Sales & Distribution
Processes
EGN 5620
Enterprise Systems Configuration
Spring, 2015
Sales & Distribution Process
1.
2.
3.
4.
5.
6.
7.
Engage in pre-sales activities
Create quotations and send to customers
Create sales orders
Schedule & deliver
Bill customer
Receive payment from customer
Handle sales order return
January 2008
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2
Sales & Distribution
Process
SAP Implementation
Business Process Integration
MM
SD
Rules
FI
FI
MM
SD
January 2008
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Pen Incorporated
Procure for Sales Order
Pre-Sales
Activity
Sales Order
Delivery
Availability
Check
In
Inventory
Accounts
Receivable
Goods to
Delivery
YES
NO
Purchase
Requisition
Billing
Plant or
Warehouse
General
Ledger
Accounts
Inventory
Postings
Goods from
Purchase Order
Purchase
Order
Goods
Receipt
Invoice
Receipt
January 2008
Accounts
Payable
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5
Business Process Integration
SD Process
January 2008
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Integration
SAP Sales Order Process
(Order-to-Cash)
Check
Availability
Sales Order
Entry
Sales Quotation
Entry
Pre-Sales
Activities
Receipt of
Customer Payment
Delivery Note &
Pick Materials
Sales
Process
Pack
Materials
Invoice
Customer
Post Goods
Issue
January 2008
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SAP SD Process
1. Engage in pre-sales activities
2. Create quotations and send to
customers
3. Create sales orders, item proposal, or
scheduling agreement
4. Schedule delivery and create delivery
note
5. Create/send invoice to customer
(billing)
6. Receive/post payment from customer
7. Handle sales order return
January 2008
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1: Engage in Pre-Sales Activities
Pre-sales Activities:
◦ Initiate customer contacts and communications
(sales activity) via:
Phone call records
On-site meeting
Letters
Campaign communication
◦ Implement and track
 direct mailing,
 internet, and
 trade fair campaigns based on customer attributes
Pre-sales documents :
Inquiries and Requests for Quotation from
customers.
2: Create quotation to customer
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 time
frame at a predefined price.
Customer-Specific Material Info Record
Customer material information records is
used to store data on a material defined
for each specific customer.
 It contains customer-specific:

◦ Material number,
◦ Material description, and
◦ Data on deliveries and delivery tolerances
January 2008
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3: Create Sales Order

A sales order contains all of the information
needed to process customers request. The
process for creating a sales order has the
following steps:
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Pricing
Credit limit check
Availability Check
Delivering Schedule
Shipping point and route determination
Transfer of requirements to MRP
foreign trade and license processing
3: Create Sales Order
Three primary areas of a
sales order:
◦ Header
Data relevant for entire sales
order: customer data, total
cost of order, number of
sold-to party, number of
ship-to party and payer,
document currency and
exchange rate, pricing
elements for the entire
document, delivery date
and shipping point order
◦ Line Item
Information about the
specific product: Ex:
material and quantity, cost
of an individual line
◦ Schedule Lines
Uniquely belongs to a Line
Item, contains delivery
quantities and dates for
partial deliveries
3: Create Sales Order
Item Data
Whereas data in the document header applies to all items
in the document, some data applies only to specific items.
This data is stored at item level and includes the:
• Material number
• Target quantity for outline agreements
• Number of the ship-to party and the payer (an
alternative ship-to party or payer can be defined for a
particular item)
• Plant and storage location specifications
• Pricing elements for the individual items
• Schedule line data
January 2008
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3: Create sales order: item proposal

If a customer frequently orders the same
combination of materials, system can store
the frequently used data as an item proposal in
the system.

During sales order processing, the user can copy
all or some of the materials and quantity data
from the item proposal directly into the sales
order (document)

Item proposal can be assigned to one or multiple
customer master records
January 2008
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3.1: Pricing

SAP can display pricing information at both the header for
entire sales order and the line item level for individual
material.

It enables the user to program varied pricing procedures to
meet individual organizations needs.

Pricing is extendable; it can be attached, or extended to
external pricing programs or elements outside SAP for
pricing.

It allows Gross to Net pricing: This allows discounts and
reductions from the ‘master’ price.
3.2: Credit Check

SAP provides an efficient means to implement
credit management

It is integrated with Financial Accounting (FI), via
credit control area

It automatically alerts when a credit check fails
January 2008
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3.2: Credit Check

A large number of outstanding receivables or bad
debts can have a considerable impact on company
performance.

User may minimize credit risk by defining a credit
limit for customers by using Credit Management.

