1. Sales & Distribution Processes EGN 5620 Enterprise Systems Configuration Fall, 2015

2. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 2 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 Sales & Distribution Process

3. Sales & Distribution Process SAP Implementation Sales & Distribution Process SAP Implementation

4. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 4 Business Process Integration FI MM SD Org Data Rules FI MM SD Master Data FI MM SD FISD MM

5. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 5 Business Process Integration SD Process

6. Sales Process January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 6 SAP Sales Order Process (Order-to-Cash) Integration Sales Order Entry Post Goods Issue Invoice Customer Delivery Note & Pick Materials Receipt of Customer Payment Pack Materials Check Availability Pre-Sales Activities Sales Quotation Entry

7. 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.

8. 1: Engage in Pre-Sales Activities (Inquiry)

9. 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 pre- defined price.

10. 2: Create quotation to customer

11. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 11 Customer-Specific Material Info Record Customer material information records is used to store data on a material defined for specific customer. It contains customer-specific: ◦Material number, ◦Material description, and ◦Data on deliveries and delivery tolerances

12. 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 Pricing 3.2 Credit limit check 3.3 Availability Check 3.4 Delivering Schedule 3.5 Shipping point and route determination 3.6 Transfer of requirements to MRP 3.7 foreign trade and license processing

13. 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

14. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 14 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

15. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 15 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

16. 3.1: Pricing SAP can display pricing information at both the header for entire sales order and the line item level for individual material. 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.

17. 3.1: Pricing

18. 3.1: Pricing (discount applied for entire sales order)

19. 3.1: Pricing (Discount for individual item)

20. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 20 3.2: Credit Check SAP provides an efficient means to implement credit management It is integrated with Financial Accounting (FI), via credit control area 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 It automatically alerts when a credit check fails

21. 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 one- time delivery)  Delayed proposal (allows partial delivery schedule)

22. 3.3: Availability Check

23. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 23 3.3: Availability Check Inward/Outward movement of goods Supply side: ◦purchase orders ◦purchase requisitions ◦planned orders ◦production orders Demand side: ◦reservations ◦dependent reservations ◦independent/dependent requirements ◦sales requirements ◦delivery requirements ◦safety stock

24. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 24 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.

25. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 25 3.4: Delivery Scheduling

26. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 26 3.4: Delivery Scheduling An item can 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.

27. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 27 3.4: Delivery Scheduling Structure of sales documents Header Line Item # 1 Line Item # 2 Schedule Line # 1 Schedule Line # 2

28. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 28 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 - SAP system determines routes automatically for each sales document item Routes can be used to simply define transit time

29. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 29 3.5: Shipping Point and Route Determination

30. 30 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. 3.6: Transfer of requirements to MRP

32. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 32 3.7: Foreign Trade and License Processing Predefined trade areas — NAFTA, EU, TPP (Trans-Pacific Partnership) Automated reporting for trade areas Automated controls ◦License management ◦Embargo lists ◦Control by customer, country, product, point in time

33. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 33 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 Post Goods Issue Delivery Note Each step in the delivery process updates the delivery note status

34. Delivery/ Goods Issuing Reconciliation Account Sales quotation Sales order Materials Management (MM) and Financial Accounting (FI) Delivery/Goods Issuing No impact on Financial Accounting (FI)

35. 4: Shipping Order Combination Sales Order 1 Sales Order 2 Sales Order 3 Delivery 8…12 Partial Delivery Sales Order 4 Delivery 8…13 Delivery 8…14 Delivery 8…15 Complete Delivery Sales Order 5 Delivery 8…16

36. 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 is integrated with Finance (FI) & Controlling (CO) It updates customer’s credit data January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 36

37. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 37 5: Billing Sales Invoice Sold To: Rushmore Group Sales Org: S001 Dist Channel: RE Division: 01 Conditions/Price: $120

38. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 38 5: Billing Methods Collective Invoicing Delivery based Invoicing Delivery 8…34 Delivery 8…33 Order 14 Order 9 Delivery 8…56 Invoice 9…68 Order 6 Delivery 8…20 Delivery 8…21 Invoice 9…45 Invoice 9…46 Split Invoicing Order 32Delivery 8…86 Invoice 9…92 Invoice 9…91

39. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 39 5: Billing 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.

40. 6: Payment Payment is the final step in the sales order process. SAP posts payments against invoices. Posting clears the liability in the A/R account and debit your bank account.

41. Sales Process January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 41 7: Handle Customer Return Customer Return Order received Goods Receipt Create Credit Memo Quality Inspection Payment to Customer Delivery Note

42. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 42 7: Handle Customer Return 1 2 3 Order 14Delivery 8…56 Return OrderReturn Delivery Invoice 9…68 PaymentCredit Memo Quality Inspection Return to Inventory

43. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 43 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

44. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 44 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)

45. GBI, Inc. GBI, Inc. Sales & Distribution Processes

46. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 46 Global Bicycle Incorporated (GBI) Procure for Sales Order Pre-Sales Activity Sales Order DeliveryBilling General Ledger Accounts Purchase Requisition Purchase Order Goods Receipt In Inventory Plant or Warehouse Invoice Receipt Availability Check NO YES Goods to Delivery Goods from Purchase Order Inventory Postings Accounts Receivable Accounts Payable

47. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 47 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).

48. Exercises: (Due date: 10/26/2015) 1. Create sales quotation 2. Check stock status 3. Create sales order from sales quotation 4. Check stock status 5. Create outbound delivery 6. Check stock status 7. Ship materials 8. Create invoice 9. Receipt payment 10. Review document flow of sales order 11. Move materials between plants 12. Create second sales order 13. Create outbound delivery for second sales order 14. Ship materials 15. Create invoice 16. Receive payment