Sales Order Process ADMS3502 January 23, 2010 Douglas Peebles, PhD 1 © 2008 by SAP AG. All rights reserved. Sales Organization A sales organization is responsible for negotiating sales conditions and 2 distributing goods and services. Top organizational level to which you sum sales figures. There must be at least one sales organization defined A sales organization is assigned to only one company code. More than one sales organization can be assigned to a company code. © 2008 by SAP AG. All rights reserved. Distribution Channel Sales Organization Distribution Channel Wholesale Retail Direct A Distribution Channel is the way sales materials reach the customer. A distribution channel can be assigned (serve) to more than one sales organization. Distribution Channels allow for different conditions such as minimum order quantities and pricing. 3 © 2008 by SAP AG. All rights reserved. Division Sales Organization Product Line 1 Divisions Product Line 2 Product Line 3 Divisions are used to present product lines. At least one division must be defined. Divisions can be assigned to more than one sales organization. Divisions restrict access to materials, so care should be exercised in defining divisions. 4 © 2008 by SAP AG. All rights reserved. Sales Area Sales Organization 1 Distribution Channel 1 Division 1 Distribution Channel 2 Division 2 Division 1 Sales Organization 2 Distribution Channel 1 Division 1 A Sales Area is a valid combination of Sales organization, Division 2 Distribution Channel and Division. Customer Master Data and Sales Documents are linked to sales areas. Simple organizational structures are usually preferred to complex ones. 5 © 2008 by SAP AG. All rights reserved. Fitter Snacker Organizational Structure for Sales Fitter Sales (##FS) Wholesale (WH) Snackbar (SB) 6 © 2008 by SAP AG. All rights reserved. Direct (DI) Snackbar (SB) Shipping Point A shipping point is a fixed location that carries out shipping activities. It may be a loading dock, a mail room or a shipping department. One plant can have multiple shipping points. A shipping point can serve multiple plants. Lead times for determining delivery dates are associated with shipping points. 7 © 2008 by SAP AG. All rights reserved. Customer Order Cycle Pre-Sales Activities Sales Order Processing Inventory Sourcing Payment Billing 8 © 2008 by SAP AG. All rights reserved. Delivery Pre-Sales Activities Includes Sales Support and Pre-sales Documents. Sales Support Allows for tracking of customer contacts Includes management of sales visits, phone calls, letters and direct mailings. Mailing lists can be generated based on specific customer characteristics. Basically an Integrated Customer Relationship Management (CRM) system. Pre-sales docuiments include inquiries and quotes. Inquiries document customer requests for information (“how much is . . .”, “is the product in stock . . .”) Quotes are binding documents to a customer offering a specific quantity of material at a specific price if accepted within a specific period. Both Inquiries and Quotes can be used as a starting point to create a customer order. 9 © 2008 by SAP AG. All rights reserved. Sales Order Processing Customers place orders with a customer service representative who create a document* with information on: Customer Material Ordered - material and quantity Pricing conditions for each item Schedule lines - delivery dates and quantities Delivery Information Billing information Information is pulled from master data on customers and materials to minimize data entry errors. *Electronic Capture of a Business Event 10 © 2008 by SAP AG. All rights reserved. Inventory Sourcing Inventory Sourcing determines: If a product is available (availability check). How the product will be supplied: From stock on hand. From production or purchase orders that should be available. From make-to-order production. Shipped from an external supplier. Shipped from another plant or warehouse. 11 © 2008 by SAP AG. All rights reserved. Inventory Sourcing Inventory sourcing occurs when: An order is created. An order is changed. When the delivery document is created. 12 © 2008 by SAP AG. All rights reserved. Delivery Delivery activities include: 13 Creating delivery documents Creating transfer orders for material picking Provide packing information (if required) Goods issue (updating accounting and inventory data) © 2008 by SAP AG. All rights reserved. Billing A Billing Document is created by copying information for the sales order and delivery document into the billing document which is used to create the invoice. Billing Documents automatically debit the customer’s accounts receivable account and credit the revenue account. Postings may also be made to other accounts. 14 © 2008 by SAP AG. All rights reserved. Payment Payment is the final step in the customer order management cycle. Final payment includes: Posting payments against invoices. Reconciling differences, if necessary. The Cycle may not always go as planned material not in stock defective material returned for credit, etc. SAP has procedures to deal with these possibilities. 