Reverse logisitics

To be added smth about SAP ARM 

1. Reverse logistics
• focusing on
• organization level
2. Returns from the customer:
• Free-of-Charge Deliveries
• Free-of-Charge Subsequent Deliveries
• Returns:
• Make a subsequent delivery of the goods, free of charge
• Credit Memo Request (If the customer complains that the price was miscalculated)
• Debit Memo Requests (If prices were calculated as too low)
• Invoice Correction Requests (price or quantity that should have been calculated)
3. Refurbishment 
4. Customer paid repair 
5. Return to vendor
• Using a PO
• Using a QM notification
6. Stock transfer return 
7. ARM

• Determining what to do with a large volume of returned products is a complex process, and many retailers rely on manual, rule-based decisionmaking and inefficient processing, which can lead to a significant amount of waste. 
• Using returns technology automates the returns routing process by leveraging data-driven decision-making that sends returned inventory to the most profitable channel. This starts with a customer-facing portal that allows shoppers to initiate their return online, and seamlessly exchange the item rather than just return it. Another way that retailers can ensure that their returns process encourages repeat customers is by offering flexible returns policies

KEY STEPS TO TAKE WHEN DIGITIZING

• Map Out the Process Flow – When determining your digitization strategy, factor in the process flows and all their associated dependencies and complexities. Consider all the tools you use to communicate and collaborate internally and externally, such as informal spreadsheets, emails, and undocumented communications, which tend to contribute most to process inefficiency. To launch a successful project, you’ll need to articulate to key stakeholders and leadership how certain supply chain software, such as a Control Tower or Returns Management System, will contribute to greater speed, accuracy, and strategic insight.
• Ensure Corporate/Executive Alignment – Digitization efforts may already be underway at the corporate level. Don’t delay presenting your vision, communicating the benefits and necessities, and aligning with the digital roadmap, or else you risk the project being pushed off. Larger organizations should focus on explaining how tightly integrated a digital returns supply chain is with the overall business. Doing so will help accelerate the internal alignment process. 
• Select a lasting Reverse Logistics Platform – Focus your selection on key criteria, such as platform capabilities, implementation speed, and openness to multiple data sources. To see real results in profitability and customer satisfaction, the platform should support multi- and omni-channel return flows throughout the full lifecycle of return orders and offer dynamic cost controls. An easily configurable platform will help you launch your initiative faster and derive value sooner, and harnessing real-time data on retail and manufacturing returns, as well as incorporating 3rd party technology providers, like IoT, will enable greater innovation. 
• Most importantly, don’t underestimate the value of a good partnership with the software company you choose. A good partner doesn’t just deliver a product; they invest time in understanding your business, providing thought leadership, and doing what it takes to ensure a successful initiative.
• Business Releases – The saying “Don’t try to boil the ocean” has never been more relevant. Executives are usually hesitant to invest in lengthy projects that don’t yield immediate value. More frequent wins are readily embraced over long drawn out projects. When selecting a provider and solution, talk about how you can digitize specific returns processes in bite-sized chunks called “business releases” to deliver wins in a phased manner. For example, the first business release may focus on the B2B return channel, whereas the second can then bolster the B2C return channel, and so on. 

Reverse logistics is for all operations related to the reuse of products and materials. It is "the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics. 

Focusing on

• Cycle time 
• The transaction cost of operations
• Elimination of waste in resources
• Improving user experience
• Clear identification and segregation of materials
• Proper accounting 

Considering organizations involved

Engineering/Desing

• How material is returned, refurbished, repaired.
• How to represent material conditions?
• using the suffix: Material number: A100, A100-B ( broken )
• using batches: bathes with the restricted use (?)
• using serial numbers

Order management

• Condition of the material being returned, serial number of a material,
• Batch number of the material, Return-from (location), Contact information.
• Is it under warranty? Reason for return?
• Sales order to return, repair order, credit memo, repair order

Planning & Inventory management

• What kind of materials need to be included in MRP?
• Distribute to locations ( transport orders )
• Special storage locations
• Quality inspection

Shipping and transportation

Quality management

• Quality notification, quality inspection, inspection characteristics

Finance
Foreign trade
Service management

Procurements

• RFQ, PO
• Return to vendor
• Vendor evaluation
• Warranty provided by a vendor (serial number management)

Complaints processing (return from the customer)

All complaints can be approved or rejected. If you reject a complaint, you can specify a reason for the rejection.

