Create a Trade Operation from Scratch

You can create trade operations for purchase orders and transfer orders. The allocation type for purchase orders can be PO schedules or PO shipments, and for transfer orders it can be transfer order shipments.

To create a trade operation from scratch:

In the Receipt Accounting work area, select Trade Operations from the Quick actions menu.

If required, click View all actions to see the complete list of actions available.
Click Create Trade Operation on the Trade Operations page.

Specify trade operation details in these fields on the New trade operation panel drawer.

Field	Description
Name	Specify the name for the trade operation.
Description	Provide a brief description of the trade operation.
Transaction Type	Select the type of transaction: PO receipt: Allocates landed cost charges based on purchase orders. Transfer order: Allocates landed cost charges based on the transfer order shipment quantity. Note: The support for landed cost for transfer orders is available only if you've opted in for the Allocate for Landed Cost Charges in Transfer Order Receipt Transactions feature.
Procurement BU	Specify the procurement business unit for the trade operation.
Document Currency	Select the required currency for the trade operation.
Currency Conversion Rate Type	Select the currency conversion rate type for the trade operation.
Allocation Quantity Type	Select the type of allocation quantity. For the Transfer order transaction type, the allocation quantity type is always Transfer order shipment. For the PO receipt transaction type, select from these options: Purchase order schedule quantity: This is the default value and landed costs are calculated based on the quantity mentioned in the purchase order schedule. Shipment quantity: The quantity mentioned in the purchase order shipments associated with the trade operation is used to calculate landed costs. This option is useful when the purchase order schedule quantity is fully received across multiple partial shipments. Also, you must have an ASN-based receiving process to utilize this setting. Note: The Allocation Quantity Type field is available only if you've opted in for the Allocate Landed Cost Charges Using ASN Quantity feature.
Route	Select a route through which materials are transported for this trade operation.

Click Create.
For the newly created trade operation, you can add the relevant information on the various tabs displayed for the trade operation.

Trade Operation Information

The information about a trade operation is organized across these tabs in the trade operation record:

Transfer Order Shipments/Purchase Order Schedules/Purchase Order Shipments
- Transfer Order Shipments tab: Displays transfer order shipments added to a trade operation. You can associate one or more transfer order shipments to a trade operation.
  
  This tab is displayed for a trade operation created with the transaction type as Transfer order.
- Purchase Order Schedules tab: Displays purchase order schedules being shipped as a part of a trade operation. You can associate one or more schedules to a trade operation.
  This tab is displayed for a trade operation when the transaction type is set to PO receipt and the allocation quantity type is set to Purchase order schedule quantity.
- Purchase Order Shipments tab: Displays purchase order shipments added to a trade operation. You can associate one or more purchase order shipments to a trade operation.
  
  This tab is displayed for a trade operation when the transaction type is PO receipt and the allocation quantity type is Shipment quantity.
  
  You need to set the Allocation Quantity Type parameter according to your use case. If the purchase order schedule quantity is fully received in partial shipments across multiple periods or if the purchase order schedule quantity might not be fully received, then set the parameter value to Shipment quantity. By using Shipment quantity as the allocation quantity type, you get these benefits:
  - More accurate landed cost for inventory valuation and COGS because the landed cost charges are captured only when the shipment information is available and allocated based on the shipment quantity.
  - Full absorption of the invoice amount to the receipt quantity.
  - By adding ASNs to the trade operation, purchase order schedule and shipment quantity get automatically added to charges.
Charges tab: Displays the landed cost charge lines added to a trade operation along with the charge line status, estimated amount, and actual amount. You can also add new charge lines.
Estimates and Actuals tab: Displays the estimated and actual amounts at the purchase order schedule, purchase order shipment, or transfer order shipment level. You can export the data to a downloadable spreadsheet for offline analysis.

Add Purchase Order Shipments to a Trade Operation

You can associate one or more purchase order shipments, purchase order schedules, or transfer order shipments to a trade operation, depending on the allocation quantity type set for the trade operation.

To associate a purchase order shipment to a trade operation:

On the Trade Operations page, click the Edit icon for the trade operation that you want to edit.
On the Purchase Order Shipments tab, click the Add icon.
On the Associate purchase order shipments page, search for and select the purchase order shipments that you want to associate with the trade operation. Use filters as required.
Click Add to associate the selected purchase order shipments.

After PO shipments are associated with a trade operation, the corresponding purchase order schedules are automatically associated with the charge line. You can also see the shipment quantity from the PO shipment and the ordered quantity from the purchase order schedule.

Similarly, you can associate purchase order schedules and transfer order shipments to a trade operation.

Note:

To ensure that charges are correctly applied to receipt quantity, all receipts must be created through PO shipments when the Allocation Quantity Type field is set to Shipment quantity.

Examples of Landed Cost Absorption

Here's a simple example explaining how landed costs are absorbed based on the allocation quantity type setting in a trade operation. Here are the charge line details:

Charge name: Freight
Charge basis: Aggregate
Charge amount: 1000.00
Allocation basis: Equally

This table shows the landed cost absorption when the Allocation Quantity Type field is set to Purchase order schedule quantity.

PO Schedule	Allocated Charge	Shipment Quantity	PO Schedule Quantity	Per Unit Charge	Receipt Quantity	Charge Absorbed
1005379/1/1	500.00	10	20	25.00	10	250.00
1005380/1/1	500.00	20	40	12.50	20	250.00

In this case, notice that for the first PO schedule the charge absorbed in 10 (receipt quantity) * 25.00 (per unit charge computed based on the purchase order schedule quantity), which is 250.00. The same is true for the second PO schedule. The total freight charge of 1000.00 is partially absorbed across the two purchase order schedules.

The following table shows the landed cost absorption when the Allocation Quantity Type field is set to Shipment quantity.

PO Schedule	Allocated Charge	Shipment Quantity	PO Schedule Quantity	Per Unit Charge	Receipt Quantity	Charge Absorbed
1005379/1/1	500.00	10	20	50.00	10	500.00
1005380/1/1	500.00	20	40	25.00	20	500.00

In this case, notice that for the first PO schedule the entire charge is absorbed. That's 10 (receipt quantity) * 50.00 (per unit charge computed based on the shipment quantity), which is 500.00. The same is true for the second PO schedule. The total freight charge of 1000.00 is fully absorbed across the two purchase order schedules.