SAP SD Third Party sales process with MIGO and Without MIGO complete class with Configuration

Neutral Minds
2 Jan 202330:15

TLDRThis video tutorial delves into the third-party sales process in SAP's Sales and Distribution module. It explains how to manage scenarios where goods are not produced in-house but sourced from vendors to fulfill customer orders. The instructor outlines the steps to create sales orders, generate purchase requisitions, and handle vendor payments and customer billing, emphasizing the configurations needed for a successful third-party sales setup. Two main scenarios are discussed: third-party sales with and without MIGO (Goods Receipt), highlighting the configurations and processes unique to each. The tutorial aims to provide clarity on how to set up and execute third-party sales in SAP for optimal efficiency and margin gains.

Takeaways

  • 😀 Third-party sales in SAP SD module allow for the sale of goods without manufacturing them, relying on vendors for supply.
  • 🏢 When a customer requests goods, a sales order can be created along with a purchase requisition to request the vendor to send goods directly to the customer.
  • 🛒 The purchase requisition is a request to the vendor to supply goods, which is different from a purchase order, which is an actual order to buy goods.
  • 📋 MIGO (Material Input for General Operations) is used for vendor payment and customer billing in the third-party sales process.
  • 💰 Margin can be earned in third-party sales by paying a lower amount to the vendor and selling at a higher price to the customer.
  • 🔍 There are two scenarios for third-party sales in SAP: with and without MIGO. With MIGO, goods receipt is recorded; without MIGO, it's for statistical purposes only.
  • 📝 The configuration for third-party sales involves setting up material masters, activating the purchasing tab, and defining item category groups and purchasing groups.
  • 🔑 The item category group 'BANS' is used to identify third-party items in the system, which are goods sold but not manufactured by the company.
  • 🔄 The sales order creation process in third-party sales involves entering the third-party material, setting the item category, and using specific document types and settings.
  • 📑 The system automatically creates a purchase requisition based on the sales order, which can then be used to create a purchase order and subsequently a MIGO document.
  • 📈 Understanding the configuration settings and document flows is crucial for managing third-party sales efficiently in SAP.

Q & A

  • What is the third party sales process in SAP SD?

    -The third party sales process in SAP SD involves creating a sales order for goods that the company does not produce. Instead of manufacturing, the company purchases these goods from vendors and then sends them to the customer. This process includes creating a purchase requisition, a purchase order, and then conducting a vendor payment (MIGO) and customer billing.

  • What is the role of a purchase requisition in third party sales?

    -A purchase requisition in third party sales is a request to the vendor to send goods directly to the customer. It is created as part of the sales order process and signifies the company's intention to purchase goods from the vendor for a specific customer.

  • How does the margin work in third party sales?

    -In third party sales, the margin is the difference between the amount paid to the vendor and the amount charged to the customer. For example, if the company pays the vendor $100 and charges the customer $120, the margin is $20.

  • What are the two scenarios in third party sales in SAP SD?

    -The two scenarios in third party sales in SAP SD are with MIGO (invoice verification) and without MIGO. With MIGO, goods receipt is recorded, and payment is made to the vendor. Without MIGO, the process is for statistical purposes only, and no actual goods receipt is recorded.

  • What is MIGO in the context of SAP SD?

    -MIGO in SAP SD stands for Material Input and Invoices Goods Movement. It is a transaction code used for recording goods receipt and invoice verification, which is essential for managing inventory and payments to vendors.

  • Why would a company use third party sales?

    -A company would use third party sales when it does not manufacture certain goods but instead purchases them from vendors to fulfill customer orders. This allows the company to offer a wider range of products without the need for manufacturing capabilities.

  • What is the significance of the item category group 'BANS' in third party sales?

    -The item category group 'BANS' is used in third party sales to identify items that are sourced from vendors and sold to customers without going through the company's inventory. It helps in differentiating third party items from those produced or stocked by the company.

  • How does the configuration of a material master for third party sales differ from regular items?

