Sales & Distribution Processes: (Professional MSEM)

Sales & Distribution
Processes
EGN 5620 Enterprise Systems Configuration

(Professional MSEM)
Fall, 2012
Sales & Distribution Process
1. Engage in pre-sales activities
2. Create quotations and send to customers
3. Create sales orders
4. Schedule & deliver
5. Bill customer (by invoice)
6. Receive payment from customer
7. Handle sales order return
SAP AG - University Alliances and

The Rushmore Group, LLC 2008. All
January 2008 rights reserved. 2
Process
SAP Implementation

(Professional MSEM)
Fall, 2012
Business Process Integration
FI MM SD
Rules
FI
MM
SD SAP AG - University Alliances and

Pen Incorporated
Procure for Sales Order
Pre-Sales Sales Order Accounts
Delivery Billing
Activity Receivable
Availability Goods to
Check Delivery
In Plant or Inventory General

Inventory Warehouse Postings Ledger
YES Accounts
NO Goods from
Purchase Order
Purchase Purchase Goods Invoice Accounts

Requisition Order Receipt Receipt Payable

Business Process Integration
SD Process

Integration
SAP Sales Order Process

(Order-to-Cash)
Check
Sales Order Availability
Entry
Sales Quotation Delivery Note &
Entry Pick Materials
Pre-Sales Sales
Activities Process
Pack
Materials
Post Goods
Receipt of Issue
Customer Payment Invoice
Customer
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

SD3: 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:
1. Pricing
2. Credit limit check
3. Availability Check
4. Delivering Schedule
5. Shipping point and route determination
6. Transfer of requirements to MRP
7. foreign trade and license processing
SD3-1: Pricing
SAP can display pricing information at both the header and
the line item level for sales order.
It enables the user to program varied pricing procedures to

meet individual organizations needs.
The pricing is extendable; it can be attached, or extended to

external pricing programs or elements outside SAP for
pricing.
It also allows Gross to Net pricing: This allows discounts

and reductions from the master price.
SD3-2: 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

SD3-2: Credit Check
A large number of outstanding receivables or bad
debts can have a considerable impact on company
performance.
The 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.
SD3-3: 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 one-time delivery)
Complete delivery
(possibly delayed one-
time delivery)
Delayed proposal (allows
partial delivery schedule)
In determining the material availability the
following elements can be included in the
availability check
Safety stock
Stock in transfer
Quality inspection stock
Blocked stock
Restricted use stock
All movements of stock

Inward/Outward movement of goods
purchase orders
purchase requisitions
planned orders
production orders
reservations
dependent reservations
dependent requirements
sales requirements
delivery requirements
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.
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.

Delayed proposal
In this section, 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.
During an availability check which takes
replenishment lead time into account, the date
on which replenishment lead time ends is
displayed if insufficient stock means that no
partial deliveries can be made before
replenishment lead time ends.
SD3-4: Delivery Scheduling
SAP can automatically schedule essential

shipping activities, using backward and
forward scheduling rules.
It uses defined activity times to schedule

delivery activities.

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. SAP AG - University Alliances and
The following 5 deadlines are of importance 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. SAP AG - University Alliances and
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.

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).

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 10
pieces now and the remaining 10 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. SAP AG - University Alliances and
SD3.4: Delivery Scheduling
Structure of sales documents

Header
Line Item # 1
Schedule Line # 1
Schedule Line # 2
Line Item # 2
Schedule Line # 1

SD3-5: 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

SD3-6: 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.

SD3-6: Transfer of requirements to MRP
SD3-7: 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

The sales order document is
made up of three primary
areas:
Header
Data relevant for the entire
sales order: customer data,
total cost of the order,
number of the sold-to party,
number of the ship-to party
and the 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
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

DS3: Create sales order: item proposal
If a customer frequently orders the same
combination of materials, SAP 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
SD4: 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 Each step in

the delivery
Delivery Packing process
Note Loading updates the
delivery
Post Goods Issue note status
SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights
January 2008 reserved. 33
Delivery/ Goods Issuing
Reconciliation Account
Sales quotation No impact on
Financial Accounting (FI)
Sales order
Delivery/Goods Materials Management (MM)

Issuing and Financial Accounting (FI)
SD4: Shipping
Sales Order 1 Sales Order 4 Sales Order 5
Sales Order 2 Delivery 813 Delivery 816
Sales Order 3 Delivery 814
Delivery 812 Delivery 815
Order Partial Complete

