SAP has added some new features for license determination in the recent release of SAP BusinessObjects Global Trade Services 8.0:

• Projects interface for International Traffic Arms Regulations (ITAR)
• Re-export check on products
• Bill of product/material - license check
• Project tracking

This article takes a closer look at these new features and explains how you can use them.

Projects Interface for ITAR

Beginning with SAP BusinessObjects Global Trade Services 7.1 and continuing to SAP BusinessObjects Global Trade Services 8.0, SAP BusinessObjects Global Trade Services has the functionality to support ITAR regulation with the legal control called agreements. With ITAR regulation, the authorities approve one agreement, which might consist of approvals or licenses to ship materials, software, and other associated technical documents. Prior to SAP BusinessObjects Global Trade Services 7.1 you defined the ITAR regulation and performed individual license determinations. With SAP BusinessObjects Global Trade Services 7.1, SAP introduced the nested license (licenses within licenses), which allows you to meet the requirements for multiple license approvals. SAP BusinessObjects Global Trade Services 7.2 enhanced the agreements with license type attributes and value depreciation by linking the reference material with export licenses. The system could depreciate the products in the export license for the generic reference material in the agreement.

SAP BusinessObjects Global Trade Services 8.0 takes ITAR regulation one step further by allowing users to separately track ITAR-relevant goods with projects and transactional-based bills of material (BOM). You can link export licenses to the projects manually or by interfacing from your feeder system by making use of Business Add-Ins (BAdIs). You can also transfer transactional-based BOM information from the feeder system by using the BAdI to filter the ITAR-relevant items from the BOM explosion. You can track the material, software, and technical documents with individual licenses rolled into one license. Figure 1 shows the configuration definition of such an agreement.

Figure 1

Agreement definitions

Typically, a defense shipment can involve multiple licenses and the approval of one depends on the overall agreement. When the agreements are defined, they refer to the license type. When a document is checked, it checks against the agreement and the agreement in turn has licenses associated with it.

Re-Export Check on Products

Another key functionality release with the SAP BusinessObjects Global Trade Services 8.0 is the re-export check on relevant products. When you export a product, it is not only important that you check the export regulation of the country it is being shipped to, but you also need to check if the product is going to be shipped out from the country receiving it. If the product is received into a country with the intent to have it shipped to a different country after some processing, then the re-export law of the originating country applies. With a re-export regulation check, you need to check for products that are eligible for re-export and apply the regulations to the component and the final product. If the component license determination finds that the product needs additional licenses, then the system proposes the license required.

Figure 2 shows how you can put in the re-export information for a product specific to the foreign trade organization (FT Org.), Re-Export Regulation (L.Reg.), Destination Group (Dest.Group), and re-export control relevance (Re-Ex-Contr. Rel). When you go to the Re-Ex-Contr. Rel. field, you are offered a drop-down menu. The different selections allow you to perform checks on all transactions or perform checks on just the value share (the cost of the component as compared to the cost of the entire product) of the component that makes up the final product. You can also place a check in the No Component (No Comp.) check box to indicate if there is no component below. Place a check in the No Calculation (No Calc.) check box if you don’t want the system to perform the calculation of value share. The value shares of the components are defined manually based on the value each component contributes to making the final product. If you do not define it, the system assumes that the value share is zero.

Figure 2

Maintain re-export information for a product

Restricting your selection to individual foreign trade organizations can optimize your system performance, as you exclude the business transactions of foreign trade organizations whose product supply sources are not relevant for re-export. Legal control for re-exports of individual legal regulations can have differing requirements of the re-export relevance of a product, depending on the country of destination. As a result, you can group countries that have the same re-export requirements in a legal regulation together in a country group. When you define this country group restriction, you can enter the re-export settings and data for each product and legal regulation at the same time.

