Chapter 5

The Fulfillment Process

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 Learning Objectives
1. Describe the organizational levels
associated with the fulfillment process.
2. List and explain the master data associated
with the fulfillment process.
3. Identify the key steps in the fulfillment
process and the data, documents, and
information associated with each step.
4. Discuss the role of the credit management
process in fulfillment.
5. Effectively execute the key steps in the
fulfillment process.
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 Learning Objectives
(Continued)
6. Explain how and why fulfillment is
integrated with other processes.

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A Basic Fulfillment Process

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 Organizational Data
Client
Company code
Sales organization
Distribution channel
Division
Sales area
Plant (shipping plant)
Storage location
Shipping point
Credit control area

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 Sales Organization
Responsible for
Distributing goods and services
Negotiating sales conditions
Product liability and rights of recourse
Used to divide the market based on
geographic regions
Highest level of aggregation in sales-
related reporting
A company code must have at least one
sales organization

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GBI Sales Organizations

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 Distribution Channel
Responsible for delivering materials to
customers
Used to
Differentiate distribution strategies or
approaches
Different pricing, responsibilities
Wholesale sales, retail sales, Internet sales
Statistics and reporting at the DC level
A sales organization must have at least one
distribution channel

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GBI US Distribution Channels

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 Division
Used to consolidate materials with similar
characteristics
May have different sales strategies, pricing
agreements
Statistics and reporting at the DC level
Associated with product lines
A sales organization must have at least one
division
Can be assigned to multiple sales
organizations

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GBI US Divisions

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GBI DE Divisions

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 Sales Area
Made up of three other organizational
elements
Sales organization
Distribution channel
Division

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GBI Sales Areas

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 Distribution Chain
A unique combination of sales organization
and division
Some master data are maintained at this
level
Material master
Pricing conditions

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 Plant
Plant
Manufacturing facility
Warehouse
Office
A company code must have at least one
plant defined in a company code.
A plant must be uniquely assigned to a
company code.
A plant can be assigned to deliver products
or services for multiple distribution chains.

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Plants and Distribution Chains

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 Shipping Point
A physical location from which outbound
deliveries are sent
Loading dock
Mail room
Rail depot
Group of employees (to handle expedited
orders)
A plant must have at least one shipping
point
A shipping point can be assigned to many
plants
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Shared Shipping Points

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Multiple Shipping Points

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Shipping Point Example

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Shipping Point Example

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Shipping Point Example

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 Credit Control Area
Responsible for customer credit
Centralized
One credit control area for all company codes
in the enterprise
All customers in all company codes are
managed by one credit control area
Decentralized
More than one credit control area in the
enterprise
Each credit control area manages credit for
one or more company codes

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Centralized Credit Control Area

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Decentralized Credit Control Area

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 Master Data
Material master
Customer master
Customer-material info record
Conditions
Output master data
Credit management master record

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 Material Master Data
Basic Data
Sales: Sales Organization
Includes data specific to a combination of
sales organization and distribution channels
Examples include: delivering plant, sales
units (unit of measure), minimum quantities
(order, delivery)
Sales: General/Plant
Includes data specific to a plant
Examples include: handling requirements
(refrigeration), loading (hand cart, forklift)

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 Customer Master Data
General Data
Specific to a client
Valid across company code and sales area
Financial/ Accounting data
Specific to a company code
Sales Area data
Specific to a sales area

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Segments Of Customer Master
Data

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 Customer Master Data
General data
Account number
Address
Communication
Company code data (FI)
Reconciliation account
Payment terms

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 Customer Master Data
Sales Area data (Sales)
Sales related
 Sales area, currency
Shipping
 Delivering plant, priorities, methods, tolerances, partial
delivery
Billing
 Terms, tax-related,
Partner functions: multiple roles
 Sold-to-party, ship-to-party, bill-to-party, payer

A customer can be served by multiple sales

areas

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Multiple Definitions of a
Customer

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GBI Customers

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Customer - Material Information
Record
Intersection data for one customer and one
material
Data specific to the combination of customer
and material
Examples of data
Specific terms (e.g., shipping, tolerances,
partial deliveries, delivering plant)
Alternate delivery plant, shipping
terms/methods, tolerances, partial deliveries

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RMB and GBI Material Numbers

The customer material number is the link between

the seller’s master data and the buyer’s master
data.

