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How supplier declaration management is automated in SAP

Preferential EU agreements allow companies in many countries to export their goods with no or with heavily reduced import duties. This provides important competitive benefits, but often requires a great deal of effort. The Mercoline M.SecureTrade Preference Management solution automates the processing in SAP.

Increasing importance of preference management

The EU has concluded free trade agreements with close to 50 countries or groups of countries, and many more such agreements are currently in negotiation. This only underscores how the importance of such export easements will continue to increase. A written preference certificate documenting the origin of the goods to be exported in the EU is required in order to take advantage of the benefits of preferential agreements. The proportion of all the purchased articles from third countries must be clearly calculated and documented. Incomplete or false declarations pose significant risks, as they can be regarded as tax offences resulting in further duties and fines.

Supplier declaration management has required great effort – until now

Proof of origin for all articles contained within a product is required for a preference certificate. The suppliers must verify how high the EU value proportion of the article is. This requires a high level of administrative effort for the exporting company. The documents must be requested by the suppliers, and the declarations must be monitored and, if necessary, dunned. The formal validity of the declarations must also be inspected, for instance to check whether they use the stipulated wording. Finally, the reported data must be evaluated and transferred into the ERP system. The processing of, at times, thousands of articles requires a great deal of manual work. The standard functions in the SAP ERP system only cover a small portion of the processing operation, and there’s no monitoring of the status of the declarations. In addition, these functions will no longer be available under SAP S/4HANA. Companies unable to transition to the SAP solution Global Trade Services (SAP GTS) now have an alternative with this Mercoline solution that automates supplier declaration management in SAP.

Automated processing of supplier declarations in the SAP system

Mercoline’s M.SecureTrade Preference Management is an add-on for the SAP system which automates supplier declaration management in SAP and makes it transparent. Central elements of the solution include the summarization of all data in one document, the electronic exchange of single or long-term supplier declarations (SD/LTSD), for instance via web portal and automated processing in the SAP system. The most important features are:
  • The determination of relevant procedures (e.g., materials without an invalid supplier declaration) from master data (purchase information records, material masters)
  • The automated creation of SD/LTSD documents per supplier (also across numerous plants), based on the above information
  • The automated and electronic request from SAP for supplier declarations through various communication channels (e.g., via web portal)
  • The automatic import and summarization of data confirmed by the supplier at the material and preference zone level/country level
  • The creation, dispatch or printing of supplier declarations from the customer
  • The management and monitoring of all documents in the monitor, for instance for dunning and withdrawing documents
  • The processing of the supplier declaration document, inspecting it to ensure its completion and dispatching it (all of the processing steps can automatically be conducted in the background)
  • The logging of changes in their entirety to the SD document
  • The selection and monitoring of SD documents according to various criteria via the SD Monitor
  • The running of the preference calculation in the SAP standard and using it for SD processes

Great flexibility in controlling supplier declarations

SD/LTSD documents are automatically created per respective supplier on the basis of flexible SAP selection criteria such as company code, purchase organization, purchasing group, plant, preference zones, expiration date, etc. The document is filled out with all the important header and item data necessary for the dispatch of the SD request or dunning. Additional customer-specific reference data can also be imported. How and when a document is dispatched can be controlled up to the supplier level via dispatch profiles. This ensures that the suppliers can also be reached on their preferred communication channels.

Automate data reporting with the SD web portal

In the SD web portal, suppliers can easily access, edit and conclude requested supplier declarations. The supplier declaration texts and the materials and preference countries to be verified are displayed as paper forms, but can be filled out much faster this way. This information can be collected again by the SAP system, allowing it to facilitate an update of the supplier declarations data in the SAP material master in seconds. This saves time for both the supplier and in particular for the SAP user companies. And the electronic exchange via the web portal and mobile devices also increases the SD response rate.

Preference management for small and mid-sized companies

Until now, it has been primarily large companies that have enjoyed the tax benefits of the EU’s preferential agreements. The Mercoline solution replaces the time-consuming manual activities involved in requesting and issuing supplier declarations with automated functions. This means that now, the increased efficiency of preference management can also pay dividends for small and mid-sized companies as well. Other benefits include greater transparency in all SD procedures thanks to SD Monitoring and the logging of all reports and changes in the SD document. Flexibility is also increased in the summarization of SD procedures, for instance, for the same material in several plants. This greater transparency as well as automated dunning and withdrawal functions decreases the risk of non-compliance. SAP standard functionalities such as skips, authorizations or archiving can continue to be used with this add-on to the SAP system. And the add-on avoids the disadvantages of external non-SAP solutions such as separate data storage in isolated data silos, customizing and the maintenance of interfaces and various user interfaces. The M.SecureTrade Preference Management solution is continuously being developed. Mercoline advises customers in the implementation or recalibration of preference calculation in SAP (SAP standard customizing).
Suitable Mercoline solutions