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Enterprise Structures in Sales and Distribution

Contents:

 Introduction to the R/3 organizational elements

 Organizational units in the R/3 System
 Sales and distribution structures of the case company
IDES AG

 SAP AG 1999

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Unit Objectives

At the conclusion of this unit, you will be able to:

 Describe the sales and distribution structures of

IDES AG
 Identify organizational units in the SAP System
that are relevant for sales and distribution
 Describe the essential characteristics of these
organizational units
 Form organizational structures using the
organizational units
 Explain the most important relationships between
the organizational structures in sales and
distribution

 SAP AG 1999

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Overview Diagram: Enterprise Structures

Enterprise Structures in
Sales and Distribution

Sales Order
Processing

Pre-Sales Activities Procurement

Invoice
Shipping

Payment

Billing

 SAP AG 1999

 This unit covers the possibilities for representing the organizational structure of a company's sales
and distribution department in the SAP System.
 You use various organizational elements and connect them together, as required.

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Enterprise Structures: Business Scenario

 Your company IDES AG is part of the globally

operating IDES group.
 IDES AG produces and sells motorcycles.
Assemblies are delivered from plants in Europe
and North America.
 Your company also serves the market with
assemblies and spare parts.
 IDES usually uses authorized dealers that only sell
IDES vehicles.

 SAP AG 1999

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0.5
Organizational Structure of IDES Holding AG

IDES AG

IDES US INC New York

Frankfurt

 SAP AG 1999

 Defining your organizational structure in SAP System is an important step. It requires thorough
analysis of how your organization wants to run your business.
 The standard SAP System contains the IDES case company which is completely represented in the
SAP System. IDES stands for International Demonstration and Education System.
 The instructor's demonstrations in the system and the exercises for this training course use this case
company.
 The consolidated group, the IDES Holding AG, is divided into several independently operating
subsidiaries. The companies that are relevant for this course are owned by these subsidiaries: IDES
AG in Frankfurt and IDES US INC in New York.

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Sales and Distribution Structures of IDES AG

IDES AG
Company

Sales and Sales and

Distribution Distribution
Frankfurt Berlin
Sales office

Chain Industr.
Reseller Service
stores Consumer
Distribution channel

Motorcycles Services Food Paint

Product line

 SAP AG 1999

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Delivery Structure of IDES AG

IDES AG

Sales and Sales and

Distribution Distribution
Frankfurt Berlin
Sales office

W arehouse W arehouse W arehouse

Hamburg Dresden Berlin
Distribution center

Hamburg Hamburg
Dresden Berlin
Shipping Standard Express
processing

 SAP AG 1999

 Note:
This diagram shows the delivery structure within IDES AG, independently from the R/3 system
(using general business terms).
 Before IDES AG confirms an order for a customer, they check from which warehouse distribution
center the material ordered is to be delivered and whether sufficient stock is available.
 The goods delivery is usually organized at these locations. These facilities are not available at every
location where products are manufactured.
 In order to fulfill very urgent customer requests, the warehouse distribution center in Hamburg can
arrange express deliveries.

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Organizational Units in Sales and Distribution

R /3
 Company code
 Sales Area
Document
 Sales organization
 Distribution channel
 Division
 Plant
 Storage location
 shipping point

 SAP AG 1999

 Organizational units in the R/3 System represent the structure of an enterprise organization.
Organizational units represent the legal and organizational views of an enterprise.
 The Sales and Distribution module uses some organizational units that can only represent sales and
distribution processes, such as sales organization, distribution channel, division or shipping point.
Other organizational units, such as company code or plant, are used in Sales and Distribution and in
other modules in the R/3 System.
 You can represent your enterprise structure using organizational units based on your business
processes.
 This is not a complete list of all organizational units relevant for the sales and distribution processes
in the R/3 System.

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Organizational Units: Company Code

Company code

 legal entity and independent accounting unit

 at company code level, you create:
 balance sheets required by law
 profit and loss statement

 SAP AG 1999

 For a company code, a complete independent accounting unit can be represented as the smallest
organizational unit in external accounting.
This includes entry of all accountable transactions and the creation of all proofs for a legally required
individual account closing, such as the balance sheets and the profit and loss statement.
 Examples of a company code are: a company within a corporate group or a subsidiary.

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Organizational Units: Sales Organization

Sales organization

responsible for
 distributing goods and services
 negotiating sales conditions
 product liability and rights of recourse

 SAP AG 1999

 The sales organization is an organizational unit in Logistics that groups the enterprise according to
the requirements of sales and distribution. A sales organization is responsible for distributing goods
and services. Therefore, it is also liable for the sold products and responsible for a customer‘s rights
of recourse.
 The sales organization is also used, for example, to take a regional, national or international
subdivision of the market into account.
 A sales organization is uniquely assigned to a company code. More than one sales organization can
be assigned to a company code. If you use the Sales and Distribution module, you need at least one
sales organization.
 You enter and update your own master data for a sales organization. In sales statistics, the sales
organization is the highest summation level. All items in a sales and distribution document, that is,
all items of an order, an outbound delivery or a billing document, belong to a sales organization.

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0.11
O rg a n iz a tio n a l U n its : D is trib u tio n C h a n n e l

S a le s o rg a n iz a tio n

D is trib u tio n C h a n n e l 1 D is trib u tio n C h a n n e l 2

 is a m e a n s th ro u g h w h ic h s a le s m a te ria ls re a c h th e c u s to m e r
 r e p re s e n ts y o u r s tr a te g ie s to d is trib u te g o o d s a n d / o r s e rv ic e s
to y o u r c u s to m e r
 fo r e x a m p le : w h o le s a le tr a d e , re ta il tra d e , in te rn e t tra d e , ...
 S AP AG 1999

 A distribution channel is a means through which salable materials or services reach the customer.

 Several distribution channels can be assigned to a sales organization. If you use the Sales and
Distribution module, you need at least one distribution channel. For example, it is used to:
 Define responsibilities,
 Achieve flexible pricing and
 Differentiate sales statistics.

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Organizational Units: Division

Sales organization

Division 1 Division 2

 represents a product line

 for example: motorcycles, spare parts, services, ...

 SAP AG 1999

 A division is used to group materials and services.

 A sales organization can have several divisions assigned to it, for which it is responsible. If you use
the Sales and Distribution module, you will need at least one division.
 The system uses the division to determine the sales areas a material or a service is assigned to.
 A division can, for example, represent a product group. Therefore, you can, for example, restrict
price agreements with a customer to a certain division. You can also conduct statistical analysis by
division.

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S ale s A re a

S ale s
o rg an iza tio n 1 F ran kfu rt 2 B e rlin

D istrib u tio n
c h an n e l 2 R etail tra de 5 Intern et 1 W ho le sale
trad e

D iv isio n
2 M o to rcycle s 3 C om p uters 3 C om p uters 2 M o to rcycle s 1 P u m ps

S ale s 1 1 1 2 2
a re a s 2 2 5 1 1
2 3 3 2 1

 S A P AG 1999

 A sales area is a combination of the sales organization, distribution channel, and division. It defines
the distribution channel a sales organization uses to sell products from a certain division.
 Each sales and distribution document is assigned to exactly one sales area. This assignment cannot
be changed.
 A sales area can belong to only one company code. This relationship is created by assigning the sales
organization.
 During the processing of sales and distribution documents, the system accesses various master data,
according to the sales area. This master data includes, for example, customer master data, material
master data, prices, and discounts. In addition, the system carries out several checks concerning the
validity of certain entries according to the sales area.
 Note:
A simple organizational structure can be better than a complex one. For example, it simplifies
updating master data. Do not define complex organizational structures in order to have detailed
reporting options. Use fields on the master data screen.

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O r g a n iz a t io n a l U n its : P la n t a n d S to r a g e L o c a tio n

1 2 2
1 1 2
( D e liv e r in g ) p la n t

BAB B
C
P la n t 1 P la n t 2 P la n t 3

S to r a g e lo c a tio n

 SAP AG 1999

 The plant is a location where material stock is kept. In the R/3 System, a plant can, for example,
represent a production facility or simply a grouping of locations (storage locations) in physical
proximity.
 Plant and storage location are organizational units that can be used by all logistic areas of the R/3
System.
 Materials management is primarily concerned with the material flow. From a materials
management point of view, a plant is, above all, a location where material stock is kept.
 In production, a plant can represent a manufacturing facility.
 In sales and distribution, a plant represents the location from which materials and services
are distributed and corresponds to a distribution center. The relevant stocks are kept here.
 If you sell a service, a plant can represent the location services are rendered from (that is, an
office).
 In sales and distribution, the plant has a central function:
 You have to create at least one plant in order to be able to use the Sales and Distribution module.
 A plant must be uniquely assigned to a company code.
 The assignment between sales organizations and plants does not have to be unique.
 The plant is essential for determining the shipping point.

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O rganizational Unit: Shipping Point

Plant 2 Plant 2

Shipping point 1 shipping point shipping point

 SAP AG 1999

 Shipping is an integrated module of sales and distribution processing. The shipping point is the
highest-level organizational unit of shipping that controls your shipping activities. Each outbound
delivery is processed by one shipping point.
 The shipping point can be a loading ramp, a mail depot, or a rail depot. It can also be, for example, a
group of employees responsible (only) for organizing urgent deliveries.
 You assign a shipping point in the SAP System at plant level. A shipping point is a physical place
and should be near the delivering plant. More than one shipping point can be assigned to a plant.
You can also assign several plants to a shipping point. This can also be appropriate for plants in
physical proximity.

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0.16
IDES Holding AG in the R/3 System

Company
Companycode
code Company
Companycode
code
1000
1000 IDESAG
IDES AG 3000
3000 IDESAG
IDES AG New York

Frankfurt

Sales
Salesorganization
organization Sales
Salesorganization
organization
1000
1000Frankfurt
Frankfurt 3000
3000New
NewYork
York

 SAP AG 1999

 IDES Holding AG is a globally operating group.

 The subsidiaries of IDES Holding AG are organized according to country-specific situations and
laws. Two of these subsidiaries are IDES AG in Frankfurt, Germany, and IDES US INC in New
York.
Structure in the SAP System:

Company code
1000 IDES AG
Company code
3000 IDES AG
 Sales and distribution of IDES AG in Germany is organized at two sales facilities, each of which has
its clearly defined area of responsibility.
Structure in the SAP System:

Sales organization 1000 Frankfurt

Sales organization 1020 Frankfurt
 Each sales organization is responsible for sales in its country and sets its own distribution and pricing
policies.

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0.17
Sales Areas of IDESHoldingAGinthe SAPSystem

1000 1IDESAG
Company code

1000 1020 1Berlin

Frankfurt
Sales organization

12 Reseller
14 Service 2Chain 22 Industr.
Consumer
stores 2
Distribution
channel

02 Motor 08 Services 05 Food

03 Paint
cycles02

Division
 SAPAG1999

 In the SAP System, sales and distribution processes are always uniquely assigned to a sales area.
 To represent the different ways through which goods reach the customer, the appropriate distribution
channels were set up. In this course, the IDES AG sales areas that contain the following distribution
channels are used:
 12 Resale
 14 Service
 To represent the different product lines , the appropriate divisions were set up. In this course, the
sales areas that contain the following distribution channels are used:
 00 Cross-division
 02 Motor cycles
 08 Services
 Sales areas were set up on the basis of these sales organizations, distribution channels, and divisions.
However, the combinations considered were those in which sales and distributions processes had to
be represented. These include:
 Sales organization 1000, distribution channel 12, division 00
 Sales organization 1000, distribution channel 12, division 02
 Sales organization 1000, distribution channel 14, division 08

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0.18
The Delivery Process in IDES AG in the R/3 System

1000 1020
Frankfurt Berlin
Sales organization 1000

IDES AG
Com pany code

1000 1400 1300 1100

Ham burg Stuttgart Frankfurt Berlin
Plant

1000 1400 1100

...
Ham burg Stuttgart Berlin
Shipping point

 SAP AG 1999

 Before IDES AG confirms an order for a customer, they check from which delivering plant the
material ordered is to be delivered and whether sufficient stock is available.
 Every plant must be assigned to a company code.
The plants of IDES AG include, for example:
- Plant 1000 Hamburg - Plant 1400 Stuttgart
- Plant 1300 Frankfurt - Plant 1100 Berlin
In addition, delivering plants need to have assigned a sales organization and a distribution channel:
 Plant 1000 Hamburg and plant 1400 Stuttgart are the delivering plants for sales organization 1000
and distribution channel 12.
 Plant 1100 Berlin is the delivering plant for sales organization 1020 and distribution channel 20.
 Plant 1300 Frankfurt ist not a delivering plant for sales and distribution.
 The delivery is organized by various shipping points which are assigned to the delivering plants:
 Shipping point 1000 Hamburg processes outbound deliveries from plant 1000
 Shipping point 1100 Berlin processes outbound deliveries from plant 1100

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Summary

You are now able to:

 Describe the sales and distribution structures of

IDES AG
 Identify organizational units in the R/3 System that
are relevant for sales and distribution
 Describe the essential characteristics of these
organizational units
 Form organizational structures using the
organizational units
 Explain the most important relationships between
the organizational structures in sales and
distribution

 SAP AG 1999

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0.20Unternehmensstrukturen im Vertrieb Exercises

Unit: Enterprise Structures in Sales and Distribution

Organizational units in the SAP System.

- Sales and distribution structures of the case company
IDES AG

At the conclusion of these exercises, you will be able to:

 Explain the organizational units and their relationships which are
relevant for sales and distribution
 Describe the sales and distribution structures of the case company
IDES AG

The case company IDES AG is a globally operating group. They

manufacture products (for example, motorcycles and spare parts) for
multiple product lines at various locations. These materials, as well as
other materials that are not produced in-house, are distributed by several
sales facilities using multiple distribution channels.

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 1-1 Organizational units in Sales and Distribution.

1-1-1 Organizational units in the R/3 System represent the structure of an

enterprise organization.
Which organizationl units represent sales and distribution only ?

_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________

1-1-2 Which organizational unit can you use in the SAP system to represent a
sales facility or a sales subsidiary?

_______________________________________

1-1-3 Which organizational units can you use in the SAP System to represent a
means to ship goods to the customer (for example, factory sales, whole sales
trade or retail trade)?

_______________________________________

1-1-4 Which organizational units can you use in the R/3 System to represent
multiple product lines and to group materials (for example, vehicles,
accessories or spare parts)?

_______________________________________

1-1-5 Which organizational units can you use in the R/3 System to organize and
process outbound deliveries from different places (for example, loading
ramp or rail depot)?

_______________________________________

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 1-2 Cross-sales organizational units.

1-2-1 A corporate group can be divided up into several companies or subsidiaries.

Which organizational unit can you use in financial accounting to represent a
legal entity and an independent accounting unit in the R/3 System?

_______________________________________

1-2-2 In a company, you can manufacture and store materials in different places.
Which organizational unit can you use in the R/3 system to represent a
production facility or a distribution center?

_______________________________________

1-2-3 Within a plant, material storage can be divided up according to various

locations or rooms. Which organizational unit can you use in the R/3 system
to represent such a location or room?

_______________________________________

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 1-3 Assigning organizational units.

1-3-1 Which organizational units does a sales area consist of?

_______________________________________
_______________________________________
_______________________________________

1-3-2 Can you assign more than one distribution channel to a sales organization?

_______________________________________

1-3-3 Can you assign a distribution channel to multiple sales organizations?

_______________________________________

1-3-4 Which organizational unit is a sales organization assigned to in order to

represent the connection of sales and distribution processes to financial
accounting?

_______________________________________

1-3-5 Can you assign a sales organization to multiple company codes?

_______________________________________

1-3-6 In a sales organization, can you sell materials from multiple delivering
plants?

_______________________________________

1-3-7 To which organizational unit do you assign a shipping point?

_______________________________________

1-3-8 Can you assign a shipping point to multiple plants?

_______________________________________

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 1-3-9 In which organizational unit are storage locations grouped together?

_______________________________________

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 1-4 Organizational structures of IDES AG.

You can answer these question using the course material; you will
not need the SAP System.

1-4-1 The subsidiaries of IDES Holding AG are organized according to country-

specific situations and laws. Hierzu gehören in Deutschland die IDES AG
und in den USA die IDES US INC. Mit welcher Organisationseinheit und
Nummer sind die beiden Tochtergesellschaften im R/3-System abgebildet?

_______________________________________
_______________________________________

1-4-2 Two sales facilities organize the sales and distribution process for IDES AG
in Germany (for this training course). Which organizational unit and number
is used to represent the two sales facilities in the SAP System?
_______________________________________
_______________________________________

1-4-3 Which distribution channels does sales organization 1000 use (for this
training course)?
_______________________________________

1-4-4 Which sales areas were set up for sales organization 1000 (for this training
course)?
_______________________________________
_______________________________________
_______________________________________

1-4-5 Which plants are assigned to company code 1000 IDES AG (for this
training course)?
_______________________________________
_______________________________________
_______________________________________

1-4-6 Which shipping point processes outbound deliveries from plant 1000
Hamburg (for this training course)?

_______________________________________

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 1-5*Organizational units in the R/3 System.
For this training course, only some of the organizational units in the SAP IDES
System are used.
When you create a sales order, you always have to enter a sales area (sales
organization, distribution channel, division).

1-5-1 Check in the system, which sales organizations exist for sales order entry for
the USA: Write down three examples.

You enter a sales order using the following menu path: Logistics 
Sales and distribution  Sales  Order  Create. Place the cursor
on the input field for the sales organization and display the possible
input values using the F4 input help.

_______________________________________
_______________________________________
_______________________________________

1-5-2 Check in the system, which distribution channels exist for sales organization
1000: Write down three examples.

Place the cursor on the input field for the distribution channel and
display the possible input values using the F4 input help.

_______________________________________
_______________________________________
_______________________________________

1-5-3 Check in the system, which divisions exist for sales organization 1000 and
for distribution channel 12. Write down three examples.

Place the cursor on the input field for the sales organization and
display the possible input values using the F4 input help.

_______________________________________
_______________________________________
_______________________________________

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0.21 Solutions

Unit: Enterprise Structures in Sales and Distribution

Organizational units in the SAP System.

- Sales and distribution structures of the case company
IDES AG

1-1-1 Sales Area

Sales organization
Distribution channel
Division
shipping point
The combination of sales organization, distribution channel and
division makes a sales area.
There are also other organizational units apart from these that are used
for sales and distribution. Other organizational units, such as company
code, plant, or storage location, are not only used by sales and
distribution, but also by other modules (for example, financial
accounting, materials management, or production).

1-1-2 Sales organization

1-1-3 Distribution channel

1-1-4 Division

1-1-5 shipping point

1-2-1 Company code

1-2-2 Plant

1-2-3 Storage location

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 1-3-1 The sales area consists of a combination of sales organization,
distribution channel, and division.

1-3-2 Yes. You can assign more than one distribution channel to a sales
organization.

1-3-3 Yes. You can assign a distribution channel to multiple sales

organizations.

1-3-4 To the company code.

1-3-5 No. A sales organization is only assigned to one company code.

However, more than one sales organization can be assigned to a
company code.

1-3-6 Yes. In a sales organization, you can sell materials from multiple
delivering plants. .

1-3-7 The shipping point is assigned to a plant.

1-3-8 Yes. A shipping point can also be assigned to multiple plants. However,
this might only be appropriate when the plants are in physical proximity
to each other.

1-3-9 To the plant.

1-4-1 Company code 1000: IDES AG Germany

Company code 3000: IDES US INC USA
1-4-2 Sales organization 1000: Frankfurt
Sales organization 1020: Berlin
1-4-3 Distribution channel 12: Resale
Distribution channel 14: Service

1-4-4 Sales organization 1000, distribution channel 12, division 00

Sales organization 1000, distribution channel 12, division 02
Sales organization 1000, distribution channel 14, division 08
1-4-5 Plant 1000: Hamburg
Plant 1300: Frankfurt
Plant 1100: Berlin
1-4-6 Shipping point 1000: Hamburg

1-5-1 Logistics  Sales and distribution  Sales  Order  Create

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 Place the cursor on the input field for the sales organization and display
the possible input values using the F4 input help.

Sales organization for the USA:

3000 USA Philadelphia
3020 USA Denver
R300 Retail USA

S300 Service USA

1-5-2 Place the cursor on the input field for the distribution channel and
display the possible input values using the F4 input help.

Distribution channels for sales organization 1000:

01 Direct sales
10 Final customer sales
12 Resale
14 Service
16 Factory sales

1-5-3 Place the cursor on the input field for the sales organization and display
the possible input values using the F4 input help.

Divisions for sales organization 1000 and distribution channel 12:

00 Cross-division
02 Motor cycles
04 Lighting
07 High Tech
10 Vehicles

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