Returnable Packaging 

Implementation Considerations

Returnable packaging consists of materials that are stored at the customer location but which remain the property of your company. The customer is only required to pay you for the returnable packaging if he does not return it to you by a specified time. Using this function you can, for example, process euro-pallets. You can also use it to resell returnable packaging to a third party. Since stocks of returnable packaging form part of your valuated stock even when they are at the customer site, you must manage them in your system.

However, stocks of returnable packaging must be

  • Managed separately from the rest of your stock so that you know exactly what stock is stored at the customer location
  • Managed separately for each customer

Inventory management treats returnable packaging as special stock in your inventory and is assigned to specific customers. This enables you to keep track of returnable packaging stock by customer.

Prerequisites

Settings in the Material Master Record

A prerequisite for returnable packaging processing is that the value LEIH (returnable packaging) is entered in the material master record on the second sales screen in the Item category group field. This entry in combination with the document type automatically determines the appropriate item category for each transaction involving the material.

Settings for the Special Stock Partner

You must define a special stock partner for processing returnable packaging when a third party is involved. This means you can manage all special stock under one partner. You might use this partner function if your customer, for example, uses a decentralized order processing system but manages returnable packaging centrally. You can also use this partner function to process returnable packaging when a carrier is involved (for example, for euro-pallets). If you want to process returnable packaging using the special stock partner, first make the settings which are described for

Consignment Stock Processing.

If you want to manage returnable packaging for a carrier, for whom a vendor record already exists, you must also create a customer master record for the carrier. You are then able to assign returnable packaging stock to the carrier.

Process Flow

There are three main transactions for processing returnable packaging, all of which support separate inventory management:

Creating Returnable Packaging Shipments
  • Creating Returnable Packaging Pick-Up
  • Creating Returnable Packaging Issue

    Returnable Packaging Shipments

    When you sell goods to a customer, you may send the goods in returnable packaging. During sales order processing, you simply enter the returnable packaging as an item in your order. You can process returnable packaging either as main items or as sub-items. For example, if you sell drinks in bottles and want the empty bottles to be returned, you can enter the bottles as sub-items for the drinks in the sales order. The item category group

    LEIH must be assigned to the bottles in the material master record so that they are processed as returnable packaging. During processing, the system recognizes that it is dealing with returnable packaging because the item category group LEIH is assigned to the material. The system then determines another item category in the sales order to allow the material to be processed as returnable packaging. As a result of entering returnable packaging in a sales order, the system carries out the following actions:
    • If special stock does not yet exist in your inventory for the customer (or special stock partner), the system creates it when goods issue is posted
    • The relevant quantity is removed from regular inventory in your plant and is added to the special stock for the customer. The total valuated stock for the plant remains the same.
    • The transaction is not relevant for pricing since the consignment stock remains the property of your company.

    Returnable Packaging Pick-Up

    If the customer returns the returnable packaging to you, you record the transaction in the system by creating a returnable packaging pick-up order (order type LA). As a result, the system carries out the following actions:

    • When goods issue is posted, the relevant quantity is deducted from the customer’s special stock and is added back into your regular stock at the plant where the goods are returned. Your total valuated stock remains the same since the returned stock was regarded as part of your own inventory even while it was at the customer’s premises.
    • This transaction is not relevant for billing.

    Returnable Packaging Issue

    In the following situations, you can create a returnable packaging issue order (order type LN):

    • The customer decides to keep the returnable packaging
    • The customer damages the returnable packaging and you decide to charge the customer
    • The customer sells the returnable packaging to a third party

     

    As a result of processing a returnable packaging issue, the system carries out the following actions:

    • When goods issue is posted, the relevant quantity is deducted from both the customer’s special stock and your own total valuated stock.
    • The transaction is relevant for billing since the goods have become the property of the customer.

    Sales Order Types

    The following table provides an overview of the order types used in the standard system for processing returnable packaging:

     

    Transaction

    Sales order type

    Returnable packaging pick-up

    LA

    Returnable packaging issue

    LN

    When you ship returnable packaging to the customer, you do not need to use a special order type. The transaction is a normal business transaction and you can use either a standard sales order or, if appropriate, a free of charge delivery.

    Pricing and Availability Check

    Whether pricing is carried out for the individual transactions depends on the item category. The schedule line category controls the availability check and the transfer of requirements in each of the transactions. The schedule line category itself is determined by the item category and the MRP type of the material. The order types LN and LA check against returnable packaging for the relevant customer. Requirement records for returnable packaging stock are stored as individual requirements, independently of the setting in the material master record.