Due to presence of global companies, there is a need to do procurement of goods and services which are strictly internal procurement but at the same time can be treated as external procurement in many ways. There are many variations in which internal procurement can be done depending on the needs of the company.
Internal procurement can be broadly categorized as stock transfer and stock transport order. Stock transfers are a simpler mechanism to do internal procurement without using a purchase order. In stock transfers, goods are issued from one storage location to another storage location. Stock transfer can happen in 2 ways: one step transfer and 2 step transfer.
One step transfer is used when in transit goods movements need not to be tracked. There is goods issue from one location and there is goods receipt at the same time at another location. This kind of stock transfer is used when distance between the 2 locations is not much.
In 2 step stock transfer, goods issue from one location happens in first step. Then goods are in transit till goods are received at another location. Then in 2nd step, goods are actually received when they arrive at the other location. This kind of stock transfer is used when distance between the 2 locations is significant and in transit movement of goods needs to be tracked.
In SAP, stock transfers are configured to be used when internal procurement is done within a legal entity. When internal procurement is done between 2 different legal entities who are controlled by one business house then stock transport orders are used. Here stock transfers are done using a purchase order. So even though stock transport orders are internal procurement instruments, nevertheless by nature they are very much like external procurement. We will see stock transport orders in nest post.