LOG10 – Import and Export Compliance LATAM

LOG10 – Import and Export
Compliance
LOG10

This course provides a broad insight into the Import and Export compliance
process within SAP
Target Audience
This course is intended for the following audiences:
 Customer Service Reps
 Customer Service Management
 Trafic Control Employees
Course Prerequisites
As a prerequisite to this course all participants should have taken the following
courses:
 Basic Navigation (SAP01)
 Organizational Structures (SAP10)
 Logistics Execution Overview (LOG01)
Course Overview

The aim of this course is to provide you with the knowledge and skills required
Import and Export compliance processes.
Upon completion of this course, you will be able to:
 Process Sanctioned Party Hits
 Process ECCN Licensing Requirements
Course Objective

Course Agenda:
 Lesson 1 - Introduction / Concepts in Import/Export Compliance
 Lesson 2 - Sanctioned Party Screening
 Lesson 3 - ECCN Licensing
Approximate course time:
 6 hours
Course Content

INTRODUCTION / CONCEPTS IN
IMPORT/EXPORT COMPLIANCE
Lesson 1:

Lesson Objective
At the end of this lesson, you should be able to:
 Understand processes and terminology associated with Import/Export
Compliance in Global Trade Services (GTS)
 Locate FCC & FDA codes
 Locate HTS & ECCN codes

WARNING
In order to be more
compliant and avoid
fines, new processes
are put in place to insure
a stricter and more
complete Import/Export
compliance towards the
Governments. We are
aiming to improve our
procedures and monitor
closer or business

General information
General Rules
• An order will simultaneously go under credit and GTS check. None are
correlated and therefore will be dealt separately. An order can then be
released from GTS but still blocked by RFS and vice versa.
• An order blocked will prevent the delivery to be created, therefore no
delivery will be created if there is a GTS block. A single line can block the
full order. On the SO overview, you will have the general order status but
the actual GTS block will have to be check on the item level in the Status
Tab clicking on the Obj. Status

General information
General Rules
• The only logical system group use by ScanSource in GTS is
GRPLOGSYS
• Some classifications (ECCN) will be common to all ScanSource
offices but other will be country specific (HTS)

Processes and Terminology Associated with Import/Export
Global Trade Services
• Export Management – trade regulations and localizations
• Import Management – Importer security filing, duty calculation and many
others
• Preferential and Free trade agreement – Reduce duty and taxes payments
and manage vendor and customer declarations
• Single data repository – Centralize master, classification and compliance
data
• Regional and Industry compliance – Automate compliance

Global Trade Services
• As you could see in the previous slide, the services
offered by GTS are wide. ScanSource is currently
actively using the two below parts; it could be reviewed
in the future

Global Trade Services – Main Menu
• For security and audit reason, the employees will have access only
specifically to the t-codes they will be using to complete their job. Yet, it’s
nice to have an overview on the general menu to see all the available
options

Locate FCC & FDA Codes (US Only)
FCC
• Federal Communication Commission
• Six goals in the areas of broadband, competition, the spectrum,
the media, public safety and homeland security
• Responsible for managing and licensing the electromagnetic
spectrum (mobile wireless, television, radio, satellite and other
services)
FDA
• Food and Drug Administration

Locate FCC & FDA Codes (US Only)
FCC & FDA
• T-code
 /N/SAPSLL/PRODUCT_02
 /N/SAPSLL/PRODUCT_03
• General Information
 Display Customs Product Master
 Notions are displayed on the ScanSource tab as this was a customized
requirement
 ScanSource tab is displayed the MFG address too

HTS
HTS
• Names
 Harmonized Tariff Schedule (HTS)
 Harmonized system
 Commodity code
 Trade Tariff
• T-code
 /N/SAPSLL/PRODUCT_01 (Not used as created in ECC)
 /N/SAPSLL/PRODUCT_02 (Classification Tab)
 /N/SAPSLL/PRODUCT_03 (Classification Tab)

HTS
HTS
 The classification is performed upon material master creation by the responsible
users. Without classification, the system will block some transactions from
running correctly
 Classification of the products mainly used to calculate the customs duties,
monitor import/export quotas and controlled goods flow (narcotics, weapons,
endangered species…) , collect the international trade statistics and taxes,
impose the required licenses and helps during the negotiation of international
agreements
 In Europe, the HTS classification is closely linked to the Intrastat. To be
compliant to the EU regulation, each company should be able to provide an
Intrastat declaration. As there is a free trade agreement between the countries,
there are no longer customs declarations. It helps the government to monitor the
movements in-between the member states. On a ScanSource point of view,
FICO must provide a report to the Belgian Government every month.

