SALES & DISTRIBUTION OVERVIEW -Arun
Introduction to SAP •
SAP Supports all Kinds of Industries and all Functions of the Industry
•
SAP is an Integrated System
•
This means that all SAP modules are designed to share information and automatically create transactions based on various business process.
R/3 Business Application Modules • • • • • • • • • •
FI - Financial Accounting IM - Investment Management CO - Controlling SD - Sales MM - Materials Management PP - Production Planning QM - Quality Management PM - Plant Maintenance PS - Project System HR - Human Resources
Business Process Integration FI
MM
Rules FI
MM SD
SD
How Businesses Work
Order to Cash • Receive customer orders • Deliver to customer • Invoice the customer • Receive payment
Purchase to Pay
• Buy goods and services • Receive those goods and services • Pay for what they have received
Company X
Internal Functions
• Manufacturing • Inventory Control • Accounting functions • Human Resources
SAP Sales Order Process (Order-to-Cash)
Check Sales Order Availability Entry Sales Quotation Delivery Note & Entry Pick Materials Pre-Sales Activities Pack Materials
Post Goods Receipt of Issue Invoice Customer Payment Customer
Order to Cash (OTC) Process The Order to Cash process is made up of four basic process blocks:
Sales Order
Captures the customer demand
Delivery
Transition of ownership
Billing
Charging the customer for the goods or services that they have received
Accounts Receivable Receiving payment for the goods or services that they have received
Sales Order – OTC Process Sales Order
Delivery
Billing
Accounts Receivable
Captures the customer demand
What does the customer want? Where does the customer want the goods/services to go? Input to the delivery process Input to the demand fulfilment process (do we buy or make it?)
Pricing Credit Checking Availability Checking Output : Order Acknowledgement
Sales Order/Delivery – OTC Process Sales Order
Delivery
Billing
Accounts Receivable
Transition of ownership Many goods orders may be put on a single delivery A single order could be split into many deliveries When a delivery is completed, ownership is transferred to the customer
Picking Packing Foreign Trade Shipping / Routes / Transportation Output : Delivery Docket / Manifest / Bill of Lading G/L Posting
Billing – OTC Process Sales Order
Delivery
Billing
Accounts Receivable
Charging the customer for the goods or services that they have received Typically the invoice is produced as the delivery has been completed Also periodic invoicing Pricing Credit Update Output : Billing Document / Invoice G/L Posting Transfer to CO-PA (Sales Reporting)
Accounts Receivable – OTC Process Sales Order
Delivery
Billing
Customer pays in accordance with terms of payment Money can be received via cash, cheque, EFT
Credit Update G/L Posting
Accounts Receivable Receiving payment for the goods or services that they have received
Accounting View of the OTC Process The OTC process flow triggers G/L postings: When the delivery is Post Goods Issued (ie: transfer of ownership) When the billing document is produced When customer payment is received
Sales Order
Delivery
Billing
Accounts Receivable
No posting!
DR COGS CR Inventory
DR A/R Cust. CR Revenue
COGS
A/R Cust.
DR Cash at Bank CR A/R Cust. Cash at Bank
Inventory
Revenue
A/R Cust.
IMG • It is where all the customizing takes place.
SAP Reference IMG
FI CO PP PS
Enterprise IMG
SD
CO
MM
PP
MM CO
MM
PP
HR ….
FI
Project IMG
FI
CO FI
Org units in SD…
Sales and Distribution Organisational Structure •
An organization Structure provides the foundations for an organization to complete its business. It provides the structure for:
Performing business functions – e.g. create sales orders Reporting – e.g. stock listing by warehouse Legal requirements Financial requirements Managing controlling Physical facilities Supply chain of products from warehouse to customer Integration with other modules in SAP
Guiding principles for design…
Standardization – create uniform structures and standards across business units
Simplicity – represent the business with a structure which is simple. Adding unnecessary complexity will drive maintenance issues, user error, etc. Flexibility – the structure should have the ability to handle future growth such as new products, new warehouses or even acquisition of new businesses Optimization – ensure that the structure will allow for simplified transaction flow
Company Code Sales Organization Distribution Channel Division Sales Area – Sales Office – Sales Group Plant – Storage Location Shipping Points – Loading Point
COMPANY CODE
• A Company Code represents a legal entity of the organization (as defined per the legal requirements of that country) • It is the organization unit which needs relevant financial statements such as balance sheets and profit and loss statements as a result of business transactions • A company code will be configured for each legal entity.
