Steps to Enhance SAP Third-Party Procurement

  • by Trilokesh Satpathy, PMP, Consultant, Infosys Technologies Limited
  • October 15, 2006
Examine the five steps involved in setting up a standard third-party procurement process in your R/3 Enterprise or mySAP ERP Central Component system. Then look at options you have for special orders. A workaround allows you to cancel third-party orders even after the third-party vendor receives the order.
Key Concept
The third-party procurement solution available with standard R/3 Enterprise and mySAP ERP Central Component allows you to ship third-party items to your customers without ever coming in contact with the items. By slightly modifying this standard process, you enable additional logistics processes for third-party items. You can either hold the stock as vendor consigned (the vendor keeps the stock in their inventory until you need it) or book it directly as inventory and hold it at a company warehouse. These strategies are useful when dealing with high volumes of third-party items or if you must ship all of the items in an order in one package.
Prior to the R/3 Enterprise release, companies had to use customization to carry out their third-party procurement processes. Now they can use standard third-party procurement in the Materials Management (MM) and Sales and Distribution (SD) modules to pass sales order requirements to a third-party vendor, which then ships the items directly to the customer.

Say you are a computer company and you produce laptops. You offer another company’s antivirus software installed on these laptops. Consumers can order both of the products from your company’s Web site. Your company obtains the antivirus software via third-party procurement. Note that the service guarantee for the antivirus software remains with the third party. Your company does not sell it under your brand name. This is the major difference between third-party and OEM procurement.

I developed a process to set up the standard third-party procurement process. Within this process are logistics options that you might have to build into the standard solution, depending on your business requirements. For example, if you have a large volume of third-party orders or if you need to fulfill orders in one shipment, you might want to build stock for the third-party items instead of direct ship-to customers when orders drop.

Along with the third-party procurement process, I created a workaround that allows you to cancel third-party orders for vendors willing to accept cancellations. With the standard cancellation process, you can cancel the order before the system sends the purchase order (PO) to the third-party vendor, but not after the third-party vendor receives it. With the workaround, you can create a conditional cancellation that allows you to cancel the order after receipt by the third-party vendor.

Trilokesh Satpathy

Trilokesh Satpathy, PMP, is a consultant with Infosys Technologies Limited with more than six years of SAP consulting experience spanning automobile and computer manufacturing companies. He holds a bachelor’s degree in mechanical engineering and a post-graduate degree in business management.

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6/5/2015 6:12:06 AM


Thanks for this article.
Apparently printscreen does not fit with descriptions ! Can you fix it ?

Other point : you say you can not consume consignment to meet a sales ordre requirement. However using stock determination, you can pick goods directly from consignment stock avoiding MB01 step.


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