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This blog post will provide the detailed process on Two-Tier ERP solution for process of sales and installation using solution order with finished goods procured from Headquarters and installation done by the subsidiary.

Business Context:

OEMs or Headquarters employ Resellers/Retailers/Service providers as channel through which product can be delivered to the end customer. Service Provider’s core business model mostly include installation and services, however expansion of subsidiary business model in addition to their core process helps increase customer experience.

To understand better, Customer walks into the retail stores for a particular product. Retailer not only procures the product from the headquarters, if not available, but also installs the product at the customer location.

Process Flow

Subsidiary is running on SAP S/4HANA Cloud and Headquarters on SAP S/4HANA on-prem. Through Two-Tier ERP solutions, seamless orchestration of process between Subsidiary and Headquarters along with below Integration points.

  1. Solution order is created at the Subsidiary for Sales and Service material.

    • Sales material is to be procured from the headquarters

  2. Sales Order created in the subsidiary generates Purchase Requisition. Purchase order created from the requisition at subsidiary will be automatically transformed to Sales Order at headquarters.

  3. Headquarters confirms the Sales order followed by Delivery and subsequently inbound delivery against the Purchase order in the subsidiary.

  4. Service Material is release and Service Order created which is communicated to the Field service agent for installation.

  5. Intercompany invoicing between subsidiary and headquarters on the part delivered.

  6. Three Best Practices – 4GT , 49X and 2EJ are integrated for an end-to-end process flow.

The process starts with customer walking into the Retailer stores or reaching out to Service Provided/Reseller for requirement of product along with installation at the location. Subsidiary receive the customer’s order and creates a Solution Order with Sales and Service Material.

Upon release of the Sales line item, Sales Order is created, based on the orchestration, with Purchase requisition and is automatically converted to Purchase order through background schedule purchase order creation job.

Purchase order is created with vendor as Headquarters. EDI output type in the purchase order send the details to Cloud integration. Integration flow created using standard artefacts help create a Sales order in OEM system with reference document as purchase order.

Similarly, EDI output from Sales Order triggers another Integration Flow for updating the purchase order, in the confirmations tab, with Sales order details. Subsequent Delivery creation – Post Good Issue from headquarters is done. Inbound delivery is created against the purchase order in subsidiary.

Sales Invoice is created in the Subsidiary for the end customer.

Subsidiary release the Service line item which creates the service order. The service order is replicated to Field Service Management wherein an agent is assigned. Installation of the product is done and service confirmation sent back to the subsidiary for invoicing, if necessary.

Billing document is created at headquarters and bill to subsidiary, corresponding Supplier invoice will be created automatically at subsidiary.

Business Benefits

  • Increase customer satisfaction through extended channel of sales along with installation.

  • Experience greater automation for Solution Order in Two-Tier ERP. Seamless Integration of transactional steps like creation of Sales Order at Subsidiary with part procurement from headquarters.

  • Reduction in the data entry points from the business users

  • Save costs for paper, postage, mailing, records management

  • Enable higher degrees of scalability with process efficiency gains


This blog post should help you to understand in detail about the direct delivery of service from subsidiary to customer against a purchase order in headquarter in Two-Tier Model.

Thanks for reading this blog post, hopefully the blog post was informative.

Two-Tier ERP Accelerators can be downloaded from best practice explorer and as shown in below screen

Best Practice Explorer

SAP Best Practice Explorer

For more information on SAP S/4HANA Cloud, check out the following links: