RE: [sap-log-mm] Frieght Purchase Orders

Posted by Sap Land Monday, 26 September 2011 03:53

Posted by satishvp123
on Sep 26 at 6:53 AM

It is always better to have freight costs included in material purchase PO to get the material stock valuation right.

But you also have to look at business considerations. For example in the case you have explained, obviously the equipments are purchased under projects, or as AUC (Asset Under Construction). In such cases the transport cost may be tracked separately, since finally when you capitalize, all costs will get included.

The transportation cost is expected to be high, and you need to track service tax on it separately so that you can get benefit in tax returns.

Regards.
Satish.

---------------Original Message---------------
From: manoj raut
Sent: Sunday, September 25, 2011 10:59 AM
Subject: Frieght Purchase Orders

Hi ,
We have separate Logistics ( Frieght ) and Material Procurement Teams here in our procurement department.

Scenario is as below.
We procure large equipments for our EPC business. Generally equipment supplier and transporter are different. so when material procurement team creates a purchase order, they are not generally aware of transportation costs needed since its MTO scenario where equipment manufacturing might take 5-6 months.

so once vendor confirms that equipment is ready for dispatch, procurement team informs logisitcs team to arrange for transporter to transport equipment to our premises.

Then Logistics team negotiates with transporters and chooses one of them . A transport purchase order against transporter is created which has freight charges and service taxes included .

But now this cost doesn't add to material Value and its giving us wrong valuation of material. So is there any better way to handle this?

Thanks
Manoj

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