Setting up the bonded warehousing functionality

Storage and tracking

The storage and tracking of bonded and cleared non-bonded goods, (which can physically be stored together even though there is no physical marking on the goods to denote if they are bonded or non-bonded), is facilitated by the Stock Ownership functionality, an IM7 reference, and automatically updated customs-related files.

The Stock Ownership functionality, which must be activated together with the Bonded Warehousing functionality, provides the possibility to set up and utilize logical and physical warehouses for tracking bonded, non-bonded and physical inventory. The bonded goods are tracked using the bonded logical warehouse, and the non-bonded goods are tracked using the non-bonded logical warehouse.
An IM7 reference must be entered when purchasing bonded goods and is updated in the Customs-related files.

The system automatically updates the following customs-related files:

Customs-related files	Purpose
Work with customs reference file Customs reference log file	The system will track and store the bonded inventory balance against an IM7 reference as follows: When bonded goods are purchased, this file will store the goods purchased against the IM7 reference and reception timestamp. When cleared bonded goods are sold domestically, this file will be updated to consume the quantity against the IM7 reference in a FIFO manner (using the reception date of the IM7 reference). When bonded goods are exported (sold to export customers), this file will also be updated to consume the quantity against the IM7 reference in a FIFO manner (using the reception date of the IM7 reference). As a result, the Work with customs reference file and the Customs reference log file will always display the available balance against each IM7 reference. Note: Any manual changes required in the Work with customs reference file may only be performed by users with ADMIN authority, and only limited details are allowed to be altered. For example IM7 reference field – The value in this field can only be changed if the quantity of the IM7 reference is not consumed by any sales order. If editable, then a change in this field will also trigger an automatic update in the Customs reporting file. Values for other editable fields can be changed but any change to those field values in this file requires a mandatory manual change of the equivalent field values in the Customs reporting file. Any altered details will automatically be logged in the Customs reference log file (which is accessed via the Enquiries menu).
Work with customs reporting file Customs reporting log file	The Work with customs reporting file tracks all the transactions of bonded inventory that are purchased, cleared, and sold against the IM7 reference. This file can also be used to create monthly, quarterly, and yearly reports as per customs regulations. When bonded goods are purchased, a new entry will be added after reception confirmation with details like, e.g., quantity purchased, supplier, IM7 reference, Country of origin, reception, and transaction dates. When cleared non-bonded goods are sold domestically (or moved out of the bonded warehouse), then a new transaction will be created after pick list confirmation, with details like, e.g., quantity consumed, sales order number selling the quantity (denoted as a negative value) to the customer, IRO order numbers used for clearing the quantities from bonded to non-bonded, transaction dates. When bonded goods are exported (sold to export customers), (or moved out of the bonded warehouse), then a new transaction will be created after pick list confirmation, with details like, e.g., quantity consumed, sales order number selling the quantity (denoted as a negative value) to the customer, transaction dates. Note: Any manual changes required in the Work with customs reporting file may only be performed by users with ADMIN authority, and only limited details are allowed to be altered. Any altered details will automatically be logged in the Customs reporting log file (which is accessed via the Enquiries menu). Extracting logged data and creating reports for customs The tracked details (i.e., each quantity purchased and sold against each IM7 reference) can be extracted to allow for the creation of customs reports and the calculation of the actual import duty. The calculation of the actual duty can be facilitated by the following: The Bonded landed cost type defined in the DIS control file can be used to cross-validate the landed cost applied on the IRO purchase order created during the clearing process of bonded to non-bonded goods. An IM4 reference that can be linked to monthly exchange rates created in the Exchange rate table.

Customs-related files

Purpose

Work with customs reference file

Customs reference log file

The system will track and store the bonded inventory balance against an IM7 reference as follows:

When bonded goods are purchased, this file will store the goods purchased against the IM7 reference and reception timestamp.
When cleared bonded goods are sold domestically, this file will be updated to consume the quantity against the IM7 reference in a FIFO manner (using the reception date of the IM7 reference).
When bonded goods are exported (sold to export customers), this file will also be updated to consume the quantity against the IM7 reference in a FIFO manner (using the reception date of the IM7 reference).

As a result, the Work with customs reference file and the Customs reference log file will always display the available balance against each IM7 reference.

