SAP 3rd Party Order Fulfillment Process to Make Your Supply Chain Efficient and Cost Effective: Part-1

Irrespective of geographic regions, industries, or channels, the story is the same around the word– customer wants better than yesterday. To remain in business, sellers need to continuously innovate and bring something new and better to customers. It is not always a new product or a service that makes our customers happy, but the same service delivered faster and cost-effectively can achieve the required goal – Customer Happiness!

SAP 3rd Party Order Processing is one of the ways you can make your supply chain efficient and helps improve customer satisfaction. In 3rd Party order processing, the seller arranges direct shipment from the manufacturer (a company not owned by the seller) to end customer. As an example, in the automotive industry, it is very common that general parts such as oil, coolant, filters, bulbs, etc. are not manufactured in-house but procured from niche vendors which may have the capability to direct ship to end dealers or customers.

SAP 3rd Party Order Processing

SAP Business Process Steps:

  1. Customer places a sales order to company A for a product
  2. Company A has identified the ordered product as a 3rd Party Product that can be shipped to customers directly from the vendor
  3. SAP system based on the sales order product creates a purchase requisition for the ordered material
  4. A purchase requisition is converted into the purchase order
  5. The purchase order is sent to the vendor with the customer delivery address
  6. Vendor ships products to customer
  7. The vendor sends an invoice to Company A
  8. Company A verifies the invoice and delivers the invoice Receipt
  9. Based on the vendor invoice receipt, the customer is billed.


  1. Time-saving: As products are shipped directly from vendor to customer substantial time is saved in comparison to if the goods are routed from vendor to company A and from there to customer.
  2. Cost Saving: As there is no need to ship the goods to Company A there is cost saving in terms of shipment cost and stocking cost.
  3. Customer Satisfaction: Overall cycle time from order to shipment is reduced which increases customer satisfaction
  4. Customer billing based on the Invoice Receipt minimizes over-billing to customers.


  1. Minimum sales order quantity should match with minimum purchase order quantity otherwise vendor may refuse to deliver.
  2. There must be a master agreement with the vendors to ship goods directly to customers with a target time of fulfillment
  3. Vendor agreement for ownership of goods during transit, customer returns, overages, and shortages must be signed before the start of vendor direct services.
  4. Packaging and branding of goods must be finalized before the start of the process.

Contact us at if you want to learn more about Third Party Order Fulfillment.

Genius Business Solutions is an ERP Consulting firm headquartered at Moline -Quad Cities, Illinois with clients based throughout the United States and India. Call us now to achieve the most ROI out of your SAP ERP investments. With over 12 years of industry experience and certified industry experts with software and business knowledge, we can help run your business efficiently by optimizing your ERP system and re-engineering your business processes to achieve unprecedented business results.

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