If the customer complains, for instance, that the goods were faulty, you take the goods back to check them. 

• Send the customer a credit memo
• Make a subsequent delivery of the goods, free of charge

You can create the returns order in one of the following ways:

• without any reference
• with reference to an existing Order
• with reference to an existing Invoice
• with reference to existing Contracts
• with reference to an existing Contract Release Orders

Returns for Sales Scheduling Agreements

When processing returns for sales scheduling agreements with delivery schedules, note the following:

• Use document type RZ for returns: To ensure immediate pick-up, the system automatically creates an immediate delivery when you save a return with this document type. If you do not want this, create a new sales document type in Customizing and switch off the immediate delivery indicator. You can then create and process returns from a work list.
• Use document type KRZU (consignment returns) or KAZU (consignment pick-up) for returns involving external agents . Create returns with reference to the relevant sales scheduling agreement.

When the customer posts goods receipt, their system automatically updates the cumulative quantites. For this reason, you may want to correct your cumulative quantities only when the customer sends the items back without having posted goods receipt.

Cumulative quantities are not updated automatically. You must correct them manually.

Choose Goods issue to book goods receipt.

Customer return

1. Customer contacts the company for a return
2. A user creates a sales document type RE 
• Define order reasons 
• Item cat. REN, RENN 
• Blocking a delivery 
• Movement type 651: Shelf life req.-s
• Incompletion procedure 
• Returns stock ( not valuated, the return is not owned by the company )
3. Creare a return delivery 
• Delivery type
• Storage location determination  
4. GR
5. Scenarios
• Free-of-Charge Deliveries
• A free-of-charge delivery is used to send a customer a free sample of your products.
• Use order type FD in the standard system.
• Free-of-Charge Subsequent Deliveries
• If the customer complains (for example, that they received the wrong quantity) you can send them the extra material later free of charge.
• Use order type FD in the standard system.
• The complaint must be based on an existing order.
• Refund
• Create a credit memo request (G2)
• Create a credit memo

Credit memo (without goods movement)

• Credit Memo Requests
• If the customer complains that the price was miscalculated
• Debit Memo Requests
• If prices were calculated as too low, you request a debit memo.
• Invoice Correction Requests:
• The system calculates the difference and creates either a debit or a credit memo, depending on whether the difference is negative or positive. Only with the reference to a billing document. A sales document used in complaints processing to correct the quantity or price of one or more items in an invoice.

Refurbishment 

The process when materials are repaired and sold to customers again at a lower price or with an extended warranty.

Internal repair 

1. Warranty claim created 
2. Return order
3. Return delivery
4. Product received in the network
5. Quality inspection 
6. Product transferred for scrapping
7. Product transferred for repairing
8. Create production order: cleaning, disassembly, repair 

External repair  

1. Part returned from 
2. Part inspection
3. RFQ 
4. Part shipped to vendor
5. The repaired part is back 

Customer paid repair 

1. Create service notification
2. Create a repair order
3. GR
4. Technical check
5. Generate service order
6. Repair service material
7. Credit memo 

Return to vendor

Vendor return with a PO

• Return to vendor without a separate return purchase order item for the returned quantity (movement type 122), and without or with a separate outbound delivery item
• Return to vendor with a separate return purchase order item for the returned quantity (movement type 161), and without or with a separate outbound delivery item

Return Purchase Order Process

1. ME21N - Purchase Order creation
2. MIGO - Goods Receipt
3. MIRO - Invoice Receipt
4. MIRO - Credit Memo

1. ME21N - Purchase Order Creation

2. MIGO - Create Goods receipt for the material

3. MIRO - Invoice Verification

4. MIRO - Credit Memo

Now, let's focus on the credit memo. See the screenshot below and take notice the field "reference" is not filled. For credit memo in the return process, the field should never be filled.

Why is that? In the return process, a number from your number range will be consumed as the nota fiscal must be approved at SEFAZ. For this, depending on your SP release, if you fill the field reference, the number there can be taken to the nota fiscal number.

