Third party

[Former Member]

hi gurus

this is srinivas

i have a doubght on third party can u solve this

u will be get full rewarded points

pls go through

Third party order processing is as follows:

Assume three companies X, Y and Z

X - The company,

y - The customer

Z - Vendor

When ever X gets a PO from Y to supply some goods, X has an option of either manufacturing those goods or procuring those goods.

If he is procuring the goods, there are two methods that are generally followed:

Method 1) After receiving the PO from Y, X creates a sales order against Y.

Now at the same time he also creates a PO to a vendor Z to produce the goods

Z produces the goods and supplies to X

X receives the goods from Z

Then X delivers the same goods to Y.

After that X invoices Y and Z invoices X.

Note : Here there is no direct/ Indirect relation between Z and Y.

This process is known as Trading Process. and the Material here is created with Material type HAWA.

The other method is a Third party order processing method:

Here the glaring difference is that instead of Z supplying the material to X and X in turn supplying the same material to Y.

X authorizes Z to supply the material to Y on his behalf and notify him once the delivery is complete.

Now Z supplies the material to Y and acknowledges the same to X.

Z will send a copy of delivery acknowledgement and invoice to X.

After receiving the delivery confirmation and invoice from Z, X has to verify the invoice and this process is known as invoice verification and is done in SAP through Tcode MIRO.

<u><b>here i have a doubt if he send the goods to X , X will deliver the goods so X si create the delivery document here, but here it is not done. Z directly send the goods to the Y so what will happend in delivery stage in X.</b></u>

The next step for X is to create an invoice and submit to Y

Only after the invoice verification document is posted then only X can create an invoice for Y.

Advanced Thanks

srinivask

[Former Member · Accepted solution]

Dear Srinivas,

you have described two standard process provided by SAP in the frames of the third-party processing:

a) pure third-party process: X creates the sales order, automatically purchase requision and later a purchase order will be created at the vendor. Then the vendor sends the goods directly to your customer and send the invoice to X. The company X creates the invoice to the customer Y.

b) individual purchase order: the same process, but the vendor sends the goods not to the customer directly, but first to X, and then the company X delivers the goods to the customer Y. The invoice is coming from Z to X (transaction MIRO), and then X creates invoice to Y.

The recommended Customizing of billing relevance of item category (transaction VOV7) is 'F' according to invoice receipt.

Kind regards,

Akmal Vakhidov

Development Support SD, SAP, Walldorf/Germany

[Former Member · Accepted solution]

thanks for reply and its not clear

so what will happen in delivery sate in X company

[Former Member · Accepted solution]

Dear Srinivas,

if you have individual purchase order then there is no delivery from X company. In this process the sales order item is not delivery relevant, but relevant for invoicing. If the vendor creates the delivery to the customer, then nothing is hapenned with the sales order in the company 'X'. This order will not be updated. The sales order created purchase requisition, which will be later converted to the opurchase order and simply wait for incoming invoices. Nothing happens in the company 'X' during delivery from vendir to end-customer and sales order item should be not relevant for delivery.It is not a delivery-relevant order.

I hope, this info helps you a little bit further.

Kind regards,

Akmal Vakhidov

Development Support SD, SAP, Walldorf/Germany

[Former Member · Accepted solution]

yes i got it

thanks

[Former Member · Accepted solution]

yes i got it

thanks

[Former Member]

Srinivas,

As you mentioned the process of Thrid party dropship, it is standard process in SAP. And due to item cateogory (TAS) at line item level of sales order, the order becomes order related billing instead delivery related. And Schedule line category at line item bypasses the delivery process as we are not shipping the material from our Plant.So no delivery process is required in thrid party drop ship scenario.

In the first case of trading scenario, the PO which is created for the material is not linked to SALES order. Lets say you have a material abc you are getting from Z vendor. When you create sales order for Y customer, the sales order will not be confirmed (or ready for delivery) till you have stock. For getting stock of this externally procured abc material a PO is raised on Z vendor. And once PO process is complete using MIGO & MIRO, the stock is now present in Plant present at sales order level.

Now sales order can be processed to delivery as stock is available in Plant. And then later we can do billing. AGAIN PO IS NOT RELATED FOR THIS SALES ORDER, SO IF SOMEONE ELSE USES THIS ABC MATERIAL PROCESSED BY PO, THEN THE SALES ORDER WILL BE STILL OPEN.

Now getting back to third party scenario - When you create a sales order, due to item category, PO is created via PR (purchase req., can be seen at schedule line level of item). So, if you see this PO, the delivery address at PO line item level, it is customer's ship-to address picked from sales order. So, this PO when it goes to MIGO/MIRO process the material is posted for this SALES order. And as the material is already sent to customer, no delivery process is required.

Hope this helps.

Naren

[Former Member]

Srinivas,

As you mentioned the process of Thrid party dropship, it is standard process in SAP. And due to item cateogory (TAS) at line item level of sales order, the order becomes order related billing instead delivery related. And Schedule line category at line item bypasses the delivery process as we are not shipping the material from our Plant.So no delivery process is required in thrid party drop ship scenario.

In the first case of trading scenario, the PO which is created for the material is not linked to SALES order. Lets say you have a material abc you are getting from Z vendor. When you create sales order for Y customer, the sales order will not be confirmed (or ready for delivery) till you have stock. For getting stock of this externally procured abc material a PO is raised on Z vendor. And once PO process is complete using MIGO & MIRO, the stock is now present in Plant present at sales order level.

Now sales order can be processed to delivery as stock is available in Plant. And then later we can do billing. AGAIN PO IS NOT RELATED FOR THIS SALES ORDER, SO IF SOMEONE ELSE USES THIS ABC MATERIAL PROCESSED BY PO, THEN THE SALES ORDER WILL BE STILL OPEN.

Now getting back to third party scenario - When you create a sales order, due to item category, PO is created via PR (purchase req., can be seen at schedule line level of item). So, if you see this PO, the delivery address at PO line item level, it is customer's ship-to address picked from sales order. So, this PO when it goes to MIGO/MIRO process the material is posted for this SALES order. And as the material is already sent to customer, no delivery process is required.

Hope this helps.

Naren