Enterprise Structure

Sales & Distribution



1. Introduction 2. Sales Organization 3. Distribution Channel 4. Division 5. Sales Area 6. Sales Office & Sales Group 7. Integration

 Enterprise structure is a representation of Legal and Organizational structure of the company.  It helps to set up the structure for all business functions like
   

Finance and Controlling(FI-CO) Sales & Distribution (SD) Materials Management (MM) Logistics General (LO) and Logistics Execution (LE).

 It allows necessary integration among these functions (SAP calls these as Modules) within enterprise structure to manage transaction processing.

 Enterprise structure of sales and distribution has the following basic organizational elements. –
   

Sales organization Distribution channel Sales office Sales group

 Graphic representation of Sales enterprise structure

Sales Organization
 Sales Organization  Definition of Sales organization is basic and mandatory in SD configuration.

It is used for creation and processing of sales documents from sales to cash. Need for different sales organization can be based on geography or type of sale (domestic or export) or different businesses of the company. Sales Organization can have its own customer and material master data in system.

Sales Organization
 Sales Organization  Example - A company wants to divide its sales organization structure separately for North America, rest of the US, Europe and Asia-pacific, then it can have 4 different sales organizations.

This will help to have sales to cash cycle run separately for each of this region. Statistical sales reporting can be managed per sales organization.

Distribution Channel
 Distribution channel  Distribution channel is an organization element, which represents the way goods or services are distributed to the customers.

A sales organization can have more than 1 distribution channel. These distribution channels must be assigned to sales organization in enterprise structure. Example - A computer manufacturer can sell computers through channel partners or can sell to the corporate clients directly. A distribution channel can be used by more than 1 sales organization. Example - Distribution channel like “Direct sale” can be used by North American as well as European sales organizations of a company as a channel for selling.

 Division

It is necessary to understand the concept division before we learn about setup of Sales area. Generally “division” is used to classify products into certain product groups or families. Example - A consumer and electronic goods company can have divisions as  Consumer electronic – TVs, DVD players  Home Appliances – Washing machines, Refrigerators Company can sell bulk TVs to corporate client directly; therefore sales organization can use distribution channel as “direct sale” and division as “Consumer electronics”

Sales Area
 Sales Area  It is used to control which distribution channel is used to sell products belonging to a division in a sales organization. Therefore, all sales documents are created and processed in a sales area.  It is a combination of Sales organization, Distribution channel and Division.  Use of sales area allows different business control or parameters to be set for the same customers like
    Customer’s currency Partial delivery agreement Payment terms Taxes

Sales Office & Sales Group
 Sales office and Sales group  Sales office – It represents a sales office / branch of the company. Different sales areas can use one sales office
 Example – When the sales organization and distribution channel are same but division is different (e.g. Home Appliances and Consumer electronics), the sales areas are different but still sales group associated with these divisions can use the same sales office.

Note - Use of sales office in SAP is optional unlike sales area.

Sales group – This is the grouping of sales persons. One sales group can be associated with different sales offices as in business a sales group taking care of one product family can work for different sales office.

 Integration with other modules  Assigning of sales organization to company code (Integration with FI)
 In Business, all sales transactions need to be posted in Finance; therefore it is necessary that sales organization should be assigned to company code, which is the legal entity.

Use of division in sales area setup (Integration with Logistics general)

 Integration with other modules  Assigning of plant to sales organization and distribution channel (Integration with MM) For delivery of material from a plant, that plant has to be assigned to the sales organization and distribution channel in which order is created.
 Example - If for all orders of distribution channel, “direct sales” should be delivered through factory then it must be assigned to the combination of the sales organization and distribution channel, “direct sales”, otherwise system will not allow delivery from the factory plant.

Pre-requisite – Definition / Assignments in enterprise structure
 Define Company code (FI accounting)  Define Plant and assign to company code (LG)  Define Division (LG)