SAP Sales and Distribution

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The sales and distribution (SD) function of SAP is part of the logistics area and contains the processes that help a company integrate with their customers. These processes include providing quotations to customers, receiving sales orders via phone, internet or EDI, shipping the finished goods, and finally billing the customer for the goods that they have received.

Sales Organizational Structure

Within SAP there is an organizational structure that exists for the sales and distribution module. The highest level of this is the sales organization, which is responsible for the sale and distribution of goods and services. The sales organization is a legal entity and is associated with one company code, but a company code can have a number of sales organizations assigned to it. On the logistics side, a sales organization can sell products for more than one plant, and a plant can have more than one sales organization selling its products.

It can be subdivided into a number of distribution channels which helps a sales force on getting the right products to the right customers at the right price.

The distribution channel that can be defined will depend on the products that a company sells, for example you can have channels that represent wholesalers, distributors, or direct sales. A good distribution channel strategy will help your company to increase sales, improve sales and marketing coverage, and reduce your costs across the sales function.

For each sales organization there can be one or many sales divisions. The role of the sales division is to structure the sales resources within the sales organization. The resources in a sales division are focused on a single customer or group of similar customers.

Sales Documents

In SAP there are a number of documents that are used in the sales and distribution process include customer inquiries, quotations, sales orders, sales order contracts, credit memos, and returns. A customer inquiry is given to a customer or potential customer for an item. After the inquiry has been received by the sales office associated with the customer, the team can work on a response. The resulting sales document is a quotation that is sent back to the customer with the best price and conditions offered by a company.

A sales order is an agreement between a company and a customer. The sales document specifies the items to be delivered, the quantity, and the date of delivery of the items to the customer.

A sales scheduling agreement is similar to the sales order in the sense that the customer orders a range of items, price and conditions are agreed upon, and a delivery is arranged. The agreement schedules a number of deliveries to the customer over a period of time.

A sales contract is an agreement between a company and a customer for goods or services over a specified period of time. There are a number of contracts that can be created such as a quantity contract that specifies the total of the items to be sold to the customer over a period of time. A contact can also be based on value so that items are sold to a customer over a period of time up to a total amount.

On occasion a customer will want to return items. This may be because they are the wrong items, the items failed inspection, or they are not required. Depending on a company's return policy, it may require the customer to obtain a return merchandise authorization (RMA) number or it may allow customers to return items without an RMA. When the returns are processed, a credit is issued to the customer in the form of a sales document called a credit memo. Credit memos can also be processed if the customer has been charged a price that is in excess of the agreed amount, if a discount has not been applied or if they have been charged for freight when the order included free shipping.

The opposite of a credit memo is a debit memo and this can be created if a sales department has undercharged a customer for items on the sales order.