HTS
HTS
 Internationally recognized and maintained by World Customs Organization
 A lot of useful and detailed information can be found on
https://www.wto.org/english/tratop_e/tariffs_e/tariff_data_e.htm
 Usually between 8 and 10 digits number according to the countries / 21 sections
and 96 chapters for over 17000 unique codes

HTS
HTS
 The full list of Tariff Numbers is available in GTS but only specific codes
will be used. In our business we usually use codes from Chapter 84 and
85.
 The HTS must be provided by the vendors. Often they will provide the 8
digit codes, we would then recommend to use the subdivision Other
would need to be selected for the last two digits
 The classification of a product cannot be amended upon customer
request. In case there is a demand, you will have to contact the vendor
to have the commodity code verified and confirmed. It is strictly
prohibited to modify an HTS to reduce the customer’s customs fee

ECCN Codes
ECCN
• Name
 Export Control Classification Number
• T-code
 /N/SAPSLL/PR_PRCON_02 (Legal Control tab)
 /N/SAPSLL/PR_PRCON_03 (Legal Control tab)
 The classification is performed upon material master creation by the responsible
users. Without classification, the system will block some transactions from
running correctly

ECCN Codes
ECCN
 Based on the nature of the product (type of commodity, software, technology and
technical parameters). Once the ECCN has been identified, the reasons for
control of the item, which transaction may require an export license based on the
country of destination, and which license exceptions, if any, may apply. Due to
the above explanations, you need to bare in mind the ECCN might undergo
changes in case of a technology change
 5 character alpha-numeric designations used to identify dual-use items
 The ECCN must be provided by the vendors.
 When the material is not listed on the Commerce Control List, it will be set
EAR99 as a general category. They generally ship under designation “No
License Required”. Some countries might request extra licenses to be able to
import the products; also, ScanSource would need an Export license to send
those products to Embargoed or Sanctioned Countries. More information
available on http://www.bis.doc.gov/index.php/regulations/export-administration-
regulations-ear

SANCTIONED PARTY
SCREENING
Lesson 2:

Lesson Objective
 Understand SPL
 View & Review Blocked documents or Business Partners
 Release blocked documents or Business Partners

Sanctioned Party Screening
• T-codes
 /N/SAPSLL/SPL_BLBPLO
 /N/SAPSLL/SPL_BLCD
 The Legal Regulation name is SPLUS
 As ScanSource is a US based company, we have the obligation by law of
screening of parties involved in a commercial transaction. We need to meet the
safety standards of the US Government
 The check includes denied parties, controlled products, embargoed and
sanctioned countries.
 Previously called denied party screening, the check was only done on the sold-to
and the ship-to. Nowadays the data controlled is more spread in order to avoid
fines, penalties and sanctions if we would ship products to dangerous entities or
countries
 When searching a Sales Order, you need to know that in GTS it’s considered as
a Reference Number while the GTS document number is a internal number
generated by GTS

 ScanSource has a contract with a third party company in order to have accurate
and legal reference data. MK Data is the service provider which is providing
through an interface new files as often as the list is renewed. The files are sent a
nightly basis almost every night
 SPL will also monitor the embargoed countries to prevent us from shipping there.
Those countries are currently Cuba*, Iran, North Korea, Sudan and Syria
* To be followed
due to open
new openings
between USA
and Cuba

 SPL check is part of the compliance management subdivision of GTS

Blocked Documents or Business Partners
Display Blocked Business Partners for Sanctioned Party Screening
• T-code
 /N/SAPSLL/SPL_BLBPLO
• General information
 Business partners are all the components of a transactional operation, including
vendors, customers, contacts, etc.
 The first line of verification is the business when creating the master data in
ECC. They will check the background and information of the partner they create
in the system
• Steps to clear the blocks
 Log into GTS and access the transaction code

 Run the transaction, clicking on execute
 Select the business partners to be cleaned up and released. We consider the
check done by the business

 Click on release partner and confirm you want to release them
 Provide the reason of the release and click on transfer. It will clear the list and
you have completed the clearance

• T-code
 /N/SAPSLL/SPL_BLCD
 Run the transaction, select SPLUS as a Legal Regulation, your foreign trade
organization (corresponding to the company code) and Object type BUS2032
then run the report

 The SPL Screen column will be showing red if blocked due to Denied Party
 Select the line you want to review and run the check
 Double-click on the blocked line, it will display the Details for Partner’s
Sanctioned Party List Entry. The screen displays the supposed match
references. You will then need to double-click on the line to see which word has
been triggered by MKData. This is the detailed Analysis for Sanctioned Party List
Entry. This would allow you to check any other supposed spelling and the match
percentage. The percentage might not be a full stopper. Each case must be
analyzed cautiously

