Third-party order processing

Third-party order processing

In third-party order processing, the business passes the order from the customer, to a third-party vendor who then ships the goods directly to the customer and bills the business.

•          When a third party order is saved, purchase requisition is automatically created and forwarded to the purchase department.

•          The purchase department then creates the purchase order on the third-party vendor indicating that all goods are to be delivered directly to the customer.

•          The vendor delivers the goods to the customer and bills the business for the same.

•          The business then bills the customer for the goods delivered by the vendor after verifying the invoice receipt.

The processing of third-party orders is controlled via material types which define whether a material is produced only internally, can be ordered only from third-party vendors, or whether both are possible.

•          If a material is always delivered from one or more third-party vendors, material is maintained as third-party item. BANS is entered in the Item category group field in the Sales 2 screen of the material master record. System determines the item category as TAS while processing the material in the order.

•          In the case of a material that business delivers itself but occasionally orders from a third-party vendor, the item category of the material is manually changed from TAN to TAS during sales order processing.

Maintain Schedule line cateogories

•          Third-party items are processed by creating a normal sales order.

•          The system uses TAS as the standard third party item category.

A sales order may consist partly or wholly of third-party items

1.  Purchase requisition is automatically created in purchasing once the sales order is saved.
2. Each third-party item in a sales order automatically generates a corresponding purchase requisition item.
3. If a third-party order item has more than one schedule line, the system creates a purchase requisition item for each schedule line.
4. Purchase requisition is automatically created in purchasing once the sales order is saved.
5. Each third-party item in a sales order automatically generates a corresponding purchase requisition item.
6. If a third-party order item has more than one schedule line, the system creates a purchase requisition item for each schedule line.
7. Once the goods have been delivered to the customer by the vendor, the business then bills the customer.
8. No delivery exists in the system for third-party order items.
9. The system is set for order related billing during selection of the documents to be billed.

Free Of Charge Delivery & Subsequent Delivery Free of Charge

     Free Of Charge Delivery

A Free of Charge Delivery is basically used to send samples or free products to the customer free of charge.

•          The customer is not billed for the goods delivered.

Subsequent Delivery Free of Charge

Subsequent Delivery Free of Charge involves the delivery of goods free of charge in response to the complaints raised by the customers  with respect to the quantity or quality differences.

•          A subsequent delivery of charge is usually created with reference to the previous order.

•          The transaction is not relevant for pricing and hence no billing takes place.

•          The transaction wherein the business send samples or free products, free of charge, is recorded using the order document type – FD.

•           The delivery is actually only relevant for deliveries and not invoicing. The delivery     type used is the standard delivery type- LF.

•           The item category – KLN is not relevant for billing and pricing.

•          A free of charge subsequent delivery document-SDF is used to send products later to the customer free of charge against any complaints made by the customer.

•          The standard delivery type – LF is configured for this transaction.

•          The transaction is not relevant for billing as the items are free.

•          The standard item category- KLN is used which is not relevant for billing and pricing.

Refer to the below Order Type Configuration

Item Categories setting would be 

Consignments Sales Process

Consignment refers to those goods which are stored at the customer’s location but are owned by the business. For example pharmaceutical company’s store they are medicine in a retaileri

Benefits of Consignment Sales as below

• The consignment quantity is monitored and controlled separately from the rest of the stock.
• The customer pays only for those goods used or consumed from the consignment stock.
• The customer can usually return consignment goods which are not required.

There are four main transactions for processing consignment stock -

1. Consignment Fill-Up
2. Consignment Issue
3. Consignment Returns
4. Consignment Pick-Up

Consignment Fill-Up

When consignment stock is shipped to the customer, the transaction is referred to as consignment fill-up. In consignment fill-up, goods are delivered to the customer but they remain the property of the business.The transaction is not relevant for pricing and billing. Hence no invoice is generated

Basic setting for Consignment Fill ups 

•  Consignment fill-up is represented by the order document type – CF.
•  Standard delivery type – LF is used.
•  The document is not relevant for billing. Hence no values are maintained for delivery and  order-related billing types.
•  The standard item category used by consignment fill-up – KBN is not relevant for pricing and  billing.
•  The consignment fill-up uses the schedule line category E0 or E1.
•  Schedule line category E1 is used with MRP and uses availability checking.
•  Availability check is carried against the stock in the delivering plant.
•  Movement Type-631 enables the posting of the goods into a special consignment category in the delivering plants stock for that particular customer and material.
• The consignment fill-up order type is then followed by a standard delivery – LF.
• The document is relevant for Picking and PGI as it ensures the creation of consignment special stock for the customer 