Basic Configuration
SALES ORGANIZATION
• The Sales organization is responsible for the sale of certain products or services • It is responsible for product liability and rights of recourse • Sales organization is assigned to the company code •
One company can have more than one sales organization but one sales organization can only be assigned to one company
Company ABC
Sales Org 1000 (e.g. Delhi)
Sales Org 2000 (e.g. Patna)
Basic Configuration
Basic Configuration
DISTRIBUTION CHANNEL
• The distribution channel represents the channel through which salable materials or services reach • Within a sales organization a customer can be supplied through several distribution channels. • The distribution channel is assigned to the sales organization • One distribution channel can be assigned to more than one sales org and sales organizations generally have multiple divisions Company ABC Sales Org 2000 (e.g. Australia)
Sales Org 1000 (e.g. Singapore)
Distribution Channel 01 (e.g. Wholesale)
Distribution Channel 02 (e.g. Retail)
Distribution Channel 03 (e.g. Direct Sales)
Basic Configuration - Definition
Basic Configuration - Assignment
DIVISION
• A Division distinguishes between business segments and is used to track sales, profitability, and statistical analysis. • For example, a division may be used to represent product group or any other grouping in the sales organization structure • A material is always assigned to one division only
Company ABC Sales Org 2000 (e.g. Australia)
Sales Org 1000 (e.g. Singapore)
Division 01 (e.g. Phone
Division 2 (e.g. Television)
Basic Configuration - Definition
Basic Configuration - Assignment
SALES AREA
•
Sales Area is the combination of • Sales organization • Distribution Channel • Division
•
Sales Area is assigned to Credit Control Area to activate credit management system for the area
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SAP SD uses sales area as the center in this module
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Before the Sales Area is set up, the following assignments needs to be made in customisation: Assign Distribution Channel to Sales organization Assign Division to Sales organization
Basic Configuration – Sales Area
SALES OFFICE & SALES GROUP
• Sales Office: • A organizational unit in a geographical area of a sales organization.
• Sales Group: • A Group of people who is responsible for Sales. Note: The Sales Office is assigned to Sales Area The Sales Group is assigned to Sales Office
Basic Configuration – Sales Office & Sales Group
PLANT
•
A plant can be a production facility, a material stock location, or even a repair facility
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From the point of view of SAP SD, a plant can be defined as a material stock location from where you can source the delivery of goods to your customers
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Plant is assigned to a company code and a company code can have more than one plant
Basic Configuration – Plant
Basic Configuration – Plant Assignment
STORAGE LOCATION
• A storage location is the place where stock is physically kept within a plant • A storage location has the following attributes:
There may be one or more storage locations within a plant A storage location has a description It is possible to store material data specific to a storage location Stocks are managed only on a quantity basis and not on a value basis at storage location level Physical inventories are carried out at storage location level • Storage locations are assigned to the plant
Basic Configuration – Storage Location
SHIPPING POINT
•
The shipping point is the top level in the organization for shipping
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Shipping Point represents a fixed/physical location that is responsible for processing and monitoring deliveries as well as goods issue
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A shipping point can be allocated to several plants
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A delivery is always initiated from exactly one shipping point. Thus, all items of a delivery belong to one shipping point.
•
Groups of deliveries also belong to exactly one shipping point.
Basic Configuration – Shipping point
Shipping Point Assignment..
LOADING POINT
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A loading point is a subdivision of a shipping point.
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A place in a shipping point where goods are loaded.
•
The definition of loading points is optional
•
The exact physical location where the loading of a delivery item takes place (for example, the number of a specific loading bay).
Basic Configuration – Loading Point
For better understanding..
Company Plant
Shipping points
Loading points
Truck
Rail depot
Ramp A
Ramp B
Ship depot
Just a quick recap…
SD: Master Data
Condition Master Data
Customer Master Data
Material Master Data
Cust/Mat Info Record
Output Master Data
Customer Master General Information relevant for the entire organization: Name Address Communication
Client 410
Company Code specific information: Acc. Mgmt Payment Bank
Company Code 102 Company Code 101 Company Code 100
Sales Area specific information: Sales Office Currency
Sales Org. 101 Sales Org. 100
Customer Master Data • Customer Master
– Contains all of the information necessary for processing orders, deliveries, invoices and customer payment – Every customer MUST have a master record
• Customer Master Data is created by Sales Area – Sales Organization – Distribution Channel – Division
Customer Master Data • The customer master information is divided into 3 areas: – General Data – Company Code Data – Sales Area Data
Partner Functions To distinguish these different roles of the Customer, Partner Functions are used in SAP to define the different roles. Partners can also be used for reporting, output determination, agreements and pricing. Places the Order
SP - Sold-to Party
Receives the goods
SH - Ship-to Party SP – Forwarding Agent
CP - Contact Person ……….. Mandatory Functions
Receives the invoice
Customer Master
BP - Bill-to Party
Settles the account & Pays the receivables
PY - Payer
SD: Material Master General Information relevant for the entire organization: Name Weight U/M
Client 410
Sales specific information: Delivery Plant Loading Grp
Plant 102 Plant 101 Plant 100
Storage Location specific information: Stock Qty
Storage Location 20 Storage Location 10
Material Master • Material Master – Contains all the information a company needs to manage about a material – It is used by most components within the SAP system • • • • • •
Sales and Distribution Materials Management Production Plant Maintenance Accounting/Controlling Quality Management
– Material master data is stored in functional segments called Views
Customer-Material Information Record • Data on a material defined for a specific customer is stored in a Customer material info record. •
Info Records contain: – customer-specific material number – customer-specific material description – customer-specific data on deliveries and delivery tolerances
•
You can also maintain default text to appear on sales orders for that customer
Condition Master (Pricing) • Condition master data includes: – – – – –
•
Prices Surcharges Discounts Freights Taxes
You can define the condition master to be dependent on various data: – Material specific – Customer specific
•
Conditions can be dependent on any document field
SD Process: Inquiry •
An inquiry is a customer’s request to a company for information or quotation in respect to their products or services without obligation to purchase
– How much will it cost – Material/Service availability – May contain specific quantities and dates •
The inquiry is maintained in the system and a quotation is created to address questions for the potential customer.
