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In this blog you will learn about the Service Order process with Procurement of External Service. This service process flow is based on SAP S/4HANA Cloud Private Edition, release 2023.
Step 1: Create and Release Service Order with External Service Item
Start the process by creating a service order with an External Service item. It is also possible to first create a service quote with external service item and convert it to service order when the quote is accepted.
When releasing the service order (and save), a purchase requisition is created. The purchase requisition is visible in the Transaction History.
It is also possible to directly create a Purchase Order from the Service Order item. This is controlled by the Logistics Scenario assigned to the Item Category.
When using "Legacy" Organizational Management: IMG - Service - Transactions - Settings for Service Transactions - Integration - Logistics Integration - Organizational Management (Legacy) - Define Logistics Scenario for the Procurement of Materials and Services
When using Enterprise Organizational Model: IMG - Service - Transactions - Settings for Service Transactions - Integration - Logistics Integration - Enterprise Organizational Management - Define Logistics Scenario for the Procurement of Materials and Services
The Account Assignment Category can be left blank. In this case, Account Assignment Category R (= Service Order) is used.
Step 2: Check Purchase Requisition and create Purchase Order
Using Fiori app Process Purchase Requisitions, it is possible to review the purchase requisition, assign a supplier, and create a purchase order.
Regarding supplier or vendor selection:
- Assign a Vendor in the Parties Involved of the Service Order Item: this Vendor is copied to the purchase requisition as "Fixed Vendor"
- Maintain a Purchasing Info Record for the Material: if a unique info record exists for the product in the service order item, then this info record and corresponding vendor are copied into the purchase requisition
The Purchase Organization is taken from the default purchase organization assigned to the Plant.
The new Purchase Order is updated into the Transaction History of the Service Order.
Step 3: Create and Approve Service Entry Sheet
After the external supplier has performed the service activities, a Service Entry Sheet can be created with reference to the Purchase Order.
Use Fiori app Manage Service Entry Sheets (Lean Services) to create the service entry sheet and to start the approval workflow.
After approval of the Service Entry Sheet, a Service Confirmation is created automatically. Both Service Entry Sheet and Service Confirmation are added to the Transaction History of the Service Order.
The approved Service Entry Sheet triggers the creation of a Goods Receipt document to post costs. These costs are assigned to the Service Order item.
With the Display Line Items (Margin Analysis) app, you can see the cost posting.
Step 4: Create and post Supplier Invoice
Using the Fiori app Create Supplier Invoice, you create the incoming invoice from your supplier, with reference to the Purchase Order.
Step 5: Set Service Confirmation to Completed
The Service Confirmation is needed to support T&M-based billing. No cost postings are happening from the Service Confirmation.
Step 6: Release Service Confirmation for Billing
After completing the service confirmation, you can release the service confirmation for billing. This creates a Billing Document Request (BDR).
Step 7: Create and post customer invoice
The BDR can be converted into a Customer Invoice.
Step 8: Review Margin Analysis
The resulting cost and revenue postings are visible in the Fiori app Display Line Items (Margin Analysis).
Additional information about Planned Cost calculation
Planned costs for External Service Procurement are calculated depending on the status of the process:
- Service Order item in status Open: Price maintained in Vendor Info Record. In case of multiple info records, the lowest price will be taken as planned cost
- Service Order item in status Released:
- When the service order item is released a purchase requisition is created. The planned cost in the service order item are taken from the valuation price of the purchase requisition.
- Afterwards, when the purchase requisition is converted into a purchase order, the planned cost in the service order is taken from the price of the purchase order. This update in planned cost is not immediately reflected in the service order item. Any update to the service order or the creation of a follow-up (e.g. service confirmation) will trigger a recalculation of the planned costs.
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