Third party process

Third party process is an integration between SD +

MM

Scenario 1
Most of the companies will not manufacture all
the products which they are selling or have in
their product portfolio, they will manufacture
Some products and for remaining products
they will do third party process,

Scenario 2
In some scenarios even though company
manufacture the products and if stock is not
available or if there is some problem in
manufacturing unit then they go for third party
process.
Third party process: when our customer place order
for third party material and when we create 3 party
sales order in SAP, then system automatically
generates PR and PR will converted to PO and PO
will be send to vendor and vendor delivers the
goods to customer and vendor will send the invoice
to company and company will raise invoice to
customer.
We do third party with shipping
notification, if vendor is not ready to
send the invoice immediately, if vendor
is not sending the invoice then we
cannot raise invoice to customer
because we don't know that how much
quantity vendor has delivered to
customer.
 6

Shipping
Notification

DeliveryChallan

Third Party Business Process - With Shipping

Notification
In this situation we ask vendor to send
shipping notification to the company
which consists Of material details and
quantity details which vendor has
delivered to customer. Then we can do
MIGO in SAP and based on MIGO
quantity we raise invoice to customer.
Important points in Third party process:- Item
Category TAS
l. For third party material maintain "Item
category group" as [BANS] and maintain
material type as 'HAWA.

We do third party with shipping notification, if

vendor is not ready to send the invoice
immediately, if vendor is not sending the invoice
then we cannot raise invoice to customer
because we don't know that how much quantity
vendor has delivered to customer.
 6

Shipping
Notification

DeliveryChallan

Third Party Business Process - With Shipping

Notification
In this situation we ask vendor to send shipping
notification to the company which consists Of
material details and quantity details which
vendor has delivered to customer. Then we can
do MIGO in SAP and based on MIGO quantity we
raise invoice to customer.

Controls in Item category (TAS)

 Item Category TAS
l. For third party material maintains "Item category
group" as [BANS] and maintain material type as
'HAWA.
Item category group BANS will
help to determine item category
*TAS' In sales document.
2. Third party item category determination OR+
BANS + Blank+ Blank=TAS.
3. Billing relevance 'F' standard. F means order
related billing status according to MIRO.
If we want 3rd party with shipping notification
then we maintain billing relevance as 'G' and G
means order related billing status according to
MIGO.
Billing relevance F' controls that in 3 party w/o
shipping notification if MIRO is not created then
system will not allow to create invoice to
customer.
Billing relevance 'G' controls that in third party
with shipping notification if MIGO is not created
then system will not allow to create invoice to
customer.

4. Create PO automatically — In standard process

of 3 party when we create sales order, system
automatically generates PR but if we want
system to generate direct PO automatically
 then check this field. Along with ALE data for
purchases order in sales organisation.

Controls in CS (Schedule line category)

5. Order type "NB" — it will help to generate
purchases requisition automatically in the
background while creating sales order in third
party process.

6. Item category — purpose of item category in

schedule line category like sales documents,
MM documents also require item category
information while creating PR manually. User
will assign item category manually, but in third
party process we are generating PR
automatically in the background so we are
passing item category information from
schedule line category to PR.

7. Item category [5]: - item category [5] controls

that even we do MIGO in third party with
 shipping notification system will treat it as
dummy MIGO and stock will not be update.
8. Account assignment category [1]: - It controls
that whether to generate inventory accounting
document or not while doing MIGO and PGI (this
field controls the cost should be assigned to any
special cost object Or not).lhis also helps to
pass on customer information from order to PR.

Controls in copy control (VTFA):

9. In copy control between order to invoice (OR —
F2) TAS has billing quantity 'F' and it will help to
copy the quantity from MIRO to invoice while
creating invoice to customer in third party
process. - VTFA
If we want third party process with shipping
notification then we maintain billing quantity
"E" which helps to copy the quantity from MIGO
 to invoice while creating invoice to customer in
third party process. – VTFA

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Process (or creating Purchase order: -

Maintain purchase organisation: - To create PO we

require purchase organisation, which is in MM.

