Logistics to Treasury Integration for Commodities 2 (Reversible)

Technical Data
Technical Name of Business Function	LOG_TRM_INT_2
Type of Business Function	Enterprise Business Function
Available From	SAP enhancement package 7 for SAP ERP 6.0
Technical Usage	Central Application
Application Component	Materials Management (MM) Sales and Distribution (SD)

This business function contains new features that enhance the integration between SAP Logistics applications and SAP Treasury and Risk Management. This integration allows you to calculate and analyze raw exposures related to the sale and purchase of specified commodities and the pricing procedures for these commodities.

Prerequisites

You have installed the following components as of the version mentioned:

Type of Component

Component

Required for the Following Features Only

Software Component

SAP_APPL 617

Type of Component	Component	Required for the Following Features Only
Software Component	SAP_APPL 617

Features

Raw Exposures from Schedule Lines

You can perform a more exact evaluation of logistics dates and quantities in Treasury and Risk Management (TRM) by taking into account delivery dates and quantities for individual schedule lines in purchase orders. For each schedule line, you can create a raw exposure item with dates and quantities based on the schedule line’s dates and quantities.

For sales orders, you can now take into account the unconfirmed quantity of a schedule line when determining the exposure quantity. The unconfirmed quantity can have the same origin as the confirmed quantity, or a different origin.

For more information, see SAP Library for SAP ERP, on SAP Help Portal, under http://help.sap.com/erp Start of the navigation path SAP Enhancement Package 7 for SAP ERP 6.0 Next navigation step Application Help SAP ERP Central Component Logistics Logistics - General Integration of Logistics with Treasury and Risk Management Creating Raw Exposures from Logistics Transactions Raw Exposures from Purchase Orders and Sales Orders End of the navigation path .

Raw Exposures from Contracts

In contracts, you can maintain a delivery schedule representing (internal) planning of deliveries or an (external) agreement with a supplier. This information can then be used to determine the commodity-specific risk that is transferred to TRM as raw exposures. Contracts do not contain scheduling information. Therefore, if an exposure is to be written for a contract, the target quantity needs to be split into smaller quantities with their own validity periods. These smaller quantities are called planned risk quantities (PRQs) and they represent:

A concrete quantity schedule as agreed in a written paper contract
An expected quantity schedule based on, for example, seasonal planning

For distributing planned risk quantities to specific time intervals, there is a new entity with its own database tables that is located below the contract item: risk distribution plan (RDP). RDPs are used only as a basis for risk hedging in TRM.

If you want to perform automatic distribution, you can assign a risk distribution strategy (RDS) to each contract type in Customizing. If you use the standard RDS, the system distributes the target quantity on a daily basis across the months. You can also create customer-specific RDS’s.

Raw Exposures from Stock Transport Orders and Stock Transport Contracts

Logistics-Treasury integration has been enhanced to include an issuing view of the price raw exposure for stock transport orders (STOs) and stock transport contracts at the issuing company code. The raw exposure is determined by mirroring the receiving side. You can specify in Customizing which side of the STO or stock transport contract you want to see in exposure reporting.

Physical Commodity ID

The material master has been enhanced by the addition of a physical commodity ID. The physical commodity ID is used in various Commodity Management functions, for example to derive commodities for stock exposures and for mark-to-market reporting:

Simple cases: At client level, the physical commodity ID has been added to the material master in order to support simple cases where a material exactly matches the specification of a commodity.
Complex cases: A new master data table has been introduced to assign (batch) characteristics to materials where the commodity is only a proportion of the material. The Proportion/Product Unit of Measure tab has been enhanced to display the derived commodity per unit of measure for this case.

Raw Exposures from Material Stock

You can use the report CMM_MAT_STOCK_EXPOSURE_LOAD to update raw exposures based on physical stock and transfer them to Treasury and Risk Management. These updates are triggered by stock changes. You can access the report by calling transaction MATREX. You can also use it as an initial load report, or for periodical updates.

