Third party process

THIRD PARTY PROCESS
By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 1
In business some materials may be procured from external vendors or some materials may be
purchased from external vendors.
Third party order is controlled via material types. Material types define whether a material is
produced only internally can be ordered only from third party vendors or from both
possibilities.
Ex: Trading goods (HAWA) can only be ordered from third party vendors. Third party items can
be created automatically by the system or standard items can be changed manually by the end
user by changing item category during sales order processing.
The below scenarios we do third party process:
a. We don’t manufacture the products but we sell it to customers.
b. We manufacture the product but if the stock is not available then we go for third party
process.
Whenever customer places order for third party material, while creating order in SAP, system
automatically generates purchase requisition. PR is converted to PO and PO will be sent to
vendor. Vendor delivers the goods to the customer. Vendor will raise invoice to company and
company will raise invoice to customer.
Third party process can be done in 2 ways depending on the business:
1. Third party without shipping notification
2. Third party with shipping notification
We will discuss both in the next step.
1. Third party without shipping notification:
Company PR (2) PO (3) MIRO (6)
Order (1) Invoice to Customer (7) Vendor Invoice
Customer Vendor (4)
Delivery (5)

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By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant)
Configuration for Third party process without shipping notification:
a. Create Material: If the material is third party material then we need to maintain item
category group as “BANS
And also under purchasing tab maintain purchasing group.
THIRD PARTY PROCESS
Configuration for Third party process without shipping notification:
If the material is third party material then we need to maintain item
BANS”. And the material should be a trading good (HAWA).
purchasing tab maintain purchasing group.
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If the material is third party material then we need to maintain item
”. And the material should be a trading good (HAWA).

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Under MRP2 view the procurement type should be “
b. For third party material item category
THIRD PARTY PROCESS
Under MRP2 view the procurement type should be “F”.
item category is “TAS”. For “TAS” the billing relevance is “
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”. For “TAS” the billing relevance is “F”.

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Billing relevance “F” controls that in third party process without
create invoice to the customer.
c. Item category determination:
d. Schedule line category: For third party item schedule line category is “
THIRD PARTY PROCESS
” controls that in third party process without MIRO system will not allow to
Item category determination:
For third party item schedule line category is “CS
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system will not allow to
CS”

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Order type “NB” will help to generate PR automatically in the back ground while
order in third party process.
Item category “5” controls that even if we do MIGO in third party process system will treat it as
dummy MIGO and stocks will not be updated. It will also help in generating PR automatically in
the background.
Like sales transaction, MM transactions will also require item category. Without item category
system will not allow to create MM transactions. When user create PR manually they maintain
item category manually. But in third party process we are generating pu
automatically in the background. So, we are passing item category information from schedule
line category to PR.
The account assignment category is “
generate accounting document o
The item relevant for delivery is un
Q. Even though third party process is not relevant for delivery why we require schedule line
category?
A. To generate PR automatically.
Schedule line category determination:
e. Copy Control: In copy control
as “F”.
Billing quantity “F” controls that in third party process while creating invoice to customer the
invoice quantity will be copied from “
In our case the documents which we are using are:
YOR > YF2 and YTAS
THIRD PARTY PROCESS
” will help to generate PR automatically in the back ground while
” controls that even if we do MIGO in third party process system will treat it as
ke sales transaction, MM transactions will also require item category. Without item category
item category manually. But in third party process we are generating purchase requisitions
The account assignment category is “1”. Account assignment category controls that whether to
generate accounting document or not at the time of MIGO in third party process.
The item relevant for delivery is un-check in third party.
A. To generate PR automatically.
chedule line category determination:
In copy control OR >F2, in item category TAS we maintain billing quantity
” controls that in third party process while creating invoice to customer the
be copied from “MIRO”.
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” will help to generate PR automatically in the back ground while creating sales
” controls that even if we do MIGO in third party process system will treat it as
ke sales transaction, MM transactions will also require item category. Without item category
rchase requisitions
”. Account assignment category controls that whether to
r not at the time of MIGO in third party process.
we maintain billing quantity

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f. Create Purchase Organization:
Path: SPRO > Enterprise structure > Definition > Materials Management > Maintain
Purchasing Organization
Assign purchasing organization to company code and plant.
Path: SPRO > Enterprise structure > Assignment > Materials Management
THIRD PARTY PROCESS
Create Purchase Organization:
organization to company code and plant.
Path: SPRO > Enterprise structure > Assignment > Materials Management
Page 6

