Sometimes goods or services are purchased from a related concern within the same organization. Thus, this translates to one division of a parent company purchasing from another one to fulfil its sales order. Hence the sales order of former becomes purchase order for the second.

Example: A  multi-national company ABC Limited manufactures and distributes laptops. There is a single plant in Japan which is  assigned to company code of Japan. The sales orders are received in various countries and this should automatically raise a PO to Japan. So, if any order is received from end customer in USA, an automatic PO must be raised from USA company code to Japan.

This article describes the steps in which you can set up an automatic Intercompany Process in SAP.

Understanding Intercompany Processes in SAP

SAP link units inside one group for buy and sell tasks. It keep data tidy while tax and currency show correct on both sides of process. That cut end month surprises by removing hidden gaps in invoicing and accounting posts. You can set price rules once and have the system apply them every time. All entries post with the same document flow ID, which make the audit process clear and easy.

Key points

• View all sales orders and purchase orders for multiple units in a single SAP screen
  
• Track cost and stock levels across all company codes in real time without manual updates
  
• Keep ledgers in sync via system rules for clear audit trails and faster closing cycles

Common Scenarios

Intercompany Sale

One unit sells goods or services to another unit in the same corporate group. For example, USA office orders laptops from Japan factory under one master contract. SAP create the sales order in one code and the purchase order in the other. Pricing, tax rates, and delivery dates flow into the PO fast. The system post revenue in one code and cost in the other.

Effect: This shorten the order cycle and cut data mistakes, so you close deals quickly and avoid invoice mismatches.

Key takeaways

• Zero double entry stops most manual mistakes and speeds up the order process
  
• Legal and tax steps apply on both ends, so compliance is built into every transaction
  
• You get clear document links for trace and audit, making reviews much faster and easier
  

Intercompany Stock Transfer

Units move stock without logging a sale in SAP, so you avoid extra billing steps. A Japan warehouse ships screens to a US repair center under one transfer order in SAP. SAP use a stock transport order to handle this move and track each step in real time. The system post a goods issue at source code and a goods receipt at target code. It also adjust stock and cost in both ledgers immediately after the transfer is confirmed.

Effect
Your inventory counts stay accurate and you avoid hidden stock losses after each move.

Key takeaways

• Moves execute with no extra billing runs or manual updates
  
• You keep stock levels correct in both codes at all times
  
• The audit trail shows each issue and receipt clearly, making compliance checks simple and quick
  

Classic vs. Advanced Intercompany Processing

In classic setup you must enter a sales order and then create a purchase order by hand. This mean more clicks and more chance of missing data fields. Advanced processing auto generate the PO once you save the SO. You only need to set the rule in SPRO and run the config one time.

Key benefits

• Order entry time cuts sharply thanks to system PO creation rules
  
• Error rate drops since users no longer copy data by hand
  
• Maintenance effort drops over time as rules run without manual checks

Steps to Set Up an Automatic Intercompany Process in SAP

1. Create headquarters as a vendor

Using XK01 create the headquarters as a vendor in the purchase organization of the buying company code. In above example, this is the USA entity.

2. Maintain the purchase order information at Sales Organization Level

For the entity which is placing order to the headquarters, maintain the purchase information as shown below:

3. Click the automatic PO for item category

Navigate to the menu node of the SPRO and mark the Automatic PO checkbox for the respective item category.

4. Maintain purchase info records

In general, a particular material can be procured from different vendors (dealers) if a single source of supply doesn’t meet the company requirements. Here’s how you can Configure Multi-Vendor Quotas in SAP ERP Within Purchasing!

To get an approval a request document called Purchase Requisition which contains information such as materials, services, delivery date and quantity needs to be prepared.

Maintain the purchase info records as shown below:

• Effect

Whenever a new sales order is raised in the buying organization (in above example USA), it automatically creates a purchase order to the headquarter organization (Japan).

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