The Fulfillment Process
Chapter 5
1 Magal and Word | Integrated Business Processes with ERP Systems | 2011
General recap
1. Client: is the highest organizational level in SAP ERP 1. Better knows as the Enterprise level
2. Company Code: each company within the enterpeise is
represented by a company code (CC)
- A client can have multiple company codes, but a company
code must belong to only one client.
2 Magal and Word | Integrated Business Processes with ERP Systems | 2011
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. Explain how and why fulfillment is integrated with other
processes.
3
Magal and Word | Integrated Business Processes with ERP Systems | 2011
A Basic Fulfillment Process
Magal and Word | Integrated Business Processes with ERP Systems | 2011 4
Mainly focusing on these steps of the fulfillment process
Organizational Data
Client
Company code
Sales organization
Distribution channel
Division
Plant (shipping plant)
Storage location
Shipping point
Credit control area
Magal and Word | Integrated Business Processes with ERP Systems | 2011 5
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 6
GBI Sales Organizations
Magal and Word | Integrated Business Processes with ERP Systems | 2011 7
Distribution Channel
Responsible for getting materials to customers
Differentiate distribution strategies or approaches
Different pricing, responsibilities
Wholesale sales, retail sales, Internet sales
A sales organization must have at least one distribution
channel to reach customers
DC = Distribution Channel
Magal and Word | Integrated Business Processes with ERP Systems | 2011 8
GBI US Distribution Channels
Magal and Word | Integrated Business Processes with ERP Systems | 2011 9
Division
Used to consolidate materials with similar characteristics
Typically divisions are associated with a companys
product line
Div_1 = Accessories Vs. Div_2 = Bicycles
Different sales strategies, pricing agreements
Associated with product lines
A sales organization must have at least one division
Magal and Word | Integrated Business Processes with ERP Systems | 2011 10
GBI US Divisions
Magal and Word | Integrated Business Processes with ERP Systems | 2011 11
Distribution Chain
A unique combination of sales organization and division
Some master data are maintained at this level
Material master
Pricing conditions
Magal and Word | Integrated Business Processes with ERP Systems | 2011 12
Plant
Plant
Manufacturing facility
Warehouse
Others..
A plant can be assigned to deliver products or services for
multiple distribution chains.
Magal and Word | Integrated Business Processes with ERP Systems | 2011 13
Plants and Distribution Chains
Magal and Word | Integrated Business Processes with ERP Systems | 2011 14
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 15
Shipping Point Example
Magal and Word | Integrated Business Processes with ERP Systems | 2011 16
Magal and Word | Integrated Business Processes with ERP Systems | 2011 17
Shipping Point Example
Magal and Word | Integrated Business Processes with ERP Systems | 2011 18
Shipping Point Example
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 19
Centralized Credit Control Area
Magal and Word | Integrated Business Processes with ERP Systems | 2011 20
Decentralized Credit Control Area
Magal and Word | Integrated Business Processes with ERP Systems | 2011 21
Master Data (in fulfillment)
Material master (what views?)
Customer master (what segments?)
Conditions
Output master data
Credit management master record
Magal and Word | Integrated Business Processes with ERP Systems | 2011 22
Material Master Data
Basic Data
Which are relevant to all processes, are defined at client level
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)
Magal and Word | Integrated Business Processes with ERP Systems | 2011 23
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 24
Segments Of Customer Master Data
Magal and Word | Integrated Business Processes with ERP Systems | 2011 25
Customer Master Data
General data
Account number
Address
Communication
Company code data
Reconciliation account
Payment terms
Magal and Word | Integrated Business Processes with ERP Systems | 2011 26
Customer Master Data
Sales Area data (Sales)
Sales related
Sales area, pricing, 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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 27
Multiple Definitions of a Customer
Magal and Word | Integrated Business Processes with ERP Systems | 2011 28
GBI Customers
Magal and Word | Integrated Business Processes with ERP Systems | 2011 29
Pricing Conditions
Prices
Material price
Customer specific price
Freight
InCoTerms (International Commercial Terms)
Trade terms published by the International Chamber of Commerce (ICC)
that are commonly used in both international and domestic trade
contracts
Surcharges and discounts
For customer, material, or combination
Taxes
Magal and Word | Integrated Business Processes with ERP Systems | 2011
30
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 31
Credit Management Master Record
- Extension of the customer master record that includes data
relevant to managing credit for that customer
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 (how risky it is to extend credit to the customer)
Overview (key data from other areas)
Magal and Word | Integrated Business Processes with ERP Systems | 2011 32
Fulfillment Process Steps
Magal and Word | Integrated Business Processes with ERP Systems | 2011 33
Pre-sales Activity
CRM light establishing and maintaining customer
relationships
Activities include
Creating and tracking customer contacts
Mailing campaigns
Workshops
Responding to customer inquiries and request for quotation
Outline agreements
Contracts
Scheduling agreements
Magal and Word | Integrated Business Processes with ERP Systems | 2011 34
Elements of the Pre-sales activity
