19/11/2015 Third­party process overview | SCN

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SAP ERP Sales and Distribution (SAP SD)

Third­party process overview

Posted by Joanna Grobelna in SAP ERP Sales and Distribution (SAP SD) on Jun 8, 2013 8:54:03 PM

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In third­party process the delivery of the goods required by the customer is not done by sales organization where
customer orders. Instead, the request of the goods is forwarded to an external vendor who sends the material directly
to the customer.

Here is what happens in third­party process:

1. Customer orders goods and a sales order is created in a sales organization
2. Purchase requisition is created automatically when sales order is saved.
3. Purchase order is created at the vendor in the MM purchasing application (manually or automatically)
4. If the vendor does the outbound delivery to the customer, the goods receipt can be posted in the system
5. Invoice receipt is created (invoice from vendor)
6. Invoice to customer is created (order based invoice)

SALES ORDER
Third­party process is triggered when the sales order with third­party item is created. Depending on settings done in
customization third­party item categories can be automatically determined by the system (automatic third­party
processing) or they can be changed from standard item to third­party item category in sales order (manual third­party
processing).

Sales order type used for third­party – OR (standard order)

Item category for third­party – TAS
Schedule line category for third­party – CS

Let’s look deeper into the settings in the system done for automatic and standard third­party process:

ITEM CATEGORY TAS:

Create PO Automatic indicator is not marked in TAS. ALES is an item category for third­party processing where this
indicator is marked.

ITEM CATEGORY DETERMINATION

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Item category TAS will be determined automatically for standard order (OR) and item category group BANS (third­party
item). Item category group can be found in material master, Sales: Sales org.2 view.

SCHEDULE LINE CATEGORY CS

Data: Order type = NB, Item Category = 5 and Acct.AssgntCat = X is the data for Purchase requisition. If it is filled like
above the purchasing requisition will be created automatically as standard purchasing requisition (NB), with item
category S and acc.assign cat X. The mapping of item category (from 5 to S) can be found in IMG: MM­>Purchasing­
>Define External Representation of item categories. The definition of account assignment category can be found in
IMG: MM­>Purchasing­>Account assignment­>Maintain acc.***. categories

SCHEDULE LINE CATEGORY DETERMINATION

THIRD­PARTY PURCHASE REQUISITION

After saving sales order with item category TAS the purchase requisition is automatically created. In order to see the
document go to: Environment ­> Status overview and expand data for item, then expand data for purchase requisition
as well:

Double click on the requisition number and you will be taken to the purchase requisition document. The other way is to
go to schedule line where you can find the purchase requisition number.
If third­party item has more than one schedule line with confirmed quantity > 0, then purchase requisition is created for
each schedule line.
It is wise to have the vendor determined in source of supply at this stage of the process (i.e. source list)

MANUAL PURCHASE ORDER

The purchase requisition needs to be converted into purchase order in MM (t­code me21n). The purchase order
document type is NB (standard order), item category S, that must be assigned to account. Thus account assignment
category needs to be given. In this example it is X (automatically taken during conversion from purchase requisition, as
it was defined in item category CS).
The definition of acct assignment category can be found in IMG: MM­>Purchasing­>Account assignment­>Maintain

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acc.***. categories:

Note: There is also a third­party account assignment category created in the system and its definition looks as follows:

The mapping of item categories: IMG: MM­>Purchasing­>Define External Representation of item categories:

AUTOMATIC PURCHASE ORDER

As it was written before – the purchase requisition is created automatically when sales order is saved. It is possible to
automatize the next step, the creation of purchase order, as well. The ALE function is used for that purpose. The
indicator for the automatic creation of purchase order is not set for TAS item category. However, there is a special item
category – ALES which can be used instead in third­party process. The indicator for the automatic creation of purchase
order is marked in ALES by default.

Prerequisites for the automatic creation of purchase order are as follows:

The indicator automatic purchase order needs to be marked in item category definition (item category ALES has
it by default)
Unique source of supply needs to exist for third­party item
At least the document type for the purchase order must be assigned for Sales organization in customizing under
Enterprise structure­>Definition­>SD­>Define, copy, delete, check sales organization

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If all above prerequisites are set up correctly, purchase order will be created when sales order is saved. Then, it can
be found in document flow in sales order.

GOODS RECEIPT
Since during third­party processing goods are moved directly from the vendor to the customer, inventory management
is not affected by this event. However, if sales department would like to document and enter delivery to the customer in
the system it is possible depending on settings in customization. If account assignment category 1 is used in item
category definition, goods receipt is not possible, as the goods receipt indicator is not set for this account assignment
cat. If account assignment category X is used, goods receipt is possible.