    -For third party sales, the material master needs to be configured with the item category group set to 'BANS'. Additionally, the purchasing tab must be activated, and the purchasing group must be maintained. This configuration ensures that the system recognizes the item as a third party item and processes it accordingly.

  • What is the purpose of creating a purchase order after a sales order in third party sales?

    -The purpose of creating a purchase order after a sales order in third party sales is to formalize the agreement with the vendor to supply the goods that the company will then sell to the customer. It is a crucial step in ensuring that the vendor delivers the goods as per the customer's request.

  • How does the system know whether a sales order is for third party sales or not?

    -The system determines if a sales order is for third party sales based on the item category group. If the item category group is set to 'BANS', the system recognizes the sales order as being for third party sales.

Outlines

00:00

🛒 Introduction to Third Party Sales in SAP

The video script begins with an introduction to third party sales in SAP's sales and distribution module. It explains that in third party scenarios, the company doesn't produce goods but rather sources them from vendors to fulfill customer orders. The process involves creating a sales order, followed by a purchase requisition to request the vendor to send goods directly to the customer. The company then makes a payment to the vendor (Miro) and bills the customer, potentially earning a margin on the transaction. Two scenarios are mentioned: third party sales with and without goods receipt for invoice verification.

05:01

🔍 Understanding Third Party Material and System Controls

This paragraph delves into how the system identifies third party materials based on the item category group 'BANS'. It describes the importance of entering the correct material and stock information, and how the system uses document types and item categories to control the creation of purchase requisitions and orders. The paragraph also explains the significance of the 'CS' scheduling category for third party sales and the absence of delivery movements in such transactions.

10:03

📋 Configuring and Creating Purchase Requisitions

The script continues with a detailed explanation of how to configure and create purchase requisitions in SAP. It covers the process of assigning vendors, setting options for creating a purchase order, and the distinction between valued (GR) and non-valued (NR) materials. The paragraph also discusses the system's ability to automatically generate purchase requisitions based on sales orders and the importance of maintaining the correct settings for procurement.

15:03

🚀 Creating and Processing Goods Receipts and Vendor Invoices

This section describes the process of creating goods receipts (MIGO) in SAP, emphasizing that in third party sales, goods receipts are often statistical and not tied to actual inventory movements. It explains how the system tracks the transfer of goods from the vendor to the customer and the subsequent creation of vendor invoices (MIRO) for payment. The paragraph also touches on the importance of posting MIRO documents to enable customer billing.

20:04

🔗 Document Flow and Billing Controls in Third Party Sales

The script explains the document flow in third party sales, from purchase requisitions to orders and invoices. It discusses how to check the document flow and the importance of creating a goods receipt (MIGO) before billing the customer. The paragraph highlights the billing controls based on invoice quantities and the conditions that must be met for the system to allow billing, such as the completion of MIRO transactions.

25:06

🛍️ Completing Sales Orders and Billing Without Shipping Notifications

This paragraph focuses on the final steps of the third party sales process, including creating sales orders and billing the customer without the need for shipping notifications (MIGO). It describes the conditions under which the system allows billing, such as the configuration settings in the item category and the completion of MIRO documents. The script also mentions the importance of maintaining correct billing quantities and the implications of using different billing types.

30:08

📝 Conclusion and Encouragement for Further Engagement

The final paragraph serves as a conclusion to the video script, summarizing the key points covered in the tutorial on third party sales in SAP. It encourages viewers to subscribe to the channel, like the video, and share it with others. The script also invites viewers to reach out with any questions or doubts, emphasizing the importance of understanding the configuration steps and material master settings for successful third party sales processing in SAP.

Mindmap

Keywords

💡Third Party Sales

Third Party Sales refers to a business transaction where a seller arranges to supply goods from a third-party supplier to a customer. In the context of the video, it is about selling products that the company does not manufacture but procures from vendors. An example from the script is when the speaker mentions, 'in third party sales we cannot produce the goods we can send it from our standard vendors.'

💡SAP SD

SAP SD stands for SAP Sales and Distribution, which is a module in the SAP ERP system that deals with all processes related to selling and distributing products. The script discusses the configuration and processes within SAP SD for third-party sales, such as creating sales orders and managing purchase requisitions.

