Sales and Distribution

Enterprise Structure Overview

SAP R/3 - SD module

SALES INFORMATION SYSTEM Sales Support
Sales activity Inquiry Quotation Delivery free of charge Subsequent delivery free of charge Sales order Contract Scheduling agreement

MATERIALS MANAGEMENT

Sales

Returns

Shipping
Delivery Transportation

Billing
Debit memo Invoice Credit memo

FINANCIAL ACCOUNTING

SAP R/3 Integration Model

Sales Order

Customer

Shipment Credit Limit

Sales & Distribution

Invoice

Material Availability Check Transfer of Requirements Goods Issue

Sales Forecast / Plan

Production Planning
Production Cost

Production Order Production Order Receipt Accounting Document

Materials Management
Purchase Order Invoice Receipt Goods Receipt

Receivable Accounts / Cash Receipt

Finance & Controlling

Accounts Payable

Vendor

Organization Terms Finance

Client
A grouping of companies with a common purpose. Example: Client 001

Company Code
Legally independent entity, within a client, that has its own balance sheet and creates its own profit-and-loss statement. Example: Co.Code 0001

Organization Terms Sales and Distribution

Sales Organization
A selling unit Example: 0001

RETAIL STORE

Distribution Channel
A customer classification Example: Retail, Institution

Organization Terms Sales and Distribution

Division
A product group Example: Foods, Cosmetics

Sales Area
The combination of sales organization, distribution channel and division

Organization from Sales Perspective

C l i e n t

S a l e s O r g

S a l e s O r g

D i s t r i b u t i o n C h a n n e l

D i s t r i b u t i o n C h a n n e l

D i s t r i b u t i o n C h a n n e l

D i s t r i b u t i o n C h a n n e l

Sales Area
D i v i s i o n D i v i s i o n D i v i s i o n D i v i s i o n D i v i s i o n D i v i s i o n

Organization from Sales Perspective

HLL

India

Nepal

Retail

Institution

Retail

Cosmetics

Foods

Beverages

Foods

Foods

Cosmetics

Sales Area

Organization Terms Sales and Distribution

Sales Offices
A subsidiary of a Sales Area (Sales Region) Example: South India

Sales Group
A subgroup of Sales Office (District) Example: Hyderabad

Organization Terms Sales and Distribution

Sales Person
Individual person assigned to a Sales Group Example: 0001

Organizational structure in MM
Client
Plant 1

Plant 3

Plant 2

Company Code 1

Company Code 2
= Storage Locations

Organizational Structure in Shipping

Client

0001

Plant

0001

0002

Shipping point

Truck

Railway

Air

Organizational Structure in Accounting

Client

Company Codes

0001

0002

0003

MASTER DATA IN SALES AND DISTRIBUTION

Every company is structured in a particular manner. In order to work with the SAP system the required company structure has to be mapped into the system. This is done with the help of different organizational structures.
Data about the products,services and business partners is the basis for sales processing in sales and distribution. In the SAP R/3 system, the master data is required for sales processing. In addition to sales and Distribution ,other departments of the company such as Accounting,MM,and PP access the master data. The different business transactions in sales and distribution are stored in the SAP system in the form of documents.

 In SAP,customers and vendors have been termed as Business Partners.

If a customer is also a vendor,both customer master record and a vendor master record should be maintained . To create a link between the master records you should enter the vendor number in the customer master record and customer number in the vendor master record. Both the accounting department and the sales and distribution department have access to the customer master record. In order to avoid data redundancy,the data for both department is stored in a common master record.

Customer Master Terms Business Partner All Customers with whom the company is in contact. Sold-to Party The company which places the order Ship-to Party The partner receiving the goods. Bill-to Party The location, the invoice is mailed to

Payer
Responsible for Payment Carrier

The vendor responsible for transporting goods

Business Partners in SD
Sold To Party
Personnel Ship To Party

Business Partner Functions

Bill To Party
Vendor

Payer

 General data,Company Code data and Sales and Distribution data is stored separately in the customer master record.Company code data is defined individually for for each company code.Sales and distribution data is defined individually for each sales area.General data is independent from company code and sales area.It applies to one customer in all company codes and sales area.

Structure of the Customer Master Records

General data Sales and Distribution Data Company Code Data

General Customer Master Data

Address Marketing Export General Control Contact Person

General data

Identified only by the Customer Number, not by Company Code or Sales Area Gives the General Control Parameters Applicable for any business transaction With the customer

Company Code Customer Master Data

Account Management Payment Correspondence Insurance
Company Code Data

Applies to only one Company Code

Sales and Distribution Customer Master Data

Sales Shipping Billing Partner Functions

S&D Data

Applies to only one Sales Area - Dependent on Sales Structure

Linking Business Partners

In most cases the sold-to party is at the same time ship-to party,payer and bill-to party.For this reason in the SAP system the function sold-to party includes all these other functions.

If a customer fulfills all the partner functions at the same time then only one master record is necessary but if the functions are divided ,a corresponding number of master records is needed.

Account Group : With the help of account groups we can control the screens,fields and number ranges for the different partner functions of a customer. Each master record must be assigned to an account group.When you create a customer record for different partner functions,different account groups are assigned automatically by the system. You can access the general data of a customer by just entering the customer number,but to access the S&D data,you have to enter the customer number and sales area.

