Automate Sales Processing and Price Updates for Third-Party Products

  • by Rhishikesh Andhari, Senior Consultant, Infosys Technologies Limited
  • August 25, 2009
Learn about the procurement process of an item that is not manufactured in-house by a manufacturing company but is instead a direct procurement from a third party sold to the customer of the manufacturing company. See how you can configure your system to carry out automatic updates of prices of such items in SAP ERP Central Component 6.0.
Key Concept
In sales using third-party processing, the seller does not keep the goods it sells in stock. Instead, it transfers the customer’s order and the shipping details to a manufacturer or a vendor who delivers the goods directly to the customer. The seller makes a profit on the difference between the vendor’s wholesale price and retail price. In this process, the manufacturing company also caters to the customer requirement of additional products that are not its own products. For instance, suppose the Dell Manufacturing Company provides a laptop with a Hewlett-Packard printer to its customer. Dell executes the entire order with Dell procuring the printer from HP on the customer’s behalf.

A client I once helped had a vendor that used to send the company a price list for a third- party product. The list had to be updated manually by the purchase department in SAP R/3 4.7. This manual process was cumbersome and prone to many errors. Not only did the company need an automatic process for updating the prices, but it also needed to ensure that the client’s own product and the third-party product were delivered together.

My team and I helped the client by creating a custom development using intermediate document (IDoc) methodology in SAP R/3 4.7 for automatic price updates. Then, to ensure that the products were delivered together, we linked the delivery date of the client’s own product to the purchase requisition release date of the third-party product. This made the price update procedure seamless and reduced the number of errors that occurred due to manual intervention. It also reduced the manual effort, which was around 60 days of work a year. The automated process does not require any manual intervention. Someone has to manually intervene only if there are errors. This may be around seven to eight days of effort per year. The approximate savings for the client was US$15,000. I’ll explain exactly what we did and how we did it.

Rhishikesh Andhari

Rhishikesh Andhari works as an SAP senior consultant for Infosys Technologies Limited. He has more than six years of industry experience, primarily in manufacturing, and five years in SAP consulting. He has primarily worked for clients in the high tech space. Currently he is working as a logistics lead in the implementation of PP-CO (Repetitive Manufacturing) module for one of the top companies in chip manufacturing. He has been involved in SAP rollout projects for service repairs at one of the leading companies in PC manufacturing. At the same client he has worked on an SAP Project System implementation project for business processes covering the project planning, budgeting, and procurement in setting up retail stores across the globe. He has also worked on a customer information management project at another semiconductor manufacturing company. This involved streamlining of SAP customer master database and establishing a governance model and authorization procedures. Prior to SAP consulting Rhishikesh spent considerable time in Asia’s top paint manufacturing company where he primarily worked on project management, operations, plant maintenance, and p rocurement. Rhishikesh holds a bachelor’s degree in mechanical engineering and a master’s degree in financial management.

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