SD Process: Quotation • The 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 timeframe at a predefined price.
SD Process: Sales Order • Sales order processing can originate from a variety of documents and activities – Customer contacts us for order: phone, internet, email – Existing Contract – Quotations • The electronic document that is created should contain the following basic information: – Customer Information – Material/service and quantity – Pricing (conditions) – Specific delivery dates and quantities – Shipping information – Billing Information
SD Process: Sales Order • The sales document is made up of three primary areas: – Header
• Data relevant for the entire sales order: Ex: customer data, total cost of the 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
Sales Order
DATA FROM MASTER RECORDS
Structure of sales documents Header
Line Item # 1 Schedule Line # 1 Schedule Line # 2 Line Item # 2 Schedule Line # 1
Controlling Sales Documents via … • Sales Document type • Item Category • Schedule line Category
SALES DOCUMENT TYPE
Some of the standard order types.. Standard Order (OR)
Cash Sales (CS) Rush Order (RO)
Credit memo (CR) Debit Memo (DR) Returns (RE)
How to do..
Controls..
Controls.. (contd..)
Controls.. (contd..)
ITEM CATEGORY CONTROL
Item Category Controls
SCHEDULE LINE CATEGORY
Schedule line Category Controls..
Sales Order: Delivery Scheduling • When an order is created the you must enter a requested delivery date for the order or each line item
• The system will then determine a delivery timeline, this will be used when determining our material availability, or ATP (Availability to Promise) date • The system will determine this date using forward and backward scheduling rules you have defined.
Delivery Processing.. The Shipping Process is initiated with the creation of the Delivery document. The Delivery Document manages the Picking, Packing and Goods Issue. It is also used in the creation of the Shipment document.
Picking Delivery Note
Packing Loading Post Goods Issue
Each step in the delivery process updates the delivery note status
Functions in Shipping Process • Monitoring of deadlines for reference documents due for shipping (customer orders, purchase orders) • Creation and processing of outbound deliveries • Monitoring of goods availability • Monitoring of capacity situation in the warehouse • Picking (with a link to WMS) • Packing of the delivery • Printing and distribution of shipping documents • Processing of goods issue
Prerequisites for Creating Deliveries from Sales Orders
Header level 1. There cannot be a delivery block at header level. 2. Sales Order must contain at least one item due for delivery Item Level and Schedule line Level 3. The schedule line must be due for shipping on the specified selection date. 4. The schedule line cannot be blocked for delivery. 5. The delivery quantity must be greater than one. 6. The items in the order must be fully processed. 7. The product status of the material must permit delivery. 8. Sufficient quantity of the material must be available.
Outbound delivery Structure A delivery document consists of: Overview
Header Items
Overview Header Data
Item Data
Overview Screen: A Summary of Header and Item Information
Origin of Data in Delivery • Data from ship-to party master record • Data from material master of delivery item
Delivery Type Controls..
The customisation is being made for a standard delivery process. Here sales order is a mandatory requirement in creating this delivery type
Delivery Item Category Type
Delivery Item Category Determination The Item Category is copied into the delivery from the sales document based on the copy control settings.
Standard Order OR ---------------------
Outbound Delivery LF ---------------------
Order Item Category TAN
Delivery Item Category TAN
Copy Control
Delivery Item Category Determination For order-independent deliveries (e.g. ‘LO’), SAP cannot use the copy control settings to determine the Item Category In this case, the system proposes delivery item categories using below determination rule
Delivery Document Type
Delivery Document
+
Item Category Group
Material Master
Usage
+
Item Usage (ABAP)
=
Delivery Item Category
Delivery Item Category Type Customization
Creating Outbound Deliveries • A delivery is processed through one shipping point.
Creating single Delivery Document manually
With Reference to order
Without Reference to order
OR LF
Collective processing of Delivery Document
Online Processing
Back ground Processing
• Sales order
LO
• Purchase order (STO)
Creating Deliveries.. Sales Order 1
Sales Order 4
Sales Order 2
Delivery 8…13
Sales Order 3
Delivery 8…14
Delivery 8…12
Order Combination
Sales Order 5
Delivery 8…16
Delivery 8…15
Partial Delivery
Complete Delivery
Collective Delivery Creation Selection can be made based on various criteria or common data e.g. Shipping Point, Delivery creation date, all deliveries travelling on the same route
Complete and Partial Delivery Sales order may be split into multiple deliveries for various reasons: The full sales order quantity is not available Different shipping points proposed in the Sales Order Items having different routes It is also possible to split a single line item in the sales order into 2 different deliveries
Partial delivery
Outbound delivery 08401
Sales Order 02345
Outbound delivery 08402
Transfer Order: Information Flow After the goods have been picked, the transfer order updates the following items in the delivery:
Delivery Quantity Outbound delivery 08400 --------------------Item Item Material Delivery Pick Qty. Qty. 10 20 10 M -02 40 pc 40 20 M -03 20 pc 20
Pick status is updated
Pick Quantity
Transfer order --------------------Material Pick Qty. M -02 M -03
40 pc 20 pc
Complete and Partial Delivery A setting on the Ship-to party Customer Master Data controls whether customers will accept: a single delivery per order (complete delivery); or multiple deliveries for the order placed (partial deliveries)
Sales Order 02345 --------------------Item 10 560001 10 pc Item 20 560002 40 pc
Complete delivery
Outbound delivery 08400 --------------------Item 10 560001 10 pc Item 20 560002 40 pc
Picking Process Picking involves preparing the goods and ensuring that the correct quantity and quality are ready for dispatch The picking process allows: Printing of pick lists and labels Monitoring the status of the picking of items Single and collective picking
Warehouse Management (WM) is fully integrated with SD and can be used to manage the picking process In using WM (lean or full), the picking process is initiated by creating the transfer order. It is an internal warehouse process involving movement of goods from source storage location to destination storage location The picking process is optional and can be made not relevant in the delivery item category.
Picking Location Determination Picking is carried out from a particular storage location A storage location will only be determined when an Item is relevant for picking The storage location can be manually changed by the user if required
When the delivery is goods issued, the picking quantity is reduced from this storage location/plant
Storage Condition
+ Shipping Point
+
Delivering Plant
=
Picking Location
Picking Location Determination: Configuration
Picking Status With the delivery, items can have the following picking status: not started partially picked fully picked not relevant for picking If using WM, then a separate status will be included
The picking status is shown on the picking tab in the Delivery:
Header Overall Picking Status
Line Item Individual Line Item Status
Picking Quantity Within the delivery, there are 2 quantities relevant to the shipping process: A. Delivery Quantity – this was the quantity ordered by the customer (copied from the sales order) B. Picking Quantity – this is the actual quantity picked by the warehouse
PGI can’t be done unless Delivery quantity = Picking Quantity
Picking Process Summary Outbound delivery ---------------------
Creating transfer order for the delivery
Print Pick Slip
Transfer order contains: - Material Number
.......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... . . . .......................... . ... .... ...
- Quantities to be removed
....
. . . .. . . ....
... ...
Pick Slip
- Source storage bin - Destination storage bin Confirm transfer order (Qty)
Post Goods issue
Transfer Order Creation (LT03)
Goods Issue •
As soon as the goods leave the company, the shipping business activity is finished. This is illustrated using goods issue for outbound deliveries.
Effect of Goods Issue posting 1. Enters status information in the outbound delivery 2. Reduces inventory stock 3. Posts the value change to the stock accounts in inventory accounting 4. Updates the billing due list 5. Updates the document flow 6. Reduces delivery requirements
Billing •
Last step in the standard OTC Cycle
•
Starts with creation of the billing document
SD Process: Billing Documents • The billing document will automatically create a debit posting to your customer sub-ledger account and credit your revenue account. • It is at this point that the sales process is passed over to Financial Accounting to await payment.
Structure of Billing Document Billing document Header section & item section
Item Header + Material Number + Payer Number + Billing Qty + Billing Date + Net Value of the individual item + Billing document Net Value + Weight & Volume + Document currency + Reference document number used for + Terms of payment & Incoterms billing document + Pricing Elements + Pricing Elements for the individual item
Header + Payer Number + Billing Date + Billing document Net Value + Document currency + Terms of payment & Incoterms + Pricing Elements
Item + Material Number + Billing Qty + Net Value of the individual item + Weight & Volume + Reference document number used for billing document + Pricing Elements for the individual item
HOW TO CREATE?
Creation of Billing Document Billing can be created in two ways: 1. Individual Billing Document 2. Processing Billing Due List
Processing Billing Due List •
The Billing Due List is a list of sales documents that are ready to be processed. Example: All deliveries and orders that have been processed for the day (i.e. post goods have been issued) will be invoiced when the Billing Due list is processed.