Bill of Product/Material - License Check

Final products often consist of many sub-products or assembly of products. Each of these components that make up a final product has to go through the license determination for ITAR regulations and dual-use goods. These BOMs are also relevant for customs declarations and SAP BusinessObjects Global Trade Services captures the relationship between the final product and the components. Let me explain what I mean. When you look at a BOM or a bill of product (BOP) that constitutes the components for a product, the BOM or BOP can have different structures. For example, an assembly BOM displays a hierarchy structure where the lower level components comprise the next level assembly and then finally the finished product. Based on the BOP transferred from the feeder system, the system determines the necessary export licenses for all components of a product contained in the final product.

The system uses the top-down method for determining the license. The report in Figure 3 shows how you can explode the BOM and perform the license determinations on the components.

Figure 3

Explode and check BOMs

SAP BusinessObjects Global Trade Services 8.0 also allows you to run a report for product classification evaluation. This helps you analyze the classification of the products in legal control. You can run the analysis for specific products or based on data such as relevance for controls or classification number. Figure 4 shows the report output. This report can display the products that are subject to ITAR regulations and other details on the control relevance.

Figure 4

Classification analysis report

Within the Legal Control Service, you need to enable the BOP check for determining all BOP items. Figure 4 shows the configuration step. The menu path for this configuration can be found within SAP BusinessObjects Global Trade Services Reference IMG > SAP Global Trade Services > SAP Compliance Management > “Legal Control” Service > Control Settings for “Legal Control” Service.

Figure 5 shows the configuration selections options for the billing of product/materials check. Within the control settings, you also have configuration settings for Re-Exports checks. Also within Figure 5, you can see the settings that apply to the re-export. To define the reference regulation, check the box next to Re-Exp. and then supply the product’s value in the Customs Value Currency, as well as its value in the currency of its final destination in the Exchange Rate Type.

Figure 5

Control Settings for Legal Control Service

Figure 6 shows the configuration setup for transfer of BOMs from SAP ERP Central Component (ECC) to SAP BusinessObjects Global Trade Services. Here you need to set up the control settings for static billing of material with BOM usage — Global or Alternative BOM. Within the Type of BOM Expl. field, you need to select from the drop down the bottom-up or top-down method. If you plan to use the BOM transfer for Preferential Treatment, than you need to select the appropriate agreement within the Type of Rule Set. Check the appropriate BOM (Shipping, Production or Phantom), based on the BOM that you plan on transferring.

Figure 6

BOM transfer configuration set up with the SAP ECC SAP BusinessObjects Global Trade Services Plug In

Within the SAP BusinessObjects Global Trade Services system product master, you need to maintain the BOM ID and the Final Product Quantity of the component that makes up the product. Check the box for Compliance or Customs based on the functionality you are using. For legal control license determination, check Compliance, and for customs reporting, check Customs. Figure 7 shows the BOP maintenance with the product. The product is the BOM ID and the component quantity that make up the final product. Here, the product is applied to Compliance and Customs management.

Figure 7

BOM identification for the product

Project Tracking

SAP BusinessObjects Global Trade Services 8.0 allows you to track your project. You can associate your projects with your overall contract. This is especially helpful on defense-related projects when you have many shipments associated with the main project. Projects track the key milestone and the delivery schedule and these are associated with goods procured from your vendor and the shipments to your customers. Figure 8 shows the project number and description maintained within the system.

Figure 8

Project number in the SAP BusinessObjects Global Trade Services system

When you have an approval for a project, you can associate the project number to the customer shipment, as seen in Figure 9. You can either manually assign the product in the customs declaration document or you can code it within the BAdI to capture the information from the SAP ECC feeder system.

Figure 9

Project number associated with the customs shipment

While declaring to the customs authorities, you can associate the customs declaration document (Figure 9) with the project number. These customs declarations are created against the export shipment from the feeder system. The assignment of the project number can either be transferred from the feeder system or you can manually assign the project number to the customs declaration document. Assign the project number in the Project Number field under the Project Assignment section, as shown in Figure 9. ITAR Project tracking allows for strategic trade compliance by associating with projects, instead of product-based tracking and BOM level compliance and license determination. This is one of the critical requirements in Aerospace and Defense and High Tech companies and this provides a granular level of export compliance on the market and better audit ability.

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.

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