SAP Sales and Distribution Overview

BASIC SD Overview

This writing is
focused on the Sales and Distribution Module of the mySAP ERP Application which
is one of the applications within mySAP Business Suite which includes the
below:

·        
mySAP ERP

·        
mySAP
Supply Chain Management (SCM)

·        
mySAP
Customer Relationship Management (CRM)

·        
mySAP
Supplier Relationship Management (SRM)

·        
mySAP
Product Lifestyle Management (PLM)

SAP ERP Sales
and Distribution module is one of the key components within other modules in SAP
ERP Systems. Overall these modules can summarized as below:

·        
SAP
Financial Accounting (FI)

·        
SAP
Controlling (CO)

·        
SAP Sales and Distribution (SD)

·        
SAP
Production Planning (PP)

·        
SAP
Materials Management (MM)

·        
SAP
Quality Management (QM)

·        
SAP
Human Capital Management (HCM)

Each of the
above mentioned process plays a key role in supporting transactions needed to
execute key day to day business processes.

We will limit the scope of this discussion
only to the Sales and Distribution processes within SAP. Later in the
discussion we will also talk about the impact of S/4 HANA on the existing SD
Processes.

 

As already highlighted above SAP SD
(Sales and Distribution) is one of the significant modules within SAP ERP
Logistics Applications. It is used to store and manage day to day transactions
related to customer and product data for large, midsize or small enterprise.

In a nutshell SAP SD has always been one
of the largest and complex module which helps to manage the shipping, billing,
selling and transportation of products and services of a company.

Below are some of the keep processes
within the SD Module:

Ø 
Manage
Customer Inquiry

Ø 
Manage
Quotation arising out of the inquiry.

Ø 
Manage
Sales Order as a follow-up of Quotation

Ø 
Manage
Billing of the Product post creation of Order

Ø 
Manage
Shipping

Ø 
Provide
Service for the Product post-delivery.

 

SAP SD module is tightly integrated with
other SAP Modules like SAP Material Management and PP.

However as mentioned above focus of this
discussion will be only on the Sales and Distribution scenarios.

 

 

A typical Sales and Distribution cycle of
an organization will looks like the below:

                  

 

 

 

SAP ERP has a
dedicated components for each of the above key scenarios. Technical names for
some of the key components are as below:

Sales Order

SD-SLS

Shipping and
Transportation

LE-SHP / LE-TRA

Billing

SD-BIL

Payment Processing

SD-BIL-IV

 

The first step
for setting up a sales process within SAP SD is to set up the master data. In
any sales process Master Data would mostly include Customer Master, Material
Master and Pricing Conditions. It is important to note that setting up the
master data is a prerequisite for any module with in SAP, since Master Data
forms the basis for any kind of transactional processing.

Hence it is the
responsibility of the individual module with SAP to ensure that Master Data is
set up accurately.

In the next
section we will be talking about Customer Master Data in detail.

 

 

 

SD Master Data Overview

Any module
within SAP cannot exists without setting up the Customer Master Data within the
system. Before we get into the details of Customer Master Data in SAP lets
first understand what Master Data actually means.

Wikipedia
describes Master Data as below:

“Master
data represents
the business objects which are agreed on and shared across the enterprise. It
can cover relatively static reference data, transactional,
unstructured, analytical, hierarchical and meta data. It is the
primary focus of the Information Technology (IT) discipline of Master
Data Management (MDM).”

This definition
pretty much explains a lot about Master Data in generic terms. Now let’s get
too understand what type of Master Data we have in SAP SD.

Master Data in SAP SD can be categorized
into two levels:

Ø 
First Level

This level can be further categorized as
below:

·        
Customer Master

·        
Material Master

·        
Pricing Conditions

 

Ø 
Second Level

This can be
categorized based on the available Output Determination Types. Some of the
Output Types in SD Processing can be as below:

·        
Print Output

·        
FAX

·        
Emails

·        
EDI (Electronic Data
Interchange)

 

Let’s briefly touch base upon one of important
First Level Master Data – Customer Master.

 

SAP Customer Master Data would include all the details regarding
the customers which are to be maintained into the system and used as and when
required. Customer Master Data in SAP can categorized into three main areas:

Ø 
Basic Data

This part of the customer data always remains
the same irrespective of the transactions which the customer performs
throughout the enterprise. Example of such type of data can be customer address
and contact details

 

Ø  Organizational Data

This data varies based in the Organizational
structure of the Company. For example a company might have two units one
operating from New York and other from CA in the US. The Organizational Master
Data for these two units would differ based on the respective unit’s structure
even though both the units are part of the same Company.

An Organization Data comprises of the below
components:

 

·        
Sales
Organization

This is the top most entity while setting up the Customer
Master Data within SAP SD. This could be defined based on the geography of the
Organizations and other key sales parameters as some of the key parameters.

This can be configured in SAP ERP using the below SPRO Path:

SPRO-> Enterprise Structure-> Definition-> Sales and Distribution-> Define, copy, delete, check
sales organization.

You can refer to the screenshot below to understand the
navigation within in SPRO

   

 

·        
Distribution
Channel

This defines the channel through which a given product or
item will reach the customer. This channel could be wholesale distributor or a
retail outlet or direct sales. This purely depends on the business needs of a
given enterprise.

The configuration path within SPRO remains the same (as for
Sales Organization) up to the Sales and Distribution Node. The exact path for
maintaining the same is as below:

SPRO-> Enterprise Structure-> Definition-> Sales and Distribution-> Define, copy, delete, check
sales organization->Define,
copy, delete, check distribution channel

 

·        
Division

In a nutshell, Division is a way of grouping materials,
products, or services. For example an automobile company sells both two
wheelers and four wheelers. Sales processing of these two items can be better
managed under two different divisions.