Enhancement of the Adjustment Condition Concept

You can use new functionality to handle complex pricing agreements and special pricing clauses. Within a condition schema used in MM or SD, you can define conditions that calculate raw exposure quantities with reference to other conditions.

Market Price Raw Exposure

By utilizing mark-to-market (MtM) features, you can write raw exposures for market price conditions. This allows you to capture the market norm in quantity position reporting, providing information on how the exposures may be hedged.

For more information, see SAP Library for SAP ERP, on SAP Help Portal, under http://help.sap.com/erp Start of the navigation path SAP Enhancement Package 7 for SAP ERP 6.0 Next navigation step Application Help SAP ERP Central Component Logistics Logistics - General Integration of Logistics with Treasury and Risk Management Creating Raw Exposures from Logistics Transactions Market Price Raw Exposure End of the navigation path .

Compression for Raw Exposures

You can use the new compression logic to deal with the vast amounts of data and records that are produced when transferring raw exposure price items from logistics to treasury management in both MM and SD. For example, for quotation periods that lie far in the future, it is sufficient to know the exposure quantity per month only.

For more information, see SAP Library for SAP ERP, on SAP Help Portal, under http://help.sap.com/erp Start of the navigation path SAP Enhancement Package 7 for SAP ERP 6.0 Next navigation step Application Help SAP ERP Central Component Logistics Logistics - General Integration of Logistics with Treasury and Risk Management Creating Raw Exposures from Logistics Transactions Compression for Raw Exposures End of the navigation path .

Price Fixation

You use this function to convert price fixation data and exercise data that has been defined as part of a price fixation option into a raw exposure quantity. You are then able to distinguish between the distinct parts of this raw exposure quantity within Treasury and Risk Management (TRM).

Whenever a price fixation option is exercised, three distinct quantities are produced as follows, depending on how high the limit has been set:

Fixed Quantity
Non-Fixed Quantity (Floating)
Non-Fixable Quantity (Floating)

The system expresses these quantities as three separate exposure positions and then converts the data into an exposure quantity, which can be analyzed in greater detail within TRM.

Once a price fixation option has been defined, the system flags the non-fixed floating quantity accordingly so that it can be identified correctly in TRM.

Once a user has exercised an option and fixed a portion of the fixable quantity, the system flags the fixed portion and the (remaining) fixable quantity accordingly, so that the relevant information about each part is transferred to TRM correctly.

The portion of the raw exposure quantity that does not involve a price fixation option is sent in a separate raw exposure item.

For more information, see SAP Library for SAP ERP, on SAP Help Portal, under http://help.sap.com/erp Start of the navigation path SAP Enhancement Package 7 for SAP ERP 6.0 Next navigation step Application Help SAP ERP Central Component Logistics Sales and Distribution (SD) Pricing and Conditions (SD-BF-PR) Commodity Pricing Price Fixation Price Fixation Option and Risk Management End of the navigation path .

Create Raw Exposure from CPE Terms

New CPE-related functions are available, which you can use when generating raw exposures in combination with CPE terms, as follows:

CPE Term Rate Caps and Floors
Term rate caps and floors allow purchasers and sellers to protect themselves against rising and falling rates in floating-price agreements. You can also consider these caps and floors when creating raw exposures in logistics to treasury integration.
CPE-Pricing-Relevant Quotations for Raw Exposures
This function allows you to activate the logic that determines how final terms, combined by specific CPE formula combination routines, contribute to the exposure quantity calculation. For example, whether a fixed subset or variable subset contributes to the raw exposure quantity.

For more information about these functions related to pricing, see SAP Library for SAP ERP, on SAP Help Portal, under http://help.sap.com/erp Start of the navigation path SAP Enhancement Package 7 for SAP ERP 6.0 Next navigation step Application Help SAP ERP Central Component Logistics Logistics - General Integration of Logistics with Treasury and Risk Management Creating Raw Exposures from Logistics Transactions Raw Exposures from CPE Terms End of the navigation path .