Magal and Word | Integrated Business Processes with ERP Systems | 2011 35
Data in a Quotation
Magal and Word | Integrated Business Processes with ERP Systems | 2011 36
Elements of a Sales Order
Magal and Word | Integrated Business Processes with ERP Systems | 2011 37
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 38
Data in a Sales Order
Magal and Word | Integrated Business Processes with ERP Systems | 2011 39
Structure of a Sales Order
Magal and Word | Integrated Business Processes with ERP Systems | 2011 40
Sales Order Document
Header
Dates, terms, customer data, etc
Line items
Item number
Quantity
Schedule lines (illustration next slide)
Date
Order quantity
Delivery quantity
Magal and Word | Integrated Business Processes with ERP Systems | 2011 41
Backward Scheduling
Magal and Word | Integrated Business Processes with ERP Systems | 2011 42
Inventory Sourcing
- Related to material staging (prepare materials for shipment)
- Transfer of requirements (materials management / materials
planning)
From stock
Materials management
Internal procurement
In-house production process
External procurement
Procurement process
Magal and Word | Integrated Business Processes with ERP Systems | 2011
43
Shipping
Create outbound deliveries (plan transportation)
Picking (optional)
Packing (optional)
Transfer requirement (if WM is enabled)
How best to transport the materials
Goods Issue (recording the financial impact of shipping
goods)
Magal and Word | Integrated Business Processes with ERP Systems | 2011 44
Elements of the Shipping Step
Magal and Word | Integrated Business Processes with ERP Systems | 2011 45
Data in a Delivery Document
Magal and Word | Integrated Business Processes with ERP Systems | 2011 46
Structure of a Delivery Document
Magal and Word | Integrated Business Processes with ERP Systems | 2011 47
Delivery Document Structure
Header
General data
Line Item
Item number
Material
Quantity
Weight
Magal and Word | Integrated Business Processes with ERP Systems | 2011 48
Relationship between Schedule Lines
and Delivery Items
Magal and Word | Integrated Business Processes with ERP Systems | 2011 49
Deliveries
One order >> multiple deliveries
Multiple orders >> one delivery
Constraints?
Same customer
Same shipping point
Same delivery date
Same ship-to-address
Magal and Word | Integrated Business Processes with ERP Systems | 2011 50
Relationship between Sales Order and
Deliveries
Magal and Word | Integrated Business Processes with ERP Systems | 2011 51
Relationship between Delivery
Documents and Transfer Requirements
Magal and Word | Integrated Business Processes with ERP Systems | 2011 52
Packing Options
Magal and Word | Integrated Business Processes with ERP Systems | 2011 53
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)
Magal and Word | Integrated Business Processes with ERP Systems | 2011 54
Outcomes of Shipping (Goods Issue)
Magal and Word | Integrated Business Processes with ERP Systems | 2011 55
FI Impact of the Shipping Step
Magal and Word | Integrated Business Processes with ERP Systems | 2011 56
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 57
Elements of the Billing Step
Magal and Word | Integrated Business Processes with ERP Systems | 2011 58
Data in a Billing Document
Magal and Word | Integrated Business Processes with ERP Systems | 2011 59
Relationship between Deliveries and
Billing
Magal and Word | Integrated Business Processes with ERP Systems | 2011 60
Structure of a Billing Document
Magal and Word | Integrated Business Processes with ERP Systems | 2011 61
Billing Document Structure
Header
Payer, billing date, totals, etc.
Line items
Item number
Material
Quantity invoiced
Value
Magal and Word | Integrated Business Processes with ERP Systems | 2011 62
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)
Magal and Word | Integrated Business Processes with ERP Systems | 2011 63
Outcomes of the Billing Step
Magal and Word | Integrated Business Processes with ERP Systems | 2011 64
FI Impact of the Billing Step
Magal and Word | Integrated Business Processes with ERP Systems | 2011 65
Payment
Post incoming payment
GL accounts are updated and an FI document is created
Cash/Bank account
Customer account -> AR reconciliation account
Magal and Word | Integrated Business Processes with ERP Systems | 2011 66
Elements of the Payment Step
Magal and Word | Integrated Business Processes with ERP Systems | 2011 67
Data in a Payment Document
Magal and Word | Integrated Business Processes with ERP Systems | 2011 68
FI Impact of the Payment Step
Magal and Word | Integrated Business Processes with ERP Systems | 2011 69
Customer Payment with Discount
Magal and Word | Integrated Business Processes with ERP Systems | 2011 70
Processing Customer Payment
Magal and Word | Integrated Business Processes with ERP Systems | 2011 71
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
Magal and Word | Integrated Business Processes with ERP Systems | 2011 72
Credit Management Process
Magal and Word | Integrated Business Processes with ERP Systems | 2011 73
Integration with Other Processes
Magal and Word | Integrated Business Processes with ERP Systems | 2011 74
Reporting
General SAP reporting options
Online lists
Work lists
Analytics
Fulfillment specific reporting options
Document flow
Magal and Word | Integrated Business Processes with ERP Systems | 2011 75
Document Flow
Magal and Word | Integrated Business Processes with ERP Systems | 2011 76
Work Lists
Magal and Word | Integrated Business Processes with ERP Systems | 2011 77
List of Sales Orders
Magal and Word | Integrated Business Processes with ERP Systems | 2011 78
Information Structures
Magal and Word | Integrated Business Processes with ERP Systems | 2011 79
Example of Standard Analysis
Magal and Word | Integrated Business Processes with ERP Systems | 2011 80