 Common sense should be your first check. In case of doubt, you can use the
modern tool like internet to find information about the partner. Do not release in
case of doubt and contact your manager to ask for advice
 Once you are convinced the SO can be released, select the blocked line and hit
the Release button

 Mention the reason of the release and click on transfer. It will clear the list and
you have completed the clearance
 Repeat for each blocked line and save the SPL control you have just performed

• Warning
Caution when releasing a
Business Partner or a Document.
In case of a doubt, check with
your manager and never release a
SO for an Embargoed country

Lesson Objective
 Understand ECCN and the process
 View & Review Blocked documents
 Add a license

ECCN Licensing
ECCN licensing
• T-codes
 /N/SAPSLL/LCLIC05_EXP (Assigned export documents)
 N/SAPSLL/BL_DOCS_EXP (Blocked export documents)
 /N/SAPSLL/CD_DISPLAY (Display Determination Strategies)
 /N/SAPSLL/LCLIC01 (Create Licenses)
 /N/SAPSLL/LCLIC02 (Change Licenses)
 /N/SAPSLL/LCLIC03 (Display Licenses)
 /N/SAPSLL/LCLIC_MAIN (General Licenses)

ECCN Licensing
ECCN licensing
 The Legal Regulation name is EAR which stands for Export Administration
Regulation
 ScanSource has a contract with a third party company in order to have accurate
and legal reference data. MK Data is the service provider which is providing
through an interface new files as often as the list is renewed. The list is usually
reviewed yearly
 A SO will be subject to GTS checks which are independent one from the other. It
can be immediately go through SPL but being stuck for an ECCN issue
 As they are WW data stored, we recommend to restrict the search by inserting
criteria
 When searching a Sales Order, you need to know that in GTS it’s considered as
a Reference Number while the GTS document number is a internal number
generated by GTS

ECCN Licensing
ECCN licensing
 ECCN control is part of the compliance management subdivision of GTS

ECCN Licensing
ECCN Licensing – Assigned Export Document
• T-code
 /N/SAPSLL/LCLIC05_EXP
 When an SO is created in ECC, it’s immediately sent over to GTS in order to
compare the data to the existing licenses provided by MK Data. When the data is
compliant to the legal regulation determination recorded in the system, the
license will instantly be assigned to the document. An compliant order will be
released and will be authorized from shipment
 This transaction will display all the documents contained in a license. The
compliancy is based mainly on the ECCN from each product and the destination
country
 Useful to make governmental reports in order to establish the declaration the
value related to ECCN leaving the country

ECCN Licensing
• Steps to follow
 Log into the transaction
 Mention EAR into the Legal Regulation field
 Restrict the search by inserting criteria
 Execute the Report

ECCN Licensing

ECCN Licensing
ECCN Licensing – Blocked Export Documents
• T-code
 /N/SAPSLL/BL_DOCS_EXP
 This transaction is where the daily monitoring is done. It is displaying all
documents blocked by GTS due to a missing or partial license or incomplete
classification of the product. You will need to review the document and regulation
assignments
 It’s capital to understand this also affects order shipping within the our countries
and not only exportations. National orders could be block to and need to be
verified too
 The report uses a system of green and red lines to draw the attention to the
specific issue. It will be important to understand where the problem is and the
type of block. When you have a red line in the control column, you are facing an
issue related to ECCN

ECCN Licensing
• Steps to follow (Report)
 Select your Foreign Trade Organization
 Select BUS2032 in Object Type (to restrict)

ECCN Licensing

ECCN Licensing
• Steps to follow (1)
 Now that you have identified your documents in issue, you will have to identify
the reason of the block
 Start by selecting the document line you want analyze and click on the glasses
icon to identify which line in causing the block. As mentioned one line will block
everything

ECCN Licensing
 You know now which line is in error, so you will have to step back to access the
display log which will provide the detailed description
 You will need to track down the red lights till you have reach the full error
description. It will also provide you also all information you need to update the
license or the product. You will have the type of license, the date when the check
was completed, the product number, the ECCN and the destination countries. On
a early stage, we were also filtering the partner but as we were also making a
SPL background check on them, it was redundant.

