INTRANSIT STOCK TREATMENT PROCESS

Background: When we transfer stock from one plant to another plant and at receiving plant if there is
any discrepancy then in such a case it shown in In transit Stock (MB51).

Current when we made treatment of in transit stock as return by sending plant then in such a case stock
still shown in In transit report. Further, in transit loss is also not accounted properly with proper
tracking.

Case 1 : LOSS IN - TRANSIT

SAP PROCESS

When the goods are short because of the vendor (Transporter) reason, for example 100 quantity of STO
PO is created from 1201 plant and 90 quantity is received at 1301 plant.

Approach: In this case 90 quantity will be received in the main storage location (DP01) for which the
stock is required, and 10 quantity will be received in the storage location which is for shortage due to
vendor reason (In transit Loss Location).

Here to clear the transit stock firstly Inventory write off will be done by posting the 201 movement from
storage location which is for shortage due to vendor reason.

In this case GL “Loss in Transit” will be selected with cost centre of “Dispatch & Warehouse”.

Secondly debit note (Financial) of 10 quantity is raised to the vendor from the storage location which is
for shortage due to vendor reason.

GST Team comment: To raise invoice against penalty for violation of contract to transporter for loss of
goods in transit

OPERATION PROCESS

Step 1 : Logistic team will book inventory of “In transit Loss Location” on cost centre at the time of
receiving POD.

Step 2 : Logistic team submit working of debit note to be raised to transporter to accounts team with
confirmation of transporter.

Step 3: After verification accounts team post GST debit note in SAP at receiving location’s profit centre.
Case 2 : SEND SHORT

When the goods delivered are short in quantity whereas in system it is delivered with full quantity, for
example 100 quantity of STO PO is created from 1201 plant while only 90 quantity is received at 1301
plant, and 10 quantity is still at 1201 plant due to any reason.

Approach : In the above case 100 quantity of STO PO is created and 90 quantity is delivered, in this case
goods receipt of 90 quantity is done in the main storage location for which stock is required and 10
quantity is received in the storage location which is created for receiving the stock when less quantity is
delivered from the sending plant “Stock in-Transit”. Here to clear the transit stock again return stock
transfer process will be performed from the storage location which is created for receiving the less
quantity.

GST Team Comment: Goods are not physically moved from one location to another in order to rectify
same section 34 suggest issue of debit and credit note therefore approach suggested is not compliant as
per provisions of GST. 

Solution for GST Compliance: For GST compliance we may transfer inventory directly from receiving to
sending plant “301 movement type” & pass financial debit/credit note or we make customization is SAP
that while direct transfer system automatically passes financial debit/credit note.

As per EY team customization will take 10 man-days.

OPERATION PROCESS

1. Receiving plant take confirmation from sending plant for discrepancy quantity, after
confirmation receiving plant make GRN of material.
2. Based on confirmation, dispatch manager will make direct transfer to sending plant by 301
movement. Transfer will be done to “Stock In-transit” location.
3. Sending plant transfer stock from “Stock In-transit” location to its main dispatch location.
4. Receiving plant team communicate the discrepancy to its respective accounts team. Based on
communication accounts team pass Debit note to sending plant.
5. Sending plant will make Credit note based on Debit note of receiving plant.
Case 3: INTERCHANGE

When Dispatch Quantity is A (100 Unit) but Invoiced Quantity is B (100 Unit)

Approach: In above case sending plant receive Invoiced quantity in In- transit location & again return
stock transfer process will be performed from this storage location.

For physically received stock, take invoice from the sending location.

GST Team Comment: Goods are not physically moved from one location to another in order to rectify
same section 34 suggest issue of debit and credit note therefore approach suggested is not compliant as
per provisions of GST. 

Solution for GST Compliance: For GST compliance, here to clear the transit stock of “invoiced quantity
B” inventory adjustment of 100 qty is done via 301 movement type (Transfer posting -others) from
receiving plant to supplying plant.

Similarly, inventory adjustment of dispatch quantity “A” for 100 qty is done via 301 movement type
(Transfer posting -others) from supplying plant to receiving plant.

Post that debit and credit note will be issued.

OPERATION PROCESS

For Invoice Quantity:

1. Receiving plant take confirmation from sending plant for discrepancy quantity, after
confirmation receiving plant make GRN of material.
2. Based on confirmation, dispatch manager will make direct transfer to sending plant by 301
movement. Transfer will be done to “Stock In-transit” location.
3. Sending plant transfer stock from “Stock In-transit” location to its main dispatch location.
4. Receiving plant team communicate the discrepancy to its respective accounts team. Based on
communication accounts team pass Debit note to sending plant.
5. Sending plant will make Credit note based on Debit note of receiving plant.

For Dispatch Quantity:

1. Based on confirmation, dispatch manager of sending plant will make direct transfer to receiving
plant by 301 movement. Transfer will be done to “Stock In-transit” location.
2. Receiving plant transfer stock from “Stock In-transit” location to its main dispatch location.
3. Sending plant team communicate the discrepancy to its respective accounts team. Based on
communication accounts team pass Debit note to receiving plant.
4. Receiving plant will make Credit note based on Debit note of Sending plant.

*Restrict 301 movement to in transit location.

* may configure two step transfer process