Take Advantage of Third-Party Process Customization

  • by Gaetano Altavilla, Senior SAP Practice Manager
  • May 12, 2011
Learn about third-party processes using sales and distribution, materials management, and financial accounting. Discover the main customization settings to carry out in the system from the sales, procurement, and financial points of view. By applying the standard settings, companies reduce the risk of adopting custom solutions and also follow best practices to manage third-party business procedures.
Key Concept
SAP’s third-party process is a standard solution to manage customer orders for products your company does not produce or keep in stock. In such situations, your company does not deliver the items requested by a customer. Rather, your company passes the order along to a third-party vendor, which then ships the goods directly to the customer and bills you. A sales order may consist partly or wholly of third-party items. Occasionally, your company may need to let a vendor deliver items you would normally deliver yourself.

To reduce freight and associated logistics costs, companies sometimes procure goods from other business partners (i.e., vendors) without receiving them into their own warehouses. Instead, the products go directly to the customer. The company receives notification from the vendor stating that the products have been shipped to the customer. The customer is billed based on the quantity shipped as noted on the shipping notification.

Many business activities are associated with third-party vendors (see the sidebar, “Business Activities to Note in Third-Party Processes”).

SAP’s third-party process can manage this type of situation. Based on my experience implementing it in production environments, I provide the steps you need to take in the sales and distribution (SD), materials management (MM), and financial (FI) modules. In my example, I use SAP ERP Central Component (SAP ECC) 6.0. However, the processes I describe also apply to previous releases.

Gaetano Altavilla

Dr. Gaetano Altavilla is a senior SAP practice manager. His focus is on pre-sales, delivery of SAP application solutions for large international corporations, and SAP knowledge management in Europe, the Middle East, and Africa (EMEA).

In his 18 years of SAP application experience working for many multinational companies, such as Procter & Gamble and Hewlett-Packard, he has covered a wide range of ERP logistic areas, focusing on the MM, WM, SD, LES, PP, PP-PI, PLM (QM, PM, PS) modules, as welll as CRM (TFM), SRM (EBP), SCM (SAP APO), and MES (ME) components.

Dr. Altavilla holds a degree with first-class honors in mathematics from the University of Naples and is certified in many SAP modules: SAP Logistics Bootcamp, SAP MM, SD, LE (SHP/WM/LE), PP, PLM (PM, QM, PS), SRM, CRM, SCM (APO), SCM (TM), FI, CO, and Solution Manager. He also has experience in ABAP/4 and application link enabling (ALE) and IDocs. He has participated in numerous industry conferences, such as the SAP Skills Conference in Walldorf at SAP SE.

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