This is especially important if a company does
business with customers in financially unstable
sectors or countries, or trade with countries that
are politically unstable or that adopt a restrictive
exchange rate policy.
January 2008
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3.3: Availability Check
Availability Check
◦ Determines the material
availability date
◦ Considers all inward and
outward inventory
movements
Allow for 3 methods of
delivery
One-time delivery (
on- time with one-time
delivery)
Complete delivery
(possibly delayed onetime delivery)
Delayed proposal
(allows partial delivery
schedule)
3.3: Availability Check

Material availability check includes:
◦
◦
◦
◦
◦
◦
Safety stock (one of demands)
Stock in transfer
Quality inspection stock
Blocked stock
Restricted use stock
All movements of stock
January 2008
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3.3: Availability Check

Inward/Outward movement of goods
Supply side:
◦ purchase orders
◦ purchase requisitions
◦ planned orders
◦ production orders
Demand side:
◦ reservations
◦ dependent reservations
◦ dependent requirements
◦ sales requirements
◦ delivery requirements
January 2008
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3.3: Availability Check
One-time delivery
•
Deliver on the requested delivery date
•
In this section, SAP checks whether the
requested delivery date can be kept to. If stock
of the material is available to make a delivery
on the requested delivery date, the stock
quantity is confirmed here.
•
If there is no stock available, confirmed
quantity zero is displayed.
January 2008
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3.3: Availability Check
Complete delivery
 In this section, SAP checks whether there will be
sufficient stock for complete delivery at a later
date:
If there is sufficient stock available at a later
date to cover the required quantity in the sales
document, the system proposes the date here.
If the system determines that complete
delivery cannot be made at a later date, no
date is proposed in this section.
January 2008
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3.3: Availability Check
Delayed proposal
 SAP checks whether and for which dates partial
deliveries can be made. Partial deliveries are
displayed for different dates. These dates are
based on the planned inward and outward
movements of stock.

Availability check takes replenishment lead time
into account.
January 2008
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3.4: Delivery Scheduling

SAP can automatically schedule essential
shipping activities, using backward and
forward scheduling rules.

It uses defined activity times to schedule
delivery activities.
January 2008
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3.4: Delivery Scheduling
Terms used in scheduling are defined below.
Transit time is the time in days that is required to deliver goods
from your premises to the customer location. It is defined for a
route.
Loading time is the time in days that is required for loading a
delivery item. It is determined from the shipping point, the route,
and the loading group of the material.
Pick/pack time is the time in days that is required for allocating
goods to a delivery as well as the time in days that is required for
picking and packing. It is calculated using the shipping point, the
route, and the weight group of the order item.
Transportation lead-time is the time in days that is needed to
organize the shipping of the goods. This might include booking a
ship and reserving a truck from a forwarding agent. It is defined
for a route.
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January 2008
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3.4: Delivery Scheduling
Five deadlines for delivery scheduling:
1. Material availability deadline: must start picking and
packing activities on the material availability deadline.
This deadline must be selected early enough in
advance so that the goods are ready by the given
loading deadline.
2. Transportation scheduling deadline: the date on
which you must start to organize the transportation of
the goods. This deadline must be selected early enough
to ensure that the means of transport is available by
the loading deadline.
January 2008
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3.4: Delivery Scheduling
3. Loading deadline: the date on which the goods must
be available for loading and on which all vehicles that
are required to ship these goods must be ready for
loading. After the time required for loading the goods
(loading time) has expired, goods issue can be carried
out.
4. Goods issue deadline: the date on which the goods
leave the company in order to arrive punctually at the
customer location.
January 2008
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3.4: Delivery Scheduling
5. Delivery deadline: the date on which the goods are to
arrive at the customer location. The difference between the
goods issue deadline and the delivery deadline is
calculated from the transit time required for the route
between the delivering plant and the customer.
The delivery deadline can be the customer's requested
delivery deadline or the confirmed delivery date (that is,
the earliest date on which you can deliver goods to the
customer).
January 2008
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3.4: Delivery Scheduling
An item consists of one or more schedule
lines. The schedule line contains all the data
that is needed for a delivery.
For example,
a customer orders 20 units of a particular
material which you enter as one item in the
sales order. However, you can only deliver 15
pieces now and the remaining 5 pieces next
month. So you need to schedule two
deliveries.
The data for these deliveries (dates, confirmed
quantities) are stored in two separate schedule
lines.
January 2008
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3.4: Delivery Scheduling

Structure of sales documents
Header
Line Item # 1
Schedule Line # 1
Schedule Line # 2
Line Item # 2
Schedule Line # 1
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3.5: Shipping Point and Route
Determination

A shipping point is determined for each line item

A delivery can only be processed from one
shipping point

Routes - route to be traveled & transit time are
determined using customized rules