The correct place to fill with the information of reference to the original nota fiscal is "Header Text". See below

QM  Processing Return Deliveries to Vendors

Constrains 

1. The quality notification can only reference a single vendor and a single material 
• The goods to be returned must initially be located in unrestricted-use stock.
2. You cannot process goods that have already been debited to an order or cost center.
3. You cannot process materials with serial numbers or manufacturer part numbers.
4. All goods to be returned must be located in a single storage location within the same plant.

Basic data/master data

1. Catalogs (QM)
2. Inspection plan (QM): If you intend to inspect a returned material using an inspection plan, a corresponding inspection plan exists and has been assigned to the material.
3. Material master (MM): A loading group is specified, Inspection type 08 is set for the material
4. Vendor master (MM): GR-based invoice verification/Evaluated receipt settlement/Automatic evaluated receipt settlement for return items/Returns vendor

Process flow 

1. During a goods receipt or production, you determine that a vendor has delivered defective goods.
2. You create a quality notification to record a complaint against a vendor (notification type Q2).
3. You determine whether or not the goods need to be inspected. If the goods:
• Need to be inspected, you post the goods from unrestricted-use stock to inspection stock
• Do not need to be inspected, you post the goods from unrestricted-use stock to blocked stock
4. Depending on the stock you chose in step 3, you process the defective goods accordingly. For example, if you posted the goods to:
• Inspection stock, you inspect the goods in a quality inspection
• After you have completed the inspection, you choose a function in the action box to make the usage decision for the inspection lot. When you make the usage decision, you determine whether the goods should be returned to the vendor or posted from inspection stock to unrestricted-use stock (for example, if the goods are OK). In this case the process is terminated.
• Blocked stock, you decide whether the goods should be returned to the vendor in a return delivery or scrapped
5. If you decided to:
• Return the goods to the vendor, you can choose function in the action box to create a return delivery (with or without reference to an original purchasing document)
• Scrap the goods, you can choose a function in the action box to post the goods to scrap
6. You choose a function in the action box to branch from the quality notification to the delivery.
7. Using the functions of the Sales and Distribution (SD) component, you can process the return delivery, prepare the shipping documents, and process the goods issue.
8. You debit the vendor with the costs of the returned goods and settle the costs in the Materials Management (MM) component. If the evaluated receipt settlement (ERS) procedure is used in MM, the system can debit the vendor automatically.

Stock transfer return

Return delivery using transaction MIGO
Sales org./ Distribution channel is dependent on a plant's settings (T001W).

1. Returning plant “A” should create a return PO by checking the return field on line
2. Change the delivery address to plant “B”, so that it will print the Ship-to address (plant “B”).
3. Update Header text with details like old PO # and batch # returning if it’s a batch managed.
4. Print the PO, it will print the Header text with the PO and batch number.
5. Send this PO print out with the materials.
6. DO the GR for this PO – this will place the stock in-transit.
7. The nightly batch job will create the delivery (with delivery note).
8. When plant “B” receives the product, they can open the PO via ME23N and will find the delivery number in “Purchasing Order History” tab.
9. Take the delivery number, go to VL02N and receive the product by entering the batch number from the PO print out or from the PO header text.
10. Optional – at this stage, you can print the Delivery note to view the batch number.
11. DO the PGR, the stock will be placed in Plant “B”.

Comments:

For stock transfers within a company code, the quantity of goods received must still equal the goods issue quantity. 

In order to display material losses during the stock transfer process, the goods must be received to one of the plants (either reverse to the issuing plant or receive to the receiving plant) and then scrapped from the plant.

"Damage that occurs during transport and that leads to scrapping of the goods must be reported in the system, so that the transfer stock can be corrected accordingly. 

There are two ways of doing this:

- You reverse the removal from storage from the issuing plant and then post the goods for scrapping. Refer to 'Entering Material for Scrapping'.

- Alternatively, you can post the placement of the entire quantity into storage at the receiving plant and then post the goods for scrapping from there.

It is important that the scrapped quantity does not remain in stock in transfer, but is reported in the system as scrapped.

Therefore, for stock transport orders within a company code, in which there is stock in transit that will never arrive to the receiving plant because it was damaged / stolen during the transportation, you have two options:

- receive the whole quantity in the receiving plant and then manually scrap for the quantity lost from that plant through a goods issue with movement 551.