Note: Any manual changes required in the Work with customs reference file may only be performed by users with ADMIN authority, and only limited details are allowed to be altered.

For example

IM7 reference field – The value in this field can only be changed if the quantity of the IM7 reference is not consumed by any sales order. If editable, then a change in this field will also trigger an automatic update in the Customs reporting file.

Values for other editable fields can be changed but any change to those field values in this file requires a mandatory manual change of the equivalent field values in the Customs reporting file.

Any altered details will automatically be logged in the Customs reference log file (which is accessed via the Enquiries menu).

Work with customs reporting file

Customs reporting log file

The Work with customs reporting file tracks all the transactions of bonded inventory that are purchased, cleared, and sold against the IM7 reference. This file can also be used to create monthly, quarterly, and yearly reports as per customs regulations.

When bonded goods are purchased, a new entry will be added after reception confirmation with details like, e.g., quantity purchased, supplier, IM7 reference, Country of origin, reception, and transaction dates.

When cleared non-bonded goods are sold domestically (or moved out of the bonded warehouse), then a new transaction will be created after pick list confirmation, with details like, e.g., quantity consumed, sales order number selling the quantity (denoted as a negative value) to the customer, IRO order numbers used for clearing the quantities from bonded to non-bonded, transaction dates.

When bonded goods are exported (sold to export customers), (or moved out of the bonded warehouse), then a new transaction will be created after pick list confirmation, with details like, e.g., quantity consumed, sales order number selling the quantity (denoted as a negative value) to the customer, transaction dates.

Note: Any manual changes required in the Work with customs reporting file may only be performed by users with ADMIN authority, and only limited details are allowed to be altered. Any altered details will automatically be logged in the Customs reporting log file (which is accessed via the Enquiries menu).

Extracting logged data and creating reports for customs
The tracked details (i.e., each quantity purchased and sold against each IM7 reference) can be extracted to allow for the creation of customs reports and the calculation of the actual import duty.

The calculation of the actual duty can be facilitated by the following:

The Bonded landed cost type defined in the DIS control file can be used to cross-validate the landed cost applied on the IRO purchase order created during the clearing process of bonded to non-bonded goods.
An IM4 reference that can be linked to monthly exchange rates created in the Exchange rate table.

Methods for clearing bonded goods

The clearance of bonded goods for a domestic sale can be done via one of two ways:

Manually using IRO orders and transferring goods from the bonded to the non-bonded logical warehouse. Note: This method should be chosen when you want to pay the import duty in advance before selling the cleared goods.
OR
Automatically by creating a sales order from a non-bonded warehouse. This sales order when picked will then auto-create an IRO to transfer (clear) the required quantity of goods and calculate the estimated import duty by applying Landed cost to the IR purchase order. Note: This method should be chosen when you want to delay the payment of import duty until you sell the cleared goods.

Set-up for importing and clearing bonded goods to sell to domestic customers

The following depicts the set-up instructions to be able to import and clear bonded goods. Once the bonded goods are cleared, you will be able to sell them to your domestic customers.

Note that the set-up instructions for everything required to process a ‘normal’ purchase order and sales order are not outlined below. Ensure your system is set up with everything that is needed for a normal purchase order and sales order process.

