Authored by: Andreea Nalbaru
While delivering products to its customers, a manufacturing company is required to deliver it along with specific preference statements.
All of this depends on the raw materials and its preference eligibility used up during the production. SAP Global Trade Services add-on – Identity-Based Preference Processing (IBPP) allows user to determine the preference status for a specific batch (or any other indicator). So, lets us understand what is an SAP IBPP, its importance and advantages for global trade.
What is Identity-Based Preference Processing (IBPP)?
SAP GTS has come with a new add-on solution for companies which will help them in the process of preference processing.
Compared with the standard SAP GTS Trade Preference module where the determination of the preferential origin happens on product level, the new solution, Identity Based Preference Processing (IBPP), focuses on performing preference calculations one level below the product, on batch for example. This offers a more accurate result since the calculation takes into account only the components/materials, which are used during the production process. For the components/materials which are externally procured, the LTSD (Long Term Supplier Declaration) is maintained based on the supplier-product-batch combination. The preference status is stored at the batch level, which allows the company to deliver their products to their customers from those specific batches.
In an intercompany process, SAP GTS helps reduce the import duties which must be paid by the company. This leads to an increased revenue since it allows the company to lower the prices for its customers.
This is a recommended solution for a company, which is uses – batches, equipment, or serial numbers.
Identity Based Preference Processing (IBPP) advantages:
- Seamless integration with standard Trade Preference
- Preference calculations performed based on the process/production order transferred from the feeder system
- Maintain preference status on identifier level (e.g. batch)
- Aggregation of Long-Term Supplier Declaration (LTSD) is not necessary
- Preferential status is transferred from SAP GTS to the feeder system and stored in the batch characteristics
- The possibility of picking the appropriate products for the outbound process based on their preference status
Identity Based Preference Processing (IBPP) integration
IBPP was created as a response to address the questions by various companies:
- How can I avoid the aggregation of Vendor Declarations based on the worst-case scenario?
- How can I use in a preference calculation only the components which are consumed?
- How can I combine long-time valid commitments against my customer and identity-based preference origins?
- How can I maintain the eligibility of a product batch managed?
The seamless integration of IBPP with Trade Preference and logistics processes, is the answer.
- The system can identify if a product is batch managed based on the Goods Receipt transferred from the feeder system. A new worklist is created in GTS for these products where you can display, maintain, update, copy one or multiple entries. Aggregation is not relevant since the products are maintained at batch level. For the products identified as not batch managed, the standard Trade Preference process will take place: update the LTSD worklist, request, maintain, aggregate.
- Process/production orders are transferred in real time to GTS. Calculation is based on the components and their identifier (batch) consumed in the production process. The preference status is transferred back to the feeder system and stored in the batch characteristics.
- The Customer LTSD worklist is enhanced with the identifier (batch) and is created based on the shipped batches to the customer. This will allow the company to create a origin based strategy in the outbound process. Provide origin data to the customers through origin declarations, certificates of origin and long-term supplier declarations.
How can Krypt help?
Krypt is an SAP preferred partner and has assisted in the success stories of global businesses across industries & geographies. We have helped businesses through successful integration & implementation of SAP GTS, SAP TM, SAP EWM, and SAP IBP.
Note: A separate license is required for an SAP IBPP installation.