INFS 5024 - Enterprise Systems

Module 4 –Sales & Distribution (SD)

 Objectives

• Understand the main process behind Sales &

Distribution (SD)
• Appreciate the benefits of an Enterprise System in
supporting the process
• Understand important technical terms
 SD Organisational Structure

• Client
– An independent environment in the system
• Company Code
– Smallest org unit for which you can maintain a legal set of books / accounts
• Credit Control Area
– An organisational entity which grants and monitors a credit limit for customers.
• Sales Organisation
– An organisational unit responsible for the sale of certain products or services.
– The responsibility of a sales organisation may include legal liability for products
and customer claims
• Distribution Channel
– The way in which products or services reach the customer
– Typical examples of distribution channels are wholesale, retail, or direct sales
 SD Organisational Structure

• Division
– A way of grouping materials, products, or services
• Sales Area
– Combination of Sales Organisation, Distribution Channel and Division
– Determines conditions (i.e. pricing) for sales activities
• Plant (here: Delivering Plant)
– Plant from which the goods should be delivered to the customer
• Other SD organisation units:
– Shipping Point
– Loading Point
– Sales Office
– Sales Group
– Sales Person
SD Master Data

Customer Master

Material Master

Sales Condition
 Customer Master Data

• Customer Master
– Contains all of the information
necessary for processing orders,
deliveries, invoices and
customer payment
– Every customer MUST have a
master record

• Created by Sales Area

– Sales Organisation
– Distribution Channel
– Division
 Customer Master Data

• The customer master

information is divided into 3
areas:
– General data
– Company Code specific data
– Sales Area specific data
 Customer Master

General Information relevant for the entire organization:

Name
Address
Client XXX Communication

Company Code specific information: Sales Area specific information:

Acc. Mgmt
Payment Sales Office
Bank Currency

Company Code US00 Sales Org. UW00

Company Code DE00 Sales Org. DS00

 Condition Master Data (Pricing)

• Condition master data includes:

– Prices
– Surcharges
– Discounts
– Freights
– Taxes
• You can define the condition
master to be dependent on various
data:
– Material specific
– Customer specific
• Conditions can be dependent on
any document field
 Output

• Output is information that is sent

to the customer using various
media, such as:
– E-mail
– Mail
– EDI
– Fax
– XML
• Output examples:
– Quotation
– Confirmation
– Invoice
 Sales Order Process

Pre-sales Sales Order

Activities Entry

Check
Availability

Pick
Materials
Receipt of
Customer Payment
Pack
Invoice Materials
Customer
Post Goods
Issue
 Pre-Sales Activities

• Sales Support is a component of SD that assists in the sales,

distribution, and marketing of a companies products and services to
its customers. It contains the following functionality:
– Creating and tracking customer contacts and communications (sales
activity)
• Phone call records
• On-site meeting
• Letters
• Campaign communication
– Implementing and tracking direct mailing, internet, and trade fair
campaigns based on customer attributes

• Pre-sales documents need to be managed within the presales

activities: Inquiries and Quotations. These documents help identify
possible sales related activity and determine sales probability.
 Pre-Sales Activities

• The ultimate goal of all pre-sales

activities is to equip the sales
technician with all the
information necessary to
negotiate and complete the
potential sale.
• Information needed:
– Past sales activity
– Past communication
– Contact information
– General Company info
– Credit limits and usage
– Current backorders
• 360º view of your customer
 Inquiry

• An inquiry is a customer’s request

to a company for information or
quotation in respect to their
products or services without
obligation to purchase.
– How much will it cost
– Material/Service availability
– May contain specific quantities
and dates

• The inquiry is maintained in the

system and a quotation is created
to address questions for the
potential customer.
 Quotation

The quotation presents the

customer with a legally
binding offer to deliver
specific products or a
selection of a certain
amount of products in a
specified timeframe at a
pre-defined price.
 Sales Order

• Sales order processing can originate from a variety of documents

and activities
– Customer order: phone, internet, email
– Existing Contract
– Quotations

• The electronic document that is created should contain the following

basic information:
– Customer Information
– Material/service and quantity
– Pricing (conditions)
– Specific delivery dates and quantities
– Shipping information
– Billing Information
 Sales Order
• The sales document is made up
of three primary areas:
– Header
• Data relevant for the entire sales
order: Ex: customer data, total
cost of the order

– Line Item(s)
• Information about the specific
product: Ex: material and
quantity, cost of an individual line

– Schedule Line(s)
• Uniquely belongs to a Line Item,
contains delivery quantities and
dates for partial deliveries
 Sales Order

• The sales order contains all of the information

needed to process your customers request, the
following information is determined for each
sales order:
– Delivering Schedule
– Shipping point and route determination
– Availability Check
– Transfer of requirements to MRP
– Pricing
– Credit limit check
 Delivery Scheduling

• When an order is created the user must enter a

requested delivery date for the order or each line item.