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 Pricing Conditions
companies use to determine the selling
prices of their products.
Gross prices
seller charges the same price to all of its
customers
Customer specific price
Freight
Surcharges and discounts
Taxes

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 Output Conditions
Sent to customers using a variety of media
Examples of output
Quotation, order confirmation, invoices
Media
Mail, fax, EDI
Master data includes
Output type, medium, time (immediate or
later), partner function

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 Credit Management Master
Record
Extension of the customer master record
General data (client level)
Address, communication, total credit at the
enterprise level
Credit control area data (credit control area
level)
Credit limit for the credit control area
Risk category: is a classification used to
determine how risky
it is to extend credit to the customer
Overview :key data from other areas

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Fulfillment Process Steps

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 GBI Scenario
Customer: RMB, Denver, CO.
Silver Deluxe Touring bikes: 40
Delivery 30 by May 10, 10 by June 10
T-shirts: 100 (qualifies for 10% disc)
Delivery all by May 10
Deliver to racing location in Colorado
Springs
Selling price Cost price
Silver deluxe $2,800 $1,400
touring bike
T-shirt $30 $15

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 Pre-sales Activity
CRM – establishing and maintaining
customer relationships
Activities include
Creating and tracking customer contacts
Mailing campaigns
Responding to customer inquiries and
request for quotation
Quotations
Outline agreements
 Contracts
 Scheduling agreements

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Elements of the Pre-sales activity

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Data in a Quotation

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 Customer Inquiry

ss Processes
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 Quotation

ss Processes
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Reference Documents for a
Quotation

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Elements of a Sales Order

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 Customer Purchase Order

ss Processes
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 Sales Order

ss Processes
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 Sales Order Processing
Typical data in a sales order
Customer and material data
Delivery dates and quantities
Pricing conditions
Shipping information
Billing information
Source of data
Customer order
Master data
Contracts

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Data in a Sales Order

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Relationship between Quotations
and Sales Orders

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Structure of a Sales Order

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 Sales Order Document
Header
Dates, terms, customer data, etc
Line items
Item number
Quantity
Schedule lines
 Date
 Order quantity
 Delivery quantity

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Backward Scheduling

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 Inventory Sourcing
Transfer of requirements (materials
management / materials planning)
From stock
Materials management
Internal procurement
In-house production process
External procurement
Procurement process

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 Shipping
Create outbound deliveries
Picking (optional)
Packing (optional)
Transfer requirement
Post goods issue

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Elements of the Shipping Step

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 Picking Document

ss Processes
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 Packing List

ss Processes
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Data in a Delivery Document

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Structure of a Delivery Document

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 Delivery Document Structure
Header
General data
Line Item
Item number
Material
Quantity
Weight

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Relationship between Schedule
Lines and Delivery Items

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 Deliveries
One order >> multiple deliveries
Multiple orders >> one delivery
Constraints?
 Same customer
 Same shipping point
 Same delivery date
 Same ship-to-address

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Relationship between Sales
Order and Deliveries

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Packing Options

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 Impact of Post Goods Issue
A material document is created
GL accounts - Stock accounts and cost of
goods sold account - are updated, and an
accounting document is created
A controlling document is created
Fulfillment provides COGS data to profitability
analysis in controlling
The billing due list is updated
Sales documents are updated (status)

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Outcomes of Shipping (Goods
Issue)

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FI Impact of the Shipping Step

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 Billing
Create invoices
Crete credit and debit memos
Many deliveries >> one billing document
Same payer, billing date and destination
country
One delivery >> many billing documents

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Elements of the Billing Step

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 Customer Invoice

ss Processes
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Data in a Billing Document

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Relationship between Deliveries
and Billing

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Structure of a Billing Document

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 Billing Document Structure
Header
Payer, billing date, totals, etc.
Line items
Item number
Material
Quantity invoiced
Value

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 Impacts of a Billing
Document
GL accounts are updated and an FI
document is created
Customer account > AR reconciliation
account
Sales revenue account
A controlling document is created
Fulfillment provides revenue data to the
profitability analysis process
Sales documents are updated (status)

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Outcomes of the Billing Step

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FI Impact of the Billing Step

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 Payment
Post incoming payment
GL accounts are updated and an FI
document is created
Cash/Bank account
Customer account -> AR reconciliation
account

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Elements of the Payment Step

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Data in a Payment Document

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FI Impact of the Payment Step

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Customer Payment with Discount

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Processing Customer Payment

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 Credit Management Process
Used to determine if credit should be granted
to a customer (i.e., should process continue?)
Credit is checked when:
Sales order is created or changed
Delivery is created or changed
Post goods issue
Approval based on
Credit exposure = sum of open orders, deliveries,
open invoices, and current order value
Outcomes: warn & continue, error &
terminate, block delivery

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Credit Management Process

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Integration with Other Processes

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 Reporting
General SAP reporting options
Online lists
Work lists
Analytics
Fulfillment specific reporting options
Document flow

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Document Flow

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Work Lists

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List of Sales Orders

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Example of Standard Analysis

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