When the goods issue is posted –

1. A special stock is created for the customer.
2. The order quantity is moved from unrestricted use stocks in the plant and added to the special stock for the customer.
3. The goods remain in the possession of the customer.
4. The total valuated stock for the plant remains the same

Consignment Issue

Consignment issue enables the customer to take consignment goods from the special stock for their use.The customer or the consignee may use the stock at his site and indicates the business of the same.The consignment stock that is used now becomes the property of the customer.The customer pays only for those quantity of goods consumed by him.

• The consignment issue uses standard sales order document type – CI.
• It is followed by standard delivery type – LF.
• A delivery related billing type – F2 is defined for this order type
• The standard item category used is KEN.
•  The item is relevant for pricing as well as billing-delivery related.
• Special stock indicator-W is maintained
•  The consignment issue uses the standard schedule line categories  - C0 and C1.
• Schedule line C1 performs MRP and availability check.
• The goods movement type-633 checks for the available consignment stock at the customers place.
• The business issues the sale, for the quantity consumed, to the customer thru the order type – Consignment Issue, CI.
• The consignment issue order type is followed by a standard delivery – LF.
• The document is not relevant for Picking as the goods being dealt  are from the special stock already marked for the customer.
•  The goods issue triggers the transfers of goods ownership from the business to the consignment consumer.

When the goods issue is posted –

1. The order quantity is deducted from both the customer’s special stock and the business own total valuated stock.
2. The goods become the property of the customer.

Consignment Return 

Consignment Return involves the return of already issued consignment goods, by the customer, back to the consignment stock.

•          The transaction is not relevant for billing as the returned stock was regarded as part of business inventory.

•          The customer may then request for a credit note for returns.

•          The sales order document type – CONR is used for consignment returns.

•          The order is assigned returns delivery document type – LR.

•          The order is relevant for order related billing type-RE.

Billing block is proposed to check if the credit is authorized and valid

•          Consignment returns uses item category -  KRN.

•          Special stock indicator – W is maintained indicating consignment process.

•          The item is relevant for pricing and order relevant billing based on the order quantity.

•          The standard schedule line category used for consignment returns is D0.

•          The schedule line used standard movement type – 634.

•          No transfer of requirements and availability check are carried out as the goods are being received back to the consignment stock at the customers site.

•          The faulty materials returned back by the customer is represented by the sales order document type- CONR.

•          The returns are recorded in the standard returns delivery document type– LR.

•          PGR causes the stock to move back into the customers consignment stock.

The ownership of the goods is passed from the customer back to the business

• When goods receipt is posted, the returns quantity is added to the customer’s special stock at the plant where the goods are returned.

Thus the customers consignment stock will increase by the returns quantity

Consignment Pick-up 

Consignment Pick-up  involves the return or reposting of any unused consignment goods stored at the customer’s place, back to the business warehouse.  The transaction is not relevant for billing as the returned stock is regarded as part of business inventory

• Consignment pick-up is represented by the order document type – CP.
• Standard returns delivery type – LR is configured.
• The transaction is not relevant for billing. Hence no values are maintained for delivery and order-related billing types.
• Consignment Pick up uses the standard item category – KAN.
• The item is not relevant for billing and pricing as the stock is coming back into the warehouse and hence there is no change of the ownership.
• The consignment pick-up uses the standard schedule line categories – F0 and F1.
• The schedule line category F1 is relevant for transfer of requirements and availability check.
•  Availability check is carried against the stock on the customers consignment.
• It has standard movement type - 632.
• All the excess material lying unconsumed and any faulty material at the customers site are brought back to the business using the order document type –CP
•   Delivery is carried out using the standard returns document type-LR.
• Goods receipt posts the stock back to the business warehouse.

 With the PGR the quantity gets deducted from the customer’s special stock and is added back into the regular stock at the plant where the goods are returned.

The total valuated stock remains the same since the returned stock was regarded as part of the business own inventory even while it was at the customer’s premises