Enterprise Structures in Sales and

Distribution
Overview
• Describes how a company's sales and distribution structures can
be mapped in the system
• Illustrated in more detail with the model company IDES

2
Objectives
After completing this unit, you’ll be able to:
• Describe sales and distribution structures
• Name the organizational units relevant to sales and distribution
in the SAP ERP Central Component system
• Describe the essential characteristics of these organizational
units
• Explain the most important relationships between the
organizational structures in sales and distribution
• Describe the sales and distribution structures of IDES, Inc.

3
Contents
• General Sales and Distribution Structures
• Sales and Distribution Structures in mySAP ERP
• Sales and Distribution Structures of The Model Company IDES,
Inc.

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General Sales and
Distribution Structures
Lesson Overview
• Introduces general sales and distribution structures, which are
described using IDES Inc. as an example

6
Objectives
After completing this lesson, you’ll be able to:
• Describe sales and distribution structures

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General Sales and Distribution
Structures
• An important step is to define the organizational structures
• It requires thorough analysis of how organization wants to run its
business
• The system demonstrations use the model company IDES as an
example
• IDES means Internet Demonstration and Evaluation System
• The consolidated group, the IDES Holding AG, is divided into
several independently operating subsidiaries
• The companies that are relevant for this course belong to these
subsidiaries: IDES AG in Frankfurt and IDES US INC in New York

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Organizational Structure of IDES
Holding Inc.

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Sales and Distribution Structures of
IDES AG
• IDES AG has two branch offices for its sales and distribution
activities
• Materials for different product lines, such as motorbikes or paints, are
distributed from Hamburg and Berlin via different distribution channels

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Sales and Distribution Structures of
IDES AG

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Delivery Structure of IDES AG
• Before IDES AG confirms an order for a customer, they check
from which warehouse distribution center the material ordered is
to be delivered and whether sufficient stock is available
• The goods delivery is usually organized at these locations
• These facilities are not available at every location where products are
manufactured
• To fulfill urgent customer requests, the warehouse distribution
center in Hamburg can arrange express deliveries
• The illustration in the next slide shows the delivery structure
within IDES AG, independently from the system (using general
business terms)

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Delivery Structure of IDES AG

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Lesson Summary
You should now be able to:
• Describe sales and distribution structures

14
Sales and Distribution
Structures in mySAP ERP
Lesson Overview
• Introduces organizational elements available in the system for
mapping sales and distribution structures

16
Objectives
After completing this lesson, you’ll be able to:
• Name the organizational units relevant to sales and distribution
in the SAP ERP Central Component system
• Describe the essential characteristics of these organizational
units
• Explain the most important relationships between the
organizational structures in sales and distribution

17
Organizational Units in Sales and
Distribution
• Organizational units in the SAP system represent the
structure of an enterprise organization
• In other words, organizational units are legal and/or
organizational units in an enterprise
• mySAP ERP Sales and Service uses a range of
organizational units designed exclusively for mapping
sales and distribution processes, such as the sales
organization and distribution channel
• Other organizational units, such as the company code or plant,
are required in Sales and Distribution and other system areas
• The organizational units outlined here are just some of
the ones relevant to sales and distribution processes in
the system
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Organizational Units in Sales and
Distribution

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Organizational Units: Company
Code
• Each company within the enterprise is represented by a
company code
• Examples of a company code are: a company within a corporate
group, or a subsidiary
• A client can have multiple company codes, but a company code
must belong to only one client
• For a company code, a complete independent accounting
unit can be represented as the smallest organizational unit
of external accounting
• That is, financial statements required for legal reporting
purposes are maintained at the company code level
• This includes the entry of all accountable transactions and the
creation of all proofs for a legally required individual account
closing, such as the balance sheets and the profit and loss
statement 20
Organizational Units: Company
Code

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 Organizational Units: Sales
Organization
• The sales organization is an organizational unit in Logistics which
groups the enterprise according to the requirements of sales and
distribution
• A sales organization is responsible for distributing goods and services
• Specifically, a sales organization is:
• Responsible for negotiating terms and conditions of sales for that market
• Responsible to customers with regard to liability and rights of recourse in
cases of disputes
• The highest level of aggregation in sales-related reporting
• That is, sales data can be summarized up to the level of the sales organization
• The sales organization is also used to take, for example, a regional,
national, or international subdivision of the market into account
• In the sales statistics, the sales organization is the highest summation
level
• All sales and distribution documents, that is, all orders, outbound deliveries,
and billing documents, are assigned to a sales organization 22
Organizational Units: Sales
Organization
• A sales organization is uniquely assigned to a company
code
• More than one sales organization can be assigned to a
company code, each of which is responsible for the sale and
distribution of goods and services for a particular geographical
area, such as a regional or national market
• The latter arrangement is appropriate if the sales processes are
substantially different in the different sales organizations, for instance,
to handle regional differences in practices and customs
• In other cases a company might use multiple sales organizations
simply to make sure that the geographic area covered remains
manageable
• Although a company can include multiple sales organizations, a
sales organization can belong to only one company code
• To use the sales and distribution functions in the system, user
needs at least one sales organization
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Organizational Units: Sales
Organization

