Free Goods

Free Goods Sales & Distribution

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Topics 1. Introduction 2. Free Goods Types 3. Inclusive Bonus Quantity 4. Exclusive Bonus Quantity 5. Free Goods Processing 6. Free Goods Constraints

Introduction  In Sales processing in various Industry sectors it is required to supply certain goods for free additionally or supply customer with a portion of goods for free.  Free Goods functionality in system caters to these requirements and enables business to enhance sales operations.  Types of Free goods provided in system are explained in following slides

Inclusive Bonus Quantity  Inclusive Bonus Quantity: In this type of Free Goods, the customer only pays for some of the Goods ordered, rest of goods being free of charge. This is also called as Inclusive free goods. Example: In an order of 20 cases of toothpaste, customer would be charged only for 18 cases, 2 being inclusive free goods and not charged.  Two options are available in system for Inclusive bonus quantity. The quantity of free goods can be shown as a separate item or be included in the same line item in sales document.

Exclusive Bonus Quantity  Exclusive Bonus Quantity: In this type the customer pays for the goods ordered and is additionally given extra goods free of charge. So in this case, a larger quantity is delivered than ordered and additional quantity delivered is not charged. Example: Customer orders for 2 welding machines and is supplied with a case of welding rod consumables, but is not charged for it.  The material supplied additionally need not be the same as materials ordered in this case.

Free Goods Processing  Free Goods Processing 

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For Free goods processing condition needs to be set up in system. ‘NA00’ is Free goods condition type available in standard system. Conditions are maintained by standard Condition technique and can be maintained at various levels i.e. Customer/Material, Customer Hierarchy/Material etc. Free goods agreement is setup with validity period and various controls are available for system behavior of free goods while maintaining condition records. These are explained in user guide. Based on condition records set, these are automatically determined in Sales order and can be copied on to Delivery and Billing document as separate line items.

Free Goods Processing  Free Goods Processing 

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An item in sales document becomes free of charge when 100% markdown is applied on the item. With this the prices are visible however there is no net price applicable. Standard system contains condition type ‘R100’ for this purpose. In Inclusive Free Goods case without item generation the total price is adjusted in a way to effectively have no charge for quantity of free goods in the item. This is controlled by a condition ‘NRAB’ available in system and assigned in pricing procedure.

Free Goods Constraints  Free Goods Constraints There are couple of constraints in system for free goods processing. Free Goods can be supported on a 1:1 ratio, i.e an order item can lead to only one more item. With material 1, material 2 & 3 to be given free of charge are not supported. Free Goods are also not supported in combinations with structures like BOM explosion etc. also they cannot be used in Make-to-order production, Third party processing and scheduling agreements.