One Time Customers :

With some customers your company has a long-lasting relationship but with other customers you have only one contact. These customers are known as one time customers.
For customers you create a customer master record for each customer but for one time customers you create a collective master record. When creating a sales order for a one time customer,the system automatically branches to an address screen,where you can enter the address,name and other relevant information.

 Block/Unblock : You can block a customer master record for a sales order,a delivery, billing or sales support or all of them. Display changes : You can display all changes which have been made to a customer master record after its creation. Changing an Account group : If,for example a payer takes on the role of a sold-to party,you can assign the new function to the customer by changing the account group.Changes to the account group and the accompanying partner functions can only be made from a lower level to a higher level.

Comparing customer master record

Customer master records are created and maintained in financial accounting and in S&D.In some cases,a customer master record may have been created in S&D but not in FI or Vice-Versa.There is a program which determines which customer records have been maintained in one of these applications but not in the other.

Product & Services

Product and services are combined in SAP under the term material.
All information necessary for the management of a material and its stocks, as well as its use, is maintained in the so-called material master record. This includes, for example, data on purchasing, on sales and on storage.

Material type: The material type represents certain features of materials in the system, and has important control functions: the material type is used, among other things, to group field selection functions for a material, or to define the screen sequence, the type of number assignment and number ranges during material master record maintenance.

 Material types in the SAP standard version are, for example, raw materials, trading goods, semi-finished products, finished products, or services. Depending on the material type, company areas maintain different data screens. This screen selection applying specifically to an application is called a "view".

Trading Goods Trading goods are movable goods intended for commercial exchange. Examples of trading goods are market goods, consumption goods and durable goods. Trading goods are always bought and re-sold by your company. The material master record for trading goods therefore always contains purchasing data and sales data. Trading goods are managed in the SAP R/3 System using the key HAWA.

Non-stock Material
Non-stock material includes materials that are not managed on an inventory basis (for example, small parts such as nails) though physically in stock. Non-stock materials are managed in the SAP System using the key NLAG.

Services Services are represented and managed in the SAP System as materials. Services are immaterial goods that differ from other goods, particularly in that their production and consumption coincide. Services are generally regarded as nontransportable and non-stockable. Typical services are commercial services, transport services, bank and insurance services, goods from cultural organizations and the mass media, as well as services provided by the public security forces or the education and health sectors.
Since services cannot be stored, a material master record of this material type does not contain inventory data or inventory management data. No fields for gross weight, net weight or unit of weight are included in the basic data for a service, as are for other material types. Services are managed in the SAP R/3 System with the key DIEN.

Packaging Material This material type includes all materials needed for packaging. For example, boxes or crates. Packaging materials are managed in the SAP R/3 System with the key VERP.

Other Material

Materials which cannot be assigned to any of the standard material types, can be maintained, as "Other material". Thus, besides standard material types (trading goods, finished products, services etc.) you can also create additional material types. When creating such a material, note that a material type must be entered on the first data screen. For standard material types, this entry is not necessary because the material type is selected in the menu.

Type Material type description in SAP

IBAU Maintenance assemblies INGG Prod. resources/tools INTR Intra materials KMAT Configurable materials LEER Empties LGUT Empties (retail) MACH Rohstoffe MUSTER MODE Apparel (seasonal) NLAG Non-stock materials NOF1 Nonfoods PANI Trading goods PIPE Pipeline materials PROC Process materials PROD Product groups ROH Raw materials UNBW Nonvaluated materials VERP Packaging VKHM Additionals VOLL Full products WERB Product catalogs WERT Value-only materials WETT Competitive products

ASSM Semifinished products CONT Kanban containers DIEN Services DUTT Trading goods ERSA Spare parts FERT Finished products FGTR Beverages FHMI Prod. resources/tools FOOD Foods (excl. perishables) FRIP Perishables GG GAUGES HALB Semifinished products HAWA Trading goods HERS Manufacturer parts HIBE Operating supplies

S&D Screens in the Material Master Record Four screens in the material master record are relevant for Distribution: S&D Description and important data fields Sales 1 Basic data and units of measure (e.g. sales units, order quantities) Sales 2 Material groupings and tax classification e.g. product hierarchy,material Sales and

Sales 1, Sales 2, Sales/Plant Data ,Texts in Sales and Distribution .

pricing group
Sales/Plant Data Sales and shipping data e.g. gross weight, loading group Texts in Sales and Distribution Single-line or multi-line texts for sales documents, in

several languages.

In the standard version of the SAP R/3 System,the following industry sectors have been defined for the material master record:
A ------Plant engineering and construction

C
M P

--------------------

Chemical
Mechanical engineering Pharmaceutical

Units of Measure and Quantity Specifications A material can be stored, transported and sold in various units of measure. In the SAP R/3 System, you can therefore define various units of measure which are maintained in the sales and distribution screens.

You can enter the following units of measure in the sales and distribution screens : Base Unit of Measure Alternative Unit of Measure Sales Unit Delivery Unit Quantity Specifications In Material Master Record two different quantity specifications are used: Minimum Order Quantity

Minimum Delivery Quantity

Delivering Plants

The delivering plant refers to the plant from which the goods are to be delivered to the customer, within a specific sales organization and distribution channel. The plant can be automatically proposed by the system when processing a sales order, if it has been maintained in one of the master records. It can be derived from : the customer/product info record
the customer master record of the ship-to party the material master record. The order of priority is as in the list above

Number Assignment for Material Master Records The material number can either be entered externally by the user, or assigned internally by the system. Both internal and external number assignment is possible. If you do not enter a material number when creating a material master record, the system automatically carries out internal number assignment.

Item Proposals
Frequently occurring material combinations and common delivery quantities can be stored in item proposals. During order entry, an item can be proposed by referring to an item proposal. You can also access an item proposal using a match code. An item proposal can consist of materials of different material types. The order entry can be processed more efficiently using item proposals. Item proposals can be transferred into a sales order document or be selected from a selection list, for example. During these transactions the current material master record is always taken into account. Items proposed from an item proposal can always be changed in the sales order. An item proposal, containing the materials a customer usually orders, can be assigned to that customer Master Record, for example. This item proposal is then automatically proposed during order entry.

Select - Products Item proposal Create.

Edit the data by at least entering data in the fields Item proposal type, Sales organization, Distribution channel and Division. You reach the Create Item Proposal: Overview - Fast Entry screen where you enter the item proposal

Now create a sales order:after entering the sold to party, purchase order no Edit propose item

MATERIAL DETERMINATION
Material determination enables the automatic or Manual substitution of materials in sales documents during sales order processing. For example, during the course of a sales promotion, the system can, during sales order entry, automatically substitute a material that has promotional packaging. A consumer product may have a special wrapper for, for example, the Christmas season. Using material determination, the system substitutes the material only during the specified period.

MATERIAL LISTING & EXCLUSION

Material listing and exclusion lets you control which materials specific customers may or may not buy. For example, if you create a listing of products for an individual customer, the customer may only order products on the list. You can also specify material exclusion for a particular customer. The customer may not order excluded materials from you.

Creating Master Records for Material Listing and Exclusion

Products Listing/exclusion Create. You reach the Create Listing/Exclusion: Initial Screen.Enter a value in the List/excl.type . The standard version of the SAP R/3 system includes two material listing/exclusion types: A001 for material listing B001 for material exclusion Press ENTER . The Selection of Key Combination window appears. The standard version includes only one key combination:Customer/material.Mark the Customer/material field and press ENTER . You reach the screen where you create the master data.Enter a customer, validity period, and the materials that you want to list or exclude

PRICING
In the standard R/3 system,the basis of pricing during sales processing is the gross price of a material.The following kinds of pricing are predefined. Material Price Price-list Price Customer-specific price/User defined Price Material Price : When you create a material price,you specify : A price or a pricing scale for a specific material A combination of sales organization and distribution channel for which the material price is valid. Price-list Price : Depending on your companys pricing policies,you can define price list types by customer groups (wholesale,retail etc.) Customer-specific price/User defined Price : When you create a Customer specific price you specify : Customer Specific material for the customer

Discount and Surcharges : The standard R/3 system includes a variety of commonly used discounts. Few predefined discounts are : Customer discount Material discount Price group discount (Bulk buyer,Occasional buyer) Material pricing group discount (Spare parts,Normal) Freight charges : You can pass freight costs on to your customers by using special conditions types that relate to shipping and freight charges.It includes predefined condition types that are based on Incoterms. Incoterms are internationally recognized shipping terms that establish the respective liabilities of both the shipping party and the recipient.

For example,a common shipping term is FOB (free on board).The term can be further qualified by adding the loading port. CONDITION TECHNIQUE : The method by which the system determines the prices from the information stored in condition records is called condition technique.The condition technique works in the background.The standard SAP system includes condition types for basic pricing elements.The predefined basic pricing elements in standard SAP R/3 system are : Prices Discounts and Surcharges Freights (Expense reimbursement) Taxes

The sequence of activities which should be carried out in Condition Technique : 1. Define condition types for each of the price elements that occur in your daily business transactions. 2. Define the condition tables that enable you to store and retrieve condition records for each of the different condition types. 3. Define the Access sequences that enable the system to find valid condition records. 4. Group condition types and establish their sequence in Pricing procedure Few predefined condition types in SAP are : - PR00 PRICE - K004 MATERIAL DISCOUNT - K005 Customer specific material specific discount - K007 Customer discount

Which determines that the Condition Type is a categorize Surchages and This field is left blank , is used by the system to This indicates that the value determined in the condition record Discountstypes or prices. condition smaller groups , such .as all freights or tax will be of % or into fixed amount or quantity conditions. This field is left blank this indicates The system is to use the commercial rounding to find the value of The the condition record This field is left blank, which indicates condition type is The value assigned ,indicates That this condition can only Result not relevant forfrom Commulation of values of BoM, nor it is plus/minus value the condition Relevant to be duplicated across all sub items Of a BoM.

Specifies whether the amout or percentage for the condition type can be changed during document processing.

Specifies whether the conversion factors for the units of measure in conditions of this type can be changed during document processing.

If this condition is marked as a header condition, it is possible to enter the condition type in the header condition screen. Checks for changing the condition manually are unaffected by this.

Indicator which controls the priority within a condition type between a condition entered manually and a condition automatically determined by the system. &WHAT_TO_DO? Make the following entries according to your requirements: _: No limitations A: Freely definable B: The automatic entry has priority. If a condition record exists, the condition cannot be entered manually. C: The manual entry has priority. When you enter the condition manually, the system does not check whether a condition record exists. D: Cannot be processed manually

Mark this field if the conditions of this type are allowed to be entered in the document items. The condition is then only valid for the particular item in which it is entered.

Indicator that controls whether the condition type may be deleted from the document.

Specifies whether the value of the condition type can be changed during document processing.