Processing Billing Due List The next screen will display all of the documents ready to be billed that fit the criteria given. All the lines are automatically highlighted for billing. To unselect them, you can use the Deselect all button.
•
1. 2. 3. 4. 5. 6. 7. 8.
Billing document type controls the entire billing document. Different types of billing types are:
F1 – Delivery related invoice F2 - Delivery related invoice F5 – Pro forma invoice for sales order F8 – Pro forma invoice for delivery L2 – Debit memo RE – Credit memo for return S1 – Cancellation invoice S2 – Cancellation credit memo
Billing Type Controls..
Billing Methods Delivery based Invoicing
Collective Invoicing
Order 6
Order 9 Order 14
Split Invoicing
Delivery 8…20
Invoice 9…45
Delivery 8…21
Invoice 9…46
Delivery 8…33 Delivery 8…34
Invoice 9…68
Delivery 8…56 Invoice 9…91
Order 32
Delivery 8…86 Invoice 9…92
Automatic Invoice Split
Effects of Billing 1.The billing document status in all the related documents 2.The customer credit account 3.Sales statistics
SD Process: Payment • Payment is the final step in the sales order process, this step is managed by the Financial Accounting department • Final payment includes: – Posting payments against invoices. – Reconciling differences between payment and invoice.
• Payment will create a posting clearing the liability in the A/R account and decreasing your bank account.
Document Flow • The document flow feature allows you to find the status of an order at any point in time. • The SAP system updated the order status every time a change is made
Sales Order: Backward Scheduling Order Date
1st
Material Availability
2nd
Pick & Pack Time (2 days)
Transp. Sched.
Loading
3rd
4th
Transp. Sched. Time (1 day)
Loading Time (1 day)
Goods Issue
5th
Requested Delv. Date
6th
Transit Time (2 days)
Sales Order: Forward Scheduling Order Date
1st
Transp. Material Availability Sched.
2nd
Pick & Pack Time (2 days)
3rd
Loading
4th
Transp. Sched. Time (1 day)
Goods Issue
5th
Loading Time (1 day)
Requested Delv. Date
6th
Transit Time (2 days)
New Delv. Date
7th
Sales Order: Availability Check • Availability Check
– Determines the material availability date – Considers all inward and outward inventory movements
• Rules are created by YOU
Availability Check •
Determines if the requested delivery quantity can be made available for shipping in order to meet the customer’s requested delivery date
•
Availability check is carried out at plant level. And it gives the material availability date
•
Added to this date is then the pick/pack time, loading time and the transportation lead time to arrive at the goods issue date
•
Shipping time or transit time is then added to arrive at the final delivery date communicated to the customer
•
It is possible to control availability check for sales documents and deliveries separately
•
ATP(Available to Promise) is the basis for availability check.
Important terminology in ATP •
• • •
•
•
•
Backorder Processing, is the processing of backorder which itself is a sales order not been confirmed in full or not confirmed at certain delivery date. Rescheduling, is a proposal of how confirmed quantities assigned already to sales orders may be assigned other orders having high priority. ATP takes into account all the movements into and out of the warehouse. The stock examined by ATP may be safety stock, stock in transfer, stock in Q.C., blocked stock. The planned issues and receipts associated with ATP are purchase orders, purchase requisitions, planned orders, productions orders, reservations, dependent reservations, dependent requirements, sales requirements and delivery requirements. For special stock such as consignment or MTO, ATP may be carried out against special stock. Replenishment lead time is the time taken for material to become available. It is used only when doing ATP check.
Elements of Availability Check • •
Checking Group, defines whether the requirements are the summed up requirements daily or weekly or whether they are individual requirements Checking group plus the checking rule determines how the availability check is to be performed.
Continued… •
Checking Rule, is used to control the scope of availability check for each transaction in SD
Continued…. • •
Schedule Line Category, Like TOR the availability check can be switched off at schedule line category when it is maintained at requirement class level. Delivery Item Category, can be used to control whether availability check takes place in deliveries.
Sales Order: Credit Check • Allows your company to manage its credit exposure and risk for each customer by specifying credit limits. • During the sales order process the system will alert the sales rep about the customers credit situation that arises, if necessary the system can be configured to block orders and deliveries.
Pricing.. ??
Pricing Procedure Determination…
Sales Area
Customer Pricing Procedure
Document Pricing Procedure
Pricing Procedure
How condition technique elements work…
Prerequisites for Automatic Pricing
• Condition records must already exist in the system for each of the condition types that you want the system to apply automatically.
•
Where necessary, data must be maintained in the corresponding customer and material master records.
Creating a condition table..
Creating a condition type & some of its types…
Access Sequence for price..
Creation of a pricing procedure and its controls..