The goods receipt posting (t­code migo) would have the following effects:
The warehouse stock is not updated
The goods receipt is posted directly to consumption and the consumption quantity is updated
The order value is posted to a GR/IR clearing account for invoice verification purposes
The goods receipt can be traced in the purchase order history

The goods receipt posting should happen when the vendor reports that outbound delivery was executed or customer
confirms that delivery arrives.
Since no flow of goods occurs in the enterprise, the goods receipt posting results in updates on value basis.

INVOICE RECEIPT
The invoice verification with reference to purchase order needs to be created when invoice from vendor arrives to
enterprise (t­code miro). The value and, if goods receipt was done earlier, the quantity are proposed by the system.
When the incoming invoice is posted following are updated:
Purchase order history
G/L accounts
The vendor account in subledger accounting, as well as the liabilities account (general ledger)

CUSTOMER BILLING DOCUMENT

Once invoice receipt has been entered, the customer can be billed as well (t­code vf01). Since an outbound delivery
doesn’t exist for the third­party the invoicing will be order based. In the item category TAS definition, the billing
relevance indicator is set to F by default. That means: relevant for order­related billing document: status according to
invoice receipt quantity. That is, the system allows invoicing the order only when vendor’s invoice has been processed
in invoice verification.
The customer invoice is created for the quantity specified in the vendor invoice. The setting in the copy control for the
third­party item category from sales document to billing document specifies that the quantity from the invoice receipt is
transferred to the billing document instead of the order quantity (billing quantity indicator in copy control is F)

28347 Views Products: sap_erp_sales_and_distribution Topics: enterprise_resource_planning Tags: order, sd, third­party

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23 Comments

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Tomasz Domanski Jun 10, 2013 11:54 AM

Does this work in std SAP with different MM setups eg. Scheduling Agreement w. Delivery Schedule
instead of Purchase Requisition + Purchase Order? Have you tried this one also?

Like (2)

Joanna Grobelna Jun 10, 2013 5:24 PM (in response to Tomasz Domanski)

Hi,

It is not possible to choose other "order type" than purchasing requisition type in schedule
line category (purch. doc. cat. = B), so you cannot have the scheduling agreement w.
delivery schedule instead of Purchase Requisition + Purchase Order. However, it is
possible to create scheduling agreement with reference to the purchasing requisition that is
created when Sales order is saved. In such situation, you have scheduling agreement
number in Sales order history. Unfortunately, you cannot use ALE function for automatic
creation of this scheduling agreement, as in Sales organization definition you can choose
only purchase order type (purch. doc. cat. = F).

As far as I know, there is an additional solution from SAP ­ ACS (Automotive Consulting
Solution) that makes the third­party process with scheduling agreements (on both, SD and
MM sides) possible. For more info, please, check the links:

http://www.sap.com/germany/campaigns/2010­10­automotive­acs/en/resources/index.epx?
tab=sales
http://www.saptechies.com/thirdparty­order­processing­scheduling­agreements­633503/

Regards,
J.

Like (3)

Sundar S Feb 27, 2014 2:28 PM (in response to Joanna Grobelna)

Good Job Joanna, keep it up

Like (0)

Karuna Ravuri Jul 1, 2013 1:30 PM

Joanna,
helpful one..

Like (0)

Joanna Grobelna Jul 9, 2013 4:18 PM (in response to Karuna Ravuri)

Thanks!

Like (0)

Khushi Mughal Sep 8, 2013 3:01 PM

I have enjoyed and learnt from your blogs.

Keep posting...

Like (2)

venu gopal Sep 9, 2013 6:38 AM

Hai thanks a lot for sharing this

Like (0)

Naresh Krishnamoorthy Sep 9, 2013 7:59 AM

Good One...Thanks.

Best Regards,
Naresh K.

Like (0)

Joanna Grobelna Sep 19, 2013 8:27 PM

Thank you all!

Like (0)

Iqbal Ahmed Jul 2, 2015 1:18 PM (in response to Joanna Grobelna)

Thanks Joanna

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Its really valuable information related to Third Party

Like (0)

Sriram D Sep 20, 2013 10:19 AM

Jonna,

Wow your post is quite good and informative.

I have a scenario
Think that we are good and done upto invoice. If the vendor does the delay at sending the invoice to
the enterprise what do u recommend in this scenario?? If the enterprise delay in posting the invoice
to the customer, you know the consequence..

i heard about Advance Shipment Notification ?? have you configured this ?? if so could you please
explain this as well..

Sriram.