Routes can be used to simply define transit time
January 2008
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3.6: Transfer of requirements to MRP
•
Sales order is transferred to MRP as a Customer
Independent Requirement (CIR). If a deficit is
found, SAP will propose a purchase req. or
planned order to fulfill the shortage after
running MRP or MPS.
•
Sales and distribution requirements reduce
existing stock or inward movements of stock on
the material availability date to ensure that
other outward movement of stock elements
cannot access the quantity reserved in this way.
January 2008
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3.6: Transfer of requirements to MRP
3.7: Foreign Trade and License
Processing
Predefined trade areas — NAFTA, EU
 Automated reporting for trade areas
 Automated controls

◦ License management
◦ Embargo lists
◦ Control by customer, country, product, point in
time
January 2008
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4: Schedule delivery and create
Delivery notes




Initiates the delivery process
Control mechanism for the process
Changes to delivery are allowable - products,
quantities
Integrated with the Material Management (MM)
and Finance (FI) modules
Picking
Packing
Loading
Delivery
Note
Post Goods Issue
January 2008
Each step in
the delivery
process
updates the
delivery
note status
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Delivery/ Goods Issuing
Reconciliation Account
Sales quotation
No impact on
Financial Accounting (FI)
Sales order
Delivery/Goods
Issuing
Materials Management (MM)
and Financial Accounting (FI)
4: Shipping
Sales Order 1
Sales Order 4
Sales Order 2
Delivery 8…13
Sales Order 3
Delivery 8…14
Delivery 8…12
Order
Combination
Sales Order 5
Delivery 8…16
Delivery 8…15
Partial
Delivery
Complete
Delivery
5: Billing Overview





SAP has the functions of processing
credit/debit memos and rebates
It automates invoicing, based on sales
orders and/or deliveries
It can create pro forma (paper) invoices
It is integrated with Finance (FI) &
Controlling (CO)
It updates customer’s credit data
January 2008
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5: Billing
Sales Invoice
Sold To:
Rushmore Group
Sales Org: S001
Dist Channel: RE
Division: 01
Conditions/Price:
$120
January 2008
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5: Billing Methods
Delivery based
Invoicing
Delivery 8…20
Invoice 9…45
Delivery 8…21
Invoice 9…46
Order 6
Delivery 8…33
Collective
Invoicing
Order 9
Delivery 8…34
Order 14
Split
Invoicing
January 2008
Invoice 9…68
Delivery 8…56
Invoice 9…91
Order 32
Delivery 8…86
Invoice 9…92
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5: Billing Documents
It explicitly specifies documents
 Billing due list — builds a work list of
invoices that should be generated
 Automatic posting to Financial Accounting
(FI): debit to customer sub-ledger account
and credit revenue account.

January 2008
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5: Billing Plans
Periodic — total amount for a planned
billing period
 Milestone — distributing the total amount
over multiple billing dates - typically used
with the project system (PS)
 Installment — evenly proportioned
amounts and defined payment dates
 Resource related — consumed resources
such as service or consulting

January 2008
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6: Payment

Payment is the final step in the sales order
process.

SAP posts payments against invoices.

The posting clears the liability in the A/R
account and increases your bank account.
7: Handle Customer Return
Customer Return
Order received
Delivery
Note
Sales
Process
Goods
Receipt
Payment
to Customer
Create
Credit Memo
January 2008
Quality
Inspection
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7: Handle Customer Return
1
Order 14
Delivery 8…56
Invoice 9…68
2
Return Order
Return Delivery
Quality
Inspection
Return to Inventory
Credit Memo
Payment
3
January 2008
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7: Handle Customer Return

Returns document
◦ Billing block can be proposed
◦ Use the Order reason field to identify the
reason for the return
◦ Full access to pricing and ability to re-price

Return delivery
◦ Issues a goods receipt to place material into
inventory
January 2008
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7: Handle Customer Return

Credit memo
◦
◦
◦
◦
Billing block must be cleared from Return
Posts to Financial Accounting (FI)
Can be processed in batch (background)
Can be processed collectively (grouped)
January 2008
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Sales & Distribution
Processes
GBI, Inc.
Sales Quotation
Sales Order
SD Process: Billing Documents
At this point
sales process
is passed over
to Financial
Accounting to
await
payment.
Document Flow

Document flow feature allows user to find
the status of an order at any point in time.
SAP system updated the order status
every time a change is made to any of the
documents created in the customer order
management cycle (Order to Cash).
January 2008
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Exercises: (Due date: 3/23/2015)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Move stock from one plant to another plant
Check stock status
Create customer quotation
Create sales order from sales quotation
Check stock status
Create delivery note for sales order
Check stock status
Picking materials on delivery note
Post goods issue
Check stock status
Bill customer
Post receipt of customer payment
Review document flow
Create Customer Material Info Record
Create second sales order
Create delivery for second sales order
Pick materials on delivery note
Exercises:
18. Post goods issue
19. Bill customer
20. Post receipt of customer payment