Combination Delivery Delivery
DS5: 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 customers credit data

DS5: Billing
Sales Invoice
Sold To:
Rushmore Group
Sales Org: S001

Dist Channel: RE
Division: 01
Conditions/Price:
$120

DS5: Billing Methods
Delivery 820 Invoice 945

Delivery based Order 6
Invoicing Delivery 821 Invoice 946
Delivery 833
Collective Order 9
Delivery 834 Invoice 968
Invoicing
Order 14 Delivery 856
Invoice 991
Split
Order 32 Delivery 886
Invoicing
Invoice 992
DS5: 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.

DS5: 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
SD6: 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.
SD7: Handle Customer Return
Delivery
Customer Return Note
Order received
Goods
Sales Receipt
Process
Payment
to Customer
Quality
Create
Inspection
Credit Memo
1 Order 14 Delivery 856 Invoice 968
Quality
2 Return Order Return Delivery
Inspection
Return to Inventory
3 Credit Memo Payment

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

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)

Processes
PEN, Inc.

(Professional MSEM)
Fall, 2012
Sales Quotation
Sales Order
SD Process: Billing Documents
At this point
that the sales
process is
passed over
to Financial
Accounting to
await
payment.
Document Flow
The document flow feature allows you to

find the status of an order at any point in
time. The 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).

Exercises:
144a. Create customer quotation
144. Create sales order from sales quotation
145. Check stock status
146. Create delivery note for sales order
148. Picking materials on delivery note
149. Post goods issue
151. Bill customer
152. Post receipt of customer payment
153. Review document flow
154. Create Customer Material Info Record
155. Create sales order using customer info record
156. Create delivery for sales order
157. Pick materials on delivery note
Exercises:
158. Post goods issue
159. Bill customer
161. Create a scheduling agreement
162. Process deliveries for a scheduling agreement
163. Display scheduling agreement
165. Bill customer
166. Run customer credit check

Sales & Distribution Processes: (Professional MSEM)

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Sales & Distribution

EGN 5620 Enterprise Systems Configuration

SAP AG - University Alliances and

EGN 5620 Enterprise Systems Configuration

SD SAP AG - University Alliances and

In Plant or Inventory General

Purchase Purchase Goods Invoice Accounts

SAP AG - University Alliances and

SAP AG - University Alliances and

SAP Sales Order Process

SAP AG - University Alliances and

It enables the user to program varied pricing procedures to

The pricing is extendable; it can be attached, or extended to

It also allows Gross to Net pricing: This allows discounts

It is integrated with Financial Accounting (FI), via

It automatically alerts when a credit check fails

SAP AG - University Alliances and

The user may minimize credit risk by defining a

This is especially important if a company does

SAP AG - University Alliances and

In this section, SAP checks whether the

If there is no stock available, confirmed

SAP AG - University Alliances and

SAP can automatically schedule essential

It uses defined activity times to schedule

SAP AG - University Alliances and

2. Transportation scheduling deadline: the date on

4. Goods issue deadline: the date on which the goods

SAP AG - University Alliances and

SAP AG - University Alliances and

Structure of sales documents

SAP AG - University Alliances and

A delivery can only be processed from one

Routes - route to be traveled & transit time are

Routes can be used to simply define transit time

SAP AG - University Alliances and

Sales and distribution requirements reduce

SAP AG - University Alliances and

Predefined trade areas NAFTA, EU

SAP AG - University Alliances and

SAP AG - University Alliances and

During sales order processing, the user can copy

Item proposal can be assigned to one or multiple

Picking Each step in

Delivery/Goods Materials Management (MM)

Sales Order 1 Sales Order 4 Sales Order 5

Sales Order 2 Delivery 813 Delivery 816

Sales Order 3 Delivery 814

Delivery 812 Delivery 815

Order Partial Complete

SAP AG - University Alliances and

Sales Org: S001

SAP AG - University Alliances and

Delivery 820 Invoice 945

SAP AG - University Alliances and

Periodic total amount for a planned

SAP posts payments against invoices.

The posting clears the liability in the A/R

1 Order 14 Delivery 856 Invoice 968

3 Credit Memo Payment

SAP AG - University Alliances and

SAP AG - University Alliances and

SAP AG - University Alliances and