The Fulfillment Process (Sell)

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Learning Objectives
1. Describe the organizational levels associated with the
fulfillment process.
2. List and explain the master data associated with the
fulfillment process.
3. Identify the key steps in the fulfillment process and the
data, documents, and information associated with each
step.
4. Discuss the role of the credit management process in
fulfillment.
5. Effectively use SAP® ERP to execute the key steps in the
fulfillment process.
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Learning Objectives (Continued)
6. Explain how and why fulfillment is integrated with other
processes.
7. Utilize SAP ERP to extract meaningful information about
the fulfillment process.

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A Basic Fulfillment Process

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 Outline
 Organizational data
 Master data
 Key concepts
 Process
 Reporting

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1. Organizational Data
 Client (Enterprise)
 Company code (CC known in procurement process)
 Sales area
 Sales organization
 Distribution channel
 Division
 Plant (shipping plant)
 Storage location
 Shipping point
 Credit control area

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Sales Organization
 Responsible for
 Distributing goods and services
 Negotiating sales conditions
 Product liability and rights of resource
 Used to divide the market based on geographic regions
 Highest level of aggregation in sales-related reporting
 A company code must have at least one sales organization. A
sales organization can belong to only one company code.

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GBI Sales Organizations

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Distribution Channel
 Responsible for getting materials to customers
 Used to
 Differentiate distribution strategies or approaches
 Different pricing, responsibilities
 Channels: Wholesale sales, retail sales, Internet sales
 Statistics and reporting at the DC level
 A sales organization must have at least one distribution
channel, although it can have more than one.
 A distribution channel can be assigned to multiple sales
organizations.

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Division
 Used to consolidate materials with similar characteristics
 Different sales strategies, pricing agreements
 Statistics and reporting at the DC level
 Associated with product lines
 A sales organization must have at least one division
 Can be assigned to multiple sales organizations

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Sales Area
 Made up of three other organizational elements
 Sales organization
 Distribution channel
 Division

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Plant
 In the fulfillment process a delivering plant is a facility from
which the company delivers products and services to its
customers
 In the case of products, a plant is typically a manufacturing
and/or storage facility. In the case of services, it can simply
be an office
 A company code must have at least be at least one plant
defined in a company code.
 A plant must be uniquely assigned to a company code.
 A plant can be assigned to deliver products or services for
multiple distribution chains.
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2. Master Data
 Material master.
 Customer master.
 Customer-material info record
 Conditions
 Output master data
 Credit management master record

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Material Master Data
 The key organizational elements in fulfillment for which material
master data are defined are client, sales organization, distribution
channel, and plant.
 The three views relevant to fulfillment are basic data, sales
organization data, and sales plant data.
 Sales organization data: are defined for combinations of sales
organizations and distribution channels. Ex: the delivering plant, sales
units, and minimum quantities
 Sales plant data: provide details on how the material will be shipped
from that plant. Ex: transportation requirements (e.g., refrigeration)

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Customer Master Data
 General Data
 Specific to a client
 Valid across company code and sales area
 Customer master data include data needed to conduct
business with customers and to execute transactions that are
specifically related to the fulfillment process.
 The data in the customer master are divided into three
segments:
 General data: Examples ?
 Accounting data: Examples ?
 Sales area data: Example?
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Segments Of Customer Master Data

The data in the customer master are divided into three segments— general data,
accounting data, and sales area data. The relationships among these three
segments and the two departments in an organization responsible for these data
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(accounting and sales) are described.
Customer Master Data
 General data
 Account number
 Address
 Communication
 Company code data (FI- Finance Accounting)
 Reconciliation account
 Payment terms

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Customer - Material Information Record
 A customer-material information record is comprised of master
data specific to one customer and one material. In contrast to data
in a material master, which apply to all customers, and data in a
customer master, which apply to all purchases made by a
particular customer, data in a customer-material info record relate
to purchases of a specific material by a specific customer.
 Examples of data
 Cross references customer material numbers, descriptions
 Specific terms (e.g., shipping, tolerances, partial deliveries, delivering plant)
 Alternate delivery plant, shipping terms/methods, tolerances, partial
deliveries (e.g. not accepted for this material)

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Credit Management Master Record
 Extension of the customer master record, includes data
relevant to managing credit for that customer. Include three
segments.
 General data (client level)
 Address, communication, total credit at the enterprise level
 Credit control area data (credit control area level)
 Credit limit for the credit control area
 Risk category
 Overview (key data from other areas)

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3. Fulfillment Process Steps

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  A variety of documents are created during the fulfillment
process. As previously discussed, documents are categorized
as material documents, financial accounting (FI) documents,
management accounting (CO) documents, and transaction
documents.

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Elements of the Pre-sales activity

Presales activity is often triggered by a communication from a customer such

as an inquiry or a request for quotation (RFQ). The outcome is a quotation
that is sent to the customer making the inquiry.
example, RMB inquires whether GBI can deliver 40 silver deluxe touring bikes
and 100 t-shirts by the specified dates. If so, then RMB requests information
on pricing, shipping costs, and discounts. In response, GBI creates a
quotation and forwards it to RMB.
For example, a GBI customer could agree to purchase 1,200 bicycles over
the next six months and to accept delivery of these bicycles on a specific
schedule. In this case, the agreement is called a scheduling agreement

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Data in a Quotation

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Reference Documents for a Quotation

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Step 2: SALES ORDER PROCESSING

example, RMB has received a quotation from GBI and several other suppliers. It
has decided to place the order with GBI. Accordingly, RMB prepares a purchase
order using its procurement process and communicates it to GBI via e-mail, fax,
or other means
The PO represents a commitment to purchase the stated materials under the
specified terms and conditions. When GBI receives the purchase order, it will
retrieve the quotation that was previously sent to RMB and create a sales order
using the data in the quotation. As part of this process it will verify that the data in
the quotation match the data in the purchase order.

