The Third-Party Process is one of the key business processes in SAP Sales and Distribution (SD), especially for industries where companies do not manufacture or stock products but directly procure goods from external vendors and ship them to customers.
It’s a hot topic in interviews — especially for any Global Rollout projects — because of its integration with MM, FI, and EDI.
What is the Third-Party Process?
In this process:
- The company does not deliver goods directly to the customer.
- Instead, the company creates a purchase order to procure goods from an external vendor.
- The vendor delivers the goods directly to the customer.
- The vendor sends the invoice to the company.
- The company bills the customer accordingly.
🎯 Key Process Flow
- Sales Order Creation (VA01):
- Sales order with Item Category TAS (Third-Party Item).
- Schedule line category CS triggers PR creation automatically.
- Purchase Requisition (PR):
- Automatically created from the sales order.
- Convert PR to Purchase Order (PO) (ME21N):
- PO is sent to the vendor.
- Vendor Delivers Goods to Customer (No Goods Receipt in SAP).
- Vendor Invoice Receipt (MIRO):
- Vendor sends an invoice to the company.
- Customer Billing (VF01):
- Company bills the customer based on the vendor invoice.
2. Master Data Pre-requisites
| Master Data | Configuration Required |
| Material Master | Item Category Group: BANS (Third Party) in Sales Org View |
| Customer Master | Sold-to Party & Ship-to Party |
| Vendor Master | Vendor Creation with Purchase Organization |
| Info Record | Linking Material, Vendor, and Price |
3. Configuration Steps
Step-by-Step Configuration
a) Define Item Category
TAS – Standard Third-Party
- Business Data: Billing Relevance F (Order-Related Billing)
- Schedule Line Allowed: CS
b) Schedule Line Category
CS – Third-Party
- Order Type: NB (Purchase Requisition)
- Purchase Requisition Type: Immediately
- Goods Movement: Blank (No Delivery)
- Account Assignment: X (Third-Party Sales)
c) Assign Item Category to Sales Document Type
- Sales Order Type: OR
- Item Category Group: BANS
- Automatic Item Category: TAS
d) Copy Control
- OR ➡️ F2 (Order to Invoice)
- Billing Relevance: F
4. Pricing Integration
In third-party sales:
- The customer price is determined in the Sales Order.
- The vendor price is determined via Purchase Info Record.
Typical Pricing Procedure in Third-Party:
| Step | Condition Type | Description |
| 10 | PR00 | Customer Price |
| 20 | VPRS | Cost Price (Vendor) |
| 30 | EK02 | External Purchase Price |
5. Accounting Entries
| Transaction | Debit | Credit |
| Vendor Invoice (MIRO) | GR/IR | Vendor |
| Customer Invoice (VF01) | Customer | Sales Revenue |
6. Special Scenarios
| Scenario | Configuration Required |
| EDI Process | Automatic PO creation with Output Type |
| Partial Third-Party | Combination of Third-Party + Internal Delivery |
| Dropshipment Process | Advanced Variant with Stock Transfer |
7. EDI Integration for Third-Party Process (ABC Company Perspective)
Typical EDI Flow:
- ORDERS ➡️ Purchase Order to Vendor
- ORDRSP ➡️ Purchase Order Acknowledgment
- DESADV ➡️ Advanced Shipping Notification
- INVOIC ➡️ Vendor Invoice
Common Interview Questions 🔥
| Question | Key Answer |
| How does the third-party process differ from regular delivery? | No delivery, direct shipment by vendor |
| How is PR created automatically? | Schedule Line CS with Purchase Requisition |
| What happens if the vendor delivers less quantity? | Manual correction in Billing |
| How is pricing determined in third-party? | PR00 (Customer Price) + VPRS (Vendor Cost) |
Gaps/Challenges in Global Rollouts 🌍
| Gap | Solution |
| Tax Calculation in Different Countries | Condition Records per Country |
| EDI Mapping with Vendors | Custom Output Types |
| Automatic GR Creation | ABAP Custom Enhancement |
🔥 Final Summary
- The third-Party Process is Order-Related Billing.
- It integrates with SD, MM, FI, and EDI.
- Use TAS with CS schedule lines.
- The most critical part of Global Rollouts.
- Focus on EDI, Pricing, and Custom Developments during interviews.
