Third party order processing is as follows:
Assume three companies A, B and C
A – The company,
B – The customer
C – Vendor
When ever A gets a PO from B to supply some goods, A 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 B, A creates a sales order against B.
Now at the same time he also creates a PO to a vendor C to produce the goods
C produces the goods and supplies to A
A receives the goods from C
Then A delivers the same goods to B.
After that A invoices B and C invoices A.
Note : Here there is no direct/ Indirect relation between C and B.
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 C supplying the material to A and A in turn supplying the same material to B.
A authorizes C to supply the material to B on his behalf and notify him once the delivery is complete.
Now C supplies the material to B and acknowledges the same to A.
C will send a copy of delivery acknowledgement and invoice to A.
After receiving the delivery confirmation and invoice from C, A has to verify the invoice and this process is known as invoice verification and is done in SAP through T code MIRO.
The next step for A is to create an invoice and submit to B
Only after the invoice verification document is posted then only A can create an invoice for B.
This is the business flow that is followed for third party order configuration.
There are few steps that have to be configured to enable the system to function as mentioned above.
If you are always following a third party process for a material then you have to create the material using item category group BANS.
The procurement type should be marked as External procurement (F) in MRP 2 view of the material master record.
if you are not always allowing third party order processing then u can create a material master record with item category group as NORM and the procurement type should be marked as ( X) meaning both types of procurement ( in house manufacturing and external procurement).
the item category in the order should be manually changed as TAS.
For that you need to configure the item category determination
order type + item cat group + usage + Hig level = Item cat + Manual item cat
OR + NORM + + = TAN . + TAS
OR + BANS + + = TAS
make sure that during the item category configuration for TAS you need to mark relevant for billing indicator as F
The schedule line category for this type should be CS.
make sure that you mark subsequent type as NB – purchase requisition in this schedule line category as this will trigger the purchase requisition order immediately after the creation of the sales order and the PO to vendor is created against this purchase requisition.