Issue / Background

We would like to request IT’s urgent assistance to engage the Stellar Team to review and confirm the correct system transaction flow for cases where a component is issued to a subcontractor and subsequently returned embedded in a finished item.

The current scenario involves the following process:

1. Supply Chain purchases the key lock from Supplier A.
2. The key lock is received into the system.
3. The key lock is issued to Supplier B / subcontractor, who uses the key lock as part of the cabinet fabrication.
4. Supplier B completes the cabinet fabrication, installs the key lock into the cabinet, and delivers the completed cabinets back to us.
5. The completed cabinets are received through a standard GRN.

Current System / Accounting Issue

Accounts has identified that the current transaction flow does not properly relieve the WIP – Sub Contractor balance when the completed cabinets are received through the standard GRN.

As a result, the WIP – Sub Contractor balance remains open, which has a direct impact on the financial statements. Accounts is currently required to post manual journals to rectify the accounting impact.

We understand that issuing the key lock to the subcontractor is not the issue. The issue is the subsequent system treatment when the subcontractor returns the finished cabinets with the key lock already embedded in the completed item.

Supply Chain currently does not have clear system guidance on the correct transaction to perform for this scenario. Therefore, we need Stellar to confirm the appropriate end-to-end system flow rather than Supply Chain continuing to use transactions that may result in open balances.

Request to IT / Stellar Team

Please urgently engage the Stellar Team to review this scenario and advise on the correct system transaction/process, including:

• Correct transaction when the key lock is purchased from Supplier A.
• Correct transaction when the key lock is issued to Supplier B / subcontractor.
• Correct system treatment when Supplier B returns the completed cabinet with the key lock embedded in the finished item.
• How the WIP – Sub Contractor balance should be automatically relieved/netted off upon receipt of the completed cabinets.
• Whether the standard GRN process needs to be supplemented or replaced with another transaction.
• The correct treatment for similar component-to-subcontractor scenarios going forward.
• Confirmation of whether any system configuration or process changes are required in Stellar.

Important Interim Action

As requested by Accounts, Supply Chain will hold off on posting further ADJ-QTY transactions for this type of scenario, specifically where a component is issued to a subcontractor and subsequently returned embedded in a finished item, until the correct system treatment is confirmed.

This is to prevent further open balances from accumulating in WIP – Sub Contractor while the issue is being investigated.

Additional Follow-up Required

1. Stellar discussion timeline
   Please provide the target date for discussion with the Stellar Team and include the Accounts team directly in the discussion.
2. GRN references
   For the entries currently requiring correction, Supply Chain will provide the relevant GRN / packing slip lines corresponding to cabinets containing FAP-LOCK-G, so that the accounting correction can be accurately matched to the actual receipts.
3. PO 714173 – Remaining 690 pcs
   Please also advise on the correct transaction treatment for the remaining 690 pcs under PO 714173, specifically whether this quantity should be placed into WIP – Sub Contractor so that it can subsequently be properly netted off.We would appreciate IT’s urgent support in coordinating with Stellar and providing the confirmed transaction procedure to both Supply Chain and Accounts for implementation and future reference.