SD Free goods in SAP SD

Implementation Options

In many sectors of industry it is common to provide products free of charge, or not to charge the customer for some of the goods sold when a customer purchases certain goods.

The following forms of free goods exist:

• Inclusive

The customer only pays for a part of the goods required. The rest of the goods are free. This is called Inclusive free goods and means that part of the purchase quantity is designated as free goods and is not billed.

The material supplied as free goods always has the same unit of measure as the purchased quantity.

Of ten bottles of wine, two are designated as free goods. If you order ten bottles, then ten are delivered but you are not billed for two of them. You have received inclusive free goods.

• Exclusive agreement,

The customer pays for the goods ordered and receives additional goods. This is known as exclusive free goods and means that free goods is granted for an additional quantity to that in the purchase order. More is delivered than was ordered and the additional quantity is not billed.

The goods delivered as free goods do not have to be the same as material ordered.

When four coffee machines are ordered, the vendor supplies a packet of coffee as free goods. Therefore, if you order four coffee machines, you receive a free packet of coffee.

Features

You create a free goods agreement in the same way as you do a condition. You can set the requirements governing when free goods are granted at as many levels as required, e.g. at customer/material level or customer hierarchy/material level. The standard system provides for customer/material level. The free goods agreement has a validity period. In the free goods agreement you can save different rules for determining the free goods quantity. You can determine a minimum amount for the sold material. The free goods only then apply from this minimum amount. The free goods quantity can be defined proportionally to the quantity of the material sold. Another rule defines the free goods quantity per full unit of the material sold. I.e., free goods might be granted only for a certain number of full pallets and not for partially loaded pallets.

Free goods processing is supported in the sales order for direct sales. When creating the sales order, the free goods items are created automatically according to free goods agreement. The free goods are represented as an item. The free goods item is a subitem of the originating item. The free goods items are relevant for delivery and are copied to the delivery. The free goods item can be copied to the billing document. It is possible to have the free goods in the invoice as free of charge items.

In the sales order and in the billing document, pricing can be carried out for a free goods item. An automatic discount of 100 percent at the end of pricing ensures that the item is free of charge. This facilitates representation in the statistics and in the Profit Analysis. The free goods can be represented there not only as manufacturing costs but also as a special type of sales deduction.

Constraints

Free goods is currently only supported on a 1:1 basis. This means that an order item can only be the source of one free goods item. This means that agreements involving relationships such as 'Buy material 1 and get material 2 and material 3 free of charge' or 'Order material 1 and material 2 together and get material 3 free of charge' are not supported.

Free goods is not currently supported in combination with material structures (e.g. product selection, bills of material, variants with BOM explosion).

Free goods is currently only supported for sales orders with document category C (not for quotations, for example).

Free goods is not currently supported for deliveries without reference to a sales order.

Free goods is not currently supported for make-to-order production, third-party order processing and scheduling agreements.