ECC system into the Reference Number field to view the existing export document (Figure 18).

Figure 18 Enter the sales order number from SAP ECC

To display the customs document, click the glasses icon (Figure 19). Check whether the preference information has been copied to the customs document.

Figure 19

View the customs document

Step 3. Click the glasses icon in Figure 19 and then click the Pref. tab in the customs document to view the preference data (Figure 20). You can see the log related to preference processing by clicking the log icon in Figure 20. This brings up the screen in Figure 21.

Figure 20

View the preference data in a customs document

Figure 21

View the preference processing log for the products

Update Preference Information for Imports

Just like you saw in exports, you can also view the preference processing data in your import customs document. After you perform preference determination to your products, you can update the information in the customs document for those products in the following way.

Step 1. In the SAP Customs Management section of the SAP BusinessObjects Global Trade Services cockpit, click the Customs Processing – Import/Export tab (Figure 22).

Figure 22

Enter the tab to view the imports customs document

Step 2. Enter the customs declaration number to view the declaration (Figure 23).

Figure 23

Enter the import customs document number

Step 3. Click the Cust.Val tab in the customs declaration (Figure 24).

Figure 24

Enter the Cust.Val tab in the customs document

Step 4. After clicking the Cust.Val tab, click the display log icon to view the preference determination log (Figure 25). This log shows you that the preference information is stored in table /SAPSLL/LC_CUSB2.

Figure 25

View the preference processing data from the log

Archiving Capabilities for Preference Processing for Audits

There are various archiving options for the preference processing service. You can check whether the data is coming from the archive or the database. This gives you information about where the data is being stored. There are two archiving options used for monitoring vendor declarations: one for customer purposes and the other for vendor purposes. This helps you keep track of the data stored for exports and imports.

In SAP BusinessObjects Global Trade Services, you can archive the data that you no longer require for current processes, but still need to record your business transactions. You must be able to provide evidence to the customs authorities at any time in relation to import transactions or preferential treatment. Archiving this data increases the capacity of your database and boosts the system performance. This provides complete access and control for internal and external audits at all times.

Option 1. Monitor Vendor Declaration for the Customer’s Purpose

Click the execute icon next to Display Vendor Declaration in the Monitoring area in the SAP BusinessObjects Global Trade Services preference processing screen (Figure 26). Enter the appropriate information in the Administr. Unit field and the period fields and select the Read archived Data check box (Figure 27).

Figure 26

View the vendor declaration

Figure 27

Click the Read archived Data check box

The system displays the corresponding data in a monitor. An icon under the DB/Archive tab indicates if the displayed data comes from the archive or from the database (Figure 28). It is important to know where the data is because if it had been sitting in the database for a long time then it may affect system performance in the future.

Figure 28

View the DB/Archive tab in a vendor declaration

Option 2. Monitoring the Vendor-Based LTVD

Click the execute icon next to Display Vendor Declaration in the Monitoring area (Figure 29).

Figure 29

Enter to view the vendor declaration

Click the Read archived Data check box. As a result, you can also read archived data in the selection (Figure 30).

Figure 30

Click the Read archived Data check box

As with the previous option, an icon indicates if the displayed data comes from the archive or the database (Figure 31).

Figure 31

View the icon in DB/Archive tab in a vendor declaration

New Configuration Settings for Preference Determination in SAP BusinessObjects Global Trade Services 8.0 

In SAP BusinessObjects Global Trade Services 8.0, the customizing paths for organizational structures (i.e., defining the plant-based and cross-plant preference processing) have changed. They are now located in the general IMG settings for SAP BusinessObjects Global Trade Services. Here are two new configuration settings locations in SAP BusinessObjects Global Trade Services 8.0:

• Define the plant-based preference: Here you define a preference model for a plant. You can now find this at SAP BusinessObjects Global Trade Services IMG > SAP Global Trade Services > Organizational Structure > Define Plant Based Preference Model. In previous releases, it had been IMG > Global Trade Services > SAP Risk Management > Preference Processing Service > Organizational Structure > Define Plant Based Preference Model.
• Define cross-plant preference model: Here, you define a preference model for different plants. The new menu path is SAP BusinessObjects Global Trade Services IMG > Global Trade Services > Organizational Structure > Define Cross-Plant Based Preference Model. In previous releases, it was IMG > Global Trade Services > SAP Risk Management > Preference Processing Service > Organizational Structure > Define Cross Plant Preference Model.

Ravi Kalluri

Ravi Kalluri is an SAP BusinessObjects Global Trade Services consultant at Accenture Services Pvt Ltd. His focus is on the entire global trade area, including Compliance Management, Customs Management, Risk Management, and Electronic Compliance Reporting. He has an excellent understanding of SAP ERP logistics processes and their integration to global trade in a supply chain environment. His interests are networking, participating in conferences, and writing articles.

You may contact the author at ravi.kalluri@accenture.com.

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