Like (0)

Joanna Grobelna Sep 24, 2013 8:51 PM (in response to Sriram D)

Hi Siriam,

As you can read in my blog above, the billing relevance indicator is set to F by default in
item category TAS. That means: relevant for order­related billing document: status according
to invoice receipt quantity. That is, the system allows invoicing the order only when vendor’s
invoice has been processed in invoice verification. Of course it's the standard setting. As I
understand, your enterprise would want to have the possibility of creation the customer
invoice irrespective of invoice receipt. If you change this indicator (i.e. for B ­ Relevant for
order­related billing ­ status acc.to order qty) it is possible to create customer invoice before
invoice receipt. I would suggest to test this on your test environment and check if that is
suitable for you.

Unfortunately, I don't know ASN and have never configured that process.

Best regards,
J.

Like (0)

venu gopal Sep 25, 2013 3:57 AM (in response to Joanna Grobelna)

Dear Joanna

I found one thing in some links ,, ex:suppose if i created 100 qnty in sales order
and in Me21n ( po) if i changed qnty automatically it will reflect in sales order
but if we changed in sales order level but it wont reflect in PO PLZ comment on this
plz check this links
http://help.sap.com/saphelp_erp60_sp/helpdata/en/dd/5602c8545a11d1a7020000e829fd11/content.htm
http://scn.sap.com/thread/3176487
http://scn.sap.com/thread/1839363

Thanks a lot

Like (0)

Joanna Grobelna Oct 18, 2013 11:41 AM (in response to venu gopal)

Hi,

I have checked the change order quantity case and my comments are as
follows:

1) ALE scenario (when the PO is created automatically when you save

the SO) ­ if I do the change in qty in Sales order it is populated to
purchase requisition and also PO is updated.
2) Manual PO creation ­ if I do the change in qty in Sales order it is
populated to purchase requisition but PO is NOT updated.

Unfortunately, in both scenarios ­ if I do the change in PO it is not

populated to SO/PR (only the confirmed qty changes). I don't know the
reason but in your links it states that it should work... Maybe some note
would be helpful (as discussed in the second link you gave).

I especially suggest reading the note: http://www.stechno.net/sap­

notes.html?view=sapnote&id=550192 some helpful things are described
there.

BR,
Joanna

Like (1)

Iqbal Ahmed Jul 2, 2015 1:23 PM (in response to Joanna Grobelna)

Hi Joanna

http://scn.sap.com/community/erp/sd/blog/2013/06/08/third­party­process­overview 6/8
19/11/2015 Third­party process overview | SCN

Can u tell me If i change Something in PO then how its

automatically update in Sales Order. Where is the Control?
I tried a lot but i could not find the reason.

Thanks n Regards
Iqbal

Like (0)

Shiva krishna Jun 4, 2015 7:55 PM (in response to venu gopal)

Hi Venu,

For sales order if you want to change the quantity and the same changes
if you needed then to any increase in qty u need to add 1 more line item
with the same material and you can see with these effects in p.o.

Like (0)

Aniruddha Tripathy Apr 17, 2015 11:13 PM

Nice Document, Thanks for sharing.

Like (0)

Jignesh Mehta May 4, 2015 9:56 AM

Good document Joanna, thank you for sharing, specially the details of Account Assignment Category
and automatic Purchase Order.

Just a comment, I believe in Item Category TAS, is the Billing Relevance is set to G, while creating
Customer Invoice, system will refer to quantity from MIGO (Statistical Good Receipt) and not MIRO
(Invoice Verification).

Thanks,
Jignesh Mehta

Like (1)

SAP Light May 11, 2015 3:20 PM (in response to Jignesh Mehta)

Hi

Billing relevance G will be configured in the Third Party Process With Shipping Notification
(the other one being Without Shipping Notification) which is, if the vendor delays sending
the Invoice then the business asks the vendor to send the shipping notification instead.
When the Billing relevance is G, the system wont allow creation of Customer Invoice without
MIGO.

And in the copy control of OR to F2, at the Item level the Billing Qty is configured as E. This E
here ensure that wile creation of the Cust Invoice the qty. is copied from MIGO .

But as a standard, the Billing Relevance is F,as mentioned in the doc.

These are my 2 cents. Hopefully, useful.

Joanna, please correct me if i am wrong.

SAP

Like (3)

Joanna Grobelna May 18, 2015 8:15 PM (in response to SAP Light)

Hi SAP Light,

yes, I believe what you wrote is true. Thanks for your comment!

Regards,
J.

Like (0)

Maulik Bhavsar May 29, 2015 12:08 PM

Useful document and detailed insight in process.

thx.

Like (1)

Sourabh Panditrao Jul 17, 2015 10:53 PM

Good information , easy to understand

Like (1)

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