Specifies whether the calculation type for the condition type can be changed during document processing

Condition Table : A condition table defines the combination of fields (the key) that identifies an individual condition records. For example when you enter the price for a product or a special discount for a special discount for a good customer,you create individual condition records. Example of a condition table : A sales department creates condition records for customer specific material price.The standard R/3 system includes condition table 005 for this purpose.The key of table 005 includes the following fields : Sales organization Distribution Channel Customer Material The first two fields identify important organization data and the last two fields express the relationship between customer and specific materials.When the sales department creates condition records for a material price or discount that is specific to one customer, the system automatically uses condition table 005 to define the key and store the record.

Creating a new condition table : You can create a new condition table other than the tables defined in SAP system.When you create a new condition table,you select a combination of fields from the allowed fields.

Deciding the order of fields : The order of the fields in a condition table affects the performance of the system during pricing.To create an efficient condition table try to follow two general guidelines :
1. Place the most general field at the top,for example the organizational fields. 2. After the organizational fields,place fields from the document header before those that come from the item level.For example,customer comes before material.

ACCESS SEQUENCE : An access sequence is a search strategy that the system uses to find valid data for a particular CONDITION TYPE. It determines the sequence in which the system searches for data. The access sequence consists of one or more accesses. The sequence of accesses establishes which condition records have priority over the others.The accesses tell the system where to look first,second and so on,until it finds a valid condition record. You specify an access sequence for each condition type for which you create condition records. Note: There are some condition types for which you do not create condition records.They are known as Header level condition types,for example Value discount (HB00) which is entered only manually.These condition types do not require an access sequence.

Example of an Access Sequence : A sales department may offer customers different kinds of prices. The department may create,for example,the following condition records in the system : 1. Material price 2. Customer-specific price/User defined price

3. Price list price for major customers

During sales order processing,a customer may,in theory qualify for all the three prices. The access sequence enables the system to access the condition records in a particular sequence until it finds a valid price.

PRICING PROCEDURE : The primary job of a pricing procedure is to define a group of condition types in a particular sequence.The system determines the pricing procedure based on FIVE factors: 1. Sales Organization 2. Distribution Channel 3. Division 4. Document Pricing Procedure 5. Customer Pricing Procedure In Customizing we have to assign the appropriate pricing procedure to the combination of these five factors.During pricing,the system determines the pricing procedure by taking into account : Sales Area The pricing procedure key in the header of the sales document type The pricing procedure key in the customer master record

EXCLUSIVE : You can find the functionality called Exclusive in customizing while defining the access sequence for condition types.This function is available in the form of check box.When you do not set the indicator the system searches for a valid condition record from top to bottom but assigns the record from bottom to top.When you set this indicator,the system only assigns that particular condition record for which the access sequence has been set exclusive. Example : AcNo. Table Description Exclusive x 10 4 Material

20
30

5
6

Customer/Material
Price-list price

CONDITION EXCLUSION : This functionality is available in the customizing detail screen for the different condition types in the form of a field.The system accesses this field while searching for the condition records through the pricing procedure for the various condition types which are grouped in that particular pricing procedure.While accessing the different condition types in a pricing Procedure if the system finds that a particular condition type has been marked as exclusive then it stops the search and comes out of the search.The systems assigns all those condition records which it finds for the different condition types which appears in the pricing procedure sequence, till the condition type which has been marked as exclusive.

CONDITION UPDATE : This field is also available in customizing details for the different condition types.The consumer packaged goods industry frequently offers promotional allowances and discounts to customers based on sales order data that is accumulated over time. For example, when your customers place orders for a new product, you may offer them an introductory allowance up to a specified total value (for example, up to USD 5,000). As a customer places orders for the new product, the system must be able to keep track of the cumulative discount total. Condition update is controlled by the condition type in setting in Customizing. If you set the condition update for a particular condition type, the system subsequently updates the corresponding condition records whenever you process relevant sales and billing documents.Condition update provides the basis for the following pricing functions: Maximum value Maximum quantity Maximum number of orders When the maximum value,maximum quantity or maximum number of orders is reached the system automatically deactivates the particular condition record.

CONDITION SUPPLEMENTS : A condition supplement is a supplement for a particular condition type. For example, you can include a supplement every time you apply a material price. The supplement can contain various discounts. During pricing, the system automatically applies the discounts defined in the supplement every time it accesses a material price. You define for which condition types you want to use condition supplements in Customizing for Sales. NOTE: You can only enter a condition supplement if the condition type you are working with has already been defined in Customizing for Sales to include condition supplements. Example : You enter a condition record for the price of the material A and want to create it so that it is always calculated together with a customer absolute rebate of Rs. 10 and a special offer discount of 10 %. For every sales order for this material, the system automatically calculates the sales price, the customer rebate, and the special offer discount at the same time.

