Whenever soft-commodities are physically moved, some quantity gets spilled. This represents a loss. To account for this fact, most companies consider a Handling Loss Reserve (HLR). This handling loss reserve accounts for a certain percentage that gets spilled or lost for each physical movement.
With the transactional volume at elevators, the requirement is that the HLR is accounted for automatically. It also takes into account that the handling loss can be different at different locations and is usually specific to the soft-commodity handled.
It is also possible that there is a different handling loss procedure for loading in or loading out of an elevator.
Loss at Truck Unload
A truck arrives with a weight of 54,000 pounds, which becomes the base for Load Adjustment Quantity (LAQ) calculations. Behind the scenes, we've set up an automated process to account for a 0.5% handling loss during unloading. When you use load data capture, the system calculates this loss and adjusts the inventory accordingly.
This setup follows a business rule that defines the loss percentage. You can customize it based on factors like commodity, plant, storage location, and transport mode. This rule ensures that the handling loss is incorporated seamlessly into the process.
The handling loss is automatically added as a goods movement during unloading, without requiring user intervention. This process is driven by the predefined configurations.
Recovery Report
A loss at load/unload can be set up using a business rule:
- The business rule defines the loss percentage per commodity, plant, storage location, mode of transport combination.
- The loss will automatically be posted as an additional goods movement from the orchestration framework during the unload process.
- No user interaction is required.
In the recovery report, you will notice this additional adjustment made for the handling loss reserve. This showcases the practical application of automated adjustments.
Production Services
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Agricultural companies utilize production services at grain elevators to efficiently manage the quality and condition of stored grains. These services are essential in the post-harvest phase of grain handling and storage. Here's a discussion of how agricultural companies use production services at grain elevators:
- Preservation of Grain Quality: One of the primary purposes of production services is to preserve the quality of grains during storage. Grain elevators often store grains for an extended period, and maintaining quality is crucial to ensure the marketability and value of the commodities. Services like aeration and fumigation are employed to prevent spoilage, insect infestations, and the growth of molds or fungi.
- Moisture Management: Controlling the moisture content of stored grains is vital. High moisture levels can lead to grain spoilage, while overly dry conditions may result in weight loss and reduced quality. Agricultural companies use drying and moisture management services to maintain optimal moisture levels, ensuring grains meet market specifications.
- Blending Operations: Grain elevators often handle grains with varying characteristics, such as protein content and moisture levels. To meet specific market demands or quality standards, production services enable blending operations. Grains with different qualities can be mixed to create a homogeneous product that meets customer requirements.
- Cleaning and Sorting: Cleaning services help remove impurities, foreign matter, and broken kernels from the stored grains. This enhances the overall quality and marketability of the product. Additionally, sorting operations can segregate grains based on size, density, or other criteria, ensuring consistency and meeting customer specifications.
- Byproduct Generation: Some production services may result in the generation of byproducts, such as screenings or fines. These byproducts can have value in various applications, such as animal feed or industrial processes. Agricultural companies may use production services strategically to maximize the yield of these valuable byproducts.
- Inventory Management: Production services play a crucial role in inventory management. They enable companies to track changes in grain characteristics, quantities, and quality. This information is essential for accurate record-keeping, compliance with regulations, and financial reporting.
- Integration with Technology: Modern grain elevators often incorporate advanced technologies for monitoring and controlling production services. Automated systems can monitor temperature, moisture levels, and other parameters, allowing for timely interventions and adjustments to maintain grain quality.
- Compliance and Reporting: Production services are closely tied to compliance with industry standards and regulations. Agricultural companies use these services to ensure that stored grains meet quality and safety standards. Detailed reporting and documentation of these services are essential for regulatory compliance and traceability.
SAP Agricultural Contract Management and Production Services
When soft commodities are stored in silos, there's often a need to make adjustments to their quality and potentially their quantity. These adjustments can take place while the commodities are in the silo or being handled within the facility. The purpose behind these operations is to either preserve the commodities or transform them into a different type of product.
SAP Agricultural Contract Management offers a comprehensive framework designed to capture events that impact both physical and book inventory within commodity storage facilities. These events are a result of various operations aimed at conditioning soft commodities. These operations are conducted to either preserve or enhance the quality of the grains or adjust inventory levels based on physical measurements in the bins.
This framework encompasses several key elements:
- Master Data Setup: This involves configuring the necessary data elements to facilitate these operations.
- Processing Workcenter: It provides a dedicated space for executing these operations.
- Integration into Inventory Position and Mark-to-Market (MtM): Ensuring that these adjustments are properly reflected in the overall inventory management and MtM processes.
Here are the different types of operations covered within this framework:
- Condition in Place: Operations performed on a material within its existing storage location to enhance its characteristics. Examples include aeration and in-place fumigation.
- Condition and Transfer: This involves relocating a material or soft commodity to another storage location and then conducting specific operations, such as moisture reduction, on it. Examples include drying and cleaning.
- Condition and Transfer with Byproduct: Similar to the above, but with the added outcome of producing a single byproduct during the operation.
- Material to Material - Multiple Materials: Transfer of material with multiple inputs resulting in a single output material. This supports services like blending operations.
- Material to Material Transfer: Determining a target material based on the input material and its characteristics.
- Quantity Adjust - Measure Up: Measuring the stock at the bin level and then adjusting both the physical and book inventory accordingly.
- Quantity Adjust - Weigh Up: This operation involves the actual measurement of stock at the bin level and adjusting both the physical and book inventory.
- Process and Convert: Material to material transfer with one input and multiple output materials, supporting services like crush operations.