Scenario 12 — Third-Party Drop-Ship (Vendor Ships Direct to Customer)
📊 Business Case — When & Why You Use This
Third-party drop-ship is where you sell something you never physically handle. A customer order triggers a purchase order to your vendor, and the vendor ships the goods straight to your customer's site. You sit in the middle of the transaction — earning the margin between vendor cost and customer price — without the goods ever entering your warehouse or your inventory. This is a tight MM ↔ SD ↔ FI integration scenario.
🕐 When to use it
When you take a customer order for material you don't stock and don't want to stock — bulky, made-to-order, or supplier-direct items where it's cheaper and faster for the vendor to deliver to the customer for you.
❓ Why it matters
You capture the trading margin with zero inventory cost or warehousing. The sales order auto-creates the purchase requisition, so SD and MM stay linked end-to-end and the goods never touch your books.
👤 Who triggers it
Sales raises the order with item category TAS; the system auto-creates the PR; purchasing converts it to a PO to the vendor; AP verifies the vendor invoice; billing invoices the customer.
🔁 The key distinction
You never hold the goods. The PO carries account assignment X (sales order), so stock never enters your inventory — any GR is purely statistical. COGS and revenue are recognized without inventory ever sitting on your balance sheet.
💰 Financial Impact — The Easy-Money Example
PakSteel sells 200 TO of rebar to a builder. It holds no stock — Aisha Steel Mills ships straight to the builder. Here's how the money flows through PakSteel's books without a single ton of inventory landing:
The big idea: in a normal sale you'd capitalize inventory, then release it to COGS at delivery. Here the goods skip your warehouse entirely — COGS comes straight from the vendor invoice (MIRO) and revenue from customer billing (VF01). The margin lands in your P&L while inventory never appears on your balance sheet.
🇵🇰 The Business Story
🎯 What you'll learn
- Trigger: SD Sales Order with Item Category TAS (Third Party)
- PR auto-created from SO
- PO has Account Assignment X (sales order) — stock never enters our books
- Vendor ships directly to customer; PakSteel just verifies invoice + bills customer
- MIGO is STATISTICAL (no real stock movement)
- Goods Receipt indicator on PO may be unchecked (skip GR entirely)
⚙️ Prerequisite Setup Required
- 📖 If SD not yet set up: complete Setup Guide Step 16 (sub-steps 16A-16I) — focus on Sales Org + Customer Master parts
- 👥 Or: Ask your SD consultant to provide a customer master + sales area for testing
- 🪂 Alternative: Skip for now and revisit when SD setup is complete
FERT-REBAR-01 (FERT, finished) — create steps. First time? the why behind every field.
Goods Receipt · Reference Purchase Order → mvt 101, purely statistical (no stock, no value — acct assignment X routes cost to the sales order). The PO's GR flag may be off, skipping this entirely. Full guide: MIGO Selection Bar.
🔧 Step-by-Step
🔄 Transaction Flow
12.1 — Sales Order · VA01 with item category TAS
- VA01 · Order Type OR · Sales Org / Distribution Channel / Division of PSPK
- Customer: builder BP · Material FERT-REBAR-01 · Qty 200 TO
- Item Category:
TAS(Third-party — Order) - Save → SO #
- Behind the scenes: SAP creates a PR (NB-style) for the third-party PO
12.2 — Convert PR to PO · ME21N (or auto if release strategy disabled)
- ME21N · pull in the auto-created PR
- Account Assignment:
X(Sales Order) — Item Cat S (Third-party) - Vendor: VEN-AISHA · Save
12.3 — Statistical GR (optional) · MIGO
If GR indicator on PO is on: post statistical GR just to mark "vendor confirmed shipment to customer." No stock impact.
12.4 — Vendor invoice · MIRO
Standard MIRO. Posts to a "Third-party COGS" G/L → Vendor Cr.
12.5 — Customer Billing · VF01
Bill the customer based on the SO. Customer Dr / Revenue Cr. Margin = Revenue − Third-party COGS.
✅ Verification — Confirm Scenario 12 Worked
- VA03 → display the sales order → item shows category
TASand the linked purchase requisition / PO in the schedule lines - ME23N → the third-party PO shows account assignment
X(Sales Order) and item category S - MMBE → FERT-REBAR-01 → no stock change at your plant (goods never entered inventory)
- VF03 / FBL5N → customer billing posted Revenue; MIRO posted Third-party COGS → margin = Revenue − COGS
🎓 Interview-Ready Answers
Q: What is item category TAS and what does it trigger?
TAS is the third-party item category in the sales order. When you enter a line with TAS, SAP automatically creates a purchase requisition for that item, which purchasing converts into a PO to the vendor. The vendor then ships directly to the customer — you never receive the goods into your own stock.
Q: Why does the third-party PO use account assignment X, and what does that mean for stock?
Account assignment X (sales order) with item category S tells SAP the procurement is for a specific sales order, not for your own inventory. The cost is assigned to the sales order rather than capitalized as stock — so the goods never enter your valuated inventory, and any goods receipt is purely statistical.
Q: Where do revenue and COGS come from if you never hold the goods?
COGS comes from the vendor invoice posted in MIRO (to a Third-party COGS G/L, with the vendor credited). Revenue comes from customer billing in VF01 (customer debited, revenue credited). The margin is Revenue − Third-party COGS, and it's recognized without any inventory on the balance sheet.
Q: Is the goods receipt mandatory in third-party processing?
No. The GR indicator on the PO can be unchecked to skip GR entirely. If it's on, you can post a statistical goods receipt to record that the vendor confirmed shipment to the customer — but it has no stock impact either way, because the goods aren't yours.