Third Party Scenario in SAP MM

22 September, 2020


Related Blogs

SAP Third Party Process

What is Third Party?

The company’s Vendor supplies material to the company’s Customer (Or) Vendor Supplies material to a customer of a customer is called the Third-party.

Our Company sales department receives a PO from our customer for the material.

Then the company sends a PO with a delivery address as a Customer to supply this material

The vendor will supply this material directly to the customer

The vendor will send an invoice to the company

The vendor bill will be settled after the company got the payment from the customer

In SAP the Third Party procurement will be done in two ways.

A) With SD Involvement

B) W/o SD Involvement

A) With SD Involvement:

  1. Normally Salespeople will take the PO from the customers & they create a Sales Order (VA01) with 3rd party Item cat 'TAS'
  2. In the background automatically Purchase Requisition (PR) will be created with Item category 'S' along with the Delivery address.
  3. Purchase Dept creates the PO with Item cat 'S' and a/c assignment cat '1'. here customer adds will be copied from the PR.
  4. Then this PO will be sent to the Vendor.
  5. Based on the PO line items vendor will supply material directly to the customer and invoice to our Purchase organization.
  6. Based on the conditions provided in the PO
  • If it is PO-based invoice verification you can create a bill (Bill to the Customer) without waiting for Vendor IV.
  • If it is GR based invoice Verification we must very the vendor invoice before creating a bill to the customer

B) W/o SD Involvement:

  1. No sales order, No PR is generated in the background
  2. You can directly create a PO, based on the requirement of the customer with the item cat 'S' and A/c assignment cat 'X' (auxiliary a/c)
  3. The rest of the steps are the same as above
These core tutorials will help you to learn the fundamentals of SAP MM. For an in-depth understanding and practical experience, explore SAP MM Training

Third-Party Scenario Steps

The customer sends the PO to the Sales dept of the Company.

Create customer (XD01) with the account group as sold-to-party

Salespeople will create a Sales Order (VA01) with item category as ‘TAS’, i.e. Third Party.

Create material with

  • Material type as HAWA type - Adding a sales view - In Sales Data 1 view:
  • General.Item Cat BANS, Division, Tax code
  • In sales Data 2 view:
  • Item Cat group: BANS
  • In sales General/Plant view:
  • Availability Check: 01, Transport Group as 0001, Loading as 0001
  • In Purchase view: Check Automatic PO - In-Plant data storage loc 2 view: check negative stock allowed. - Accounting view: Valuation class: 3100 (for – HAWA), Price:

Create Vendor (Tcode XK01) – in purchase data view Check Automatic PO checkbox

Maintain Purchasing Info Record (T code ME11) for these vendors and material

Change the SO (VA02) and go to Schedule lines and check whether PR is created?

PR will be generated in the background with Item category 'S' and A/c assignment category '1' or X aux a/c

T code ME59 and enter relevant data to create an automatic PO with respect to PR

Send PO to Vendor.

The vendor delivers the material to the customer.

  • If it is PO based invoice verification you can create a bill (Bill to the Customer) without waiting for Vendor Invoice Verification.
  • If It is GR based invoice Verification we must verify the vendor invoice before creating a bill to the customer

We can do GR and IV however stock should not be updated.

[Note: If you are not always allowing third party order processing then you can create a material master record with item category group as ‘NORM’ and procurement should be marked as ‘X’ meaning both types of procurement (in-house manufacturing and external product) ]

About Author


Author Bio

TekSlate is the best online training provider in delivering world-class IT skills to individuals and corporates from all parts of the globe. We are proven experts in accumulating every need of an IT skills upgrade aspirant and have delivered excellent services. We aim to bring you all the essentials to learn and master new technologies in the market with our articles, blogs, and videos. Build your career success with us, enhancing most in-demand skills .