Many countries’ customs authorities allow you to defer or eliminate duty payment if the goods imported into the country are meant for re-export after value addition rather than for consumption. For example, a company can subcontract some finishing work or testing on a particular good to a company in another country and then import it back. Another example — a company could receive semi-finished parts and after assembly would export the finished product back to a company in another country. The assembly, in this case, would be the value addition.

For companies to take advantage of this, they need to identify the goods that are meant for re-export, and track and report them to the customs authorities. Customs authorities might audit your company’s premises to see how you manage this process and if your reporting is accurate. In Asian countries, this process of managing your inventory and reporting is called a bonded warehouse. A similar process in Europe is called free trade zone and in North America is called foreign trade zone. In this article, I’ll use the term bonded warehouse for consistency.

I will walk you through the configuration settings for enabling a bonded warehouse within your SAP BusinessObjects Global Trade Services system. Bonded warehouse functionality is available with SAP BusinessObjects Global Trade Services 7.0 and higher. The first configuration setting involves understanding and setting up the organizational structure needed for your bonded warehouse to be represented in the system. Before SAP BusinessObjects Global Trade Services, you would have had to track the information in SAP ERP Central Component (SAP ECC) and report manually outside of the SAP system, either in Microsoft Excel or a non-SAP system.

Bonded Warehouse Location

Within your logistics system, you might have a location that identifies the bonded warehouse location, which could be the plant location or a combination of the plant and storage locations. In SAP BusinessObjects Global Trade Services the combination of plant and storage location is identified as the customs ID. By assigning the customs ID to a combination of plant and storage locations, you can form a bonded warehouse. These locations are also relevant for the customs reporting site. Two different plants with the same company code and another plant in a different company code within the SAP ECC system can have the same customs ID. This entire location is considered for bonded warehouse tracking and reporting purposes.

From the application point of view, stock transfers within the same customs ID or bonded warehouse are not taken into account within SAP BusinessObjects Global Trade Services inventory management even if the goods are moving across company codes. It is only when the product moves into or out of the bonded warehouse or the area identified with the customs ID that it is recorded for inventory movement for bonded warehouse tracking.

SAP ECC Configuration Steps for Setting Up the Customs ID

The first configuration step is to define the customs ID. Figure 1 shows the definition for customs ID within SAP ECC. You can access this through IMG menu path Sales and Distribution > Foreign Trade / Customs > SAP Global Trade Services – Plug-in > Customs: Customs Procedure with Economic Impact: Define Customs ID.

Figure 1

Define the customs ID, 10 digits or less, with the description

A pop-up screen appears for creating a new customs ID and description. Click the New Entries button to create a new customs ID for representing the bonded warehouse. This enables you to track these goods and also put the goods into a specific status for reporting to the customs authorities.

Following the definition, you assign it to the plant and storage location where you want it to identify the bonded warehouse. Figure 2 displays the configuration setting for assigning the plant and storage location combination to the customs ID. To do this, follow IMG menu path Sales and Distribution > Foreign Trade / Customs > SAP Global Trade Services – Plug-in > Customs: Customs Procedure with Economic Impact: Assign Customs ID.

Figure 2

Assign the customs ID to the plant and storage location combination

SAP BusinessObjects Global Trade Services Configuration Setting for Customs ID

As with SAP ECC, the first step involves defining the customs ID. The customs ID in SAP ECC and SAP BusinessObjects Global Trade Services should be the same. Follow IMG menu path SAP Global Trade Services > SAP Customs Management > General Settings > Define Customs ID for Customs Procedures with Economic Impact (Figure 3). The physical goods movements are transacted in SAP ECC and the information is sent to SAP BusinessObjects Global Trade Services for trade compliance tracking and reporting purposes.

Figure 3

Define the customs ID in SAP BusinessObjects Global Trade Services

Check the ActLoc (active location for storage) check box for the bonded warehouse customs ID. If you have multiple bonded warehouses (e.g., for different physical locations based on product or business unit), you need to define these customs IDs for all the bonded warehouses separately to represent them in the system.

Next you need to assign the customs ID to the foreign trade organization and feeder system combination. Foreign trade organization is an organization element equivalent in SAP BusinessObjects Global Trade Services to the company code in your SAP ECC system, which is the feeder system. Follow IMG menu path SAP Global Trade Services > SAP Customs Management > General Settings > Assign Customs ID to Foreign Trade Org. and Group of Logical Systems (Figure 4). Enter the Cust.ID and choose the LS Group and FT Org. values from the drop-down menus.

