SAP Sales Distribution Cycle

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OTC Cycle Process starts with:

Establishing your contact with the customers which are taken care of by the pre sales
activities in the system.

Based on the pre sales activities you create a sales order in the system. You can activate
inventory sourcing to decide upon the delivery date of the material.

Depending upon the delivery date proposed in the sales order you create delivery in the
system followed by the actual issue of the material to the customer. This issuing is recorded
as post goods issue in the system. You raise an invoice for the goods delivered to the
customer. When the customer makes the payment you receive the amount against the
invoice that was created for the delivery.
Customer Master Data (VD01)
What is Customer Master Data?

Customer master data is the data you require to conduct business relationships with your
customers.

The data in the customer master are grouped into three categories, General data, Sales
Area data and Company code data. All these data are specific to a client.

General Data :

The General data in the customer master is relevant for Sales and Distribution and
Accounting and is stored centrally to avoid data redundancy.

Sales Area Data:

The Sales Area data is relevant for sales and distribution and specific to a sales area. The
company code data is relevant for accounting and is valid for that company code only.

Where is Customer Master Data used?

Customer Master Data includes address data and terms of payment, for example. It also
controls how business transactions are posted to a customer account and how the posted
data is processed.

Master data, such as whether complete delivery is required and the default delivery plant, is
stored in master records.

Material Master Data (MM01)

What is Material Master Data?

The Material Master data contains descriptions of all materials that an enterprise procures,
produces, and keeps in stock. It is the central repository of information on materials (such as
inventory levels) for the enterprise.

Where is Material Master Data used?

The integration of all Material Data in a single materials database eliminates the problem of
data redundancy and permits the data to be used not only by Purchasing, but by other
applications (such as Inventory Management, Materials Planning and Control, Invoice
Verification, and so on).
How are Materials Numbered?

A unique number is assigned to each material master record. This number identifies a
specific material.

Material numbers can be assigned internally or externally. Internal number assignment

means that the system assigns material numbers, whereas external number assignment
means that the person creating the material master record does so.

Stock Posting (MB1C)

Condition Master Data (VK11)

What is Condition Master Data?

The Condition Master, is the final source of data which contains Pricing data such as
Pricing , Freight, Surcharges or Discounts and Taxes that will be used for pricing the sales
documents.

Where is the Condition Master Data used?

The Condition Master data records can be maintained and accessed depending upon
various criteria such as customer based, material based or customer / material based
criteria.

Sales Order (VA01)

What is Sales Order?

Sales order is a document created in the system that captures the request of a customer for
products or services.

Sales Order is an important document which contains all the relevant and required
information for carrying out the entire sales process in the system.

Some of these information are:

 The Customer and material information.

 Pricing is calculated based on the pricing procedure and condition record but
results in 0 price for free goods. A condition / pricing exist for free goods.
 The Schedule of the delivery of goods with date and quantity.
 Information about shipping processing.
 The data required for sales processing are normally derived from the Masters that are
already created in the system. This reduces the data entry by the employees in the
customer service department and eliminating the data entry error.

Outbound Delivery (VL01N)

What is Outbound Delivery?

An Outbound delivery with reference to a sales order is the beginning of the shipping
process in the system.

In addition to this, the shipping process has further sub processes out of which some are
optional. These are:

1) The picking process which created a transfer order in the system.

2) The packing process.
3) Shipment creation which deals with the planning and monitoring of the transport
activities and
4) Posting the goods issue which created an impact in the inventory accounting of the
products in both quantity as well as value.

Transfer Order (LT03)

What is Transfer Order?

Transfer order is an instruction to move materials from the source storage bin to a
destination storage bin within a warehouse complex.

The Transfer order contains information such as material number, quantity, source bin and
destination bin.

Post Goods Issue (VL02N)

What is Post Goods Issue?

During the process, the goods are physically taken from the stock and distributes to the
customer.

Activities the take place automatically in the system when you post a post good issue in the
system include:

 Quantity in the inventory management and delivery requirements in the material

planning gets updated.
 The inventory accounting document is posted based on the cost of the Material.
  Further documents are created for Financial Accounting
 The billing due list is created.
 The overall status of the sales document is updated.

Stock Checking (MMBE)

Invoice Creation- Billing (VF01)

What is Invoice Creation?

Billing is the process where you actually create an impact in the financial accounting of the
customer and your sales revenue.

The Billing process in SAP helps you to

 Create an invoice for the materials delivered or services offered.

 Create credit or debit memos.

Incoming Customer Payment (F-28)

What is Incoming Customer Payment?

Payment is the process of receiving payments from customers for the billing activities you
have done for that customer.

The system posts two accounting entries during the payment process.

1. Debit the Cash Account.

2. Credit the customer`s receivable account.

Note: system - SAP