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GBI Sales Organization

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Organizational Units: Distribution
Channel
• The distribution channel characterizes the way in which
goods and services are distributed
• Several distribution channels can be assigned to a
sales organization
• To use the sales and distribution functions in the system, user
needs at least one distribution channel
• In this way, user can, among other things:
• Define responsibilities
• Carry out flexible price structuring
• Differentiate sales statistics

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 Organizational Units: Distribution
Channel
• A distribution channel (DC) is the means by which a company delivers its
goods and services to its customers
• Typical channels are wholesale, retail, and online (Internet sales)
• Just as a company can have multiple sales organizations, it can also have
multiple DCs
• Each channel has its own strategies, approaches, and constraints for getting the
goods and services to the customer
• More specifically, each channel has its distinctive responsibilities, pricing
systems, plants from which shipments are made, and other characteristics
• For example, a wholesale channel has the following characteristics (among others):
• It does not include sales taxes in calculating prices (in the United States)
• It requires a minimum volume of purchase and offers volume discounts
• It may designate a specific plant or plants from which deliveries are made
• In addition, reporting can be consolidated at the DC level
• That is, statistics can be summarized and aggregated based on distribution channels
• A sales organization must have at least one distribution channel, although it can
have more than one
• In addition, a distribution channel can be assigned to multiple sales
organizations 27
Organizational Units: Distribution
Channel

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GBI US Distribution Channels

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Distribution Chain
• A unique combination of a sales organization and distribution
channel is called a distribution chain
• Some master data, such as material master and pricing
conditions, are maintained at the distribution chain level

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 Organizational Units: Division
• Most companies consolidate materials and services with
similar characteristics within a unit known as a division
• A division is used to group materials and services
• Typically, each division is associated with a company’s product line
• A product or material can be assigned to one division only
• A division can represent a certain product group, for example
• Therefore, each division can, for example, employ its own sales strategies, such as
restrict price agreements with a customer to a certain division
• In addition, user can conduct statistical analysis by division
• Several divisions can be assigned to a sales organization
• To use the sales and distribution functions in the system, user needs at
least one division
• A sales organization must have at least one division
• A division can be assigned to multiple sales organizations
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Organizational Units: Division

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GBI US Divisions

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GBI DE Divisions

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 Sales Area
• A sales area is a combination of sales organization, distribution
channel, and division
• It defines the distribution channel a sales organization uses to sell products
of a certain division
• Each sales and distribution document , such as quotations and
packing lists, is assigned to exactly one sales area
• This assignment cannot be changed
• A sales area can belong to only one company code
• This relationship is created by assigning the sales organization
• When processing sales and distribution documents, the system
accesses various master data depending on the sales area
• This master data includes, for example, customer master data, material
master data, prices, and discounts
• The system also carries out a number of checks concerning the validity of
certain entries according to the sales area
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Sales Area

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GBI Sales Area

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 Organizational Units: Plant and
Storage Location
• The plant is a location where material stock is kept and
could, for example, represent a production facility in the
system
• The plant and storage location are organizational units that
can be used by all logistic areas of the system
• Materials management is primarily concerned with the
material flow
• From a materials management point of view, a plant is, above all, a
location where material stock is kept
• In production, a plant can represent a manufacturing facility
• In sales and distribution, a plant represents the location from
which materials and services are distributed and
corresponds to a distribution center
• The relevant stocks are kept here
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 Organizational Units: Plant and
Storage Location
• In sales and distribution, the plant has a central function:
• To use the sales and distribution functions in the system, user needs at
least one plant
• Each plant is uniquely assigned to a company code.
• The assignment between sales organizations and plants does not have
to be unique
• The plant is essential for determining the shipping point
• In the fulfillment process, a delivering plant is a facility from
which the company delivers products and services to its
customers
• In the case of products, a plant is typically a manufacturing and/or storage
facility
• In the case of services, it can simply be an office
• A plant can be assigned to more than one distribution chain
• Conversely, a distribution chain can be associated with more than one plant
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Organizational Units: Plant and
Storage Location

