Third Party Sales
The Third Party processes consist on a sales process in which a third party partner is involved. In third-party order processing, your company does not deliver the items requested by a customer. Instead, you pass the order along to a third-party vendor who then ships the goods directly to the customer and bills you. A sales order may consist partly or wholly of third-party items. Occasionally, you may need to let a vendor deliver items you would normally deliver yourself.
In SAP® ERP, Third Party sales process involves a customer placing an order which is recorded in SAP as a regular sales order. The material, since it is not supplied by company and directly by a vendor, is a 3rd party item. This is ensured by item category in Sales order where the material picks up the item category that is configured to generate a purchase requisition. Standard Item category for 3rd party sales is TAS. The SAP standard way of achieving this is to mark the material’s item category group as BANS (Third Party item) in material master - Sales org view 2. This ensures that an SAP Standard order (OR) when receives this material, assigns item category TAS to it.
Process Flow
Below diagram shows the process on a whole for third party sales. The parties involved are customer, the company (where SAP ERP configuration is being discussed) and the supplier.
Configuration Points
The Process flows from SAP SD module to SAP MM module. The configurations required to enable this process in SAP includes configurations in SAP SD as well as MM module and there are some requirements at master data level.
Sales and Distribution Configurations
Since the process originates at sales side with customer placing an order, there are certain configurations required at SD side. When customer places an order, it is up to the company to decide how it will be fulfilled. This indicates that there are no changes at customer master level. As mentioned earlier, an order can comprise of items that is a mix of items fulfilled by company and part of them supplied directly by vendor. Hence there is no difference at order header level as well.
The first level of indication that it is a third party item is at sales order line item level – item category. The item category configurations drive the process. Hence the configurations at SAP SD for this process are
- – Item category
- – Schedule line category
- – Item category determination
- – Schedule line category determination
Item Category
An item category configuration aide in 2 things
- – Invoice with respect to order since there is no delivery at company in third party process
- – Determination of schedule line category that is configured for purchase requisition generation.
Schedule Line category
The schedule line category determines further processing of a schedule line for any item including the movement type if applicable. In a schedule line category, it is determined if a purchase requisition has to be generated automatically based on requirement. The Purchase requisition type is the type of PR that will be created. Please note the account assignment has to be ‘X’ since the goods are not received into our stock and is dispatched directly to the customer by vendor.
Schedule Line category determination
The schedule line category that generates the PR has to be assigned to the line item category.
Item category determination
The usual setup is that the item category that is required has to be determined automatically based on material’s item category group which indicates that it is a third-party material. This can however be changed as per business process – end requirement is that the required item category should be there on order for purchase requisition to get generated.
Note: This is SAP Standard setting.
Materials Management Configurations
In the materials management, the purchase requisition and purchase order should be configured completely. There is no separate configuration required for this process in MM side.
Master Data Pre-requisites
As discussed earlier, only materials that are on a sales order with item category configured for third party sales get into this process. Material master should be configured to ensure item category is determined correctly.
Item category group in Material Master – Sales View 2
SAP Standard is to have BANS as material’s item category group that indicates that this is a third party item.
Once the purchase requisition is created, the standard practice is to create a PO automatically thru transaction ME59N. This, however, has few pre-requisites from master data perspective which are listed below.
Automatic PO selected in Purchasing View
Automatic PO selected at Vendor Level – Purchasing Data
Purchase Info Record / Fixed Vendor
A purchase info record should be available for the material and vendor or a fixed vendor assignment has to exist for the material. Check for Purchase Info record thru transaction ME13.
Note: When a material is directly supplied to the customer by the vendor (commonly referred to as supplier), the material code is kept separate from own inventory. This is most common business practice for ease of maintenance.
Others
Other small settings that are required are that a price should exist for the material and the vendor for Purchase Order.
Business Process in SAP
The process starts in SAP with creation of sales order and ends with invoice generation for customer.
The steps are:
- Create a sales order using transaction VA01. Check item category for material is determined as ‘TAS’.
- Check the schedule lines, it should have schedule line category as ‘CS’.
- Ensure completeness and save the order. View the order in transaction VA03 and check schedule lines – it should have a Purchase requisition number mentioned in it.
Note: If the sales order is complete but blocked due to any reason like credit check, then the purchase requisition is generated only after the order is released (like thru transaction VKM3 to release from credit check pass).
- Now go to transaction ME59N and specify Purchase Requisition to be converted to Purchase Order and execute. System provides the Purchase Order if all settings are complete.
Note: You can use ME57 to assign a Purchase Requisition to a vendor if there are no purchase info records or fixed vendors assigned for it or go to ME52N, specify Purchase Requisition and edit in tab ‘Sources of Supply’.
- Now process inbound invoice for the Purchase Order thru MIRO transaction.
- Now invoice customer thru VF01 by specifying sales order.
The sales process is complete.
Extra bytes
- If one tries to invoice customer even before a Purchase Order is generated (just Purchase Requisition exists), then system will not allow to invoice and give error ‘The item is not relevant for billing’.
- In ME59N, user can also specify Sales Order to generate Purchase Order.
Beyond SD
Once accounting document is generated, go to F-28 to post an incoming payment. Enter the amount and knock-off against correct G/L post. Once done, the document flow will show status as ‘cleared’ for accounting document.
End of Document