Third-party process overview

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

Customer orders goods and a sales order is created in a sales organization

Purchase requisition is created automatically when sales order is saved.

Purchase order is created at the vendor in the MM purchasing application (manually or automatically)

If the vendor does the outbound delivery to the customer, the goods receipt can be posted in the system

Invoice receipt is created (invoice from vendor)

Invoice to customer is created (order based invoice)

SALES ORDER
Third-party process is triggered when the sales order with third-party item is created. Depending on settings done in
customization third-party item categories can be automatically determined by the system (automatic third-party processing)
or they can be changed from standard item to third-party item category in sales order (manual third-party processing).
Sales order type used for third-party OR (standard order)
Item category for third-party TAS
Schedule line category for third-party CS
Lets look deeper into the settings in the system done for automatic and standard third-party 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


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 inIMG: MM->Purchasing->Account assignment->Maintain acc.***. categories
SCHEDULE LINE CATEGORY DETERMINATION

THIRD-PARTY 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 third-party 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 (t-code 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
acc.***. categories:

Note: There is also a

third-party 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 third-party
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 third-party item

At least the document type for the purchase order must be assigned for Sales organization in customizing
underEnterprise structure->Definition->SD->Define, copy, delete, check sales organization

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 (t-code 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

(t-code 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 (t-code vf01). Since an outbound delivery doesnt
exist for the third-party 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 order-related billing document: status according to invoice receipt quantity.
That is, the system allows invoicing the order only when vendors 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)