Condition record
Condition type controls • • • • • • • • •
Condition class Calculation type Rounding rule Structured condition Group condition Manual entries Header / Item condition Delete Value
• • • • • • • •
Valid From / To Reference condition type Pricing procedure Condition Index Condition update Scale basis Scale type Accruals
Other condition types and know how’s about pricing… • • • • • • • • •
Minimum order value Customer Expected Price Condition Exclusion Pricing reports Pricing analysis Net Price Lists Pricing Simulation Condition Supplement Pallet Discounts
Free goods…
Types of free goods Inclusive: • The customer pays only for part of the goods. • The rest of the goods are free • The unit of measure should be the same as purchase quantity • Ex: For 25 washing machines, 1 washing machine is free. The customer gets 25 items and pays for 24 items.
Types of free goods (contd…) Exclusive: • The customer pays for the goods ordered and gets some additional items • The unit of measure need not be the same as the purchase quantity • Ex: If a customer buys 25 washing machines, he can receive one microwave oven also
Company is offering 3 units of free goods for 100 units ordered. Customer orders 212 units. • Pro rata: Free goods quantity is rounded. Free goods quantity = 212*3/100 = 6.36 = 6 (after rounding) • Unit reference: Ordered quantity is rounded down as per condition record quantity. Free goods quantity = 200 (rounded down)*3/100 = 6
• Whole units: checks if ordered quantity is multiple of condition record quantity. Free goods quantity = 0 as 212 is not multiple of 100 • We can create our own calculation rules using VOFM t code
Limitations of free goods.. •
•
• •
•
Free goods can only be supported on a 1:1 ratio. Agreements in the following form are not supported: 'With material 1, material 2 and material 3 are free of charge' or 'If material 1 and material 2 are ordered at the same time, then material 3 is free of charge'. Free goods are not supported in combinations with material structures (for example, product selection, BOM, variants with BOM explosion). Free goods are only supported for sales orders with document category C (for example, not quotations). Only an order item can lead to a free goods item. Free goods are not supported for deliveries without reference to a sales order. Free goods cannot be used in make-to-order production, third-party order processing and scheduling agreements.
How FI sees free goods… • Scenario I Mlt : Not influenced by free goods Slt: Pricing deactivated, VPRS configured as costs • Scenario II Mlt: Not influenced by free goods Slt: Pricing activated for item category TANN with characteristic B in pricing procedure • Scenario III Mlt: Cumulated calculation price transferred as costs Slt: Pricing deactivated
Material Determination
Material Determination • Substituting one product with another product is called material determination. • Material Determination uses condition technique to substitute one material by another in the sales order when certain conditions are met.
Material Determination can be used when_
– Customer specific product numbers with your own material numbers – Substituting discontinued materials with newer materials – Seasonal products – Same material with special packing
Menu Path
Substitution Reason A substitution reason is a rule that controls the material determination’s execution. With this reason we can specify, for example:
– What products should be printed in documents, such as an order confirmation – You can control whether the system issues a warning message before it substitutes a material
Substitution Reason
Strategy- Controls whether product selection should occur automatically in the background or whether the alternative materials should be offered for selection in a dialog box. Outcome- It controls whether the outcome of product selection should replace the original entry or whether it should be recorded as a sub-item of the original item.
Maintain Condition record (VB11) We maintain condition record as which material is going to replaced by which material.
Restrictions • Substitution is not supported for the_
– Stock transport orders (STO) – Special order types such as make-to-order (MTO), purchase-to-order (PTO), third-party order (TPO) and consignment – Contracts, inquiries and quotations – Substitution is not supported for materials with different base units of measure (UOM)
Listing & Exclusion
While creating sales order the system first checks_
– If the material is allowed for sales area the order placed in. – Then it checks if the material is excluded for that customer. – Lastly it checks if the material is in list of allowed materials for that customer.
Configuration Steps
Maintain Condition record (VB01)
Menu Path
Condition Record
MTO & MTS..
Make-to-Order (MTO)
Make-to-Order (MTO) • In MTO, production starts once a confirmed order for products is received • Production order is linked a sales order • MTO is the most appropriate approach used for highly customized or lowvolume products. E.g. High-end motor vehicles and aircraft • The product is based on a standard design, but component production and manufacture of the final product is linked to the order placed by the final customer's specifications • Special measures should take to reduce the risk of inefficiency and wastage.
Make-to-Stock (MTS)
Make-to-Stock (MTS) •
MTS is a production (In advance) approach against a sales forecast, and sale to the customer happens from finished goods stock
•
MTS is the most appropriate approach used for normal and standard or highvolume products. E.g. The grocery and retail sectors
•
Orders are the result of production planning, which in turn is based on a sales forecast
•
Inventory permits economies of scale & protects against stock-outs due to variability of inflows & outflows
•
MTS leads to an evenly spread production schedule which is good for efficiency and effectiveness.
Special Business Transactions….
•
CASH SALES
•
RUSH ORDERS
•
CUSTOMER COMPLAINTS
•
INVOICE CORRECTION REQUEST
•
FREE OF CHARGE DELIVERY
•
SUBSEQUENT FREE OF CHARGE DELIVERY
•
CONSIGNMENT PROCESS
CASH SALES
Cash Sales •Purpose • This scenario deals with cash only payment transaction for the sales of material to a customer. • The cash sales process is used when the customer places the sales order and picks up and pays for the goods at the same time. The system automatically proposes the current date in the sales order as the date for the delivery and billing. Once the sales order is saved, the system automatically creates a delivery. •Benefits • Sales and delivery are created in one step • Optional batch management •Key Process Steps • Creation of sales order and delivery (automatically) • Check batches (optional) • Post goods issue • Billing
RUSH ORDERS..
Rush order and cash sales more or less same like cash sales system generates delivery document as soon as the end user saves the document. In the rush order processing the customer places the order and collects the items immediately or we ship the materials immediately. However, we only invoice the customer later.
The system automatically creates a delivery when we save the sales order, but no invoice is printed. Instead, the system follows the standard procedures for creating the invoice.
CREDIT MEMO REQUEST..
Credit Memo Request 1. The customer discovers the products we sent him are defective, and the costs to initiate a return delivery would exceed the costs obtained rehabilitation or repair of the product. 2. The customer is overcharged for a product or service and we issue a credit for the difference.
Once the customer receives the material and finds faulty or damaged material in the shipment, then the customer informs about the loss that he incurs. Then the business can compensate the customer for damaged goods by raising credit memo with reference to credit memo request.
Credit Memo Request: •
Need not have a reference
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Enter a reason for evaluations
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Always come with a billing block
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Accounting documents are updated after posting
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Rejected items are available for revaluation
DEBIT MEMO REQUEST..
Debit memo request When the business incurs loss in a transaction then the business should be compensated by the customer in the form of debit memo with reference to debit memo request Ex: Miss calculation of price or Excessive delivery than order quantity
INVOICE CORRECTION REQUEST
Business scenarios: Quantity difference: It can be used when a customer complaints for the damage. Ex: Damaged quantity or high price. The system corrects the quantities to be billed via the debit memo item. Price difference: When the business incurs loss. Then the business also can be compensated via the debit memo item only.
Invoice Correction Requests
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Can be created only with reference to a incorrect billing document
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A Credit and Debit Memo is generated for each item
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Changes are made to the debit side
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Net value is either credited or debited
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Remaining items are deleted in pairs
FREE OF CHARGE DELIVERY..
When the business wants to send samples to the customers then the business can map the scenario with the free of charge deliveries.
SUBSEQUENT FREE OF CHARGE DELIVERY..
CONSIGNMENT PROCESS
Consignment Process •
Consignment goods are goods which are stored at the customer location but which are owned by your company.
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The customer is not obliged to pay for these goods until they remove them from consignment stock. Otherwise, the customer can usually return consignment goods which are not required.
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Customers store the consignment goods at their own warehouses. The customer can access the goods in the consignment warehouse at any time.
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They are only billed for the goods when they are removed from the warehouse and only for the actual quantity taken.
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Since consignment stocks still form part of your valuated stock, you must manage this stock in your system.
Phases in Consignment Process
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Consignment Fill – up
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Consignment Issue
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Consignment Returns
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Consignment Pick – up
Consignment Fill-up Consignment Fill-up is nothing but filling up the goods
i.e., keeping the goods at the place of the consignee for sale. For this reason, you will be having an order, delivery, PGI but not billing. Since you are not selling the goods to the customer, billing is not involved • •
The relevant quantity is removed from regular inventory in your plant and is added to the special stock for the customer. The total valuated stock for the plant remains the same. The transaction is not relevant for pricing since the consignment stock remains the property of your company.
Consignment Issue •
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Consignment issue enables the customer to take consignment goods from the special stock for their use or to sell. Consignment issue involves removing the goods from the special stock and making it the property of the customer.
When the customer removes consignment stock to use or sell, you record the transaction in the system by creating a consignment issue order (order type KE). As a result, the system carries out the following actions: • •
When goods issue is posted, the relevant quantity is deducted from both the customer’s special stock and your own total valuated stock. The transaction is relevant for pricing since the goods now become the property of the customer.
Consignment Return
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Consignment returns are used for when your customer wants to return goods to the consignment stock
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If the customer wishes to claim on consignment goods which have already been issued, you can record this transaction by creating a consignment return order (order type KR). As a result, the system carries out the following actions:
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When goods issue is posted, the relevant quantity is added to the customer’s special stock at the plant where the goods are returned
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Since the ownership of the goods is passed from the customer back to your company, the transaction is relevant for billing. In this case, the customer receives a credit memo for the returned goods.