- or you can focus in the issuing plant (instead of focusing in the receiving plant). In this case, you can reverse the removal from storage from the issuing plant and then post the goods for scrapping from that plant through a goods issue with movement 551.

Advanced Returns Management

SAP ARM is a business function within the existing SAP Enterprise Central Component (ECC).

Serial number management in Reverse logistics 

1. The company wants to monitor the high-cost products 
2. The vendor provides serial numbers for materials and requires serial numbers be provided during the return process
3. The vendor provides the warranty data for the product
4. Warranty is provided to the customer
5. If the products must be re-called, then it can help in the identification 

Use the statuses:

• Available 
• In the warehouse ( ready for shipping )
• At customer site
• Allocated to the equipment 
• Assigned to a delivery 

 For STO ( from plant to plant ) the serial profile must be the same. 

Equipment master

Location, Organization, Warranty

Warranty master

 can be assigned to a Serial number

  

Additional information 

• https://rla.org/
• QM notification: Return to delivery 
• 2492348 - PO is not created with return delivery in quality notification when action box function is used
• For a return delivery without reference to an original document, a new purchase order (PO) should be created with a return item. However, the order is not generated.
• Function module QMLR_CREATE_RETURN_ORDER is used to create a new purchase order.

392205 - Analysis of stock in transit/correction for split valuation

The R/3 system is designed so that the stock in transit can only be posted through stock transport orders.

Purchase order and material master record can have different units of measure. The purchase order is then closed when the goods issue quantity and quantity of goods received are the same in order unit. 

On account of system-dependent and program-internal rounding effects which cannot be avoided, the open stock in transit quantities in order unit and in base unit of measure might not balance to zero at the same time.

Example 1

• Stock transport order over 100 pallets. Conversion factor 1 kg = 3 pallets.
• Goods issue in one step: 33. 333 kg are posted to the stock in transit (quantity fields of the material master record have an accuracy to three decimal places in R/3).
• Partial goods receipt over 50 pallets. It reduces the stock in transit by 16.667 kg.
• A second partial goods receipt over the still outstanding 50 pallets fails as only 16.666 kg remained in the stock in transit but 16.667 kg should be booked out again.

Example 2

• Stock transport order over 1 pallet, conversion factor 1 pallet = 10000 pieces. In the material master record, an alternative unit of measure 'Carton' is managed (conversion factor: 1 carton = 1234 pieces).
• During goods issue, 1 carton is now entered. As there is a conversion only from the carton unit of measure to the piece base unit of measure, the system first converts to 1234 pieces. These are then converted into order unit of 0.123 pallets via the factor of the purchase order. The system now posts 0.123 pallets and 1234 pieces.
• A goods receipt over 0. 123 pallets (default quantity and unit) is now executed over 1230 pieces and leaves 4 pieces in the stock in transit.

Solution

• Organizational solution
• You can avoid the effect if you use the stock transport order according to the business idea that it is based on. A corresponding goods receipt should be posted for every goods issue.
• Goods issues in N substeps and goods receipts in M substeps with N < > M or non-corresponding quantities/units do not match the business process intended for stock transport orders.
• Correction of the stock in transit without purchase order reference
• Note 389484 makes movement types 557 and 558 available. 
• These are derived from the class of the scrapping movement types and can post the stock in transit without purchase order reference. For actually visible problems, excess stock in transit can be removed or missing stock in transit can be created with this.
• Documents
• Material documents which posted to the stock in transit. The quantity is displayed in order unit and base unit of measure.
•  If you want adjustment documents to be taken into account on the initial screen of the report, the system only displays the base quantity for these.

• Purchase order item
• The data of the purchase order item results through the summation of the material documents. Here, you find the open quantity in order unit, the expected open quantity in stock in transit which results from this by means of the item conversion factors as well as the quantity actually posted in stock in transit.
• Adjustment documents are allocated with purchase order number 'Correction'.

• Valuation type
• The total of the expected open stock in transit quantity is compared with the quantity actually posted; in the case of differences, these are displayed separately.
• If these differences are the same as the differences which led to the execution of the report, adjustment postings can now be executed with movement types 557 and 558.
• Quantities displayed as positive (green) indicate a surplus in the stock in transit which should be booked out with 557. Apply analogously "negative/red/558".
• The correct valuation type is to be used for split valuated materials during the correction (see below).