Tables/Files	To do
Work with companies	Make sure the WHM (Warehouse Management) application is activated for the company to handle zones and locations.
Function control file	Activate the following functions: STKOWNER (Stock Ownership) BONDWHSG (Bonded Warehousing)
Work with G/L control file	Make sure all cost centres that you will connect to normal and logical warehouses are registered.
Work with authority groups	For the Customs reference file and Customs reporting file there are the following two levels of authority: If you want to allow user(s) to maintain or delete data in these files, the users must have ADMIN authority, and if WWOption is activated for this object, then user should also have authority on this level (for routine MAINTAIN). For Manual reservations there is the following level of authority: If you want to restrict user(s) from maintaing a manual reservation in Work with temporary orders and reservations, then use WWOption authority group.
Commodity codes	Make sure the commodity code is registered that will be connected to the Landed cost type that is used on the automatically created IRO purchase order when clearing bonded goods from the bonded (logical) warehouse to the non-bonded (logical) warehouse. The commodity code will be printed on the sales order invoice for bonded/non-bonded warehouses.
Work with countries	The following country codes need to be registered: the country of origin from where you are purchasing the bonded goods. the country of your domestic customer that you are selling the cleared non-bonded goods to. You will need to connect the applicable country code to the following: the landed cost type the internal business partners for the IRO’s that are applicable for the Bonded Warehousing functionality the Logical warehouses that must be set up to manage bonded and non-bonded goods the bonded item.
Landed cost types	One landed cost type needs to be created to apply the estimated duty on the automatically created and manually created IR purchase order during clearance from bonded stock to non-bonded stock. Add a Landed cost type, and complete the following fields: Type Description Fictitious item Enter the fictitious item to be used for the calculation of estimated duty. Make sure your fictitious item is registered in Work with items. Cost allocation method Set this field to PC (Percentage). Add the Key values for the Landed cost type, and complete the following fields: Sequence Description From country Set to YES. To country Set to YES. Commodity code Set to YES. Add as many Key Details as required for the various ´From/To countries´ and ´Vendors´, and complete as follows: From country Enter the code for the country of origin from where you are purchasing the goods. This is the country from which the estimated duty will be calculated and is stored on the IM7 reference. To country Enter the code for the country of your domestic customer that you are selling the goods to. Commodity code Enter the commodity code that you registered for the Bonded warehouse functionality in the Commodity codes table. Vendor Enter the supplier from which you are purchasing the bonded goods. Make sure your supplier and all applicable information is registered in Work with business partners. On the next panel complete the following fields under the Current section: % age of incl cost Indicate the percentage. Currency Valid from date Valid to date
DIS control file	Cost per warehouse Should be activated for the company. Bonded landed cost type Even though this is an optional entry, it should be assigned here as a best practice. It can be used to facilitate the calculation of the actual duty when creating customs reports by cross-validating the landed cost applied on the IRO purchase order created during the clearing process of bonded to non-bonded goods. Note: Any entry in this field is not allowed to be changed if there are any open/closed purchase orders using this landed cost. Fixed PO rates The setting in this field is retrieved to the Purchase order header. If this field is set to NO, then the entry of the Received exchange rate for the purchase order line on the reception header at the time of goods reception is mandatory. If this field is set to YES, then the entry of any Received exchange rate for the purchase order line on the reception header at the time of goods reception is optional. See Work with exchange rates, below, for more information.
Manners of transport	Since no physical shipments will take place for the clearance of bonded stock to non-bonded stock, a manner of transport code should be registered for ‘not applicable’. This code will be entered on the bonded (logical) warehouse, and the non-bonded (logical) warehouse that you will create.
Work with signatures	Ensure that the applicable handler for the IRO’s that can automatically or manually be created to clear bonded stock to non-bonded stock are registered. You will need to connect the handler to the Default IRO handler field on the Work with business partners, Customer file for your internal customer that needs to be created for bonded/non-bonded warehouses.
