SALES AND DISTRIBUTION

General Organizational Structure

Company and company code

Sales area
o Sales org
Distributing products
Negotiating the sales conditions
o Distribution channel How to reach the customers.
o Division Product lines.
o Sales office
o Sales group
Plant
Storage location
Shipping point
o Plant: functions differently in different modules
In MM, Material stock is kept here.
In PP, Acts as a manufacturing facility.
In SD, Products and services are distributed from the plant.
Relevant stocks are kept here.
At least, one plant is needed for SD functions.
Plant is essential for determining the shipping point.
Each Delivering plant needs to be assigned to a sales org, and
distribution channel.
Shipping points needs to be assigned to delivering plant. One
plant to many shipping point and many shipping point to one
plant is allowed. Proximity should be considered.
Each OBD is processed by a shipping point assigned to a
delivering plant.
o Storage location

Overview of sales processes

Establishing and maintaining customer relationships.
Presales activities
o
o
o
o
o

Entering and tracking customer contacts

Mailing campaigns
Customer queries thru all modes
Inquiries
Quotations

Standard order contains

Customer and Material information
Pricing information

Sales order processing

Delivery dates and delivery quantities

Info about shipping processing
Info about billing

Procurement
o
o

Check the availability of ordered goods

Transfer the requirements to material planning
Material planning (MM) responsible for procurement thru inhouse production and/or Purchasing.
Can be done thru
Transfer from available stock
Trigger a make to order production
Thru replenishment(PO, Planned order, Production order)
Thru external suppliers(Third party business )
Thru stock transfer via another warehouse

Shipping processing
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o

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o

Begins on creation of delivery document

Supports
Creating outbound deliveries
Picking(Creating Transfer orders)
Packing
Posting goods issue
On creation of delivery document, this document controls and monitors
other sub processes
Picking and confirming transfer orders
Packing
Planning and monitoring of transport shipping document
Posting goods issue document.
Creating delivery document copies information from sales order
Creating transfer order copies information from delivery document
Transfer order is essential for moving goods within the
warehouse.
Posting of goods issue brings changes in stocks quantity-wise as well
as value-wise. Relevant changes are made in financial accounting.

Billing
o

o
o
o

Supports
Creating invoices for products and services
Creating debit and credit memos
Cancelling previously posted billing documents
Automatically transferring billing document data to accounting
Billing document copies info from sales order document and delivery
document.
Billing document is helpful for creating invoices & acts as a data source
to monitor and control customer payments.
On creating a billing document, postings are done automatically
Debit posting is done on customer receivables account
Credit posting is done on revenue account.

 Payment
o
o

Taken care by financial accounting module

Supports
Posting payments against invoices
Reconciling the differences
On posting an invoice payment, postings are done automatically
Debit posting is done on the cash account
Credit memo is done on the customer receivables account.

Creating a sales order

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o

Based on quotation/Inquiries, the system copies the relevant data to

sales order
Sales order header valid for entire sales order document
Sales order items valid for each item, data about materials
and quantities ordered
Schedule lines Each line contain has schedule lines,
details about delivery quantities and delivery dates, every
item to be included in an OBD must possess at least a
schedule line.

Creating an Outbound Bound Delivery

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o

o
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OBD is created for orders that are ready to be shipped, system copies
relevant info based on sales order
Multiples SO into an OBD and Multiple OBDs for a SO is also possible
but ensure the orders correspond with characteristics essential for
shipping process. Like,
Shipping point
Due date
Ship to party
Unlike sales document, a delivery document does not contain schedule
lines. A schedule line can become an item in delivery document.
To ensure delivery documents are processed efficiently, Transfer orders
are created for an OBD.

Transfer Orders
o

TO contains all relevant info necessary for executing physical

movements of goods within warehouse, outside warehouse, inside
warehouse.
What should be moved?
Which quantity should be moved?
Where should the bin be moved from (source storage bin), and
where to (destination storage bin) and return storage bin, if
necessary depending upon the scenario.
Transfer order header
TO number, date, movement type

Transfer order item

Several items possible.
Picking lists are created to optimize picking. Picking lists can be
created for several OBD to achieve optimized picking.

Posting Goods Issue

o
o
o

Stock value and quantity changes

Billing due list gets updated
Delivery requirements in material planning is updated

Billing document processing

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o

o
o
o

o
o
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o

Billing document can be created for a single delivery or a single order.

Billing document can combine several OBDs provided that they have
same characteristics,
Payer
Billing date
Destination country
Billing document header
Info about payer and billing date
Billing document Item
Info about material, billing quantities, net value of the items
When a billing document is saved, the system automatically generates
all the required documents for accounting.
Debit posting in customers receivables account
Credit posting in revenue account
Status of all relevant sales, delivery, billing documents is updated.
Sales stats are updated
Customers credit limit is updated.
All relevant G/L accounts, accounting document gets updated.

Document flow
o
Standard
Delivery
Billing
Accountin
sales
document
document
g
Document
flow
is
updated
at
the
header
and
line
item
order
documentlevel. Sales
order contains schedule lines, each schedule lines become a line item
in the delivery document. Similarly, each schedule line has its own
delivery date.

