Product Classification in SAP GRC GTS

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

Applies to:SAP GRC GTS 7.2. For more information, visit the Governance, Risk, and Compliance homepage. .

SummaryThis document highlights the need for Product Classification as it relates to Export and Imports filing, current challenges faced by business units, the functionality offered by SAP ECC and limitations of SAP ECC. Next it discusses the benefits of SAP GTS. As an example, the procedure to maintain HTS Codes (Harmonized Tariff Schedule Codes) for US is explained in detail. Finally, some of the limitations of SAP GTS and ways to deal with those are also discussed. Author: Akhilesh K Sinha

Company: Intelligroup Inc. Created on: 5 August 2009

Author BioWith over 14 years of industry experience, Mr. Sinha currently focuses on SAP GRC GTS and Foreign Trade. In the past he has helped organizations meet the challenges in Logistics and Legal Compliance areas. Academically he holds a Bachelors degree in Mechanical Engineering and MBA in Finance and Marketing. He can be contacted at Akhilesh.sinha@intelligroup.com.

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

Table of ContentsBusiness Background Why Product Classification? ........................................................................................ 3 Limitations of SAP ECC ...................................................................................................................................... 3 Classification in SAP GTS How SAP GTS can help? ..................................................................................... 4 Pre-requisites for classification in SAP GTS ...................................................................................................... 7 Step by step Procedure to maintain HTS Codes for US in SAP GTS. ............................................................... 7 Limitations ......................................................................................................................................................... 12 Related Content ................................................................................................................................................ 13 Disclaimer and Liability Notice .......................................................................................................................... 14

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

Business Background Why Product Classification?Product classification (with Harmonized Tariff Schedule or HTS Codes, Schedule B numbers, Other Government Agency or OGA Codes, Food and Drug Administration or FDA Codes) is the foundation that supports export/import filing, documentation and preference duty claims. Missing or incorrect product classification often results into delays at customs, penalties for incorrect filing and loss of preference duty rates. Exports from US must report the associated Schedule B numbers. Imports to US must report the HTS Codes and associated OGA and FDA Code, as appropriate. Classification dictates the duty rates as well as the documentation requirements when the product crosses border.

Limitations of SAP ECCBroadly speaking, classification involves the following 2 steps: a. Identify the right HTS Code (Or Schedule B Number) b. Assign the code to the material in the ERP application To identify the right HTS Code, one could visit sites of data provider (e.g. CustomsInfo) or www.Export.gov or contact US Customs for advance ruling. This is a manual step. Assuming that one uses SAP ECC as the ERP application, assigning the codes to products has its own challenges, like: a. SAP ECC has only 1 field in the material master called Commodity Code/Import Code Number for Foreign Trade (MARC-STAWN). Since there is only 1 field, you cannot assign both the HTS Code and the Schedule B number to the same product. b. The field is at Plant level. Hence you need to maintain it multiple times, if you have multiple plants in the same country once for each plant in the material master. c. If you are exporting goods from US to MX, you need to specify the Mexican HTS Code on the export documentation. This requires that you convert the HTS code for US to the corresponding HTS Code for MX. This can be achieved by maintaining the cross-reference in the table T604U. (Configuration path shown below). The limitation of this approach is that there is a 1:1 correspondence of export and import codes. There are cases where a US HTS code maps to multiple MX HTS codes.

Note: Mapping Export Code Numbers to Import Code Numbers.

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

Classification in SAP GTS How SAP GTS can help?SAP GTS helps in both the above mentioned steps. It allows maintaining the complete set of HTS Codes, Schedule B numbers onto GTS. Users can then use this repository to search for the right code.

Note: Sample HTS Codes as maintained in SAP GRC GTS.

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

Classification Help in SAP GRC GTS During product classification, it allows searching for the right HTS codes:

Note:

Searching HTS Codes in SAP GRC GTS.

Based on the search text for Sunflower Oil, it brings up several codes to choose from:

Note:

Search results for Sunflower Oil.

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

In addition, it allows maintaining comments while classifying the products:

Note:

Adding comments while classifying a product in SAP GRC GTS.

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

Pre-requisites for classification in SAP GTSSAP GTS must be configured properly to allow loading of the HTS Codes (you would need to buy the HTS codes from data providers like CustomsInfo). This document elaborates the configuration and related necessary steps in order to be able to load the xml files for HTS Codes for US from the data provider. The procedure to load the HTS Codes file for MX and CA would be similar. So would be the procedure to load xml files for Schedule B codes for US. Step by step Procedure to maintain HTS Codes for US in SAP GTS. As an example, the steps below describe limited configuration steps related to setting up Product Classification for HTS Codes for US. For a more comprehensive list, please refer to the SAP GTS configuration guides. a. Define Unit of Measurement System In SAP GTS, go to IMG SAP Global Trade Services Define Unit of Measurement System General Settings Numbering Schemes

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

b. Define Numbering Scheme for OGA Codes

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

c.

Define Numbering Scheme for Tariff Code Numbers

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

d. Assign Numbering Scheme of Tariff Code Numbers for Customs Processing

Once the configuration steps are complete, the following transaction steps need to take place: a. Maintain OGA Codes. Use transaction code /SAPSLL/LLNS_104. b. Load HTS Codes from an xml file received from the data provider. Use transaction code: /SAPSLL/LLNS_UPL101. c. Classify Products via Worklist. Use transaction code: /SAPSLL/PR_CLWB_101.

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

LimitationsSome of the limitations that may apply to you: a. While you can mass upload FDA codes to SAP GTS, there is no standard transaction to do mass assignment of FDA codes to products. You may need to do develop a custom transaction to do this. b. If you want to segregate responsibility for product classification based on say material type or material group, you do not have this functionality in standard SAP GTS. This can be achieved by transferring the Material Type attribute from the material master in ECC to GTS.

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Product Classification for Exports and Imports: How SAP GTS Meets Industry Challenges

Related ContentFor more details please refer to the configuration guide of SAP GRC GTS along with the online help documentation at