Work with exchange rates	The entry of an exchange rate in this table is optional, but it is recommended since the exchange rate could be different at the time of goods reception than what it was at purchase order entry. The Fixed PO rates field setting in the DIS control file is retrieved to the Purchase order header. If that field is set to NO, then you must enter the Received exchange rate on the reception header at the time of goods reception. If that field is set to YES, then the entry of any Received exchange rate on the reception header at the time of goods reception is optional. You can choose to leave the exchange rate that is defaulted to the purchase order header from this Work with exchange rates file, OR you can override the defaulted exchange rate to the current exchange rate. Additionally, the entry of the IM4 reference for monthly exchange rates, is for reporting purposes only, (i.e., it is not used in any Iptor.com process), to create annual import/export reports. This monthly rate is later used to calculate the actual import duty.
Work with terms of delivery	The terms of delivery code will be connected to the internal supplier and internal customer you will register in Work with business partners. You will connect the same terms of delivery code to the internal supplier and the internal customer. The terms of delivery code must support landed cost to allow the application of estimated duty during bonded inventory clearance. Register the applicable terms of delivery code and set the Landed cost req field to YES.
Purchase order types	Ensure the following purchase order types are set up: Purchase order type for a ‘normal’ purchase to stock. This is used when purchasing bonded items. These set-up instructions are not outlined below. IR purchase order types. This is used when selling bonded stock to a domestic customer. Bonded stock needs to first be cleared to non-bonded stock which can be done automatically or manually via IRO orders from the bonded (logical) warehouse to the non-bonded (logical) warehouse. These set-up instructions are outlined below. For the IR purchase order type, the following fields must be completed as follows on the first panel: Order Description Order Set to YES. Reception note document Set to Direct print. Update stock on hand Set to YES. Add to rec trans Set to YES. IR order types Set to YES. Bonded order type Set to YES.
Sales order types	Ensure the following sales order types are set up: Sales order type for a ‘normal’ sales order. This is used when creating a sales order to sell bonded stock to a domestic customer. These set-up instructions are not outlined below. Note, however, that the Av check, pick list field impacts the automatic clearance of bonded stock and it should, as best practice, be set to NO to avoid an extra step during sales order entry. IR sales order type. This is used when selling bonded stock to a domestic customer. Bonded stock needs to first be cleared to non-bonded stock which can be done automatically or manually via IRO orders from the bonded (logical) warehouse to the non-bonded (logical) warehouse. These set-up instructions are outlined below. IR sales order type: The following are relevant on each panel: On the first panel, the following fields are relevant: Order Description Invoice Set to YES. Pick list document Set to Direct print. Invoice document Set to Direct print. IR order type Assign the IR purchase order type. Update stock on hand Set to YES. Update demand data Set to the panel value for “Do not update demand”. On the second panel, the following fields are relevant: Automatic fulfilment Must be set to NO. Auto source Must be set to NO. Av check order entry Must be set to 2. Backlog Must be set to NO to ensure that this IR sales order type is only used for clearing bonded inventory and not used on any other IRO. B log at pick conf Can be set to YES. Pick consolidation Can be set to YES. Shipment prep Must be set to NO.
Work with business partners	The following business partners needs to be registered: Normal supplier (and all applicable information) from which you are purchasing (importing) bonded goods. These set up instructions are not outlined below. Internal customer and Internal supplier for the IRO functionality used to clear the bonded goods. These set up instructions are outlined below. Regardless of the clearance method (automatic or manual), the following must be set up: An internal customer (i.e., the receiver of the goods which is the non-bonded warehouse), as well as an internal supplier (i.e., the supplier of the goods which is the bonded warehouse) need to be created. Create your internal business partners for the logical bonded and logical non-bonded warehouse (e.g., BN1WARE (internal customer for non-bonded warehouse), and BN2WARE (internal supplier for bonded warehouse), and make sure the following is definied: For the INTERNAL CUSTOMER (e.g., BN1WARE) Basic data panel: Country Enter the country code of the internal customer (i.e., the receiving non-bonded warehouse). This will be the same as that you will define on the non-bonded warehouse in Work with warehouses. (e.g., BE) Type Set to 1 or 3 Internal cust/supp Set to YES. 2nd Customer file panel: Default IRO type Enter the default IRO sales order type that you set up in the Sales order type table. (e.g., BN). Default IRO handler Enter the default IRO handler that you set up in the Signature table for the eventual automatically created IRO’s (e.g., BHAL). Terms of delivery Enter the terms of delivery code that supports landed cost for the internal customer (i.e., receiving non-bonded warehouse). (E.g., INT for bn1ware.) For the INTERNAL SUPPLIER (e.g., BN2WARE) Basic data panel: Country Enter the country code of the internal supplier (i.e., the supplying bonded warehouse). This will be the same as that you will define on the bonded warehouse in Work with warehouses. (e.g., BE). Type Set to 2 or 3. Internal cust/supp Set to YES. Supplier file panel: Terms of delivery Enter the terms of delivery code that supports landed cost for the internal supplier (i.e., the supplying bonded warehouse). (E.g., INT for bn2ware.)