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g. Create Vendor: T.Code: XK01
Vendor: 6
This is the configuration for third party without shipping notification.
We will try to do the process now.
Process:
I. Create Order:
And save the order. After saving the order, go to the change mode of the order and check
whether PR is generated or not in schedule line tab.
THIRD PARTY PROCESS
T.Code: XK01
This is the configuration for third party without shipping notification.
now.
After saving the order, go to the change mode of the order and check
whether PR is generated or not in schedule line tab.
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After saving the order, go to the change mode of the order and check

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Go to PR Change mode if we want to make any changes. T.Code: ME52N
THIRD PARTY PROCESS
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II. Create PO:
T. Code: ME21N
Raise PO (NB) with reference to PR.
After giving PR details go to the delivery tab and un
Go to Invoice tab and maintain tax code (T.Code: FTXP)
PO: 4500017188
III. Create MIRO:
Give company code in the initial screen and
In the next screen maintain invoice date, PO number and press enter.
Enter balance amount in baseline tab amount and enter base line date in payment tab and save
the transaction.
THIRD PARTY PROCESS
After giving PR details go to the delivery tab and un-check goods receipt.
Give company code in the initial screen and press enter.
In the next screen maintain invoice date, PO number and press enter.
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Enter balance amount in baseline tab amount and enter base li
the transaction.
THIRD PARTY PROCESS
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ne date in payment tab and save

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After giving baseline amount and base line date the balance field will become "0" and green
indicator will be highlighted, which means we have done with the MIRO transaction.
Save the transaction and create invoice.
Document no. 5105608733 created
IV. Create Invoice:
Create invoice and check the document flow.
Invoice has been created. Check the document flow by going to VA02.
2. Third party with shipping notification:
In standard third party process withou
invoice to customers. But in some scenarios vendor will not sen
that case company doesn't want to wait till vendor invoice to raise invoice to
case company ask vendors to send shipping notification (
receive shipping notification, they create MIGO in SAP. While creating invoice to customer
system considers MIGO.
THIRD PARTY PROCESS
create invoice.
Document no. 5105608733 created.
invoice and check the document flow.
Invoice has been created. Check the document flow by going to VA02.
shipping notification:
standard third party process without vendor invoice (MIRO) system will not allow to create
invoice to customers. But in some scenarios vendor will not send the invoice immediately. In
want to wait till vendor invoice to raise invoice to customers
case company ask vendors to send shipping notification (delivery notification). When company
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system will not allow to create
d the invoice immediately. In
customers. In this
. When company

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Company PR (2)
Order (1) Invoice to Customer (7)
Customer Vendor (4)
Configuration Steps:
a. The item category group for the third party with shipping notification and without shipping
notification is same (BANS).
b. For third party material item category
Billing relevance “G” controls that in third party process without
create invoice to the customer.
c. Copy Control: In copy control
“E”.
THIRD PARTY PROCESS
PR (2) PO (3) MIGO (6)
Invoice to Customer (7) Shipping Notification
Customer Vendor (4)
Delivery (5)
The item category group for the third party with shipping notification and without shipping
item category is “TAS”. For “TAS” the billing relevance is “
” controls that in third party process without MIGO system will not allow to
In copy control OR >F2, in item category TAS we maintain billing quantity as
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Shipping Notification
The item category group for the third party with shipping notification and without shipping
”. For “TAS” the billing relevance is “G”.
system will not allow to
we maintain billing quantity as

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YOR > YF2 and YTAS
Billing quantity “E” controls that in third party process while creating invoice to customer the
invoice quantity will be copied from “
Process:
I. Create Order: VA01
THIRD PARTY PROCESS
be copied from “MIGO”.
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Go to VA02 and check whether PR got generated or not.
II. Create PO:
T. Code: ME21N
After giving PR details go to the delivery tab and un
THIRD PARTY PROCESS
Go to VA02 and check whether PR got generated or not.
After giving PR details go to the delivery tab and un-check goods receipt.
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Check goods receipt option under delivery tab and save.
PO: 4500017189
III. Create MIGO
Enter PO number and click press enter
THIRD PARTY PROCESS
goods receipt option under delivery tab and save.
Enter PO number and click press enter
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Scroll down and check Item ok check box
Material document will be posted.
IV. Create MIRO
THIRD PARTY PROCESS
Scroll down and check Item ok check box and click on check tab and post it.
Material document will be posted.
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V. Create Invoice
T.Code: VF01
And check the document flow. Go to VA02 and see the document flow
With this we are done with the third par
shipping notification.
THIRD PARTY PROCESS
Go to VA02 and see the document flow.
With this we are done with the third party process with shipping notification and without
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ty process with shipping notification and without

Third party process

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