Consignment Pick Up
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Any consignment goods stored at the customer’s warehouse that haven’t been used can be reposted to your company’s warehouse with a consignment pick-up
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If the customer returns consignment stock to you, you record the transaction in the system by creating a consignment pick-up order (order type KA). As a result, the system carries out the following actions:
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When goods issue is posted, the relevant quantity is deducted from the customer’s special stock and is added back into your regular stock at the plant where the goods are returned. Your total valuated stock remains the same since the returned stock was regarded as part of your own inventory even while it was at the customer’s premises
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This transaction is not relevant for billing
Third party orders.. • Sale made by an agency acting as an intermediary between a buyer and a seller. Example: Trading goods
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You can't delivery the goods ordered by your customer due to Shortage of stock at that time you will create a purchase Order to your vendor and ask him to send the goods to your Customer
• Vendor delivers the goods to your customer and bills you.
How Does the Process flow • The customer sends the sales order to you • You will send a Purchase order of the same material to a vendor known as third party here • The vendor will send you the invoice for the order • The vendor will ship the products to the customer • You will bill the customer
How Material Behave • If a material is always delivered from one or more third-party vendors, you can specify in the material master that the material is a third-party item • During subsequent sales order processing, the system automatically determines the appropriate item category for a third-party item: TAS • To specify a material as a third-party item, enter BANS in the Item category group field in the Sales 2 screen of the material master record.
With Shipping Notification MIGO- Good Receipt process • You define a purchase order as a reference document for the goods receipt and copy the delivered items into the goods receipt. Then you compare the data in the purchase order with the data in the most recent delivery note.
MIRO- Invoice verification • It is basically done to check whether the vendor has billed the customer correctly or not.
With Out Shipping Notification
MIRO is only being considered
The vendor directly delivers goods to the customer with out sending the good receipt to the manufacture
Bought In • When Manufactures Buys the good from the Vendor and deliver it to the customer. a) Migo b) Miro
Incompletion log.. •
The incompletion log reminds you when data important for further processing is missing from the sales document.
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When you enter a sales document, the system usually proposes much of the necessary data from customer and material master records, and you can also enter additional data or change proposed data manually
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The sales document then forms the basis for various subsequent functions, such as delivery processing and billing. However, subsequent functions can often only be carried out if the data in the original sales document is complete
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To guarantee completeness, the system logs all missing data in an incompletion log. The data needed to process subsequent functions is defined by your system administrator for each sales document type
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The completeness of data in a sales document determines its status. You can display an overview of status information in a sales document for both header and items.
Item/Product Proposal : VA51
Item Proposals are created if certain materials are ordered with the same quantity on a regular basis (also known as a shopping list).
Item Proposals reduced order entry time by customer service.
When creating item proposals, different materials with proposed quantities can be entered
The bills of material (e.g., configurable materials) can also be adopted into an item proposal
However, it is NOT possible to explode, or configure a bill of material in an item proposal. You can only carry this out when you are copying it into a sales order.
During sales order creation, the Item Proposal is made available and either one or all items from the Item Proposal can be copied into the sales order. It is also possible to change the quantity which was copied from the item proposal.
Item/Product Proposal : VA51
Item/Product Proposal : VA51
The Product Proposal is then recorded against the Customer Master on the Orders tab of the Sales Area.
This is stored using the Item Proposal field
Item/Product Proposal : VA51 With the Product Proposal number stored against the Customer, the Product Proposal will prompt the user with the following screen when creating the sales order. There are 3 options during the Product Proposal: 1. Default without quantity
copies only the material 2. Default with quantity copies material and proposed quantities 3. Selection List provides the list of items in product proposal to select only those materials required
OUTLINE AGREEMENTS
CONTRACT..
Quantity Contracts •
It is an outline agreement between you and your customer that is valid for a certain time period
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The contract does not contain any schedule lines, delivery quantities or delivery dates
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The customer fulfills the contract with individual releases
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Schedule lines are created in the release order when it is placed and then the release order is processed like a standard order.
SCHEDULING AGREEMENT
What is that..??
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Outline agreement between you and your customer that is valid for a certain period of time
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Contains fixed delivery dates and quantities
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The dates are contained in the schedule lines for the scheduling agreements
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When you enter the schedule lines for an item in the scheduling agreement, the system adds up the quantities that have been entered and compares them to both the target quantity and the quantity already shipped
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If the quantity in the schedule line exceeds the target quantity, the system issues a warning message
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If your customer requires it, you can process invoices periodically
Creating Sales Document •
Create sales order with reference to scheduling agreement
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Rest process is same as contract
Invoice List Invoice lists contain various billing documents (invoices, credit and debit memos) and can be sent to a payer on specified days or at certain intervals.
Benefits of SAP.. • • • • • • •
Improve alignment of strategies and operations Enterprise wide and real time integration Improve productivity and insight Reduce costs through increased flexibility Support changing industry requirements Reduce risk Improve financial management and corporate governance • Optimize IT spending • Provide immediate access to enterprise information
QUESTIONS?
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