Sales Order Process

Sales Organization

A sales organization is responsible for negotiating sales

conditions and distributing goods and services.
It represents the top organizational level to which you sum sales
figures. There must be at least one sales organization defined
A sales organization is assigned to only one company code.
More than one sales organization can be assigned to a
company code.
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Distribution Channel
Sales
Organization
Distribution Channel
Wholesale

Retail

Direct

A Distribution Channel is the way sales materials reach the

customer.
A distribution channel can be assigned (serve) to more than one
sales organization.
Distribution Channels allow for different conditions such as
minimum order quantities and pricing.
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Division
Sales
Organization

Product
Line 1

Divisions
Product
Line 2

Product
Line 3

Divisions are used to present product lines.

At least one division must be defined.
Divisions can be assigned to more than one sales organization.
Divisions restrict access to materials, so care should be
exercised in defining divisions.
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Sales Area
Sales Organization 1
Distribution Channel 1
Division 1

Division 2

Distribution Channel 2
Division 1

Sales Organization 2

Distribution Channel 1

Division 1

Division 2

A Sales Area is a valid combination of Sales

organization, Distribution Channel and Division.
Customer Master Data and Sales Documents are
linked to sales areas.
Simple organizational structures are usually preferred
to complex ones.
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Fitter Snacker Sales

Organization
Fitter Sales (##FS)
Wholesale (WH)
Snackbar (SB)

Direct (DI)
Snackbar (SB)

Shipping Point

A shipping point is a fixed location that carries out shipping

activities. It may be a loading dock, a mail room or a shipping
department.
One plant can have multiple shipping points.
A shipping point can serve multiple plants.
Lead times for determining delivery dates are associated with
shipping points.
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Customer Order Cycle

Pre-Sales Activities

Sales Order Processing

Inventory Sourcing

Payment
Billing

Delivery
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Pre-Sales Activities
There are two categories of presales activity: Sales Support
and Pre-sales Documents.
Sales Support allows for tracking of customer contacts by
including sales visits, phone calls, letters and direct mailings.
Mailing lists can be generated based on specific customer
characteristics. Basically an Integrated CRM system.
Pre-sales contacts include inquiries and quotes.
Inquiries document customer requests for information (how
much is . . ., is the product in stock . . .)
Quotes are binding documents to a customer offering a
specific quantity of material at a specific price if accepted
within a specific period.
Both Inquiries and Quotes can be used as a starting point to
create a customer order.
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Sales Order Processing

Customers place orders with a customer service
representative who create a document* with
information on:
Customer
Material Ordered - material and quantity
Pricing conditions for each item
Schedule lines - delivery dates and quantities
Delivery Information
Billing information
Information is pulled from master data on customers
and materials to minimize data entry errors.
*Electronic Capture of a Business Event
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Inventory Sourcing
Inventory Sourcing determines:
If a product is available (availability check).
How the product will be supplied:
From stock on hand.
From production or purchase orders that should
be available.
From make-to-order production.
Shipped from an external supplier.
Shipped from another plant or warehouse.
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Inventory Sourcing
Inventory sourcing occurs when:
An order is created.
An order is changed.
When the delivery document is created.

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Delivery
Delivery activities include:
Creating delivery documents
Creating transfer orders for material
picking
Provide packing information (if required)
Goods issue (updating accounting and
inventory data)

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Billing
A Billing Document is created by copying information
for the sales order and delivery document into the
billing document which is used to create the invoice.
Creating a Billing Document will automatically debit
the customers accounts receivable account and
credits the revenue account. Postings may also be
made to other accounts.

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Payment
Payment is the final step in the customer order
management cycle.
Final payment includes:
Posting payments against invoices.
Reconciling differences, if necessary.
The Cycle may not always go as planned (material
not in stock, defective material returned for credit,
etc.). SAP has procedures to deal with these
possibilities.
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Order Management Process

Pre-Sales

Contact
Inquiry
Quotation
Order

Inventory Sourcing
Delivery/
Transportation
Billing
Payment/
Accounting

Delivery

Goods issue

Transfer Order Shipment

Invoice

Accounts Receivable

Production Planning

Sales Information System

Sales Order
Processing

Materials Management

Contract

Scheduling
agreement

Material Stock
Account
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Document Flow
Order

