Best Practice 3rd Party delivery

[nicholas_archer3]

We would like to setup company A (in it's own SAP client) that will deliver stock on behalf of manufacturing company B.

The Manufacturing Company B takes the customer orders and bills the customer for whatever was delivered by Company A.

What is best practice for setting up company A to receive stock from a manufacturing company and deliver to requested customer orders? This is a 3rd party company, not intercompany.

[Sharky]

Hi Nicholas,

I have some basic questions here that are important for this flow.

1. I assume that company A is setup in the SAP system and company B (the manufacturer) is not. Is that correct?
2. Does the ownership of the goods ever transfer to company A, yes or no?
3. Which company executes the sales process? I assume that is company A. Correct?
4. Does company A only receive stock based on sales, or do you actively plan stock quantities and replenishments?

If company A does not take ownership, but simply transfers the goods, then they act as a trader. Your stock should then be vendor consignment stock (meaning it is in your warehouse, but not owned).

If the sales are done by company A, but billing is done by company B, then company A is simply a commissioner. This means company A invoices company B for the sales. The costs incurring the handling of the goods should be covered by the commission of company A.

Otherwise, if Company A does not do the sales, but simply the handling, then company A is simply a service providers. In that case company A will bill company B for the services provided.

Both models require a completely different setup. therefore it is very important to know what exactly is required here.

Regards,

Sjaak

[nicholas_archer3]

Thank all of you for your responses.

Sjaak,

The Manufacturing/sales company already exist in SAP and now we want to create the delivery service company in it's own client.

The sales company stock is manufactured based on planned sales and most, if not all of it stock will be transferred to the delivery service company.

the scenario that best describes the model we're trying to implement is Company A as a service provider. Company B is only billed for the service company A provides.

Any further thought?

[Sharky]

Hi Nicholas,

Yes, quite some actually. Firstly, I think that pure SD will be somewhat limited in functionality. Why? Because your company A sells a service, but moves goods. You want to be able to track all movements (Deliveries processed, Transport costs, Handling, label printing etc) to be the basis for your billing.

The appropriate solution would be to use EWM in an LSP scenario. This integrates with SD for billing purposes.

If you want to be really creative, you might be able to use SD for this. At lease ensure that you only have non-valuated stock in the warehouse of company A. It should not be on the balance sheet, while you do need stock to be able to deliver.

Second, for every delivery / sales order from company B, you can create a replicated version for the system of company A. These have to be Free of Charge per item. Billing is not needed for the article.

In the SO you can:

1. Use material determination to determine a service that you bill to company B.
2. Use agency business to calculate service costs and bill this to company B (company A is the agent in this case).
3. A third option might be to use some sort of service management, where you use resource related billing for determining the service price and automate billing. This is more complex, but seems to fit more to the process of company A.

These are just a few options, although I am pretty sure that only implementing the right software will cover what you need. Only EWM will do this. Be aware that there are many more questions to be asked and answered and I think it will be very difficult to solve this with only sap ERP functionality.

Regards,

Sjaak

[ankurch]

Hi Nicolas,

In SAP standard we have the functionality of 3rd Party Sales process, as per your requirement I think its best suitable solution for you as you share that Company B is 3rd party company, that means you are raising sales order to Customer A, receiving the goods from Vendor X to fulfil the customer's requirement.

In this process system will create Purchase Requisitions based upon sales orders, and basis of the PR you can procured the goods from vendor to fulfil the customer requirement.

Thanks.

[jpfriends079]

Did you check "Cross-Company Sales Order Processing"?

Thanks,
JP

[Lakshmipathi]

If I were in your position, first I would ask the client what is the decision taken by the top management and what is the agreement entered into between these two companies. Depending upon that, you can address in SAP. Since your post does not have enough information, in normal cases, the seller would get some percent of commission on the sales made by them.