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 Outcomes
 A sales order is the only transaction document generated by this
step. No material or accounting documents are created. If a
contract is associated with the sales order, then it is updated to
include the quantity or amount of the sale.
 There are additional as: consequences availability check, delivery
scheduling, and transfer of requirements

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  Availability check is a procedure to determine whether the required
materials are available or will be available in time for the desired
delivery date (per the schedule lines).
 The availability check must also take into account the amount of
time needed to perform relevant activities such as material staging,
transportation planning, loading, and goods issue.

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 SHIPPING
 The shipping step is triggered when orders become due for
delivery.
 Shipping consists of several tasks that are necessary to prepare and
send shipments.
 A delivery document is created which authorizes the delivery of
orders that are ready to be shipped. Then, the necessary materials
are picked from storage and placed in a staging area where they
can be packed appropriately.
 If these tasks are completed through the warehouse management
process, then additional steps in that process are triggered. After
the order is shipped, a goods issue is recorded in the system,
which triggers processes in accounting
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 Elements of the shipping step

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 Data
 The central document in
shipping is the delivery
document, which identifies
which materials are to be
shipped to which partner
(ship-to party) and from
which plant. The delivery
document further identifies
the storage locations for these
materials

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 Structure of a delivery document

The header includes data applicable to the entire document, such as the ship-
to party, shipping address, dates, and totals (weight, number of items). Data
about each item in the shipment, such as material number, delivery quantity,
and weight, appear as separate line items. Each schedule line in a sales order
31 is a line item in the delivery document
 Tasks
 The specific tasks completed during the shipping step are (1)
creating a delivery document, (2) picking, (3) packing, and
(4) post goods issue.

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 Outcomes
 The shipping step, which ends with the goods issue, has
numerous outcomes (see Figure 5-36)

Inventory accounts of the materials shipped are credited, and the cost of goods sold
account is debited These amounts are based on the cost of making or buying the
materials

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 BILLING
 The purpose of the billing step is to create a variety of documents such as
invoices for products or services as well as credit and debit memos. The billing
step is also used to cancel previously created documents. Billing can be based
either on deliveries that have been shipped to customers or on orders that have
not yet been delivered. This step utilizes organizational data, master data, and
transaction data from previous process steps.

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 Data
 Billing, with reference to delivery documents, utilizes data from the delivery document
and the sales order, such as material number and quantities (Figure 5-39). Master data,
such as customer master and pricing conditions, are the source of pricing data and
partner function (bill-to party). In addition, billing utilizes organizational data relevant
to the fulfillment process, client, company code, and sales area.

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 Tasks
 The key task in the billing step is to generate a billing
document, typically an invoice for materials or services.
 invoice can be created on the basis of either a delivery or a
sales order.

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 Outcomes
 billing has several outcomes related to accounting, creating
documents, and updating master data and documents.

When the billing step is completed, accounts receivable reconciliation

and sales revenue accounts in the general ledger are updated. The
accounts receivable account is debited by the amount of the invoice,
which is the amount the customer owes, and the sales revenue
account is credited by the same amount
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 PAYMENT
 The final step in the fulfillment process is the receipt of
payment from the customer. The payment is applied to the
appropriate open items—that is, items that have not yet been
paid—in the customer’s account.

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 Data
 When a company receives payment from a customer, it
retrieves the customer account to identify the open items. It
then applies the payment to these items. Therefore, the
payment step involves customer master data as well as
organizational data

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 Tasks
 The tasks in the payment step are to identify the open items
and to apply the payment to these items. Customers make
payment based on terms that were previously agreed upon.
Further, customers can pay multiple invoices at once, or,
conversely, can divide a single invoice into multiple
payments.

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 Outcomes
 When a customer payment is recorded, relevant general
ledger accounts are updated, and a corresponding FI
document is create

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 Processing customer payment

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 INTEGRATION WITH OTHER
PROCESSES

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 6. REPORTING
 DOCUMENT FLOW : A document flow displays all of the
documents associated with the steps that have been
completed for a single customer inquiry or order.

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 WORK LISTS
 Work lists identify tasks that are ready for completion. These lists can be
generated for each task involved in fulfillment, such as preparing deliveries,
picking, post goods issue, and billing

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 ONLINE LISTS
 Online lists are used to generate lists of documents associated
with specific master data

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 Figure 5-53 is an example of a list
of sales orders for a particular sold-
to party. The fi gure displays three
orders, labeled 1241, 1549, and
1600. Recall that online lists are
displayed using a list viewer or an
ALV grid. These techniques provide
several options for displaying
results, such as sorting and
summation
Other examples of online lists are: •
List of delivery documents for a
specific customer • List of sales
orders for a specific combination of
customers and materials • List of
delivery documents for a specific
material or material group
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 ANALYTICS
 Figure 5-54 depicts the information structures used in the sales information system.
Standard information structures store data based on organizational elements—sales
organization and shipping point, for example—as well as master data such as customer
and material.

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