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Sales Order Management in SAP R/3
Adapted by Nik Dalal, OSU from material created by Bret Wagner, WMU
And SAP America Plug-and-Play grant
The order to cash process
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Sales Order Cycle
Pre-Sales ActivitiesSales Order Processing
DeliveryBilling
Inventory Sourcing
Payment
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SAP R/3 SD module
SD: Sales and Distribution Integrated with:
Materials Management (MM) Production Planning and Execution (PP) Financial Accounting (FI)
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R/3 Organizational Elements
Configurable structures within the software that represent the legal and/or organizational views of an enterprise
Organizational elements form a framework supporting all business activities in the manner desired and selected for a given instance of the software
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SAP R/3Organizational Elements
Client Company Code Sales Organization Distribution Channel Sales Division Sales Area Plant Storage Location Shipping Point
“An essential characteristic of the SAP R/3 standard business program is the strict adherence to a formal structure of data. In no other way is it possible to build and maintain the very large system of databases and transactional processing routines that a modern integrated system demands.
The structure of SAP R/3 is designed to be adaptable to the structure of all common configurations of head office and subsidiary operating units. The standard software is not itself altered when it is implemented in a company: only the tables of parameters that control it so as to make it fit your specific organization and its data processing requirements. There must be a set of definition of terms to ensure that everyone understands what the titles of the organizational units stand for.”
SAP R/3, page 530.
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Client
The highest level in an SAP R/3 instance A self-contained unit with a separate set of master
records and its own set of configuration tables An instance can have more than one client
Training Client Testing Client Production Client
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Company Code
Represents an independent legal accounting unit
Balanced set of books, as required by law, are prepared at this level
A client may have more than one company code United States Europe India China
Liabilities &Owners EquityAssets
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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
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.
SalesOrganization
Distribution Channel
Wholesale Retail Direct
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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. Examples
Motorcycle Accessories
DivisionsProduct Line 1
Product Line 2
ProductLine 3
SalesOrganization
Sales Division
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Sales Area
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.
Division 1 Division 2
Distribution Channel 1
Division 1
Distribution Channel 2
Sales Organization 1
D ivis ion 1 D ivis ion 2
D is trib u tion C h an n e l 1
S a les O rg an iza tion 2
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Fitter Snacker Sales Organization
Wholesale (WH) Direct (DI)
Fitter Sales (##FS)
Snackbar (SB)Snackbar (SB)
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Plant
A physical or logical site where value is added A plant can be a
Production facility Warehouse Distribution vehicle
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Storage Location
A subdivision of a plant where inventory is managed.
Storage location 0001
Storage location 0002 Storage location 0003
Storage Location 009
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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. Each delivery is processed by only one shipping point
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 ActivitiesSales Order Processing
DeliveryBilling
Inventory Sourcing
Payment
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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 customer’s 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
Quotation
Contact
Schedulingagreement
Order
Delivery Goods issue
Shipment
Invoice
Accounts ReceivableMaterial Stock
Account
Inquiry
Contract
Pre-SalesPre-Sales
Sales OrderProcessingSales OrderProcessing
Delivery/TransportationDelivery/Transportation Transfer Order
BillingBilling
Payment/AccountingPayment/Accounting
Mate
rials M
anagem
ent
Mate
rials M
anagem
ent
Pro
ductio
n P
lannin
gPro
ductio
n P
lannin
g
Inventory SourcingInventory Sourcing
Sale
s Info
rmatio
n S
yste
mSale
s Info
rmatio
n S
yste
m
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Document Flow
Order Delivery Invoice Accounting
Document Flow of a Sales OrderOrder 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
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 General Ledger Pricing
CustomerMaster
CustomerMaster
MaterialMaster
MaterialMaster
PricingMasterPricingMaster
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Customer Master
Contains all the customer related data necessary for processing orders, deliveries, invoices and customer payments
Customer Master contains all relevant data regarding business partners Sold-to party Ship-to party Bill-to party Payer
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Material Master
Contains all data required to define and manage a specific item of material
Integrates data from Inventory Control (MM) Manufacturing (PP) Sales and Distribution (SD) Accounting (FI and CO) And other departments
Each user has a unique view
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General Ledger
A book of accounts and their respective balances The primary information record for Financial
Accounting (FI) Contains the information required to prepare financial
statements The General Ledger provides a complete record of all
acceptable business transactions
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Pricing
Pricing is carried out automatically based on predefined prices, discounts, and surcharges
Highly customizable within SAP R/3
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Creating an Order
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.
Sold-to party 2540-00
Item Material Quantity 1 1400-500-00 30 2 1400-100-00 20
Customer Master
Material Master
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Shipping Point and Route
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)
Plant Shipping Point Route Customer
SP 1
SP 2
SP 3
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Stock Available: Backward Scheduling
RequestedDelivery
DateGoods
issue dateLoading
DateTransportationPlanning Date
MaterialAvailability DateOrder Date
Transit TimeLoading Time
Pick Pack and Stage
TransportationLead Time
The R/3 System uses thelonger of these two times in
calculating delivery scheduling.
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Stock Unavailable: Forward Scheduling
ConfirmedDelivery
DateGoods
issue dateLoading
DateTransportationPlanning Date
New MaterialAvailability DateOrder Date
Transit TimeLoading Time
Pick Pack and Stage
TransportationLead Time
The confirmed delivery dateis derived by the R/3 System
using forward scheduling basedon the new material availability date
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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.
Sales Order Delivery
DeliverySales Order
Sales Order
Sales Order
Delivery
Delivery
Delivery
CompleteDelivery
PartialDelivery
OrderCombination
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Picking Process
D elive ry Item s C om p le te
C op y p icked q u an tity C rea te a n ew tran s fe r o rd erfo r va rian ce q u an tity
P rocess d iffe ren ces
C on firm Tran s fe r O rd er*
P rin t Tran s fe r O rd er
Tran s fe r O rd er
D e live ry
* not mandatory
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Billing
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.
Sales Order Delivery Invoice
Invoice
Sales Order Delivery
Delivery
Invoice
Invoice
Delivery
Sales Order
Sales Order
Delivery
Delivery
Invoice
InvoiceSplit
SeparateInvoiceper delivery
CollectiveInvoice
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Posting Payments
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.
Invoice 1
Invoice 2
Invoice 3
Invoice 4
Acme Corp. 4325
Pay to $ Dollars
First National Bank 2132 123123 54545 345 34
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Fitter Snacker Exercise
Inquiry
West HillsAthletic Club
SalesOrder
1 2
AvailabilityPricing
Sales andDistribution
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Fitter Snacker Exercise
DeliverySalesOrder
3
5Pick
MaterialsManagement
Goods Issue
Delivery
4
Delivery
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Fitter Snacker Exercise
InvoiceWest Hills
Athletic Club
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7
Sales andDistribution
AccountsReceivagle
Delivery
Receivable
Post
Receivable