EXCLUSION GROUPS : During pricing in sales and billing documents, more than one condition record may apply to a particular item at any one time. You can use the condition exclusion process to compare possible conditions in order to determine such things as the best price for a customer. The Condition Exclusion Procedure First of all, you create exclusion groups. An exclusion group is a list of condition types that is identified by a three-digit number. You define each exclusion group in Customizing for Sales, including a short, descriptive text.You then assign the exclusion groups to a pricing procedure,thus defining the condition exclusion. Depending on how you configure exclusion groups in the pricing procedure, the system can use condition exclusion to select the best price or discount in six different ways:

1. Best condition between condition types (Selecting the best condition record of a particular condition type from within one exclusion group). 2. Best condition within the condition type (Selecting the best condition record for a condition type). 3. Best condition between the two exclusion groups (Selecting the best conditions from different exclusion groups) 4. Exclusive (Excluding all condition types in the second exclusion group if a particular condition type in the first exclusion group exists in the document) 5. Least favourable within the condition type(Selecting the least favourable condition record for a condition type) 6. Least favourable between the two exclusion groups. (Selecting the least favourable conditions from two exclusion groups)

Determining Best Price Across Condition Types During automatic pricing for a sales order item, the system may find a number of valid condition records that apply to the same item. If the competing condition records belong to a variety of condition types, the system selects the record with the best price and excludes the other condition records. Condition records that the system ignores are not deleted from the sales order but are simply deactivated. You can still see the excluded condition records on the pricing screen in the sales order. Determining Best Price Within One Condition Type If the access sequence for a particular condition type does not specify exclusive accesses, it is possible for the competing condition records to exist within the same condition type. For example, the system may find two valid condition records for a material discount (K004) - one a material discount, the other a customer-specific material discount.The system determines the record with the most favorable discount for the customer. Note: If the Exclusive access indicator is set, the system looks no further after it finds the first valid condition record. In this case, the system cannot determine a best price.

Determining Best Price from Different Exclusion Groups This method allows the system to check between exclusion groups for the most favorable price or discount. In this case, the system totals the condition values for each group, compares them, then selects the most advantageous group for the customer. Excluding the Conditions in an Exclusion Group In the fourth alternative when the system selects one particular condition type which exists in the first exclusion group, it excludes all the conditions in the second exclusion group from pricing. After you have defined the exclusion groups you want to use, you can enter them in the pricing procedure. The following example shows how exclusion groups can be used in the pricing procedure. In this case, the exclusion procedure selected is the best condition type within one exclusion group. Exclusion Group Condition Type Rate 001 001 002 002 K004(Material Discount) K007(Customer Discount) KF01(Freight 1) KF02(Freight 2) Rs.100 Rs.50 Rs.2/EA Rs.1/EA

When you process a Sales Order with the above condition records,the exclusion group 001 deactivates condition type K007. (The system determines that the K004 condition record is the best discount and ignores the other condition types defined in the group.) Exclusion group 002 deactivates condition type KF01 for the same reason.(The system determines that the KF02 condition record has the lowest freight cost and ignores the other condition types defined in the group.) The final price in this example is calculated this way: (PR00 = Rs.500) 500 - 100 Rs. + 1 Rs = 401 Rs.

Defining Upper/Lower Limits for Conditions : Under this section in customizing you can specify a lower or/and upper limit for any condition type.While creating a condition record for a particular condition type which has a upper and/or lower limit ,the system automatically checks whether the particular condition is satisfied. Activating Pricing by Item Category In this section, you define the item categories for which pricing should be carried out and whether the item value should be taken into account when determining the total value of a sales document. Activating Cost determination for Item Categories When processing a sales document ,the SAP System can determine the cost for each item. The cost refers to the costs of procurement or production of goods. It is an important indicator for costing a profit margin for the sales of goods.In the standard SAP R/3 System, the condition type"VPRS"is predefined for determining the cost.

How Pricing is carried out in Sales and Distribution.

Sales Document

Sales Area Do.P.P Key Cu.P.P Key

Pricing Procedure
PR00 K004

PR00

Condition Type

Access sequence

PR00 10 M.P 20 P.P 30C.M.P

Condition Record

Cross Selling
Attempt to sell a customer additional product / products in addition to those they already wish to buy. A material offered to customers in addition to merchandise they have already ordered. For example If the customer orders a VCR, you might suggest purchasing some blank

tapes

+
MATERIAL = AS RS 500 EUR

???

MATERIAL = AS MATERIAL = AKS

RS 500 EUR RS 600 EUR

RS1100 EUR

Customer Hierarchy

Customer hierarchies are available in Sales and Distribution, you can create flexible hierarchies to reflect the structure of customer organizations. If your customer base includes multi-level buying groups, cooperatives, or chains of retail outlets, for example, you can create hierarchies to reflect the structure of these groups. Use customer hierarchies during sales order processing and billing for determining pricing and running statistics. A customer hierarchy consists of nodes. To create a customer hierarchy: 1.Create master records for each node. 2. Assign the nodes to each other. 3.Assign the customer master records to the relevant nodes Hierarchy nodes are only valid for a certain period of time. They may also be moved. If a node is moved, the system automatically reassigns all related nodes and customer master records.

Customer Hierarchy
Miller Head office 8000 Miller South 8200
Customer 2742

Unique node number

Miller North 8100 Miller Central 8120

Customer 2743 Customer 2744

Miller North east 8110

Hierarchy Path
Hierarchy path Miller Organizational Organizational data data Head office 8000 1000 10 00
Sold-to party: 2743 Node/ customer 8000 8100 8120 2743 Hierarchy step Top level Second level Third level Fourth level Partner functions 1D 1C 1B AG

Pricing X

Miller South 8200 1000 Pricing Customer Customer 2742 2742 Miller Central 8120 1000 Pricing Customer Customer 2743 2743 10 00 10 00 1000

Miller North 8100 10 00 Pricing X Miller North east 8110 1000 10 00 Pricing X Customer Customer 2744 2744