SPRO— enterprises structure — definition — MM—

maintain purchase organisation— new ZPUR
 2 step
Assign purchase organisation to company code: -
SPRO— enterprises structure assignment— MM—
assign purchase organisation to company code—
position—e ZPUR—• Z.AI„K-• save it
3rd Step
Assign nurchase oreanisation to Dlant: -
SPRO* enterprises structure— assignment— MM—
assign purchase organisation to Plant— position
ZPUR—• PLANT— save it
Third party w/o shipping notification
We need to do few more configurations to make
third party process successfully.
Go to the T-code [OBGG] for country IN assign tax
procedure [TAXI)] save it.
 Go to the T-code [FTXP] and maintain tax
F-rxp•••• Sl —description
(Input tax PO) tax type [V] (input tax) enter
—input tax save it.
T-code To create PO [ME21N]

MMOI create material (THIRDI) purchasing view

should be selected maintain BANS purchasing view
— purchasing group

To create vendor the I-code is IXKOII

XKOI vendor ITVENDORI •"+ZALK •-+ZPUR•••
Account group 100011 name [third party vendor]
reconciliation Wc [1.61-1 cash mgmt grp IAII —
•order currency IINRI partner function IVNI save it.

line tab— Makeanoteof PR number

 ME21N —mention the vendor number
ITVENDORI purchase org IZPURI Purchase
group 10011 ZALK-•• go to item overview—e
go to right side—e PR No. rxxxxxl enter
some price 150001 go to delivery tab and
uncheck good receipt invoice tab — tax code
13 Il enter— save it and make a note of PO
number
The T-code for MIRO is [MIR01 we create MIRO
with reference to PO

MIRO—• ZALK —Invoice date 124.01.20141

purchase order / scheduling agreement IXXXXXXXI
enter— base line date —enter— then go to
basic data amount [5Ll enter We can change
quantity from 100 to 70— enter.
Then do Invoice VFOI. Reference quantity will
copy from order, but actual quantity will copy from
MIRO.
 Error: - Company code is not maintained in 169P.
Solution: - SE16N Table [T169Pl enter&SAP_edit
enter apFnd new mention as above Save it.

Q. In third party process what happens if user

increase / decrease the quantity in purchase
order? Will it effect in sales order or not?
Ans. The quantities changes in purchase order will
be update in sales order in confirm quantity
[schedule line datal.

•les order?
Creating automatic PO in process

1st step:-
Maintain ALE data for purchases order we have this in
sales organisation, maintain ALE 7-MUM••• 001 •
ZFC,I—••
Tvendorl 101 —e save it.

lif vendor is not fixed don't maintain the vendor name}.

Go to item category TAS and @ create PO automatically.

Master data changes ror automatic PO

Go to material master—purchasing view — @Automatic PO—

esave it
4 Step:-
Go to vendor master [XKOI] Create, [XK02] change— check
purchasing data view — scroll down and automatic PO
save it.

5th Step:-
Maintain material info record or purchasing info record. The T-
code is IMEI Il material —vendor purchase organisation
ZMUM enter— enter— net price [5000] max
quantity [10000]

save it.

6th Step:-
Maintain source list T-code material— plant— validity period |
25.01.20141 131.01.2014J
TVENDERI
7th Step:-
Maintain source list T-code material— plant— validity
saveit.
period | 25.01.20141 131.01.20141
TVENDERI ••••ZPUR

Create order,after I st time configuration go to ME59N (one

time only) execute purchase group I I purchase organisation
I vendor— plant— execute.
GO to now Check PO is not?

We do third party with shipping notification if vendor is not

sending the invoice immediately with delivering the goods to
customer.

Without vendor invoice we Cannot raise invoice to Our

customer, So in this scenario we ask vendor to send shipping
notification after delivering the goods to customer.

When we receive the shipping notification then we do MIGO and

basing on MIGO quantity we raise invoice to

Shipping
Notification
DeliveryChallan

Third Party Business Process - With Shipping Notification

 In item category TAS, change the billing relevance from 'F" to

In COPY control, order to billing for item category TAS change

the billing quantity 'F' to

Billing relevance 'G' controls that. while creating sale order

in third party process system checks whether MIGO is
created or not. If MIGO is created then system will allow to
create invoice to customer.
Billing quantity •E' Will help to COPY the quantity MIGO
to invoice.
When we do MIGO in third party process system Will treat it
as dummy MIGO and stock Will not be updated. The control
is item category [51 in schedule line category.

When customer finds damage or defective goods of third

party material. then customer will inform to company then
company will send employee to cross check the goods.

After cross checking employee will prepare return note and

submit to company and company will create return order in
SAP.

Based on return note. then we return the goods to vendor

location from customer location. Then vendor will raise
credit memo to company and company will raise credit
memo to customer.

Configuration for Third Party Returns:

Maintain item category determination RE + BANS + Blank +
Blank =TASG
step 2:
GO to TASG and maintain billing
relevance as 'F'
Step 3:-
Maintain schedule line category [CS] in VOV5
Step 4:-
IN copy control VTFA maintain item category TASG for RE —
RE combination

Maintain copy requirement as [028] VBRK / VBRP = [002]

Billing quantity[F] Plus / Minus [+], pricing type [D]