Inter-Company Sales v/s Inter-Company Stock Transfer v/s Third Party Sales

[Former Member]

Hi, I understand the basic business processes between Inter-Company Sales, Inter-Company Stock Transfer and Third Party Sales.

The Inter-Company Sales is sales process between two companies having different company codes. A customer orders an item to Company A which can't be delivered by Company A, so Company A generates PO to Company B which supplies the item to Company A and finally Company A delivers it to Customer.

The Inter-Company Stock Transfer is stock transfer from one plant to another where the plants belong to two different company codes. Now all Inter-Company Sales process covers Inter-Company Stock Transfer process.

Third Party Sales process is process where a customer orders an item to Company A but Company A ca't deliver the item to the customer. So Company A generates a PO to Company B which in turn directly delivers the item to customer. After the goods receipt verification at customer end Company A pays to Company B.

Now looking at the these basic process steps I just want to know what is the basic difference between Inter-Company Sales and Inter-Company Stock Transfer ? Is this something that when there is a need to deliver an item to the customer and not available in that company, the Inter-Company Sales takes place but when there is no customer order but the companies want to maintain stock, the Inter-Company Stock Transfer takes place ? Please clarify based on my above understanding.

[former_member550050 · Accepted solution]

Hi

I will explain you with example

Say there are 2 org structures

Company code 1000 sales org 1000 and DC 10 and division is 00 and plant 1000

Company code 2000 sales org 2000 and DC 20 and division is 00 and plant 2000

Now A customer Say X lies in sales area 1000,10,00 and a sales order is created for a material ABCD for this customer X in sales area 1000,10,00

Now if the plant 2000 supplies this material ABCD for this order to the customer X in sales area 1000,10,00 then it is intercompany sales

IF the plant 2000 transfers the stock to plant 1000 ands (then if the plant 1000 supplies to this sales order for customer X) then it is intercompany STO

If the material is supplied from a external vendor directly to the customer X without involving your plants then it is third party sales

Now all Inter-Company Sales process covers Inter-Company Stock Transfer process

No not at all

Both are entirely different

Inter-Company Stock Transfer process doesnot involve Inter-Company sales

Similarly Inter-Company sales does not involve Inter-Company Stock Transfer process both are different

Third party means it is an external vendor not your other company code

All three are different

If a plant belonging to one company code directly makes a delivery for a customer to the sales order created in another company code then it is intercompany sales

the movement of stocks between plants of 2 different company codes is inter company STO

Regards

Raja

[Former Member · Accepted solution]

Hi Ramanathan, Thanks for your elaborative explanation. From your explanation I understand the following -

• Inter-Company Sales: Same client, different company codes - The item directly reaches the customer from second company instead of reaching from first company where the customer places order.

• Third Party Sales: Different clients, different company codes - The item directly reaches the customer from second company (Vendor which is under different client) instead of reaching from first company where the customer places order.

• Inter-Company Stock Transfer: Same client, different company codes - Stocks are transferred from one company plant to another.

Am I correct ? Also does revenue or profitability analysis take place in Inter-Company Stock Trabsfer process ?

Thanks.

[former_member550050 · Accepted solution]

Inter-Company Sales: Same client, different company codes - The item directly reaches the customer from second company instead of reaching from first company where the customer places order.

Very correct

• Third Party Sales: Different clients, different company codes - The item directly reaches the customer from second company (Vendor which is under different client) instead of reaching from first company where the customer places order.

I dont understand the different clients or different company codes here

Third party means the goods directly reach your customer from your external vendor without it reaching your plant

This means we dont make any delivery in third party

The Third party external vendor can be a different client with or without SAP

Third party means just think of an external vendor dont confuse your self with different client or company code etc

Inter-Company Stock Transfer: Same client, different company codes - Stocks are transferred from one company plant to another.

Very correct

Also does revenue or profitability analysis take place in Inter-Company Stock Trabsfer process ?

Yes it happens

Regards

Raja

[Former Member · Accepted solution]

Dear raja,

with reference to your answer

Also does revenue or profitability analysis take place in Inter-Company Stock Trabsfer process ?

Yes it happens

The material is just transfered within the plant and it is not sold then how will there be profit in the process.Then how come profitablility analysis of the same.

