In the trading environment, it is necessary to control and organize the flow of materials and services from vendors to customers. The principle of the business is to match demand from the customer with supply from the vendor. This type of business is known as triangular business, principal business, or back-to-back business. The industry defines this type of business as business where purchasing and sales are carried out in parallel, in the same trading department. For example, you get a sales order from a customer, search for the best vendor to fulfil the customer's requirements, and issue a purchase order, all in one transaction. You coordinate shipping, transportation, and customs clearance for the goods. The vendor then delivers the goods directly to the customer. The trading company gets an invoice from the vendor, and bills the customer. Finally, you receive payment from the customer and make a payment to the vendor.

In the SAP system, this type of business process, in which sales and purchasing processes are carried out simultaneously, is defined as Trading Business. SAP Global Trade's new object, Trading Contract, is used to handle this ordering process.

There are several types of procurement and sales expenses associated with trading business, such as inland freight, ocean freight, insurance, duty, and so on. Trading charges linked to the Trading Contract can be processed by a new component, Trading Expense. The Trading Expense component is fully integrated with the Trading Contract so that you can maintain purchase related expenses and selling related expenses centrally. Planned expenses can be entered in the Trading Contract and accrued. Unplanned expenses can be linked to Trading Contract at a later stage when you receive invoices from service providers, freight forwarders, insurance companies and customs offices. It is thus possible to assess accurate profitability as costs and revenue elements are linked to the Trading Contract.

Subsequent transactions such as goods receipt, inventory management, goods issue, invoice verification, and customer billing are maintained in the standard SD/MM components.

The Global Trade component is a part of the standard SAP system and can be used in all business transactions, independent of the line of business.

Since Trading Business initiates both Sales and Purchasing processes, it is mandatory to maintain both SD and MM settings and Customizing.

The vendor and customer master, material master, conditions, sales transactions, and purchasing transactions must be in use if you want to use the Trading Contract component.

For further information, see ;

The Global Trade component provides: