sap sd Organizational Structure in Sales and D

Sales Organization
The sales organization has an enterprise structure in logistics that is defined for
distributing goods and services. This structure can mirror the business presence of
your sales organization and mimic regional structure or international layout. The
SAP system requires at least one sales organization to be defined for the SD functionality
to work. A sales organization has to be assigned to the company code for
accounting to be integrated.
Bear in mind that more than one sales organization can be assigned to a single
company code. All activities within this structure are reported at the sales organization
level as a summation level. The sales organization has its own address,
currency, and calendar that can be different and unique to each sales organization
you’ve defined.

Distribution Channel
 The distribution channel identifies a unique way for your customers to obtain
goods and services from your company, such as wholesale, retail, Internet sales,
and so on. By design, to use the SD functions, you need at least one distribution
channel. A distribution channel doesn’t have addresses, calendars, or currencies
to maintain. They are defined in the parent object: the sales organization. Each
distribution channel can span across one, some, or all of your sales organizations.
You can also assign one or more plants to a combination of sales organization and
distribution channel, but you need at least one for SD to function. After you define
the distribution channel, you’ll be able to do the following:
>> Define materials and services master data.
>> Create and maintain your customer master data.
>> Allow for complex pricing strategies.
>> Define determination of sales document types.
>> Use the channel in sales statistics.

Division
This SAP enterprise structure is usually based on a wide group of products or
services. Just like a distribution channel, a single division can be assigned to multiple
sales organizations, and you need exactly one division for SD to function.
Your material and customer master data has parts that are specific to the division,
therefore allowing you to maintain business activity limited to a narrow group of
goods and services

Note
A material master record can belong to only one division and is maintained on the master
data tab Sales: Sales Org. Data 1.

You can make customer-specific agreements, set pricing, set terms of payment, and
perform statistical reporting that limits the data selection to a specific division.

Note
Customer master data is specific to a division and is one of the key structures used in
master data maintenance

Sales Office
In the SAP system, the sales office is optional. You can use SD without creating
sales offices. If your organization needs this granularity of data, you should know
the following:

>> A sales office can be assigned to one or more sales areas.

>> A sales office can consist of sales groups, usually representing a salesperson or
a group of salespeople.
>> You can maintain an address for the sales office.
 >> The sales office acts as a selection criteria for sales document maintenance.
>> You can use a sales office to determine the output for your sales documents.

Sales Group

In the standard SAP system, the definition of sales groups is optional and usually
represents the salesperson or a group of salespeople. You can use the SD functionality
without creating any sales groups. However, if you’re using this in your
system, it allows you to do the following

>>> Assign a salesperson to the code representing a sales group.

>>> Assign a sales group to one or more sales offices.
>>> Select the sales group as a criterion for sales documents.
>>> Use this structure to influence printer determination for your sales documents
output.

Sales Area
The main component required for SD to function is the sales area. A sales area is
built from a combination of sales organization, distribution channel, and division
described earlier. Basically, the sales area defines the distribution channel that a
specific sales organization can use to sell products or services of a particular division.
See Figure 1.4 for a layout showing the basic sales area.

In this figure, you should identify three sales areas as follows:

Sales Area 1:
> Sales Organization: 1000
> Distribution Channel: 10
> Division: 10
Sales Area 2:
> Sales Organization: 1000
> Distribution Channel: 10
> Division: 20
Sales Area 3:
> Sales Organization: 1000
> Distribution Channel: 20
> Division: 10

Credit Control Area

The credit control area is a Financial Accounting organizational unit that maintains
and monitors credit limits for customers. A credit control area can be assigned to
one or more company codes. It isn’t possible, however to assign a company code
to multiple control areas. Multi-currency credit limits aren’t supported within single
credit control areas.

Plant, Storage Location, and Warehouse

To procure, store, and distribute goods and services, you need a Materials Management
structure called a plant, which we’ve discussed earlier in this chapter.
The plant is linked to the company code, which is defined in SAP ERP Financials
Financial Accounting. It’s also linked to the Sales Organization and Distribution
Channel, integrating all three together — Materials Management (material inventory)
and Financial Accounting (where all transactions are recorded on the company
books).
To inventory your products, you also need a storage location or multiple storage
locations representing your warehouses, including at least one for SD to function
and fulfill the deliveries.
To get down to the bin level management of your goods, you also create a warehouse
structure that can be assigned to one or more storage locations.

Shipping Point
The enterprise structure component responsible for the distribution activities is a
shipping point. This logical definition can mirror your physical shipping dock, mail
depot, or a group of people responsible for distribution activities. You can have
multiple shipping points per plant, but you need at least one for the shipping functionality
to be available. More than one plant can also be assigned to a shipping
point, although this is only recommended for plants that are close to each other.
A shipping point has its own address and calendar influencing the scheduling and
processing of deliveries to customers, as well as your own replenishment deliveries.
The shipping point also influences the pick storage location determination
together with plant and shipping condition. The organizational assignment of the
shipping point is carried out at plant level.

Note
Single sales orders or stock transport orders can have multiple lines and multiple deliveries.
A single delivery can only be processed by one shipping point.

Loading Point
Shipping points can have loading points representing structures such as loading
dock and can be assigned during delivery processing. You can also assign a name
of a person responsible for the loading dock location. Loading points are optional
and aren’t required for the shipping functionality to work.

Transportation Planning Point

The transportation planning point is assigned to the company code and allows
for planning and execution of shipments (documents that group one or more
deliveries). Transportation planning points can represent a physical transportation
department responsible for type of shipment, geographical territory responsibility,
and have its own address. You need at least one for transportation functionality
to be available. You can have one or more transportation planning points for
a company code, but you can’t share the transportation planning points among
multiple company codes.

Processes in Sales and Distribution

The SAP software package is designed to capture almost any business activity, and
if the standard functionality isn’t available, it allows you to create custom solutions
to close the gap between the pre-packaged application and the desired state. Out
of the box SD functionality covers most of the standard business functions that are
universal for most industries. See Figure 1.5 for a quick process overview.

Pre-Sale Activities
In real-life scenarios, before the sale takes place, your business needs to collect
basic data and create master records in the system for either existing or potential
customers. You’ll create data for contact people, sales prospects, and existing customers,
and you’ll also maintain data about your competitors. After this foundation
is established, the actual contact with the sales prospects are made and can
be recorded as an SD document in the form of inquiry or quotation. These documents
can help you determine important sales-related data that can be accessed
 for reporting purposes, to evaluate sales activities, and finally to convert to sales
orders, giving you a full trace of the sales activities from establishing the contact
with the customer to collecting the payment. Storage of the pre-sales data helps
also with establishing large contracts and scheduling agreements. We’ll cover all of
the activities and documents in detail throughout the rest of this book.

Order Processing
Order processing is built on myriad activities and usually starts with recording the
actual sales order, then procurement steps if goods or services aren’t available, followed
by delivery picking, packing, and shipping to the final destination.
The sales order document stores the data of customer’s firmed request for your
goods or services. The system uses master data you’ve maintained and established
to fulfill this request. Sales orders are recorded either by your own sales force or
directly by customer via web front, EDI, or XML interface messages.

The sales order contains customer information, partner data (sold-to, ship-to, billto),
material, quantity, pricing, delivery date, and shipping and transportation
information required for delivery. A goods availability check is performed at the
time of the order entry, triggering the potential procurement requests as needed.
The requirements created by the sales order can be filled from available on-hand
stock inventories, procured by replenishment that is processed by internal source
such as stock transport orders or production orders or by external sources such as
purchase orders replenishing your in-house stock levels, or via third-party delivery
— performed by external supplier shipping goods direct to your customer on
your behalf.
On the shipping due date, the delivery documents are created, and the route is
determined if you are using the SAP TM software. You can then start the process
of picking, packing, staging, and loading, if you’re using all of these steps in your
business process. If you are using SAP WM functionality (lean warehouse management
or standard Warehouse Management in SAP ERP), you’re using transfer
orders to initiate picking. The transfer order includes data copied from the delivery
document. Standard SAP functionality provides some complicated picking methods
such as grouped deliveries, wave picking, and two-step. Transfer orders can
be processed as printed pick tickets or in electronic form using RF devices on the
warehouse floor. The confirmation of the transfer order completes the picking
activities. If you use the transportation functionality, you can also start collaborating
with freight service providers, start the tendering process, and finish up by
creating the shipment cost document, which captures the payable activities related
to the delivery of goods to your customers. Delivery packing list and bill of lading
output are usually triggered at the completion of these steps.
The posting of the goods issue completes the process and results in stock movement
or a confirmation of service that changes your on-hand inventory balance,
reducing it and updating the balance sheet accounts in Financial Accounting
 Billing
The last step before collecting your customer’s payment is creating a billing document
or invoice that is sent to the customer’s bill-to party for payment request.
Just like with the delivery document, data is copied from either the sales document
or the delivery document. When you create the billing document, account
determination is performed and appropriate GL account postings are executed that
debit the customer’s receivables and credit the revenue account