Can you please explain the same.

Regards,

Nithin.

[Former Member · Accepted solution]

Ramanathan, Thanks again. By different client I wanted to mean that the vendor (company) doesn't belong to the client where the company belongs which received the customer order. But for Inter-company sales the companies must be under same client. For Third Party then vendor (company) might have different client if it had SAP or it might not fall under any client concept.

Thanks much.

[Former Member · Accepted solution]

Hi Nithin, in Inter-Company Stock Transfer the materials / Items are getting transferred from one company to another. Since both the companies maintain separate finacial and legal entities, so there must be revenues and profitability analysis. I guess you are getting confused with Intra-Company (not Inter-Company) stock transfer where both the plants fall under same company code and materials / Items are transferred from one plant to another. In Intra-Company Stock Transfer there is no revenues or Profitability analysis, only book transfer takes place.

[former_member550050 · Accepted solution]

Hi Nithin

The material is just transfered within the plant and it is not sold then how will there be profit in the process.Then how come profitablility analysis of the same.

No

In intercompany STO m,a sales process happens

supplying plant is a vendor and receiving plant is a customer the receiving plant rises a PO on the supplying plant then a supplying plant makes a delivery and then a commercial bill that is called intercompany bill

Supplying company code/Plant will make a commercial bill that is called intercompany bill on the receiving company code/Plant

It is not jsut a stock transfer and it is stock transfer with a margin

Dear sumoysen

By different client I wanted to mean that the vendor (company) doesn't belong to the client where the company belongs which received the customer order. But for Inter-company sales the companies must be under same client. For Third Party then vendor (company) might have different client if it had SAP or it might not fall under any client concept.

Yes correct if you feel your issue is answered you can close the thread

Regards

Raja

Edited by: ramanathan raja on Sep 22, 2009 7:28 PM

[Former Member · Accepted solution]

Dear raja,

I completely agree with you on the process followed. But you mean to say, if there is margin involved then this will be valid.For example, if a material cost is Rs.100 in one plant and Rs.120 in another plant.If the material is transfered then there will be profit.But when you do a goods issue during stock transfer, the difference will post to a price difference account.thereby, the margin can be calculated.

Refering to your case, you mean to say that the condition VPRS to be added in the pricing procedure of stock transfer so as to see the profitablility of the material.

Regards,

Nithin

[former_member550050 · Accepted solution]

Hi Nithin

Refering to your case, you mean to say that the condition VPRS to be added in the pricing procedure of stock transfer so as to see the profitablility of the material.

Yes go to V/08 and select the pricing procedure ICAA01 which is the SAP standard pricing procedure for intercompany

You will find VPRS there

Condition types IV01 and IV02 represents the price for the supplying company

Regards

Raja

[Former Member · Accepted solution]

Hi Raja,

Can you plz exaplain the diff between VPRS and EK01.

Both of these condition types exist in ICAA01 (Intercompany) pricing proc.

I know both these cond. types represent cost price of material. But want to know more about EK01 and its application

thnx n advance

regards,

Sagar

[former_member550050 · Accepted solution]

Dear Sagar

Please dont ask different qns in already created or closed threads and that diversifies that subject

If you open a new thread for your queries it gives a chance to many others to give excellent suggestions

Difference between VPRS and EK01 The main difference is

EK01 is used in Make To Order scenario where you do sale order costing

VPRS is used in Make To Stock scenario where your material cost is updated in Accounting1 view based on purchase cost and subcontracting cost

This is the basic difference applicationwise and configuration wise

EK01 in V/06 will have condition category as Q that is costing where as

VPRS in V/06 will have condition category as G that is internal cost

In pricing procedure EK01 will have requirement 2 and that will be in the first step and a manual condition and this value will become the base for entire calculation in MTO

VPRS will have requirement 4 and it is statistical condition and for information purposes only

Regards

Raja

[Former Member]

Moreover,

In Intercompany stock transfer, receiving plant (works as customer) creates PO in the name of supplying plant. (works as vendor)

In Intercompany sales process, delivering plant (In Sales Org where plant is assigned) creates sales order in the name of receiving plant / company (work as customer)

regards,

Sagar