• The system will then determine a delivery timeline, this

will be used when determining the material availability, or
ATP (Availability to Promise) date.

• The system will determine this date using forward and

backward scheduling rules defined in the system.
 Shipping & Route Determination

• During the creation of the sales order the system must

determine the shipping point from which the material will
be shipped and the route the material will take to get
from the warehouse to the customers location.

• A shipping point is determined for each line item within

the order.

• The route determination is also used to define the transit

time of the material.
 Availability Check

• Availability Check
– Determines the material
availability date
– Considers all inward and outward
inventory movements

• Proposes 3 methods of delivery

– One-time delivery
– Complete delivery
– Delayed proposal

• Rules are created by YOU

 Pricing

• The system displays pricing information for all sales

documents on the pricing screens at both the header
and the line item level.
– Header pricing is valid for the whole order - it is the cumulative of
all line items within the order
– Line item pricing is for each specific material.

• The system will automatically search for price, discounts,

surcharges, calculate taxes and freight. You have the
ability to manually manipulate the pricing at both the
header and line item level within the sales order by
entering a condition type and amount.
– Taxes and freight can be set-up / configured so the users don’t
have to enter manually.
 Credit Check

• Allows the company to manage its credit exposure and

risk by specifying credit limits.

• During the sales order process the system will alert the
sales rep about the customers’ credit limit.

• If necessary, the system can be configured to block

orders and deliveries.
 Shipping & Transportation

• The shipping process begins when you create the delivery

document for the sales order. This document controls, supports,
and monitors numerous sub-processes for shipping:
– Picking
– Packing
– Post Goods Issue

• Integrated with the Material Management (MM) and Finance (FI)

modules
 Delivery Creation

• Checks order and materials to determine if a delivery is possible —

delivery block (hold), completeness

• Confirms availability

• Confirms export/foreign trade requirements

• Determines total weight & volume

 Delivery Creation

• Generates packing proposal

• Calculates weight and volume
• Checks scheduling
• Considers partial deliveries
• Updates route assignment
• Assigns picking location
• Updates sales order
• Determines batches
• Quality check (if needed)
• Updates sales order
 Delivery Document

• The Delivery Document initiates the delivery process and

is the control mechanism for the process
– Picking
– Packing
– Loading
– Posting Goods Issue

• Changes to delivery are allowable - products, quantities

 Picking

• Quantities based on delivery document

• Assigned date when picking should begin
• Automated storage location assignment
• Supports serial number/lot number tracking and batch
management
• Integrated with Warehouse Management
 Loading and Packing

• Identifies which packaging is to be used for specified

products
• Identifies and updates accounts associated with
returnable packaging
• Tracks the packed product by container
• Ensures weight/volume restrictions are enforced
• All packed items are assigned to the required means of
transportation
 Goods issue

• Event that indicates the legal change of ownership of the

products

• Reduces Inventory and increases Cost of Goods Sold

• Automatically updates the General Ledger (G/L)

accounts

• Ends the shipping process and updates the status of the

shipping documents
 Billing

• The billing document is created by coping data from the

sales order and/or delivery document.
– Order-based billing
– Delivery-based billing

• The billing process is used to generate the customer

invoice.

• It will update the customer’s credit status.

 Payment

• Payment is the final step in the sales order process, this

step is managed by the Financial Accounting department
/ area.

• Final payment includes:

– Posting payments against invoices.
– Reconciling differences between payment and invoice.

• Payment will create a posting clearing the liability in the

A/R account and increases your bank account.
 Summary

• SD Module in SAP
• Relates to PP, MM, and SCM Modules
• Often relate on each other
• Enterprise System directly support the
integration of processes across the components
• Remember terms