Financial Accounting
As we touched on earlier in this chapter, the integrated philosophy of SAP is showing
you how all activities in one form or the other end up recorded on the balance
sheet accounts in Financial Accounting.
The material documents recorded when the goods issue was posted, and a subsequent
accounting document stored the stock movement data. The transportation
service provider purchase order ended up as an entry for account payables, and
the incoming payment from the customer is also posted against the invoice (billing
document) we submitted in the earlier steps.
Additional activities may also be performed when differences are reconciled and
potentially are resolved with either credit or debit memos.
All activities in the SD process end up reflected in the system as documents, master
data, and pricing records, and they are used as a foundation for the sales info
system (SIS) or SAP NetWeaver Business Warehouse) for reporting

Now that the organizational units have been defined, we can assign the
organizational structure

Assignment of Organizational Units

In assignment of the organizational data you link the different modules in the system by
defining how the structures relate to one another. This is best shown by the association of
sales organizations and plants. A plant is always linked to one company code, and can be
linked to several sales organizations. This means that the plant is owned by the company
code and can only take orders from and make deliveries to customers in its sales
organization. This is illustrated in Figure 1-22.
In Figure 1-22 Plants 1, 2, and 3 belong to Company code 1. Sales organization 1 uses
Plants 1 and 2. Sales organization 2 uses Plants 2 and 3. Sales organizations 1 and 2 can
make cross-company sales for goods from Plants 4 or 5.
After you have defined your data, and the other application components have defined
theirs (such as the company codes having been defined by FI and the plants by MM), it is
time to assign the SD organizational data.
The assignments are extremely easy settings to make once you understand how the
structures should be built up (as explained previously). They are assigned in the following
structure paths in the SAP Customizing Implementation Guide:
 SAP Customizing Implementation Guide >> Enterprise Structure >> Assignment >>
Sales and Distribution:
• Assign sales organization to company code.
• Assign distribution channel to sales organization

• Assign division to sales organization.

• Set up sales area.
• Assign sales office to sales area.
• Assign sales group to sales office.
• Assign sales organization, distribution channel, and plant.
• Assign sales area to credit control area. (We will cover the credit contr
assignment in detail in Chapter 10.)
SAP Customizing Implementation Guide >> Enterprise Structure >> Ass
Logistics Execution:
• Assign shipping point to plant.

Shipping points are assigned to the plant here, but their determination is not defined
here. Please refer to Chapter 6 for information about shipping point determination.
After the assignment you should have a business organizational structure similar to the
following:

Business Area
A business area is a subdivision of a company code for accounting purposes. You can draw
financial reports based on the business area. If the FI (Finance) team decides to use business
areas, every transaction in SAP is assigned to a business area in the same way it is assigned
to a company code.
For example, Company Acme produces and sells widgets from two different plants.
They want to draw financial reports for each plant. You would define two business areas
and then make the assignment based on the plant. Whenever a sale happens out of one of
the plants, the transactions are assigned to its sales area. You can review the financial
reports for each of the plants separately, or together for the company.
Business areas can be assigned based on the plant and division, or based on the sales
area. You need to choose one way of assigning the business area. Then you can assign the
business area created in the FI module to either the plant and division, or to the sales area.
Business areas are assigned from the following menu path

Menu Path IMG >>> Enterprise Structure >> Assignment >> Sales and Distribution >> Business
Area Account Assignment

1.2.6 Plant Assignment

From a sales standpoint, corporate facilities that hold inventory or serve as base for
field service operations must be represented in the system as plants. Plants are used
to control costs and inventory.
The work of defining plants in SAP S/4HANA calls under materials management
(MM} and controlling. A plant must be assigned to a company code. Sales needs to
identify which plants deliver goods and services to customers (third-party and internal
subsidiaries) for each of the distribution chains configured in the system.
The plant is the link between the corporate entities responsible for inventory /service
workforce costs and the corporate entities that generate revenue. This link is represented
by the assignment of a distribution chain and plants. Note that plants and distribution
chains may be assigned to different company codes, for example. in
intercompany sales scenarios.
To assign plants to distribution chains, follow the menu path SAP Customizing Implementation
Guide• Enterprise Stru cture • Assignment• Sales and Distribution• Assign
Sales Organization - Distribution Channel - Plant. On the screen that opens, click on
the New Entries button or press [li].
re in Sales and Distribution

at is defined for Defining a Sales Organization

siness presence of Here is how you define your sales organizations.
tional layout. The Menu Path SAP Customizing Implementation Guide | Enterprise Structure | Definition |
d for the SD functionality Sales and Distribution | Define, Copy, Delete, Check Sales Organization

