Third party plant

[Former Member]

Hi All,

Of late, I heard a term "Third party plant".

What is meant by "Third party plant"?

Is it a word to refer our consignment vendor?

Kindly clarify.

Regards,

Raja Durai

[former_member183379 · Accepted solution]

Excise is Dependent.

In third party plants :-

• Production happens in plants.

• Procurement is Optional as per business or its happens from main plant after transferred to Third party plant for production via STO.

• Sales is again Optional/Business as all semi-finished and Finished goods will be moved to main plants VIA STO.

Accordingly Excise/CIN transactions happens.

[former_member183379]

Durai Raja  

Welcome to SCN.

In General, Some companies classifies plants as follows as per there resource and manufacturing process.

Own Plants = All activities controlled by Own resources

2nd Party Plant = some activities controlled by Own and Some activities bye Third Party resources.

3rd Party Plants = All activities controlled by Third Party resources. (Likely Contract)

It is totally depending on business process of a company and it may vary accordingly.

Regards,

Bhg

[Former Member]

Hi Bhagyaraj,

Thanks for the response.

I am not able to understand clearly. Do you mean to say, "third party plant" is something configured in the system like our own plant?

If we create it in our system, obviously we need assign to a company code, then it has become our own plant right.

Could you clarify.

Regards,

Raja Durai

[former_member183379]

Durai Raja    

In Standard SAP there are no such things like 3rd party, 2nd parties or own party plants creation and assignments. We need to differentiate with the help of ABAPErs by customizing in tables level.

As I said earlier, Its according to business of a company.

For e.g.

Company "A" is having a product "Z" and outsourced to some other Company like "B".

Since "A" is making transaction with "B", It is need to maintain B's plant in "A" company code.

So differentiating using "2nd and 3rd party" concept wrt. Business/Process Controlling factors.

Reg,

Bhg

[mahendra_jani3]

Yes Mr. Durai,

Your understanding is correct.

3rd Party plant is just a business term and for SAP it is created same like our own plant.

Regards,

MJ.

[Former Member]

Dear Mahendra,

Thanks for your response.

As per Indian scenario, even if we are defining a Third party plant, as per the statuatory requirement, excise registrations are mandatory I believe.

In that what will be the use of having a third party plant.

Could you please explain bit more on that.

Regards,

Raja Durai

[mahendra_jani3]

Hi Durai,

Excise registration depends upon if the Manufacturing or Value addition process is happening at Plant or not else the plant is treated as Excise registered Depot.

You may have Third party warehouse as well just for storing purpose. You may create it as your own plant.

As per my understanding as long as if Excise comes in picture in Indian scenario and Excise Registration is not ours for that manufacturing plant then you would not take that plant with excise details in our system.

You may prefer to create that plant in system and showing it as purchase from Vendor and receiving the same in our registered plant but again it depends upon business process mapping as well as design.

Regards,

MJ.

[Former Member]

Dear Mahendra,

As per our requirement, we planned to create a third party plant which is actually our Dealer.

We are planning to move our stock to our Dealer (Third party plant) like consignment process, whenever our Dealer making sales, we will bill our Dealer (Third party plant).

But only the Dealer (Third party plant) is our customer, we are not dealing with end customers.

This plant should be excise registered.

Is it possible to achieve this scenario.

Regards,

Raja Durai

[mahendra_jani3]

Dear Raja,

Yes you can create a Plant as a customer. But just think in a way that if in future multiple dealers will be there then are you going to create all of them as Plant?

Another point why you would like to create is Excise registered? It is not a physical plant correct?

When you will show material movement from your Manufacturing Plant to this Third party plant via STO at that time itself excise will be applied correct?

I have a view that you can maintain Plant as DEPOT with RG23D register maintenance when it is actually a physical location. In this case, it is like a logical plant so Excise registration should not be needed.

If my understanding is wrong please correct me.

Regards,

MJ.

[jpfriends079]

I agree with MJ.

Excise?

 third party plant which is actually our Dealer.

This will be more trading scenario, whether that is your own plant or some other. And as per my knowledge in India, there is no excise on trading sales. FYI and rightly indicated, once excise is charge on the material, that is not charged again on multiple level of sales.

Thanks, JP

[Former Member]

Dear Mahendra and Jyoti Prakash,

Thanks for sharing your views.

Yes your points are correct. We are going to treat the Dealer (Third party plant) as a Depot only.

But my core doubts are given below.

How do we create a thrid party plant is SAP?

How does it differ from our plant?

Is company code assignments are required for Third party plant?

If company assigned required, legally that has become our own plant, so how does a third party plant differentiated from our own plant in SAP? Is there any special settings?

Kindly clarify.

Regards,

Raja Durai

[mahendra_jani3]

Dear Raja,

So overall conclusion of discussion is there is no special setting for creation of Third Party Plant in system.

It is same like normal Plant creation itself. It is actual or logical business process which differentiate the understanding about Plant but for system it is same configuration.

Hope it clarifies.

Regards,

MJ.