Work with warehouses	The Bonded Warehousing functionality requires the following three types of warehouses: 1 physical warehouse (where you store the bonded and non-bonded goods for your customer) 1 logical warehouse for the bonded goods 1 logical warehouse for the non-bonded goods Physical warehouse Add the physical warehouse and complete the following fields on the first detail panel: Warehouse The ID for the physical warehouse. Description Name Address Country Enter the country code of the physical warehouse. This should be the same as that defined on the Basic data panel for the internal customer and internal supplier. Whs characteristics Set to 9 (Physical warehouse). Bonded warehouse Must be blank. Stock take/owner Must be set to YES which gives you the possibility to decide how much of the gain or loss each owner (warehouse) will take. During stock take you can drill down to the logical warehouse and enter the actual counted quantity for bonded and non-bonded warehouses. See Handling stock take differences for several internal owners in Setting up the stock ownership functionality for more information. Logical warehouse for the Bonded goods (e.g.,BN2) This warehouse should be set up as follows: Warehouse Description Name Country Enter the country code of the logical warehouse for bonded goods. This should be the same as that defined on the physical warehouse. Whs characteristics Set this field to 2 (Trade warehouse). Cost centre Enter the cost centre for the internal ownership of goods and internal cost accounting. Physical warehouse Enter the code for the physical warehouse to connect it to this Logical warehouse for Bonded goods. Bonded warehouse Set to YES to denote that this logical warehouse is a bonded warehouse. Note: This flag cannot be changed once the warehouse is assigned to any item. Internal MOT This should be set to the manner of transport code that was set up for ‘not applicable’ (e.g., N/A), as described in the Manner of transports section above. Internal supplier Enter the code for the internal supplier that was set up in Work with business partners for supplying the goods from the bonded warehouse. Logical warehouse for the non-bonded goods (e.g., BN1) This warehouse should be set up as follows: Warehouse Description Name Country Enter the country code of the logical warehouse for non-bonded goods. This should be the same as that defined on the Physical warehouse. Whs characteristics Set this field to 2 (Trade warehouse). Cost centre Enter the cost centre for the internal ownership of goods and internal cost accounting. Physical warehouse Enter the code for the physical warehouse to connect it to this Logical warehouse for non-bonded goods. Bonded warehouse Set to NO. Note: This flag cannot be changed once the warehouse is assigned to any item. Internal MOT This should be set to the manner of transport code that was set up for ‘not applicable’ (e.g., N/A), as described in the Manner of transports section above. Internal customer Enter the code for the internal business partner that was set up in Work with business partners for receiving the goods from the bonded warehouse. Supplied from Enter the name of the logical bonded warehouse that will supply this non-bonded warehouse (i.e., from which the goods will be cleared).
Work with warehouse locations	Since the WHM (Warehouse Management) application must be activated for the Bonded Warehousing functionality, register your Physical warehouse, and add the applicable zones and locations for that physical warehouse.
Work with items	New and existing items in the system shall adhere to the following rules to qualify for bonded inventory handling. The following fields are applicable for bonded items: Basic data panel: Commodity code Assign the applicable commodity code to ensure that estimated duty using the landed cost type (on the IRO purchase order that will be automatically created) is correctly applied. Country of origin Enter the code for the country from where you are purchasing the goods. Inventory information panel: Cost type The cost type calculation value should be set to 1 (Average purchase cost). Batch Batch handling for bonded items is optional. Set to YES or NO to denote if the bonded item should be batch handled. Batch selection rule For batch items, this field can be set to any panel value. Note: If you set this field to the panel value 0 (No batch suggestion), the system will not suggest the batch, zone, and location during pick list confirmation. If, however, you set it to any other panel value, the system will suggest the batch and zone and location during pick list confirmation. Warehouse panels: The bonded item should be activated in the physical warehouse as well as both the bonded logical warehouse and the non-bonded logical warehouse. Warehouse Management should be activated for the Physical warehouse. Item/warehouse should have Average cost defined for both the bonded and the non-bonded warehouses. All other item set-up such as unit details, pricing details, supplier details, warehouse details, etc., should be correct and complete, to be able to automatically create IRO’s without any issues. FICTITIOUS ITEM Set up and activate your fictitious item for the Landed cost type that will be used for the calculation of estimated duty if you have not already done so. Then connect it to the landed cost type in the Landed cost types table for the calculation of estimated duty.

