ICS · DOCUMENT MECHANICS
How does affiliate-supplied direct delivery work?
Branch sells to the external customer but sources the order from Affiliated Supply. SAP uses a third-party-style procurement chain to connect Branch's sales order to Affiliated Supply, direct customer delivery, internal settlement, and customer billing. The capability is not simply “drop shipping”: it is a controlled agreement that the customer promise, physical movement, internal charge, and customer revenue can each be traced across two companies.
PROCESS ROLE
Intercompany relationship, direct-delivery mechanics
The supplier is an affiliated company, so the commercial relationship is intercompany. The Branch sales item nevertheless creates procurement demand through TAS, a purchase requisition, and a purchase order.
Branch uses a PO to source the customer order from its affiliated Affiliated Supply. Affiliated Supply delivers directly to the customer.
The selling sales organisation uses a delivering plant assigned to another company code and follows the classic or advanced intercompany billing model.
OPERATIONAL FLOW
What happens in SAP
Follow the customer promise, group supply, and two financial closures in order.
SALES TRIGGER
TAS changes what the sales item does next
The sales order remains the customer-facing commercial document, but the item is not fulfilled from Branch stock.
TAS — third-party item
Controls direct-delivery behaviour and order-related billing. It tells SAP that external procurement, rather than a Branch outbound delivery, will satisfy the sales item.
Procurement-relevant demand
The determined schedule line creates the purchase requisition and carries quantity, delivery date, purchasing, account-assignment, and customer-delivery information into procurement.
GROUP SOURCING
The purchase order is the formal demand to Affiliated Supply
Branch purchasing converts the automatically generated requisition into a purchase order. The purchase order identifies Affiliated Supply as supplier and the external customer as the delivery destination.
Affiliated Supply BP
Must be extended to Branch's purchasing organisation and company code with purchasing, payment, currency, tax, and reconciliation data.
Sales-order-linked PO item
Uses the designed item category and account assignment, retains the customer sales-order relationship, and preserves the external ship-to address.
Output or integration
The PO may be sent through output, EDI, middleware, or another agreed interface. Affiliated Supply’s supply system does not have to be the same SAP system.
AFFILIATED SUPPLY FULFILMENT
The goods bypass Branch
Affiliated Supply accepts the group demand, creates its supply-side order and delivery, posts goods issue, and ships to the customer address provided by Branch.
Can Affiliated Supply meet the requested date?
The confirmed quantity and date must return to Branch so the customer promise remains realistic.
Did Affiliated Supply ship the correct goods?
Delivery, PGI, carrier reference, proof of delivery, serial or batch data, and customer destination provide fulfilment evidence.
No physical goods receipt
The illustrated design uses no stock receipt in Branch. If configured, a statistical goods receipt may record progress without creating inventory.
INTERNAL SETTLEMENT
Affiliated Supply’s invoice becomes Branch's purchase cost
Affiliated Supply bills Branch using the agreed intercompany or transfer price. Branch posts the invoice against the purchase order and records the affiliated-company payable.
Internal sale to Branch
Recognises the supply-side revenue, related tax where applicable, and intercompany receivable according to the approved legal and accounting model.
Purchase from Affiliated Supply
Uses invoice verification to record the group payable and the designed purchase cost, COGS, or clearing account. Currency, quantity, and price differences remain visible.
EXTERNAL BILLING
Branch invoices the customer
The sales item is order-related rather than delivery-related because Branch does not create the customer shipment. In the illustrated design, the supplier invoice is required before customer billing becomes due.
Branch records what it owes Affiliated Supply.
Branch records the external commercial sale.
Branch closes the customer open item when payment is matched.
DESIGN & CONTROL
What shapes the result
A successful order has to be true in four places: customer commitment, Branch procurement, Affiliated Supply fulfilment, and the two financial closures. The chain is healthy only when each party can explain its evidence and the references agree between them.
DIAGNOSTIC EVIDENCE
Test the hand-off before trusting the next document
These are the questions an analyst or project team should answer at every stage. They expose a broken model far earlier than waiting for an invoice or a customer complaint.
Did the Branch sales item determine TAS and a procurement-relevant schedule line, with the correct quantity, date, source, credit status, and customer ship-to?
Did the PO reach Affiliated Supply with a valid supplier/customer relationship, material, plant, destination, commercial terms, and traceable reference to the Branch order?
Can HQ confirm, pick, deliver, and post goods issue for the promised quantity and date? Preserve delivery, PGI, carrier, and proof-of-delivery evidence rather than relying on an order status alone.
Does HQ intercompany billing reference the fulfilled supply, and can Branch match it to the PO for quantity, price, currency, tax, and account treatment?
Does supplier invoice processing update the Branch sales item as the illustrated billing-relevance design expects, so the customer invoice is based on reconciled supply evidence?
Can the team distinguish the HQ-to-Branch transfer price and payable from Branch-to-customer revenue and receivable, while explaining expected margin and any tax or currency variance?
PROJECT MOMENT
Treat a changed order as a chain change
A quantity reduction, ship-to change, delivery split, late shipment, supplier price variance, customer cancellation, or return affects more than the document where it first appears. Decide which company owns the change and how the matching document in the other company is updated or reversed.
- Customer-service changes must preserve the Branch order, PO, and the HQ supply reference.
- HQ fulfilment exceptions must return a confirmed quantity and date before Branch renews the customer promise.
- Internal-invoice or tax exceptions must be resolved before assuming customer billing is safely due.
- Cancellation and return handling must reconcile delivery, goods issue, both invoices, and open items in the approved sequence.
CONNECTED CONTROLS
The chain depends on six connected designs
A correct setting in one module cannot compensate for a broken hand-off elsewhere.
Organisations and partners
Branch sales area, purchasing organisation and company code; Affiliated Supply BP; Branch internal-customer representation in Affiliated Supply.
Material and source
Sales and purchasing extensions, item-category group, source list or purchasing info record, delivering supplier, customer ship-to address.
Sales control
Order type, TAS item category, procurement schedule line, billing relevance, credit behaviour, and incompletion.
Purchasing control
PR creation, PO type, item category, account assignment, release, output, confirmation, and invoice receipt.
Billing and value
Transfer price, customer price, order-related billing, invoice dependency, tax, account determination, and output.
Integration and evidence
PO transmission, order confirmation, shipment status, supplier invoice, document references, error handling, and reconciliation ownership.
A Branch sales company accepts an order from a regional customer. The TAS item creates a purchase requisition and purchase order to Affiliated Supply. Affiliated Supply ships directly to the customer and invoices Branch. Branch posts the supplier invoice, then creates the order-related customer invoice.
Read the complete practitioner swimlane across setup, Branch sales and purchasing, Affiliated Supply, warehouse, customer, billing, and Finance.