Delivery

Invoice

Accounting

Document Flow of a Sales Order

Order 900
. Delivery 50000672
. . WMS transfer order 100000828
. . GD goods issue: delivery 40000184
. . Invoice 90000376
. . . Accounting document 100000269

The sales order management process consists of a chain of

steps. Each step in the process causes the creation of a
document which can be used to track the progress of the sales
order. All changes to documents (sales orders, delivery, etc.)
creates a document to keep track of the changes.
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Document Flow

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Master Data

Customer
Master

Pricing
Master
Material
Master

Master Data is centrally stored (shared across application

modules) and is processed to eliminate data redundancy.
When creating business transactions (like a sales order) the R/3
system copies information from master data.
Three kinds of master data are critical to sales order processing:
Customer - Shared with FI/CO
Material - Shared with MM and PP
Pricing
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Creating an Order
Customer Master

Sold-to party 2540-00

Material Master

Item Material
1 1400-500-00
2 1400-100-00

Quantity
30
20

When a sales order is created in R/3, data is copied from:

Customer Master
Material Master
Condition Records for Pricing
Tables in Configuration for shipping point and route.
Data can also be copied from an inquiry or quote.
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Shipping Point and Route

SP 1
SP 2

SP 3

Plant Shipping Point

Route

Customer

The Shipping Point is the logical or physical location where

deliveries are created and managed (see Organizational
Elements).
The Route is the path that the delivery follows from the plant to
the customer site.
Delivery dates are determined based on lead times associated
with the shipping point (picking and packing time) and route
(transportation lead times and transit times)
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Stock Available: Backward Scheduling

Order Date

Material
Transportation
Availability Date Planning Date

Loading
Date

Goods
issue date

Loading Time
Pick Pack and Stage
Transportation
Lead Time

Requested
Delivery
Date

Transit Time

The R/3 System uses the

longer of these two times in
calculating delivery scheduling.

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Stock Unavailable: Forward Scheduling

Order Date

New Material Transportation

Availability Date Planning Date

Loading
Date

Goods
issue date

Loading Time
Pick Pack and Stage
Transportation
Lead Time

Confirmed
Delivery
Date

Transit Time

The confirmed delivery date

is derived by the R/3 System
using forward scheduling based
on the new material availability date

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Delivery
Complete
Delivery

Sales Order

Partial
Delivery

Delivery
Delivery

Sales Order

Delivery
Delivery

Order
Combination

Sales Order
Sales Order

Delivery

A delivery can be created for each sales order.

Sales orders may split into multiple deliveries (availability).
A delivery may combine a number of sales orders for efficiency.
Combined sales orders must have something in common like
shipping point, delivery processing date, ship-to party or route.
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Picking Process
Delivery

Transfer Order

Print Transfer Order

Confirm Transfer Order*

* not mandatory

Delivery Items Complete

Process differences

Copy picked quantity

Create a new transfer order

for variance quantity

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Billing
Invoice
Split

Sales Order

Delivery

Invoice
Invoice

Separate Sales Order

Invoice
per delivery

Delivery

Invoice

Delivery

Invoice

Collective Sales Order

Invoice

Delivery

Sales Order

Delivery

Delivery

Invoice

Invoice splits can be used to bill for different items

like materials and services.
Collective invoices can be used to consolidate
deliveries onto one invoice to minimize paperwork.
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Posting Payments
Invoice 1
Invoice 2

Acme Corp.
Pay to

Invoice 3
Invoice 4

4325
$

Dollars

First National Bank

2132 123123 54545 345 34

Customers may send one check to cover multiple invoices. They

may also send checks for less than the full amount due. SAP
allows for partial payments to be applied to invoices.
Payment posting is performed by the accounts receivable
department.
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Fitter Snacker Exercise

West Hills
Athletic Club

Sales and
Distribution

Sales
Order

Inquiry
1
Pricing

2
Availability
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Fitter Snacker Exercise

Goods Issue

Pick
4

Materials
Management

Sales
Order

Delivery

Delivery

Delivery

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Fitter Snacker Exercise

Invoice
West Hills
Athletic Club

Sales and
Distribution

Delivery
6

Accounts
Receivable

Post
Receivable

Receivable
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