• Special features of movement types 557 and 558
• These movement types should only be used to correct the stock in transit in specific cases. Regular use in order to achieve new business processes is not wanted.
• Due to historic reasons, the data model of R/3 is incomplete concerning material with split valuation in the stock in transit (the stock in transit is managed independent of valuation types but already belongs to the valuated stock which is managed with the exact valuation type).
• The direct posting of the stock in transit for material with split valuation can cause database inconsistencies that cannot be checked during the posting with movement types 557 and 558. For the time being, the use of the movement types for split valuated material is not possible and leads to error message M7048 (Use the one-step procedure for transfer posting to mat. subj. to valuation).

Movement types

• 122 Return delivery to vendor
• 161 Returns for purchase order

 

1515540 - FAQ: Advanced Returns Management in MM

1. Question:

 Which Business Function must be set to use LO-ARM functionality?

Answer: We distinguish two business functions:

OPS_ADVRETURNS_1 which is available as of ECC600 EHP4.

OPS_ADVRETURNS_2 which is available as of ECC600 EHP6.

In any case 'Advanced Returns Management' IMG settings need to be maintained additionally.

2. Question: Is it possible to use variant configuration in ARM documents?

Answer: No, that is not possible.

3. Question: Is variant configuration data copied / re-determined in an ARM Returns Purchase Order (rPO)?

Answer: When copying, e.g. a configurable (non-ARM) PO item, variant configuration data will be copied, but a re-determination is not possible.

4. Question: Is it possible to use service articles within ARM documents?

Answer: No, that is not possible.

5. Question: Why is the Returns data on PO header level not stored in the DB?

Answer: The data on the Returns header tab serves only as template for copying them to the item data and will not be stored in the database.

Relevant for the further process are the ITEM 'Returns' data only.

6. Question: Is it possible to create an ARM RPO without shipping data?

Answer: The answer is twofold depending on the Follow-Up Activity:

-> '0005' (Ship to vendor):

No, it is not possible to post an ARM return purchase order when the plant is NOT relevant for shipping.

-> '0007' (Direct Shipment to vendor):

Yes, the plant might not be necessarily set as shipping relevant. The goods will be delivered from our customer to the vendor / supplier.

7. Question: Is it possible to cancel material documents which belong to ARM Sales Orders using transaction MBST?

Answer: No, that will be refused by the system with the error message M7 378 'Material document cannot be processed'.

Solution: Use transaction MIGO instead.

8. Question: Is it possible to create an ARM RPO for a generic material / article?

Answer: No, that will be refused by the system with the error message MSR_MM 004 'Shipping data for plant required in Advanced Returns PO'.

Solution: Use the variant material / article instead.

9. Question: Is it possible to use the IS-Retail returns allocation table for ARM document creation?

Answer: Yes, generation of Stock Transport Orders (out of Allocation Table) using the Enjoy Purchase Order Logic is available.

Follow the instructions given in SAP Notes 1988393 and 1988937. In SAP S/4HANA the SAP note 2643846 is required.

10. Question: Is it possible to use text items within ARM documents?

Answer: No, that is not possible.

11. Question:

 Is it possible to use enhanced Store Returns with SIT (Stock in Transit)?

Answer:The answer is twofold depending on your SAP Release:

In ECC that is NOT allowed. It is a missing functionality.

In SAP S/4HANA it is possible, but there are some limitations. Details can be found in SAP Note 2725636.

12. Question: Is it allowed to use ARM documents with PSM (account assignment) data?

Answer: No, it is not allowed to use ARM PO items which are subject to Public Sector Management.

13. Question: Is it allowed to use multiple account assignment (MAA) in ARM documents?

Answer: No, that is not allowed. It is a missing functionality.

Solution: Use single account assignment instead.

14. Question: Is it allowed to use for example a WBS element in a Returns Sales Order as an account assignment object?

Answer: No, when creating a rSO, for example with Follow-Up Activity 0005 and a WBS element as (real) account assignment object, the system will not be able to save the expected Returns Purchase Order.

For that process, only the Sales Order will be considered as account assignment object.

1358646 - Advanced Returns Management - Constraints

1.) The system does not support return scenarios in the context of wrong deliveries.