ECCN Licensing

ECCN Licensing
• Type of blocks and resolutions
 In case of a license issue with message “could not find import/export license”,
you will need to change the license specified in the log. A refresh of the screen
will manually assign the updated license to the document
 In case of a shipment for free goods, there is a specific license which will apply.
The error in the log will be “values couldn’t be determined”. You will need to
maintain the zero value license and manually assign the license to the document
 In case of a missing product classification, you will need to inform the Product or
Asset Manager to duly classify the ECCN
 To resolution of those issues are mentioned in the upcoming slides

ECCN Licensing
ECCN Licensing – Licenses Determination
• T-code
 /N/SAPSLL/CD_DISPLAY
 Display Determination Strategies will display the rules specified by license type
and by country. It will help to identify which products are authorized for a specific
country
 It will also display all licenses available for the destination country by ECCN
numbers

ECCN Licensing
ECCN Licensing – Licenses Determination
• Steps to follow
 Fill country of departure/destination
 In case you know the ECCN, fill control list number

ECCN Licensing
ECCN Licensing – Create, maintain and display licenses
• T-code
 /N/SAPSLL/LCLIC01
 In case none of the existing license is sufficient to automatically assign to
documents, ScanSource has decided to have general licenses created. In order
to have the a correct flow in the business and to prevent the orders from being
stuck for too long, those license will have specific denomination. The usage of
those licenses are regularly reviewed by some managers in operations
 As Europe is the first office to operate due to time difference, they will usually be
the office creating the monthly license. Other location will only update the
existing licenses. Those ScSc made licenses are WW
 Those licenses are usually created for trusted countries

ECCN Licensing
 Nevertheless, some destination countries or some product lines are more tricky
to handle. Especially, the category dual use which could be used as well for civil
use than for military purpose. In case of doubts, you will have to follow the
process exposed in the flow chart we saw earlier
 When the license approval needs to go through the government way, the request
must be recorded in GTS. Once approved you will need to convert the request
into a proper license. It’s indispensable to record and track each license. This
process can take months for being completed. This must remain an exceptional
procedure as we would prefer to rely on pre-obtained licenses
 Sometimes, vendors have gone through the governmental process and have
agreed for us to use them. They have been created in the system and are
updated when the vendors inform us. They will provide us with the product
number, the ECCN and the authorized destination country

ECCN Licensing
• Steps to follow (Creation - 1)
 Log in the creation screen
 Select EAR as legal regulation
 The license type is generally IVL
 Import/Export License is the name to be given to the license. When creating the
monthly general license, it needs to follow the WW common naming convention
YYYYMMDD-USD. USD has no impact on the currency as not checked
 In case you have expired the previous license, you can still copy information from
it by using it’s name as a template. It will import data to the new license avoid
you to manually have to insert data
 Hit Enter

ECCN Licensing
 Insert your external number where requested. When creating a vendor or a
governmental license, you will use the number provided by the institution. When
creating an internal ScanSource license, you can use the YYYYMMDD-USD
name
 Select the validity of your license. Keep in mind to have larger dates than the
month because the date of check might not be included it the release month. If
you restrict too much the validity date, you will increase the number of hits and
you will have to extend many time the validity

ECCN Licensing
 In the status box, you will need to go through three status to have your license
correctly activated. License created is automatically done when you perform the
previous steps; you need then to click on license application submitted as you
would be doing for a governmental license. Finally complete this step by
selecting License active; be careful not to select license expired because there is
no way back. There is a record of each modification
 In case it’s a governmental license, do not activate until official confirmation

ECCN Licensing
 We now need to establish the check attributes in the left column as follow. First
the maximal value of the license, use 999.999.999.999.999,00USD
 Second step is to include the material which will be authorized under this license.
Use the insert row for each material and mention the usual Logical System
Group GRPLOGSYS

ECCN Licensing
 Now, the control classes field will allow you to include the ECCN to be authorized
by the license. Insert a row for each of them.
 Be careful, the format of the ECCN is case sensitive and must match the master
data. Any error will trigger the below message

ECCN Licensing
 The final data to maintain is the country of departure and destination. Make sure
your own country is always listed as well as the country you are shipping to
 Save the license and you are done

ECCN Licensing
• Steps to follow (Change - 1)
 You will need to maintain the license in some occasion. Prior to create your new
license, you will need to expire the existing license to avoid conflicts and save
 Another case you will have to update a license is when you need to add
information to it when you have the error “could not find import/export license” in
the check results. You will need to add any of the non listed materials, ECCN,
Departure/Destination Country and check that the date of the check is within the
validity period

ECCN Licensing
ECCN Licensing – Manually assign a license
 Some license types, mainly zero values licenses, will not be automatically
assigned to the document and therefore you will need to manually do it from your
display blocked export document screen
 Select the document for which you have just completed the license update and
click the change control data button

ECCN Licensing
 As the log is providing you the information about the license, you only need to
look for it in the list

ECCN Licensing
 Click on the specific license and click on adopt license for item button
 Validate your choice in the window that has just appeared and save. Refresh
your display document screen and click on the green mark of the validation pop
up screen

Course Summary
After completing this course you have learned to:
 Understand EAR regulations
 Process Sanctioned Party Hits
 Process ECCN Licensing Requirements

LOG10 – Import and Export Compliance LATAM

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