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Plants

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 Organizational Unit: Shipping Point
• Shipping is an integrated module of sales and distribution processing
• The shipping point is the highest-level organizational unit of shipping that
controls shipping activities
• Each outbound delivery is processed by exactly one shipping point.
• A shipping point is a location in a plant from which outbound deliveries are
shipped
• It can be a physical location, such as a loading dock, loading ramp, a rail depot,
a mail depot, or a mail room
• It can also be, for example, a group of employees responsible (only) for organizing
very urgent deliveries or handle express or special deliveries
• The organizational assignment of the shipping point is carried out at plant
level
• More than one shipping point can be assigned to a plant
• More than one plant can also be assigned to a shipping point, although this is
only recommended for plants that are close to each other
• A plant must have at least one shipping point from which to process deliveries,
although the shipping point does not have to be physically located within the
plant 42
Organizational Unit: Shipping Point

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Shared Shipping Point

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Multiple Shipping Points

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Lesson Summary
You should now be able to:
• Name the organizational units relevant to sales and distribution in
the SAP ERP Central Component system
• Describe the essential characteristics of the organizational units
• Explain the most impotant relationships between the
organizational structures in sales and distribution

46
Sales and Distribution
Structures of the Model
Company IDES, Inc.
Lesson Overview
• Introduces the organizational elements of sales and distribution
using IDES, Inc. as an example

48
Objectives
After completing this lesson, you’ll be able to:
• Describe the sales and distribution structures of IDES, Inc.

49
Sales and Distribution Structures of
IDES, Inc.
• IDES Holding AG is a globally operating group
• The subsidiaries of IDES Holding AG are organized according to country-
specific situations and laws
• Two of these subsidiaries are IDES AG in Frankfurt, Germany, and IDES, Inc. in
New York
• Representation in the system:
• Company code 1000 IDES US INC
• Company code 3000 IDES US INC
• Sales and distribution of IDES AG in Germany is organized at two
different sales facilities, each of which has its clearly defined area of
responsibility
• Representation in the system:
• Sales organization 1000 Frankfurt
• Sales organization 1020 Berlin
• Each sales organization is responsible for sales in its country and sets its
own distribution and pricing policies
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IDES Holding AG in The System

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IDES AG Sales Areas in The System
• Sales processes in the SAP ERP central component are always
uniquely assigned to a sales area
• In order to represent the different ways through which goods
reach the customer, the appropriate distribution channels were
set up
• In this course, those IDES AG sales areas are used that contain the
following distribution channels:
• 12 Resale
• 14 Service
• In order to represent the different product lines, the appropriate
divisions were set up
• In this course, those sales areas are used that contain the following
distribution channels:
• 00 Cross-division
• 02 Motorcycles
• 08 Services

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IDES AG Sales Areas in The System
• Sales areas were set up on the basis of these sales organizations,
distribution channels, and divisions
• However, only these combinations were considered in which sales and
distributions processes had to be represented
• These include:
• Sales organization 1000, distribution channel 12, division 00
• Sales organization 1000, distribution channel 12, division 02
• Sales organization 1000, distribution channel 14, division 08

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IDES AG Sales Areas in The System

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Shipping At The IDES AG in The
System
• Before IDES AG confirms an order for a customer, they check from
which delivering plant the material ordered is to be delivered and
whether sufficient stock is available
• The plants of IDES AG include, for example:
• Plant 1000 Hamburg
• Plant 1100 Berlin
• Plant 1300 Frankfurt
• Plant 1400 Stuttgart
• In addition, delivering plants need to have assigned a sales
organization and a distribution channel:
• Plant 1000 in Hamburg and plant 1400 in Stuttgart are delivering plants
for sales organization 1000 and distribution channel 12
• Plant 1100 Berlin is the delivering plant for sales organization 1020 and
distribution channel 20
• Plant 1300 Frankfurt is not a delivering plant for sales and distribution
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Shipping At The IDES AG in The
System
• The delivery is organized by various shipping points which are
assigned to the delivering plants:
• Shipping point 1000 Hamburg processes outbound deliveries from plant
1000
• Shipping point 1100 Berlin processes outbound deliveries from plant
1100

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Shipping At The IDES AG in The
System

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Lesson Summary
You should now be able to:
• Describe the sales and distribution structures of IDES, Inc

58
Unit Summary
You should now be able to:
• Describe sales and distribution structures
• Name the organizational units relevant to sales and distribution in
the SAP ERP Central Component system
• Describe the essential characteristics of the organizational units
• Explain the most impotant relationships between the
organizational structures in sales and distribution
• Describe the sales and distribution structures of IDES, Inc.

59