Last updated on Nov 27, 2023
SAP Sales and Distribution is one of the important modules in SAP ERP Central Component, which helps the organization in storing and managing the data related to customers and products. This data will be used by the organization for managing the orders, sales, billing, shipping and invoices of goods and services. SAP SD is also a part of the SAP ERP Central Component logistic function. It can be integrated with the other modules like Plant Maintenance, Production Planning, Material management, quality management, Human resources, and Finance and Controlling. SAP SD module working with other modules allows an order-to-cash cycle business process. The SD module manages all the parts related to sales and distribution.
Generally, SD will generate the sales quote; after that, the customer will place a sales order, goods are then picked up from the warehouse or the production facility, and they will be shipped to the client. The invoice will be sent along with the order, and the accounts receivable will make the payment with the client. In the SD module, Every step of the process generates transactions that generate additional transactions in the other modules of the ERP Central Component. For example, In SD, whenever a sales order is generated, it creates a link for the product availability check to the SAP Material Management module, a tax calculation or a credit check to the Finance and Controlling.
This module records every step related to the product, from giving the sale order quotation to the billing and delivery.
The enterprise and organizational structure are designed using the Sales and Distribution module that includes job assigning and content creation.
It changes the sales document according to the item category, company requirements; some processes include defining the item categories, variations and overviews.
SAP SD module is combined with the material management and product planning modules that enable the companies to enter the customer sales price, enquire open order and make the sales forecast.
It designs the sales documents, which include a definition of the objectives, functions, and processes for controlling the documents in the sales and controlling phases.
It can be used to record the transaction structure of the sales document and presales processes.
It can also create sales document nature, schedule line and functionalities and sales document categories.
It is a cyclic process. Every cycle starts from raising sales orders and ends up with Processing payment.
Raising sales order -> Checking availability -> outbound delivery -> transportation -> picking up goods -> issuing goods -> billing -> Processing payment.
SAP Organizational structure includes the components like distribution channel, sales area and division. It mainly involves two steps. They are: Creating an organizational element in the sap system and linking every element according to our needs.
In the SAP module, at the top of the organizational structure lies the sales organization. It deals with the distribution of goods and services. SAP recommends that the minimum number of sales organizations be maintained within an organizational structure. That will facilitate the reporting process, and hopefully, there should be one sales organization. In the next level, there will be the distribution channel. It indicates the medium through which the product and services will be distributed to the customers by the organization. Division in the SAP Organizational structure indicates the product or service line in an organization. A sales area is called an entity that is necessary to deal with an order in the company. It consists of a distribution channel, sales organization and division. Every sales organization will be assigned to the company code, and the division and distribution channel will be assigned to the sales organization. All these components together make the sales area.
Following are some of the key components of the SAP Sales and Distribution module:
It is one of the important sub-modules in Sales and distribution. It includes two levels of the master:
First level master - Pricing conditions, customer master, pricing conditions
Second level master - output condition
Sales activities are categorized into presale activities and post-sales activities. The activities that take place before the product is sold are called pre-sales activities, and the activities that take place after selling the product are called post-sales activities. There are two presales activities: Inquiries and quotations. The request or investigation by the customers about the product availability, product cost, delivery, etc., is called an inquiry. A legal document about the product and services to the customer is called a quotation.
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It is another important module. It assists the organization in creating new sales, tracking current sales and performance, and simultaneously increasing the organization's marketing and sales. There are a number of modules that help to create, process and control sales and distribution operations. They are Sales order processing, item categories, copy control, sales order creation with reference, schedule lines categories, incomplete items log.
It defines the prices calculations for external vendors or clients and costs. There are a number of pricing elements. They are surcharges, taxes, discounts and prices that are defined as the condition types in SAP. We need to create a condition record in order to manage the pricing information for the pricing element.
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It is another important activity in the sales process. It belongs to the logistics chain and assures customer service and goods distribution. It is used for performing activities like outbound delivery and other shipping activities such as packing and picking goods. The processes included in shipping are delivery processing, packing, packing of goods, shipping communication, post goods issues, planning and monitoring the shipping and other functions like serial number, batch determination, inspection, etc.
Picking of goods is performed from the warehouse management system of SAP. This is carried out through a transfer order that is used for the packing list and removing the goods from stock. Picking of goods can be of three types: picking the goods individually, picking the goods at defined intervals and automatic picking.
Packing of the goods is carried out by packing material, and it can be either automatic or manual.
Post good issue is the final step of the delivery process. The ownership of goods will be transferred to the customer, and the stock will be updated according to the delivery.
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Billing is referred to as the last stage of executing business transactions. Whenever an order is processed and delivered, billing details are available at every step of the order processing. Billing includes pricing functions, cancelling billing transactions, discount and rebate, debit and credit memos for the return goods, creating invoices for delivery and services, transferring billing data to financial accounting FI.
Credit management is about selling goods and collecting money later. The customer's credit limit is based on the customer payment history and payment method. A simple credit check and automatic credit check are the types of credit management. In simple credit check, the customer credit limit is compared with the total items and open item values of the order. Here open items are the products to which invoice is sent and the payment not yet received. Automatic credit check deals with checking the open items and open deliveries of goods.
In the SAP Sales and Distribution (SD) module, the integration with Finance and Accounting (FI) is a crucial aspect of the overall ERP system. Each step of the sales process in SD generates transactions that have a ripple effect on other modules within the ERP Central Component.
For instance, when a sales order is generated in SD, it initiates a series of actions that involve other modules. The product availability check in SD links to the SAP Material Management (MM) module, ensuring that the necessary goods are in stock and ready for delivery. This integration between SD and MM guarantees a seamless flow of information and materials throughout the sales process.
Furthermore, the financial aspects of the sales order are closely tied to the FI module. SD triggers various transactions in FI, such as tax calculations and credit checks. These actions ensure that the appropriate taxes are applied to the sales order and that the customer's creditworthiness is assessed, all within the realm of FI.
It is important to note that the integration between SD and FI goes beyond these initial steps. As the sales order progresses, billing documents such as credit and debit notes, invoices, and other financial documents are created in SD. These documents serve as references for the accounts posting in FI, ensuring that the financial transactions are accurately recorded and linked to the relevant sales activities.
By demonstrating the flow of information and transactions across different modules, the integration between SD and FI showcases the interconnectivity of the ERP system. It highlights how the sales process in SD triggers actions in MM and FI, resulting in a seamless exchange of data and a comprehensive overview of the organization's financial activities.
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In this blog, we have learned about the SAP Sales and distribution module, features of the Sales and Distribution module and the important components of the SAP Sales and Distribution module. We hope you found this information helpful. For more information related to SAP, stay tuned to HKR blogs!
Kavya works for HKR Trainings institute as a technical writer with diverse experience in many kinds of technology-related content development. She holds a graduate education in the Computer science and Engineering stream. She has cultivated strong technical skills from reading tech blogs and also doing a lot of research related to content. She manages to write great content in many fields like Programming & Frameworks, Enterprise Integration, Web Development, SAP, and Business Process Management (BPM). Connect her on LinkedIn and Twitter.
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