6.8    Foreign Trade

Many companies have a global component as part of their operations, whether for internal production and procurement processes or for external sales to customers. With the integration of global processes come many legal requirements, including reporting requirements, paying tariffs and taxes, and providing specific documentation for transfer of goods.

6.8.1    SAP Global Trade Services

SAP ERP relies on one of two services to support foreign trade transactions: Foreign Trade, which is part of SAP ERP SD, and SAP Global Trade Services (SAP GTS), which is an external service that integrates with SAP ERP. With SAP S/4HANA, the Foreign Trade functionality is retired, and all foreign trade will be managed through SAP GTS.

SAP GTS provides a number of functions for companies to manage global trade and ensure compliance with local markets. The following functions integrate directly with the Sales and Distribution processes in SAP S/4HANA:

• Compliance Management
  Ensures compliance with international trade regulations in data management and export processing.
  • Product classification is required in global trade transactions to facilitate communications with customs, identify license requirements, and support compliance reporting such as Intrastat reporting. Compliance Management facilitates product classification by assigning classification numbers and ensuring proper classification.
  • A sanctioned party list identifies entities with which trade is prohibited based on information published by government entities. SAP GTS integrates with the business partner master data and compares the addresses on file with the addresses on the sanctioned party list. These checks will happen as sales orders are created and can also be scheduled periodically, such as when sanctioned lists are updated in the system.
  • Legal control is used to ensure master data and business transactions comply with legal import and export laws at both an international and local level. In the sales process, this functionality can check for products being sold that require import or export licenses, and it can also check if there is an embargo on the destination country.
• Customs Management
  Supports both electronic and print communications with customs agencies, which facilitate faster processing of cross-border transactions and allow the faster release of goods by customs authorities.
  • Customs Management processes integrate with other SAP GTS functions, such as sanctioned party lists and product classification, to check documents for completeness and compliance before they are sent to authorities.
  • Functionality includes document entry and maintenance, import and export processing, customs duty calculations performed at the item level, transit procedures, and monitoring of goods movements subject to excise duties.
• SAP Risk Management
  Supports a business in minimizing financial risk during global trade transactions.
  • Preference processing is used by exporters to identify goods as eligible for preferential treatment, which allows customers to move goods more quickly and cheaply across borders. Preference processing can integrate with Customs Management to print preference statements.
  • Letters of credit are issued by banks and allow companies to minimize risk associated with global transactions. Letters of credit master records are created in the system with all relevant document data maintained for the header, item, and partner data, and they integrate directly with sales and delivery processing to identify customers who require letters of credit and to link them to import and export documents in the system.
  • The restitution functionality is used by exporters to maintain licenses, identify products sold or traded that are applicable for restitution, calculate restitution rates, and support all documents required for restitution.
• Electronic Compliance Reporting
  Primarily used in conjunction with trade throughout the European Union (EU), to ensure compliance with the rules and regulations of inter-EU trade. This functionality integrates material master data to identify product classifications. It also identifies logistics transactions relevant for Intrastat reporting based on the country of issue and country of receipt. Finally, a worklist is created to prepare the Intrastat reports and submit them electronically.

6.8.2    Conversion Process

When converting from SAP ERP Foreign Trade to SAP GTS, it’s important to identify impacts to data or business processes. With Foreign Trade, specific fields are stored in the material master that are used to store data related to export and preference management, letters of credit, or legal control functions. In SAP GTS, the data is stored and maintained in SAP GTS and isn’t available in the material master. These fields are as follows:

• CAP product list number
• CAP product group
• Preference status
• Vendor declaration status
• Exemption certificate
• Exemption certificate number
• Issue date of exemption certificate
• Military goods

In addition, because SAP S/4HANA and SAP GTS manage the foreign trade processes, reporting, and other requirements, there are a number of transactions that are available in SAP ERP but aren’t available in SAP S/4HANA. If third-party packages are used in SAP ERP to manage global trade processes and will continue to be used in SAP S/4HANA, a review is required to understand if the package used these transactions before conversion to SAP S/4HANA. If they were used, the third-party package might need adjustments to continue to integrate with the new system.