Set-up for importing and exporting (selling) bonded goods to non-domestic customers

Imported bonded goods that you plan on exporting (selling) to non-domestic customers can be sold directly from the bonded (logical) warehouse as normal sales orders and are exempt from import duty.

Tables/Files	To do
Work with companies	Make sure the WHM (Warehouse Management) application is activated for the company to handle zones and locations.
Function control file	Activate the following functions: STKOWNER (Stock Ownership) BONDWHSG (Bonded Warehousing)
Work with G/L control file	Make sure all cost centres that you will connect to your physical and logical warehouse are registered.
Work with authority groups	For the Customs reference file and Customs reporting file there are the following two levels of authority: If you want to allow user(s) to maintain or delete data in these files, the user must have ADMIN authority, and if WWOption is activated for this object, then user should also have authority on this level (for routine MAINTAIN).
Work with countries	The following country codes need to be registered: the country of origin from where you are purchasing the bonded goods. the country of your export customer that you are exporting (selling) goods to. You will need to connect the applicable country code to the following: the Logical warehouse that must be set up to manage bonded goods. the bonded item.
Purchase order types	Ensure the following purchase order type is set up: Purchase order type for a ‘normal’ purchase to stock. This is used when purchasing bonded items.
Sales order types	Ensure the following sales order type is set up: Sales order type for a ‘normal’ sales order. This is used when creating a sales order to export (sell) bonded stock.
Work with warehouses	If you are exporting bonded goods, the Bonded Warehousing functionality requires the following two types of warehouses: 1 physical warehouse (where you store the bonded goods for your export customer). 1 logical warehouse for the bonded goods. Physical warehouse: Add the physical warehouse and complete the following fields on the first detail panel: Warehouse The ID for the physical warehouse. Description Name Address Country Enter the country code of the physical warehouse. Whs characteristics Set to 9 (Physical warehouse). Bonded warehouse Set to 9 (Physical warehouse). Stock take/owner Must be set to YES which gives you the possibility to decide how much of the gain or loss each owner (warehouse) will take. During stock take you can drill down to the logical warehouse and enter the actual counted quantity for bonded warehouse. See Handling stock take differences for several internal owners in Setting up the stock ownership functionality for more information. Logical warehouse for the Bonded goods This warehouse should be set up as follows: Warehouse Description Name Country Enter the country code of the logical warehouse for bonded goods. This should be the same as that defined on the physical warehouse. Whs characteristics Set this field to 2 (Trade warehouse). Cost centre Enter the cost centre for the internal ownership of goods and internal cost accounting. Physical warehouse Enter the code for the physical warehouse to connect it to this Logical warehouse for Bonded goods. Bonded warehouse Set to YES to denote that this logical warehouse is a bonded warehouse. Note: This flag cannot be changed once the warehouse is assigned to any item.
Work with warehouse locations	Since the WHM (Warehouse Management) application must be activated for the Bonded Warehousing functionality, register your Physical warehouse, and add the applicable zones and locations for that physical warehouse.
Work with items	The following fields are applicable for bonded items that you plan on exporting only: Basic data panel: Country of origin Enter the code for the country from where you are purchasing the goods. Inventory information panel: Cost type The cost type calculation value should be set to 1 (Average purchase cost). Batch Batch handling for bonded items is optional. Set to YES or NO to denote if the bonded item should be batch handled. Batch selection rule For batch items, this field can be set to any panel value. Note: If you set this field to the panel value 0 (No batch suggestion), the system will not suggest the batch, zone, and location during pick list confirmation. If, however, you set it to any other panel value, the system will suggest the batch and zone and location during pick list confirmation. Warehouse panels: The bonded item should be activated in the physical warehouse as well as the bonded (logical) warehouse. Warehouse Management should be activated for the Physical warehouse. Item/warehouse should have Average cost defined for the bonded (logical) warehouse.
Sales restriction	A sale of bonded goods to domestic customers must be restricted. Bonded goods are only allowed to be exported. Set up a sales restriction to restrict the sale of bonded goods to domestic customers. Sales restriction severity code should be 1 (Sale is not allowed). See Setting up the sales restriction functionality for instructions.

Storage and tracking

Methods for clearing bonded goods

Set-up for importing and clearing bonded goods to sell to domestic customers

Set-up for importing and exporting (selling) bonded goods to non-domestic customers

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