NOTE A sales organization can belong to only one company code. You can also defi
ned to a single sales document types to be limited to within a sales organization. Later we will assi
t the sales organization offices to a sales organization
Assigning Sales Organizations to Company Codes
sales organization Now, you'll need to assign the sales organization to a sales-relevant company code
by following the menu path SAP Customizing Implementation Guide • Enterprise
Structure· Assignment· Sales and Distribution· Assign Sales Organization to Compan

Code.
Defining a Distribution Channel
mers to obtain Here is how you define your distribution channel.
il, Internet sales, Menu Path SAP Customizing Implementation Guide | Enterprise Structure | Definiti
one distribution Sales and Distribution | Define, Copy, Delete, Check Distribution Channel
ars, or currencies
anization. Each Creating Distribution Channels
les organizations. To configure distribution channels, follow the menu path SAP Customizing Impleme
s organization and Guide· Enterprise Structure· Definition· Sales and Distribution ·Define,
n. After you define Copy, Delete, Check Distribution Channel • Define Distribution Channel. On the
screen that opens, click on the New Entries button or press [£[).
Creating Distribution Chains
Now, you'll need to assign the distribution channel to a sales organization to create a
distribution chain by follo\ving the menu path SAP Customizing Implementation
Gu ide • Enterprise Structure •Assignment• Sa les and Distribution •Assign Dist ribution
Channel to Sales Orga nization. On the screen that opens, click on the New
Entries button or press CIT].

A Division Product groups can be defined for a wide-ranging spectrum of

f products or products. For every division you can make customer-specific agreements on, for
assigned to multiple example, partial deliveries, pricing, and terms of payment. Within a division you
can carry out statistical analyses or set up separate marketing
ific to the division,
narrow group of To reduce the master data you require, you can combine sales areas for customer master dat
purposes—see the Implementation Guide (IMG | Sales and Distribution | Master Data |
Define Common Distribution Channels (and Division)).

maintained on the master Assigning Divisions to Sales Organizations

To assign divisions to sales organizations, follow the menu path SAP Customizing
Implementation Guide· Enterprise Structure· Assignment· Sales and Distribution
ms of payment, and Assign Division to Sales Organization
pecific division.

ithout creating Defining a Sales Office

you should know Here is how you define your sales offices, as shown in Figure 1-18.
Menu Path SAP Customizing Implementation Guide | Enterprise Structure | Definition |
Sales and Distribution | Maintain Sales Office

salesperson or Creating Sales Offices

To configure a sales office, follow the menu path SAP Customizing Implementation
Guide • Enterprise Structure • Definition • Sales and Dist ribution • Maintain Sales
aintenance. Office. On the screen that opens, click on the New Entries button or press [NJ.
s documents. Defining a Sales Group
Here is how you define your sales group, as shown in Figure 1-19.
Menu Path SAP Customizing Implementation Guide | Enterprise Structure | Definition |
Sales and Distribution | Maintain Sales Group
• Sales Group The staff of a sales office may be subdivided into sales groups. For
unctionality example, sales groups can be defined for individual divisions within the sales team.
• Salespersons Individual personnel master records are used to manage data about
salespersons. You can assign a salesperson to a sales group in the personnel master
record.

Assigning Sales Offices to Sales Area

To assign a sales office to a sales area, follow the menu path SAP Customizing Implementation
Gu ide• Enterprise Structure• Assignment• Sa les and Distribution• Assign
Sa les Office to Sales Area. On the screen that opens, click on the New Entries button
or press [lil.

We know a sales area is compiled of a sales organization, a distribution channel, and a

division. A sales area is used for reporting purposes; all data relevant for sales can be
defined per sales area. For example, you can define pricing per sales area, or do your sales
information analyses per sales area. You can also control configuration based on the sales
area—for example, you can allow some sales processes for one sales area (for example,
product samples), but not for another.

To configure a sales area, follow the menu path SAP Customizing Implementation
Guide· Enterprise Structure• Ass ignment• Sales and Distribution· Set Up Sales Area.
On the screen that opens, click on the New Entries button or press IKJ.

To assign credit control areas to sales areas, follow the menu path SAP Customizing
Implementation Guide· Financial Supply Chain Management· Cred it Management·
Integration with Accounts Receivable Accounting and Sales and Distribution • Integration
with Sales and Distribution· Assign Sales Area to Credit Control Area.