With customer hierarchies, you can assign price or rebate agreements to a higher level node. The agreements are then valid for customers at all subordinate levels to this node. You can create pricing condition records for each node indicated as relevant for pricing. If one or more nodes in the hierarchy path of a sales order contain pricing information, the system takes them into account automatically during pricing. The customer hierarchy above represents the multi-level buying group Miller. The headquarters, Miller Head office, is the highest node defined in the hierarchy. The southern, northern, central and northeastern regional offices are also defined as nodes. A price agreement is reached with the Miller buying group for a particular product line. You offer a discount valid for all regions and offices in the buying group. In addition, you grant a promotional discount for Miller North. You create the appropriate condition records for the Miller Head office and Northern nodes. An order for customer 2742 is received and granted the cross-regional discount. When you receive orders from customers 2743 and 2744, however, the system uses the pricing data stored for Miller North and grants the exclusive promotional discount

Customer 2743 belongs to the Miller northern office. This is why a discount of 8% has been assigned. In the standard system, the access sequence is set in Customizing so that the discount is initiated at the lowest hierarchy level.

Note : The organizational data is usually the same for each individual node in the hierarchy.However,this data can also vary. The condition types predefined for Customer hierarchy are HI01 and HI02.The condition type HI01 is discount based on hierarchy node and HI02 is discount based on node and material.

Hierarchy Discount HI01

Condition record HI01

Hierarchy: 8000 Miller Head office 8100 Miller North 5- % 8- %

Order
Customer 2743 Item 10: M1 10 pc

PR00 HI01

Price Discount

100 8- %

CREATING A CUSTOMER HIERARCHY

CREATE CUSTOMER :Marketing

This is the last screen . Now save. Set the rebate and pricing indicator for the relevant nodes which are applicable for the same

In this dialog box<in the upper half>enter the highest level hierarchy node and select copy . Do not enter any thing in the lower half. similarly for other H.Nodes to assign customer to the various nodes repeat the procedure as above Now save

Shipping

Shipping
Shipping Document Structure: The delivery is made up of a document header and any number of items. The following figure shows the structure of the delivery.

Document Header :

The general data relevant for shipping is stored in the document header. This data is valid for the entire document. It includes the following:
Shipping point Data on delivery scheduling and transportation scheduling (for example, the goods issue date or the delivery date at the ship-to party) Weights and volumes of the entire delivery Number of the sold-to party and the ship-to party

Document Items : In the items, you find data that applies to one particular item. For example, Material number Delivery quantity Plant and storage location specifications

Picking date
Weights and volumes of the individual items Origins of Data in Shipping Documents : When a delivery is created, data is copied from the master records or any preceding documents. You must indicate through the delivery type whether the delivery is to be created with or without reference to a sales document.

Creating Without Reference :

When you create a delivery without referring to a preceding document, the system copies the following data into the document from the appropriate master records: Data from the customer master record of the ship-to party Data from the material master records of the delivery items Creating With Reference :

When you create a delivery with reference to an order or an outline agreement, the system copies data from the preceding document into the delivery.

Shipping Document Types : You can use the various shipping document types to deal with the different kinds of business transactions carried out in the area of shipping. Standard Shipping Document Types :

Name
Delivery with reference Delivery without reference Returns delivery Replenishment delivery

Document Type
LF LO LR NL

When you enter a delivery with reference to an order, the system automatically proposes the shipping document type on the basis of the underlying order.

A delivery without reference is defined for decentralized shipping processing and not created from an order. The shipping delivery type LO is the only shipping document type defined in the standard version of the SAP R/3 System for this kind of business transaction. Processing Deliveries :

When you create a delivery, the referenced order is automatically updated. In addition, you can agree with the customer on full or partial deliveries and on grouping orders together. Deliveries can be combined to form a single group of deliveries.

Working With Deliveries : As soon as the material availability date or the transportation scheduling date for a schedule line is reached, the schedule line becomes due for shipping. A delivery is processed through one shipping point. Which shipping point carries out the processing for a delivery can be determined automatically during order processing or you can specify it manually in the order. When a delivery is created, the system carries out various functions that add to the data in the delivery and check its validity : The delivery quantity of an item is determined and the availability of the material is checked.

The weight and the volume of the delivery are calculated.

The delivery situation of the order and any partial delivery agreements are checked.

 Picking In Shipping : Picking means staging goods on time in the correct quantity and quality for shipping. Picking can take place automatically when the delivery is created, at defined times, or it can also be initiated manually by an employee. Picking Status and Goods Issue : You can only post goods issue for a delivery once all items relevant for picking have been completely picked. Therefore, the delivery cannot leave the shipping point if the picked quantity confirmed by the warehouse is smaller than the delivery quantity. Picking Storage Location : Picking is always carried out from a particular storage location. This means that if a delivery item is relevant for picking, a storage location must be entered in the delivery. The goods are issued from the stock at the picking location which is specified in the delivery.

 Goods Issue : As soon as the goods leave their own plant, the activities of the shipping department are complete. This is displayed in the system by the goods issue. In the system, the following functions take place: The material stock is reduced by the goods issue quantity, and at the same time the respective value changes take place in Accounting. There is parallel movement in the quantity and value flows. The material requirements for the delivery are depleted. The delivery status is updated If you have billing by goods issue, the delivery will now be entered in the work list for billing.

Goods Issue Cancellation

Cancelling the goods issue for the delivery means that you withdraw the goods issue posting. This function enables you to remove the posting without having to create a returns delivery or having to post a goods receipt.

Scope of Functions : When you cancel the goods issue for a delivery, the system creates a cancellation document that adopts the quantity and the valuation from the original goods issue document, and also executes the respective value and quantity posting to stock.