Figure 4

Assign the customs ID to the logical system group and foreign trade organization

Finally, activate the customs ID for inventory management. This is necessary for SAP BusinessObjects Global Trade Services to track the goods moving in and out of the bonded warehouse. The transaction to activate the bonded warehouse of inventory tracking is /SAPSLL/LOCATION_ACT. Figure 5 displays the activation screen using this transaction.

Figure 5

Activate the customs ID for inventory management

Uncheck the Simulation Mode check box to activate the inventory management for all customs IDs. Click the execute icon and the system displays the message that the customs ID has been activated.

Application Use and Tracking

Companies sometimes pay the duty for imported goods and later submit documents for duty drawback. They do this if they want the goods to be released immediately and they don’t have the relevant document for claiming they are duty free or to prove that they are not meant for consumption. SAP BusinessObjects Global Trade Services allows you to manage both the paid and unpaid duty within the bonded warehouse.

Products that are meant for bonded warehouse tracking are identified within the SAP BusinessObjects Global Trade Services product master data maintenance. From the SAP BusinessObjects Global Trade Services product classification maintenance screen, use transaction code /SAPSLL/PRODUCT_02 or follow menu path SAP Area menu > SAP Customs Management > Master Data > Customs Products > Maintain Products. Click the change product icon to bring up the screen shown in Figure 6.

Figure 6

Assign the customs ID to the products in SAP BusinessObjects Global Trade Services

Maintain the customs ID for the product in the Cust.ID column and check the relevant process from the available columns (e.g., Bonded, Inward Procedure, and Outward Procedure). You can update the reference product if the original product is packaged and shipped out as a different part number.

Based on the stock movement within SAP ECC, the inventories are reflected within SAP BusinessObjects Global Trade Services. Follow menu path SAP Area menu > SAP Customs Management > Customs Processing – Import / Export and click the Inventory Mgmt tab. Figure 7 displays the various reports to review the transactions that are tracked through the bonded warehouse. For example, Display Receipts and Issues reports the product number with its description, quantity of duty paid and unpaid, any reversal (i.e., corrections that need to be made), and the unit of measure. Click the execute icon next to Display Receipts and Issues, enter the customs ID, and click the execute icon again. The system displays the goods coming in represented by a positive sign and goods moving out represented by a negative sign.

Figure 7

Transactions and reports to monitor inventory movement for bonded warehouse functionality

Reporting and Declarations

With a bonded warehouse, you need to also periodically declare to the customs authorities the transaction or inventory flow in and out of the bonded warehouse. This is also called the supplementary customs declarations in Europe. You need to provide a summary of the data to customs authorities for a specific period (e.g., monthly or weekly) based on the approval you have from customs authorities. You have to report goods that come into the bonded warehouse as inward movement. If they are moving in and out of the bonded warehouse, then you might have to report them as a free circulation. When they move out of the bonded warehouse, you submit a bonded warehouse declaration in general. An example of this situation is if goods are initially manufactured in Germany, moved to France for some work, brought back to Germany for assembly, then shipped out of the European Union.

For periodic declaration, you need to define procedures and steps with customs management. As mentioned above, the period of declaration depends on the authorization you have from the customs authorities.

Authorization Setup

The first configuration setting for the bonded warehouse declaration is the creation of the authorization. You maintain the authorization type in the configuration. Follow IMG menu path SAP Global Trade Services > Customs Management > General Settings > Define Authorization Types for Customs Processing. Assign these authorization types to legal regulations. These authorizations are specific to the countries’ customs authorities, so you need to ensure that there is only one authorization per legal regulation.

Figure 8 displays the configuration setup authorization type for a bonded warehouse. Follow IMG menu path SAP Global Trade Services > SAP Customs Management > General Settings > Define Types for Authorization for Customs Warehouse. Review the predefined settings and only make changes if necessary. For example, maintain the Action Profile, E-mail Sender, and User Group fields if you want to use the functionality of sending email to a user group. You can also have separate authorization for inward and outward processing (i.e., if you have different processes and groups within your organization to support them) with the configurations for Define Types of Authorization for Inward Processing or Outward Processing.

Figure 8

Authorization type setup for a bonded warehouse

Following the configuration setup, you can define the authorization for the bonded warehouse legal regulations reporting. Follow menu path SAP Customs Management > Customs Processing – Import / Export and within the Authorizations section you have the different transactions for authorization maintenance (Figure 9).

Figure 9

Authorization setup for a bonded warehouse

Declaration Configuration Setup

In the previous section, I covered the configuration to set up the bonded warehouse to capture the product and transactions within a bonded warehouse. In this section, I’ll show you how to set it up to report it to the authorities. As part of the bonded warehouse process, it is mandatory to report these goods movements.