Once your sales areas are defined, enter the credit control area into the CCAr field to
ensure that the right credit area can be identified even if the corresponding field is
left blank on the customer master data.
a Materials Management

P ERP Financials
nd Distribution
nt (material inventory)
n the company

multiple storage
or SD to function

so create a warehouse

ution activities is a Menu Path SAP Customizing Implementation Guide >>> Enterprise Structure >> D
hipping dock, mail Logistics Execution >>> Define, Copy, Delete, Check Shipping Point
s. You can have
the shipping functionality Creating Shipping Points
To configure shipping points, follow the menu path SAP Customizing Implementation
se to each other. Guide • Enterprise Structure • Definition • Logistics Execution • Define, Copy,
he scheduling and Delete, Check Shipping Point. In the dialog box that appears, choose Define Shipping
nishment deliveries. Point. On the screen that opens, click on the New Entries button or press [IT].
 Assigning Shipping Points to Plants
assignment of the To assign shipping points to plants, follow the menu path SAP Customizing Implementation
Guide • Enterprise Structure • Assignment • Logistics Execution • Assign
Shipping Point to Plant· Assign

nes and multiple deliveries.

such as loading SPRO>>>ENTERPRISE STRUCTURE>>>DEFINITION>>>>LOGISTICS EXECUTION>> M

so assign a name
oints are optional To configure loading points, f
Guide • Enterprise Structure
Point. On the screen that ope

ode and allows SPRO>>> ENTERPRISE STRUCTURE>>>DEFINITION>>>LOGISTICS EXECUTION>>> MAINTAIN T

p one or more
ical transportation To configure transportation planning points, follow the menu path SAP Customizing
itory responsibility, Implementation Gu ide • Enterprise Structure • Defin it ion • Logistics Execution• Maintain
tion functionality Transportation Plann ing Point. On the screen that opens, click on the New
ng points for Entries button or press I F5
g points among

stribution
siness activity, and
te custom solutions
desired state. Out
s functions that are

needs to collect
isting or potential
s, and existing customers,
foundation
ade and can
tion. These documents
o convert to sales
hing the contact
-sales data helps
s. We’ll cover all of

able, followed

management
ting a billing document

the sales document

gs are executed that

a subsequent

en defined, we can assign the units into an

al Units
modules in the system by
hown by the association of
ompany code, and can be
s owned by the company
omers in its sales

es organization 1 uses
ganizations 1 and 2 can

mponents have defined

d the plants by MM), it is

understand how the

assigned in the following
re >> Assignment >>

nd plant.
over the credit control area

rise Structure >> Assignment >>

imilar to the
 s. You can draw
es to use business
way it is assigned

business areas
ens out of one of
he financial
u can assign the
o the sales area.

ribution >> Business

and internal

k is represented
distribution
P Customizing Implementation

that opens, click on

 Structure | Definition |

mpany code. You can also define your own

organization. Later we will assign sales

sales-relevant company code

entation Guide • Enterprise
Sales Organization to Company
 Enterprise Structure | Definition |
Distribution Channel

path SAP Customizing Implementation

tribution ·Define,
stribution Channel. On the

reements on, for

in a division you

areas for customer master data

ribution | Master Data |

SAP Customizing
and Distribution

Structure | Definition |

ng Implementation
on • Maintain Sales
n or press [NJ.

Structure | Definition |

sales groups. For

hin the sales team.
manage data about Assigning Sales Groups to Sales Offices
he personnel master To assign a sales group to a sales office, follow the menu path SAP Customizing Implementation
Guide• Enterprise Structure• Assignment• Sa les and Distribution• Assign
Sa les Group to Sa les Office. On the screen that opens, click on the New Entries button
or press [£[).
ing Implementation

ibution channel, and a

evant for sales can be
sales area, or do your sales
uration based on the sales
sales area (for example,

g Implementation
n· Set Up Sales Area.

ath SAP Customizing

ed it Management·
Distribution • Integration

into the CCAr field to

rresponding field is
>>> Enterprise Structure >> Definition >>>
Shipping Point

izing Implementation
Define, Copy,
oose Define Shipping
n or press [IT].
Implementation

>>LOGISTICS EXECUTION>> MAINTAIN LOADING POINT

To configure loading points, follow the menu path SAP Customizing Implementation
Guide • Enterprise Structure • Definition • Logistics Execution • Maintain Load ing
Point. On the screen that opens, click on the New Entries button or press

S EXECUTION>>> MAINTAIN TRANSPORTATION PLANNING POINT

ath SAP Customizing

gistics Execution• Maintain
izing Implementation

ntries button