If you use Customer Returns in S/4HANA Cloud, it is useful and important to understand how it is designed for inventory management (See online documentation). In this blog, the concept of Non-valuated stock (with special stock indicator) and valuated stock in Customer Returns, are introduced with details.

Use case:

There are both legal and company-internal requirements that stipulate that the returns stock may not be valuated until you decide that the material is to change ownership from the customer to your company.

Change in Ownership: A change in ownership occurs when you (as supplier)

• Grant the customer a refund or replacement for the returned material (a credit memo, credit memo request, or subsequent delivery free of charge).
• Specify a logistical follow-up activity signaling that you intend to take on ownership, such as by transferring the material to unrestricted-use stock.

This ownership change applies during Customer Return Order phase, or Inspection phase.

How it works for S/4HANA Cloud

Customer return in S/4HANA Cloud, controls the goods receipt posting for returned materials to non-valuated stock by requirement type MSR which is assigned to item categories used in return orders.

Requirement Type MSR is the standard delivered setting and not configurable by customer.

The non-valuated returns stock is implemented as non-valuated special stock ‘E’ (Sales Order Stock) for the returns order – also called non-valuated returns order stock.

The posting to special stock ‘E’ for the returns order is reflected both in the return delivery document and in the material document for goods receipt posting.

Change from Non-valuated stock to valuated stock

Example 1: Return a product with follow up activity: receive into plant WITHOUT immediate refund in Return Order

Customer Return Order: Create an accelerated return (renamed to standard return) via Manage Customer Returns App – using follow up activity: 0001 receive into plant.

Check the requirement type in WEBGUI App, under the Procurement tab, requirement type MSR is determined.

Return delivery document and post good receipt: The special stock E is show in return delivery document. Movement type 657 is used for block stock.

The special stock E is also shown in Good Receipt document. Return Order is used to carry the inventory.

During inspection, the logistic follow up needs to be set. Further material document will be generated depending on follow up activities. With below logistic follow up activity in inspection, the non-valuated stock is changed to valuated stock.

· Transfer to Free Available Stock

· Transfer to Scrap

· Transfer to Specified Stock

· No Further Activities

Take follow up activity:Transfer to Free Available Stock as example (two-steps scenario),

It firstly, transfer from special (customer own, with return order) block stock to supplier own (without special stock) block stock

Secondly, it transfers from block stock to un-restricted-use stock, there is no special stock indicator.

Scenario 2: Return a product with follow up activity: receive into plant WITH immediate refund in Return Order

If you decide to refund customer during Customer Return Order Phase, then the return stock is posted to valuated stock, the requirement type is blank in such case, and there is no special stock indicator ‘E’ in return delivery and good receipt material document.

Scenario 3: Return a product with follow up activity: 0002 Immediately Move to Free Available Stock in Return Order

if you intend to take the return product ownership, and use follow up activity like 0002 Immediately Move to Free Available Stockthen the return stock is posted tovaluated stock, the requirement type is blank in such case, and there is no special stock indicator ‘E’ in return delivery and good receipt material document.

Summary

In S/4HANA Cloud, with current configuration for customer return, the return product by default is posted to non-valuated stock firstly.

When follow scenarios are occurring, return product is posted or changed to valuated stock.

In future, more logistic follow up activities and refund control values will be enabled in Manage Customer Returns Fiori App in S/4HANA Cloud, such blog will be timely updated.