In SPRO Division is maintained under the below path:

SPRO-> Enterprise Structure-> Definition-> Logistics – General-> Define, copy, delete, check
division

 

                             

                     

It is important
to note that the three components of Organization Structure defined above are
one of the key parameters for determining the Price of a Product.       

Key components
of master data which we have defined above holds no significance standalone.
For example a Distribution Channel will not hold any meaning unless assigned to
a Sales Organization. Below are the configuration path in SPRO for some of the
key assignments of components within customer master data:

Ø 
Assign sales organization to company
code.

SPRO-> Enterprise Structure-> Assignment-> Sales and Distribution-> Assign
sales organization to company code

 

 

 

 

 

 

A
typical assignment of Sales Organization to Company Code will look like the
below:

 

Ø 
Assign Distribution Channel to Sales Organization

SPRO-> Enterprise Structure-> Assignment-> Sales and Distribution-> Assign
distribution channel to sales organization

 

A
typical assignment of Distribution Channel to Sales Organization will look like
the below:

 

Ø 
Assign Division to Sales Organization

SPRO-> Enterprise Structure-> Assignment-> Sales and Distribution-> Assign
distribution channel to sales organization

 

 

A
typical assignment of Division to Sales Organization will look like the below:

 

Apart
from the above there are various other assignment that needs to be performed
which I will not be covering in this document. Some of these assignments are as
below:

 

Ø 
Assign
sales office to sales area.

Ø 
Assign
sales group to sales office.

Ø 
Assign
sales organization, distribution channel, and plant.

Ø 
Assign
sales area to credit control area

Ø 
Assign
shipping point to plant.

Sales Office,
Sales Areas and Plant are other key components within Customer Master Data
which I have not touched upon in this documents. However it is important to
note that each of these components play a key role in the in future sales
processing of an organization. It is extremely important that these components
and its related assignment are set up correctly and accurately.

The more time
we spent initially in setting up the Customer Master Data and related
Organization structure the easier it would be set up the follow-up sales
related configuration in SAP SD.

In the next
section we will not see some of the important components of a Sales Document.
We will use Sales Order as a reference.

Overview of Sales Order

Before we get
into the details of a Sales Order lets first see a generic definition of Sales
Order.

When a customer
formally accepts the quotation provided by a company a Sales Order is generated
by the company. Sales Order is an electronic document which records all
possible information from the customer for the given product which he intends
to buy. This product can either be a material or a service which is provided by
the company responsible for generating the Sales Order.

In other words
Sales Order is a contractual agreement between a company and its customer. This
agreement clearly defines all terms and conditions which can include the below:

Ø 
Details
about the customer (name, address, etc.)

Ø 
Details
about the company

Ø 
Description
of the products or the service.

Ø 
Quantity,
etc.

The amount of
information that can be captured in a Sales Order can be huge and would depend
of the kind of transaction being performed between the company and the customer.
It would not be possible to capture each and every aspect of Sales Order in the
document. Instead we will only focus on the important building blocks which
helps in forming the foundation of a Sales Order Document.

It is also
important to note that each Sales Document type in SAP SD is represented by a
Document Type. Below are some of the key Sales Document in SAP SD and their
respective Document Type:

Sales Quotation

AG

Standard Order (German)

TA

Standard Delivery

LF

 

The above are
just the standard Document Type provided by SAP for a particular region. These
values can be configured based on the business needs.

Sales Document
Type can be configured by following the below SPRO path:

SPRO-> Sales and Distribution-> Sales-> Sales Document Header-> Define
Sales Document Types

Each Sales
Order document is uniquely defined by a number which is called as Number Range.
Number Ranges are defined throughout the SAP system to uniquely identify object
such as Business Partner, Material Number etc.

In case of a
Sales Order a number range is created an assigned to the corresponding Sales
Document Type for Sales Order.

A number range can be of two types:

Ø 
Internal
: The system automatically proposes the number range and the next

                           available number to
be used.

Ø 
External
The system allows the user to specify a number that has not already been

                           used and is within
the number range for the object.

 

Number Range for a Sales Order Header
can be defined using the below configuration path :

SPRO-> Sales
and Distribution->
Sales-> Sales Documents-> Sales
Document Header->
Define Number Ranges For Sales
Documents

 

A typical Number Range configuration
will look like the below

 

 

As already mentioned below the above
defined number range can then be assigned to the Sales Document type.

 

 

The data/information which is available
within a Sales Order document can be categorized in three levels. Below is the
short summary of each of these data levels:

Ø 
Sales Document Header

The information
captured in this section is controlled by the Sales Document Type which we have
already touched based up in the earlier section.

 

Ø 
Sales Document Item

The
information captured in this level is mostly related to products for which the
sales transaction is being performed. These details are controlled by the Sales
Item Category which is something similar to Sales Document Type is used to
control on Item Level information in a Sales Document.

 

Ø 
Sales Document Schedule Line

Each
item in a Sales Document can be further broken up into Schedule Line. A
schedule line defines by when and in what quantity the given item will be
delivered to the customer. Information captured in this level of data is
controlled by Schedule Lines categories.

 

For
Example – As per a given Sales Order 200 units of printer needs to be delivered
to customer in Orlando Florida. However, these 200 units of printers will be
delivered in batch of 4 lots of 50 units each over a period of one month. In
this example the Sales Order Document will have one Line Item showing quantity
of 200. However this Line Item will be further broken up into 4 Schedule Lines
with 50 Printer each.