15 © 2008 by SAP AG. All rights reserved. Order Management Process Pre-Sales Contact Inquiry Order Inventory Sourcing Delivery/ Transportation Billing © 2008 by SAP AG. All rights reserved. Delivery Goods issue Transfer Order Shipment Invoice Accounts Receivable Material Stock Account Production Planning Sales Information System Sales Order Processing Payment/ Accounting 16 Quotation Materials Management Contract Scheduling agreement Document Flow Order Delivery Invoice Accounting Document Flow of a Sales Order Order 900 . Delivery 50000672 . . WMS transfer order 100000828 . . GD goods issue: delivery 40000184 . . Invoice 90000376 . . . Accounting document 100000269 The sales order management process consists of a chain of steps. Each step in the process causes the creation of a document which can be used to track the progress of the sales order. All changes to documents (sales orders, delivery, etc.) creates a document to keep track of the changes. 17 © 2008 by SAP AG. All rights reserved. Document Flow 18 © 2008 by SAP AG. All rights reserved. Master Data Customer Master Pricing Master Material Master Master Data is centrally stored (shared across application modules) and is processed to eliminate data redundancy. When creating business transactions (like a sales order) the ERP system copies information from master data. Three kinds of master data are critical to sales order processing: Customer - Shared with FI/CO Material - Shared with MM and PP Pricing 19 © 2008 by SAP AG. All rights reserved. Creating an Order Customer Master Sold-to party 2540-00 Material Master Item Material 1 1400-500-00 2 1400-100-00 Quantity 30 20 When a sales order is created in ERP, data is copied from: Customer Master Material Master Condition Records for Pricing Tables in Configuration for shipping point and route. Data can also be copied from an inquiry or quote. 20 © 2008 by SAP AG. All rights reserved. Shipping Point and Route SP 1 SP 2 SP 3 Plant Shipping Point Route Customer The Shipping Point is the logical or physical location where deliveries are created and managed (see Organizational Elements). The Route is the path that the delivery follows from the plant to the customer site. Delivery dates are determined based on lead times associated with the shipping point (picking and packing time) and route (transportation lead times and transit times) 21 © 2008 by SAP AG. All rights reserved. Stock Available: Backward Scheduling Order Date Material Transportation Availability Date Planning Date Loading Date Goods issue date Loading Time Pick Pack and Stage Transportation Lead Time 22 © 2008 by SAP AG. All rights reserved. Requested Delivery Date Transit Time The ERP system uses the longer of these two times in calculating delivery scheduling. Stock Unavailable: Forward Scheduling Order Date New Material Transportation Availability Date Planning Date Loading Date Goods issue date Loading Time Pick Pack and Stage Transportation Lead Time 23 © 2008 by SAP AG. All rights reserved. Confirmed Delivery Date Transit Time The confirmed delivery date is derived by the ERP system using forward scheduling based on the new material availability date Delivery Complete Delivery Sales Order Partial Delivery Delivery Delivery Sales Order Delivery Delivery Order Combination Sales Order Sales Order Delivery A delivery can be created for each sales order. Sales orders may split into multiple deliveries (availability). A delivery may combine a number of sales orders for efficiency. Combined sales orders must have something in common like shipping point, delivery processing date, ship-to party or route. 24 © 2008 by SAP AG. All rights reserved. Picking Process Delivery Transfer Order Print Transfer Order Confirm Transfer Order* * not mandatory Delivery Items Complete Process differences Copy picked quantity 25 © 2008 by SAP AG. All rights reserved. Create a new transfer order for variance quantity Billing Invoice Split Sales Order Delivery Invoice Invoice Separate Sales Order Invoice per delivery Delivery Invoice Delivery Invoice Collective Sales Order Invoice Delivery Sales Order Delivery Delivery Invoice Invoice splits can be used to bill for different items like materials and services. Collective invoices can be used to consolidate deliveries onto one invoice to minimize paperwork. 26 © 2008 by SAP AG. All rights reserved. Posting Payments Invoice 1 Invoice 2 Acme Corp. Pay to Invoice 3 Invoice 4 4325 $ Dollars First National Bank 2132 123123 54545 345 34 Customers may send one cheque to cover multiple invoices. They may also send cheques for less than the full amount due. SAP allows for partial payments to be applied to invoices. Payment posting is performed by the accounts receivable department. 27 © 2008 by SAP AG. All rights reserved. Fitter Snacker Exercise West Hills Athletic Club Sales and Distribution Inquiry 1 Pricing 28 © 2008 by SAP AG. All rights reserved. Sales Order 2 Availability Fitter Snacker Exercise Goods Issue Pick 4 5 Materials Management Sales Order Delivery 3 29 © 2008 by SAP AG. All rights reserved. Delivery Delivery Fitter Snacker Exercise Invoice West Hills Athletic Club Sales and Distribution Delivery 6 Accounts Receivable 30 © 2008 by SAP AG. All rights reserved. Post Receivable 7 Receivable