Third-Party Order Processing: Overview and Configuration in SAP SD

Third-party order processing is a process in SAP SD where the company sells goods that it does not keep in stock. Instead, the company places the order directly with a vendor, who then ships the goods to the customer. This process helps companies offer a wider range of products without maintaining large inventories.

In this tutorial, we will walk you through the steps to configure third-party order processing in SAP SD, providing real-world examples for each step.

Overview of Third-Party Order Processing

In a third-party order processing scenario, the sales order is created by the company, but the goods are delivered directly from a third-party vendor to the customer. The company does not physically handle the goods. Instead, the vendor takes care of the delivery. The steps involved in third-party processing include:

  • Creating a sales order in SAP SD.
  • Creating a purchase order with the third-party vendor.
  • Delivering the goods directly from the vendor to the customer.
  • Billing the customer for the product.

Step-by-Step Configuration of Third-Party Order Processing in SAP SD

Step 1: Define Third-Party Order Process in Sales Document Types

The first step in configuring third-party order processing is to define a sales document type that is specifically used for third-party orders. This document type will help in differentiating third-party orders from regular sales orders.

To configure a third-party order sales document type:

  1. Go to transaction SPRO and navigate to Sales and Distribution → Sales → Sales Documents → Define Sales Document Types.
  2. Click on New Entries to create a new sales document type.
  3. Enter the following details:
    • Sales Document Type: Enter a unique code (e.g., T3 for third-party order).
    • Description: Enter a description (e.g., Third-Party Order).
    • Order Category: Select OR (standard order) as the order category.
  4. Click Save to save the sales document type.

Step 2: Set Up Item Categories for Third-Party Orders

The next step is to configure item categories for third-party orders. The item category controls how the items are processed in the sales document, such as whether they are direct materials or third-party items.

To configure item categories:

  1. Go to transaction SPRO and navigate to Sales and Distribution → Sales → Sales Documents → Define Item Categories.
  2. Click on New Entries to create a new item category.
  3. Enter the following details:
    • Item Category: Enter a unique identifier (e.g., TAN for standard item).
    • Item Category Group: Select Third-Party Item as the item category group.
    • Usage: Select Third-Party Order as the usage.
    • Item Category Group: Specify the item category group that determines the type of item (e.g., TA for third-party items).
  4. Click Save to save the item category.

Step 3: Define Third-Party Vendor in Master Data

Next, you need to maintain the vendor as a third-party supplier in the system. This vendor is the one who will directly ship the goods to the customer.

To create a third-party vendor:

  1. Go to transaction XK01 to create a vendor master record.
  2. Enter the vendor's details, including Vendor Name, Address, and Contact Details.
  3. In the Purchasing tab, select Third-Party Supplier for the vendor.
  4. Click Save to create the vendor master record.

Step 4: Configure Third-Party Delivery Process

In third-party order processing, the delivery process involves the vendor directly delivering the goods to the customer. You need to ensure that the system handles the delivery accordingly.

To configure the delivery process:

  1. Go to transaction SPRO and navigate to Sales and Distribution → Shipping → Deliveries → Configure Third-Party Delivery Process.
  2. Click on New Entries to configure the delivery process.
  3. Enter the following details:
    • Shipping Point: Enter the shipping point for the third-party vendor.
    • Delivery Type: Choose Third-Party for the delivery type.
    • Delivery Mode: Specify the mode of delivery (e.g., Vendor Ship).
  4. Click Save to save the delivery configuration.

Step 5: Create Purchase Order for Third-Party Vendor

Once the sales order is created, the next step is to create a purchase order for the third-party vendor, ensuring that they receive the order and ship the goods directly to the customer.

To create the purchase order:

  1. Go to transaction ME21N to create a purchase order.
  2. Enter the vendor and material details in the purchase order, ensuring that the third-party vendor is selected as the vendor.
  3. In the Item Category, select Third-Party Item as the item category.
  4. Click Save to create the purchase order.

Step 6: Billing the Customer

Once the delivery is made by the third-party vendor, you can proceed with billing the customer for the sale.

To create the billing document:

  1. Go to transaction VF01 to create a billing document.
  2. Enter the sales order or delivery document number.
  3. Choose the billing type (e.g., F2 for standard billing).
  4. Click Save to create the billing document.

Real-World Example of Third-Party Order Processing

Let's consider a real-world example:

  • Step 1: A customer places an order for a product that the company does not keep in stock.
  • Step 2: A sales order is created in SAP SD using the Third-Party Order sales document type.
  • Step 3: The company configures the third-party vendor in the system as a third-party supplier.
  • Step 4: A purchase order is created for the third-party vendor to ship the goods directly to the customer.
  • Step 5: The third-party vendor ships the goods to the customer.
  • Step 6: The company generates a billing document to charge the customer for the product.

Conclusion

Third-party order processing in SAP SD is an effective way for companies to sell products that they do not keep in stock, allowing for better inventory management and broader product offerings. By following the steps outlined in this tutorial, you can configure and use third-party order processing in your SAP system. This process helps streamline the order fulfillment process and ensures that the customer receives the product on time, directly from the third-party vendor.




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