-->Background: The wrong delivery scenario has many process variants concerning logistical and financial aspects. Basically, with respect to returns, a replacement of returned material 4711 with material 4712 is not supported.

As of release 606, a replacement of returned material 4711 with material 4712 is supported. However, the replacement will be free of charge, so the financial aspects mentioned above are not considered.

2.) The system does not support a sales tax calculation based on data of the reference document.

-->Background: Sometimes materials are not returned to the branch where the customer has bought it. Against the background that the sales tax calculation is based on the location where the sales happens data of reference sales document should have to be used in the returns to calculate correct tax amounts during the refund determination.

3a.)The system does not support the handling of non-valuated returns stock in Advanced Returns Management. Note, this just applies for the releases 604 and 605.

3b.) The system does not allow a flexible valuation of returned materials within Advanced Returns Management.

-->Background: It's often the case that a returned material can not be sold at the normal sales price as it is no longer originally packed or even damaged. This situation shall also be considered in the material valuation. That means that the value of the material shall be lower then the standard price or moving average price - in general between zero and the standard or moving average price. You can have different values for different returns and for different inspection results within one return business transaction. Sometimes if it is even unclear whether the returned material has a value bigger than zero, returned materials shall be non-valuated.

In the existing standard you usually return - within the delivery processing - into the non-valuated returns stock; and if you transfer materials from the returns stock to other valuated stock types the material is valuated with the standard or moving average price. If you create a returns order with an order related stock (special stock E) you can manage a flexible valuation by a suitable implementation of user exit COPCP002 (User exit: Material valuation of valuated sales order stock). But this only works if you create the returns order without reference or with reference to sales order without sales order stock. If you specify a reference sales order document with sales order stock then the value of the original sales order stock is taken.

To fulfill the requirement the system, first, must also allow a flexible valuation if the user specifies a reference. And second, returns orders with special stock E have to be integrated in the processing logic of the Advanced Returns Management. Although in release 606 you can have returns orders with special stock E, these are always considered as returns to unvaluated sales order stock. Returns to valuated sales order stock are not supported in Advanced Returns Management.

4)  Advanced Returns Management supports consignment stock in the supplier returns business process. 

5)  Furthermore the following topics are not considered for the moment:

• o Enterprise Services, it exists no eSOA services to create LO ARM return order
• o also it exists no BOR/BAPI methods to create LO ARM return orders. The IDOC generation of sales documents is also not designed to create LO ARM return orders, neither message type ORDERS nor message type SALESORDER_CREATEFROMDAT2.
• o SAP developed the rfc function module SD_ADV_RETURNS_CREATE to create LO ARM return orders. For more infomation please read note 2488803. The API ia available for SAP_APPL release greater equal 617 and S4CORE greater equal 101.
• o In releases 604 and 605, there is no other interface (BAPI etc.) for creating Advanced Returns Orders. In release 606, we enhanced the so called LORD API (LORD = Lean Order). See notes 1111624 and 1224179 to get more information about the LORD API.
• o Integration with an External Warehouse Management (EWM) system - this applies to the releases 604 and 605.
• o Integration with decentralized WMS
• o Integration with other existing SAP returns solutions as e.g. warranties, SPM returns; we have an integration with repair orders as of release 606.
• o Complaints management
• o Handling unit management (inventory based)
• That means any returns to or from a storage location which is subject to Handling Unit Management is not supported by ARM.
• o Serial numbers are not fully supported until Support Package 9 of ECC EhP7. See note 2150715 for further details. For lower releases, note 1660495 describes the use of BAdIs to transfer serial numbers to follow-on documents created after material inspection.
• o Returns of text items are not supported
• o Returns of service materials are supported in SAP S/4HANA, since release 1809.
• o Returns of Retail specific BOMs are not supported (see question 1 of note 2814763)
• o Returns of BOMs with BOM usage 5 created in transaction CS01 are supported in SAP S/4HANA, since release 1809 (see note 2814763)

6) ARM does not support variant configuration. This is a missing functionality. 

Certain ARM scenarios might work properly with configurable material by chance but SAP does not guarantee correctness of the processes. No code has been created to support the handling of variant configuration through whole ARM processes and no tests have been done.