The goods issue cancellation is only possible for the entire delivery. You cannot cancel parts of a delivery for goods issue.

cash sales

With reference to sales order

Rush Orders

In a rush order transaction, the customer picks up the goods or you deliver the goods on the same day the order is placed. However, the invoice is created later.

Billing Document

The term Billing Document is used for invoices, credit memos, debit memos, pro forma invoices and cancellation documents. The billing document is created with reference to a preceding document, in order to create an invoice or a credit memo.When you create a billing document the system updates: Structure All billing documents have the same structure. They are made up of a document header and any number of items. The following figure shows how billing documents are structured.

Header

In the header, you find general data valid for the entire billing document.
Identification number of the payer Billing date Net value of the entire billing document Document currency Terms of payment and Incoterms Partner numbers, such as the identification number of the sold-to party Pricing elements

Items: In the items, you find data that applies to one particular item. For example,

Material number Billing quantity Net value of the individual item Weight and volume Number of the reference document for the billing document (for example, the number of the delivery on which the billing document is based) Pricing elements relevant for the individual item

Billing Document Type

Billing document type Controls the processing of billing documents such as invoices, credit memos, debit memos and cancellation documents. Billing document type controls the entire billing document.You can use billing document types to deal with the different business transactions carried out during billing Processing. The different billing document types available are listed in the following table:

Billing Document Type F1 F2 F5 F8 G2

DR

RE S1 S2

Name Delivery-related invoice Order-related invoice Pro forma invoice for sales order Pro forma invoice for delivery Credit memo Debit Memo Credit Memo for returns Cancellation invoice
Cancellation credit memo

Promotional Pricing Agreements

There are two kinds of agreements Promotions A promotion typically represents a high -level marketing plan for a particular product or product range. A promotion can include a number of different Sales Deals.For example,if your promotion covers a range of different products,you create separate Sales Deal for each product. Sales Deal Sales Deal provide a finer focus for your promotional activities.You create specific condition records that are linked to sales deal.If the sales deal is linked to Promotion,the condition record also contains the number of the Promotion.This helps us to list and analyze all the condition records that refer to a particular promotion.

Free Goods
In many sectors of industry it is common to provide products free of charge ,or not to charge the customer for some of the goods sold when the customer purchases certain goods.In the standard SAP system,two forms of free goods exists:

Inclusive : The customer only pays for a part of the goods required.The rest of the goods are free.This is called inclusive free goods and means that part of the purchase quantity is designated as free goods and is not billed.The material supplied as free goods always has the same unit of measure and has to be same as the material ordered.

Example : Of ten Soaps ,one is designated as free goods.If your customer orders 10 Soaps , then ten are delivered but he is not billed for one of them. Your customer has received inclusive free goods.

Exclusive : The customer pays for the goods ordered and receives additional goods.This is known as exclusive free goods and means that free goods is granted as an additional quantity to that in the purchase order.More is delivered than was ordered and the additional is not billed.The goods delivered as free goods do not have to be the same as material ordered . Example: When the customer orders 10 Soap ,you supply two Soaps as free goods. You create free goods agreement in the same way as you do a condition.

The free goods agreement has a validity period.In the free goods agreement you can save different rules for determining the free goods quantity.You can define a minimum quantity for the material sold,free goods are only granted for the material sold after this minimum quantity.When creating the sales order,the free goods items are created automatically according to free goods agreement.The free goods are represented as an item.The free goods are relevant for delivery and are copied into the delivery.The free goods item can be copied to the billing document.It is possible to have the free goods in the invoices as free of charge items.

Maintaining Free Goods Master Data : Free goods master data must be maintained before automatic free goods determination can be carried out.The condition technique is used for free goods in the same way as for pricing.

Free Goods in Sales and Distribution processing

If you grant free goods to a customer,you can implement free goods determination. The system automatically creates a free good item in the sales order. The item is free of charge.For inclusive free goods,the main item is automatically reduced by the free goods quantity.For exclusive free goods,the quantity of the main item remains the same

Example : You grant 2 pieces of Soaps as free goods when the customer orders 20 pieces of Soap. For inclusive free goods,the two pieces of mouse are deducted from the quantity of the sales material and created as a separate free of charge item. For exclusive free goods,the customer receives two additional pieces of mouse as an additional free of charge item.

Inclusive : Order quantity = 20 Item Material Quantity Item Category

10 20

Main item 18 Free goods 2

TAN TANN

Exclusive : Order quantity = 20

Item Material Quantity Item Category

10 20
Prerequisites :

Main item 20 Free goods 2

TAN TANN

Customizing : Free goods determination requires customizing settings in SD basic functions. Master Data : Free goods determination requires that the free goods be maintained in the master data.

Batch Management

Batches are parts of a material which are separated from other parts of the same material and maintained in stock.The batch number is the key for identifying a batch in the SAP R/3 System. You can assign batch numbers at the following levels:

To portray batches in the R/3 System, you first need to define at which level you want the batches to be unique. You choose the batch level in Customizing for Batch Management .

Batch numbers are only unique at the chosen level. You can enter the individual batch numbers for the materials managed in batches in sales queries,quotation or delivery. The system automatically copies the batch number in the subsequent document if you create it with respect to a preceding document. Material to be managed in batches should also be maintained either in the purchasing or storage view in addition to the Basic,Sales and Accounting views in the Material Master. In order to carry out Batch split at the time of delivery,you should specify it in the corresponding Customer master record.It is not possible to have batch split at the sales order level. The availability of materials managed in batches is checked at two levels, Batch level and Plant level.At batch level the system checks against batch stock involving all inward and outward movements of batch material.At plant level the system checks against plant stock involving all inward and outward movements of batch material.