SALES AND DISTRIBUTION PROCESS

Customer orders materials and requesting to be delivered on a specific date.
Based on this, sales order is created. We trigger the shipping activities to ensure the
materials reach the customer in time. To be able to pick the materials from stock,
we generate picking list. This picking list helps us to pick the required material in
required quantity/quality from the corresponding storage bin. Once picking is done,

the material is packed and leaves the company. As soon as the material leaves the
company, a goods issue posting has to be done to update the stocks and values.
We then create a billing document for the relevant goods issue and send the
customer the invoice. Incoming payments are posted in financial accounting.

MASTER DATA IN SALES AND DISTRIBUTION

Customer master data comprises all necessary for processing orders,

deliveries, invoices and customer payments.
o General data relevant for sales & accounting valid for all
organizational units
Address
Control data Tax info
Payment details bank details
Marketing Industry involved, customer classification
Unloading points Goods receiving
Export data Data for export control
Contact persons Address for business partners
o Sales area data Relevant for sales valid for sales org, distribution
channel, division
Sales
Sales office
Sales district
Price group
currency
Shipping
Shipping conditions key to determine shipping point
Transportation zone object for grouping locations
Delivering plant plant responsible for delivering the
materials ordered
Billing
Output tax classification
Payment condition payment terms
Partner function all these 4 are mandatory for any sales order
Ship to party receives the goods/ services
Bill to party receives the bill
Payer makes the payment
Sold to party places the order
o Company code data relevant for accounting valid for company code
Account management Reconciliation account
Payment transaction Payment methods and payments block
Correspondence Dunning procedure, Accounting clerk
Insurance Amount insured

Material master data

Condition master data Terms of payments that are negotiated with vendors
or customers (Surcharges, discounts and cash discounts)
o Prices
o Surcharges/discounts
o Freight
o Taxes

Document types

Different sales order processes can be triggered by choosing different

document types.
Sales document types
o Standard sales order
o Contract
o Cash sales
o Rush order
o Free of charge delivery
o Returns
o Consignment order
The stock is allowed to be stored in customer location.
Whenever the customer uses the stock, an invoice will be sent
to him for the used quantity.
It is a 4 step process
Consignment fill up
o Send materials to customer consignment
Consignment issue
o Issue materials from customer consignment to
customer
Consignment return
o Return materials from customer ownership to
customer consignment
Consignment pickup
o Picking consignment stock and move it to plant
stock
o Credit/debit memo request
Credit memo
Whole/part of sales order being sent back by customer for
a specific reason.
Reduces the amount receivables from customer
Debit memo
Whole/part of the goods received is sent to the vendor.
Reduces the amount payables to the vendor

Functions of sales documents

o

When sales document is created, certain functions are done

automatically
Transfer of requirements

Delivery scheduling
Pricing
Sales Info system
Credit check
Availability check
Credit check

Plant, Shipping point & Route determination

o
o

These are determined automatically and acts as basis for delivery

scheduling
Plant determination
Automatically set based on the master data, can be changed
automatically
1st checks the customer-master info,2nd checks customer master
for ship to party, 3rd it checks the material master
If nothing is found, no delivery plant is determined. Hence the
SO cannot be processed any further.
Shipping point determination
Based on the requested delivery date
Lead time required for preparing and packing the goods should
be defined for the shipping point
Shipping point is determined for each item in the sales
document
Shipping point is determined based on 3 fields as search keys
Shipping condition from sold to party(View: shipping)
Loading group in the sales specific material data(View:
sales: General/plant data)
Delivering plant
Route determination
The system uses 4 fields for determining the route automatically
Departure zone in shipping point
Shipping condition from sold to party
Transportation group in sales specific material data
Transportation zone in general data for ship to party

Shipment scheduling
o We define the time at which the receipt of goods at the customer can
be acknowledged.

Order
Materia
Trans.pl
Loadin
date
l
anning
g
These data are used
in shipment scheduling
staging

Goods
Issue

Deliver
y date

Order date Date on which order is placed

Material availability date date at which material must be available for
picking and packing

Loading date date on which the goods picking and packing process is
completed
Goods issue date date on which the goods must leave the delivering plant
Delivery date date on which goods arrive at the customer
o Requested delivery date
o Confirmed delivery date
When a delivery time is determined, the time required for delivering goods to
a customer via a particular route must also be considered.
Total time includes
o Transit time between delivery and goods issue
o Loading time between loading and goods issue
o Pick/pack time between material availability and loading
o Transportation lead time between transportation planning and
loading

Collective processing
o Collect and combine, process sales orders due for OBD in a single step
o Collect and combine, process delivery documents due for billing in a
single step

DELIVERY PROCESS

Goods Receipts
Goods Issues
Stock transfers with deliveries
Packing

Procurement

(Goods Receipts)

Internal Production planning

External Materials Management
Distribution

(Goods Issues)

Internal Production planning

External Sales & distribution

Logistics