💡MIGO

MIGO is an SAP transaction code used for goods movement. It is a generic transaction for entering inventory transactions in SAP. In the video, MIGO is discussed in the context of vendor payment ('MIRO') and customer billing, where it is used to record the receipt of goods from the vendor and the subsequent billing to the customer.

💡Purchase Requisition

A purchase requisition is a document used to initiate the purchase process, requesting goods or services from a vendor. In the script, the speaker explains that a purchase requisition is created when a customer requests goods, and the company, in turn, requests those goods from the vendor, as in 'we can create purchase requisition purchase requisition is nothing but we are requesting to vendor to send goods to customer.'

💡Purchase Order

A purchase order is a commercial document that is sent to a supplier indicating the intention to purchase goods or services on specified terms. The script describes the creation of a purchase order after a purchase requisition has been made, which is a step in the third-party sales process within SAP SD.

💡Customer Billing

Customer billing is the process of invoicing customers for goods or services provided. In the video, the speaker discusses how customer billing is done after receiving payment from the vendor, allowing the company to earn a margin on the sale, as illustrated by the example 'we can do 120 dollars to customer.'

💡Margin

In the context of the video, margin refers to the difference between the cost of goods purchased from the vendor and the amount charged to the customer, which represents the profit for the company. The script mentions earning a margin as part of the third-party sales process, such as 'we can get some margin, example hundred dollars we pay two when twenty dollars or something.'

💡Material Master

A Material Master in SAP is a record that holds all the relevant data about a product or material used in various modules of the SAP system. The script mentions creating a material master for third-party items, which is essential for configuring the item category group and other settings for third-party sales.

💡Item Category Group

In SAP, the item category group classifies materials into groups that share similar characteristics for various processes. The script specifies that for third-party sales, the item category group should be set to 'BANS' to indicate that the item is a third-party item being sold by the company but not manufactured by it.

💡Goods Receipt

Goods Receipt in SAP is a document that confirms the receipt of goods from a supplier. In the video, the speaker explains that in third-party sales with MIGO, a statistical goods receipt is created for invoice verification purposes without actual goods being received into inventory, as mentioned in 'we can create but we cannot receive any goods.'

💡Invoice Verification

Invoice verification is the process of checking the accuracy of an invoice against the purchase order and goods receipt. In the script, the speaker discusses creating a MIGO transaction for invoice verification in a third-party sales scenario, which is a way to ensure that the vendor's invoice matches the order and goods received, as indicated by 'just invoice verification.'

Highlights

Introduction to the third-party sales process in SAP SD, explaining the inability to produce goods and the need to source from vendors.

Explanation of creating a sales order and a purchase requisition in a third-party sales scenario.

The role of the purchase requisition as a request to the vendor to send goods directly to the customer.

Discussion on the margin gained in third-party sales, such as paying $20 to the vendor and selling for $120 to the customer.

Two scenarios in third-party sales: with MIGO (invoice verification) and without MIGO (statistical MIGO).

The importance of material creation and configuration for third-party sales, including activating the purchasing tab.

Differentiating between trading goods and manufacturing goods in the context of third-party sales.

The significance of the item category group 'BANS' for identifying third-party items in the system.

Process of creating a sales order in transaction VA01, including entering third-party material and settings.

How the system recognizes third-party items based on the item category group and sales document type.

The automatic creation of a purchase requisition from a sales order at the scheduling category level.

Details on creating a purchase order from a purchase requisition and the subsequent MIGO process.

The conditions under which a MIGO can be created, including the necessity of a purchase order and the GR option.

Demonstration of creating a MIGO with Goods Receipt and Invoice, explaining the stock transfer from vendor to customer.

Process of creating customer billing in transaction ME22N after completing the MIGO.

Explanation of the configuration settings for third-party sales, including the importance of building relevance and billing status.

How to handle the creation of a sales order without a shipping notification (MIGO) in third-party sales.

The impact of configuration on the process flow and the importance of proper setup for successful third-party sales.