The system checks the validity of the batch material at the the sales order level as well as at the delivery level.If the system finds that the validity is not correct at the delivery level then it issues a warning and the batch specifications has to be changed in the sales order. If no batch number is specified in the sales order then the batch number can be entered manually in the delivery or automatic batch determination can be carried out by the system if proper setting has been done in customizing. Automatic batch determination can be carried out at the sales order level as well as at the delivery level.

Batch search strategy : The batch search strategy record is a master record which is specific to an application in which you store all the data required for automatic batch determination.

Steps involved in Batch Management: 1. Create material master record for batch material. Maintain the Basic,Sales,Purchase,Storage,Classification and Accounting 1views. In the Accounting view, specify the valuation category. Extend the material master record by creating the same material for different valuation type. In the classification view,maintain the class.

2. Maintain the Characteristic and Class. Logistics Central functions Classification. Characteristic Create. Enter any name in the characteristic field.On the Basic data screen,maintain the description,status(=1) and the data type. On the allowed values screen,maintain the characteristic value. On the Restriction to class types screen,enter class type 022.

Class Create. Enter any name in the class field and the class type 022 in the initial field. Enter the description and the status field in the Basic Data screen. On the Characteristic screen Enter the characteristic which you have created earlier. 3. Create the different batches for the material. Logistics Materials Management Material Master . Batch Create. Enter the material,plant,batch and storage location. On the General Data screen,maintain the available from ,expiration date and valuation type.Also select the radio button Batch classified. Now select the push button classification .

4. Create stock for the batch material for the different batches.When you specify the quantity,you also have to specify the batches.
5. Create a Batch search strategy. Logistics Sales and Distribution Master Data.
Products Batch search strategy Create.

Select any strategy type through the combo box. After entering the required data,select the push button selection criteria.Assign your characteristic.Now select the push button sort and select any sort rule.Now save the strategy

Rebate Agreements
Structure of Rebate Agreements: A rebate agreement usually consists of a number of individual agreements in the form of condition records. A rebate agreement and the condition records it contains are uniquely identified by a rebate agreement number.The rebate agreement includes general information and terms that apply to all the condition records it contains. For example, the method of payment and the rebate recipient you specify for a rebate agreement will apply to all the condition records you create within the agreement Data Defined in a Rebate Agreement

You can define the following data in a rebate agreement. This general data applies to all condition records that you subsequently create within the rebate agreement:

Validity period data Status (for example, whether the agreement is released for settlement) Rebate recipient (the party who receives the credit memo) Currency (default from the sales organization) Method of payment (check, bank transfer, and so on)

Rebate Agreement Types When you first create a rebate agreement, the system prompts you to specify a rebate agreement type. The rebate agreement type you specify determines which data the system automatically proposes for the corresponding rebate agreement. For example, the system can propose which condition types you can use in an agreement which validity period the system automatically proposes for an agreement which status is required before an agreement can be processed for payment.

Rebate Agreement Types When you first create a rebate agreement, the system prompts you to specify a rebate agreement type. The rebate agreement type you specify determines which data the system automatically proposes for the corresponding rebate agreement. For example, the system can propose

Agreement Types in the Standard Version

The standard version of the SAP R/3 System includes the following rebate agreement types :

Retroactive Agreements You can create a rebate agreement for which the validity start date lies in the past. The system then takes into account all the rebate-relevant billing documents that were created between the validity start date and the date you created the rebate agreement. About Settlement of Rebate Agreements You can settle a rebate agreement as follows: with final settlement with partial settlement Rebate payments are made after the end of the agreement validity period, after all the related billing documents have been processed and posted to Financial Accounting.

The system uses the services rendered date (which is the billing date, if you are shipping products) to determine whether a billing document qualifies for rebate processing. To qualify, the date must fall within the validity period of one or more rebate agreements. Since it is possible for the billing date to be later than the services rendered date, you may need to allow some time after the end of a rebate agreement's validity period for final processing of billing documents.

Working with Final Settlement for Rebate Agreements When you carry out final settlement of a rebate agreement, the system automatically Calculates the rebate based on the sales volume statistics or the lump sum Deducts any previously paid rebates

It then creates a credit memo request, and proposes the end date of the agreement validity period as the billing date. Depending on Customizing, when the system creates a credit memo request, the document is automatically blocked for billing. After approving the credit memo request, the person responsible can remove the billing block. You can then create the final credit memo. You can carry out final settlement of rebate agreements automatically manually

Working with Partial Settlement You can also partially settle a rebate agreement during its validity period. The amount to be paid can be limited in Customizing for Sales. Payments can be: limited to the cumulative accruals of the condition record limited to the amount that would be paid if final settlement were presently carried out unlimited You carry out partial settlement by using the manual payment screen within rebate agreement processing. On this screen you can specify the amount to be paid for each

About Instalment Plans The instalment plan allows the customer to pay in instalments. With the instalment plan the system creates one invoice for all instalments. On the basis of this billing document you can print an invoice listing all the instalments with the relevant payment dates and amounts to be paid by those dates.The instalments are calculated by the system by taking a percentage of the total invoice amount for each instalment.