1. Using Supply Chain Cost Management
  2. Manage Transfer Charge Rules and Rule Sets

Manage Transfer Charge Rules and Rule Sets

Transfer charge rules let you define the charges for transferring an item from one organization to another.

Transfer charge rules are defined within a rule set. A transfer charge rule set can be used across multiple scenarios. You can define multiple transfer charge rule sets for different business requirements or for simulation purposes.

Within a rule set, you can define multiple transfer charge rules. A rule must be unique for a given source organization, destination organization, and effective date. You can end date a rule and create a new rule with revised charges in a rule set. You can't edit a transfer charge rule after it has been used by the Roll up Costs process to calculate transfer costs of items.

You can only calculate transfer charges as a percentage of the standard cost of the item in the source organization. All cost elements at all levels participate in calculating the transfer charge.

Standard cost of item in destination organization = Standard cost of item in source organization + Transfer charges.

Note: The standard cost of the item in destination organization won't carry over the expense pool associated with the standard cost of the item in source organization.

To create a transfer charge rule set, perform these steps:

  1. In the Cost Accounting work area, click the Manage Transfer Charge Rule Sets task.
  2. Click Create on the Transfer Charge Rule Sets page.
  3. Enter a name and description for the rule set and click the save icon.

After you create a rule set, you can add transfer charge rules to it. To create a transfer charge rule, perform these steps:

  1. In the Cost Accounting work area, click the Manage Transfer Charge Rules task.
  2. Click Create on the Transfer Charge Rules page.
  3. Select the transfer charge rule set to which you want to add the transfer charge rule.
  4. Select the source and destination organizations.
  5. Set the effective start and end date for the rule.
  6. Click Add.

  7. Select the cost element and expense pool and set the charge value.

    The charge value is a percentage of the standard cost of the item. Define the transfer charges for all the required cost elements by repeating steps 6 and 7.

  8. Click Create to save the transfer charge rule.

You can also use the REST API to create the transfer charge rule sets and rules.

Transfer charge rules are required if you want to apply markup on the costs of materials when they are transferred across organizations. You can select the transfer charge rule set in your supply chain cost rollup enabled cost scenario. The rollup process would use the transfer charge rules which are effective as of the scenario effective date in the rule set.

Let's consider an example of transfer charge rule set. The source organization is Vision Operations and the destination organization in Seattle.

Cost Element Expense Pool Charge Type Value
Freight Transfer EP Percentage 1.0%

Here's the source assignment for item ABC:

Planning Organization Sourcing Rule Type Rule Allocation Source Organization
Seattle Transfer From 100% Vision Operations

The standard cost ABC in Vision Operations is $3.00 as summed up in this table.

Cost Element Expense Pool Unit Cost
ZCST-Material $1.00
ZCST-Electrical MFG Exp Pool $1.50
ZCST-Rent MFG Exp Pool $0.50

With the transfer charge applied, standard cost of item ABC in Seattle as calculated by the Roll up Costs process is listed in the table.

Cost Element Expense Pool Unit Cost
Material $1.00
Electrical $1.50
Rent $0.50
Freight Transfer EP $0.03

The standard cost for ABC is $3.03 in Seattle.

Standard cost of item in destination organization = Standard cost of item in source organization + transfer charges