SAP BusinessObjects Global Trade Services Configuration

For a bonded warehouse declaration or supplementary declaration, you need to set up the document type. Follow IMG menu path SAP Global Trade Services > Customs Management > General Settings > Document Structure > Define Document Type for Periodic Declarations. Maintain the declaration document types by clicking the New Entries button. Figure 10 displays the configuration setup for periodic declarations. Follow IMG menu path SAP Global Trade Services > SAP Customs Management > General Settings > Document Structure > Define Document Type for Supplementary Customs Declarations (SCD). Review the predelivered document types and maintain them with the Description, Im/Ex (import/export), and Decl.Catgy (declaration category) fields.

Figure 10

Supplementary document definitions for a bonded warehouse declaration

Then you activate the declaration type for the fields shown in Figure 11 (e.g., Inward, Legal Unit, Declarant, and Cust.Stat.). Follow IMG menu path SAP Global Trade Services > SAP Customs Management > General Settings > Document Structure > Define Control for SCD and Legal Regulation at Document Type Level.

Figure 11

Control settings for supplementary customs declaration for a bonded warehouse

With a bonded warehouse, if you have an internal process to scrap your goods, you need to set up the document type for this internal process. Follow IMG menu path SAP Global Trade Services > SAP Customs Management > General Settings > Document Structure > Define Document Type for Documentation of Internal Process. Figure 12 displays the document type definition within the bonded warehouse for scrapping. This one shows predelivered configuration with the definition of internal goods movement (e.g., scrapping a part). You can review this and create your own custom transaction copy from this or make use of this document as defined.

Figure 12

Document type for internal process with a bonded warehouse

SAP ECC Configuration

SAP ECC plug-in is delivered as part of an SAP BusinessObjects Global Trade Services license, but needs to be installed in the SAP ECC system. Within SAP ECC plug-in, you need to activate the movement types that are to be sent to SAP BusinessObjects Global Trade Services for reporting. To configure, follow IMG menu path Sales and Distribution > Foreign Trade > GTS Plug In > Control Data for Transfer to SAP Global Trade Services > Configure Control Settings for Document Transfer. Select the application level MM0C and click the Document Types folder. Enter the movement types and define the control settings for customs management services. Figure 13 displays the configuration settings for the movement types from SAP ECC for transferring and activating services for a bonded warehouse in SAP BusinessObjects Global Trade Services.

Figure 13

SAP ECC plug-in set up for the movement types for inventory movements within the bonded warehouse

You can set up the document type for different movement types. Check the Call up SAP Customs Management Services check box and select the appropriate category of the goods movement from the drop-down list (e.g., Scrapping or Returns). You can also select the Manual Proc. Customs Warehouse check box if you want to use the manual declaration procedure. This indicates that movement types in SAP ECC are exempt from the automatic processing in SAP BusinessObjects Global Trade Services because they are manually processed for bonded warehouse reporting at the user’s discretion. Click the Transfer to Inward Prcssng check box if the movement is meant for inward processing within the bonded warehouse.

BAdI Activations

You need to activate pre-delivered Business Add-Ins (BAdIs) in SAP ECC for a bonded warehouse. Follow IMG menu path Sales and Distribution > Foreign Trade > SAP Global Trade Services – Plug-In. Figure 14 displays the available BAdIs.

Figure 14

Available BAdIs

By default the BAdIs are not activated. When you click one, the system produces a pop-up window that asks if you want to activate the BAdI implementation. Click Yes to activate. Based on the requirement for any additional data capture or data manipulation, you can select and activate the relevant BAdI. For example, if you need to capture temporary storage with the delivery status for a bonded warehouse, you might want to look at the Customs: Safekeeping: Choose Safekeeping Method BAdI. If you need to capture a reference number prior to scrapping, you want to look at the application of the BAdI Customs: Activate Dialog for Reference Number for Scrapping in Customs WH.

Similarly, you might want to look at the application of Customs: Activate Additional Check for Customs WH-Relevant Goods Movements if you want to apply additional checks prior to receiving the goods through goods receipt transaction MIGO in SAP ECC.

Monitoring with SAP BusinessObjects Global Trade Services

The configuration you’ve performed generates the material movement document in SAP ECC and in turn triggers a document for declaration in SAP BusinessObjects Global Trade Services. Review the data for declaration using the report Data Basis for Periodic Declaration. Follow menu path SAP Customs Management > SAP Customs Management Import / Export > Monitoring Of Log Processes. The functions, reports, and transactions within the Monitoring of Log Processes tab allow you to review the documents transferred to SAP BusinessObjects Global Trade Services for declarations and reporting to customs authorities (Figure 15).

Figure 15

SAP BusinessObjects Global Trade Services logistics monitoring for bonded warehouse reporting and declarations

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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