This blog post will provide the detailed process on Two-Tier ERP solution for process where Service is delivered from Subsidiary against a Purchase order at Headquarter

The Headquarter process the customer’s order and details of recipient of service  are communicated as service order to subsidiary, Services are directly delivered from Subsidiary with seamless processes integration between headquarters and subsidiary.

Process Flow

Through Two-Tier ERP solutions, seamless orchestration of process between headquarters and subsidiary along with below Integration points.

  1. Purchase order at Headquarter will be automatically transformed to service order at Subsidiary.
  2. Subsidiary confirms the service order and subsequently the Purchase order at the Headquarter is updated.
  3. Subsidiary creates billing documents; corresponding supplier invoice will be created at Headquarters.

The process starts where customer places order at Headquarter for services. The internal sales representative at the Headquarter creates the sales order of customer, where purchase requisition is created against the sales order. The purchase requisition is converted to purchase order from the displayed list of purchase requisition. Once the purchase order is approved EDI based approach is used to automatically transfer the purchase order information, for creation of service order at Subsidiary .

Customer Service Manager will receive the automatically generated service order at subsidiary with sold-to, bill to and pay to as headquarter and ship-to as the end customer. Once the service order is confirmed, EDI based approach is used to confirm the purchase order at Headquarter

As soon as the service order is confirmed the service technician or Service Customer Manager at subsidiary does the service and confirm the service.

One service delivery the purchaser at headquarter posts service entry sheet (this is an optional step)

Billing document is created at subsidiary and bill to headquarter, corresponding Supplier invoice will be created automatically at headquarter. Headquarter Bills the customer.

Note: For customers in SAP S/4HANA on-premise  which are using Service orders can start the process with Service order creation for customer at headquarter instead of sales order. Since this service is to be provided by subsidiary, purchase requisition is created against the service order.

Business Benefits

    • Experience greater automation for service delivery in Two-Tier ERP. Seamless Integration of transactional steps like creation of Service Order at Subsidiary and Vendor Invoice at Headquarter
    • Reduce time and manual efforts in correspondence. Services are Directly delivered to Customer from Subsidiary
    • Increase productivity, performance, and work satisfaction of sales professionals and accounts receivable accountants
    • 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:



Author Since: April 19, 2021

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