Sales and distribution
Basic Process
Abstract
To understand the basics of SAP Sales & Distribution
Sales & Distribution Fresher Guide
What is Enterprise?
Enterprise: - An enterprise is a large-scale organization with a composite
structure were all the Business Activity will be going on.
Enterprise companies often have multiple divisions, each with its specialized
function. which tend to produce or sell several products and services.
Business is the practice of making one's living or making money by
producing or buying and selling products.
Business Activities: - Procurement, Finance, Accounting, Human resources,
Manufacturing, Marketing, Research and development, Sales.
For Example: - Industrial manufacturers like TATA Groups is an enterprise
which produce products, either from raw materials or from component parts,
then export or sell the finished products at a profit. They include tangible
goods such as cars, buses, medical devices, glass, or aircraft.
Procurement:
Procurement is the process of purchasing goods or services, usually in
reference to business spending. There are two types of procurement Direct
Procurement and Indirect Procurement.
Direct procurement is spending on services, goods, and materials that drive
profit, performance, and competitive advantage. Whereas indirect
procurement is expenditure on the maintenance, goods, and services
needed for day-to-day operations, which do not directly contribute to a
company’s bottom line.
Finance:
The primary role of a finance department is to manage money for an
organization efficiently to directly contribute to that organization’s mission
and goals.
Accounting:
Accounting is the practice of recording, summarizing, and reporting a
company’s financial transactions and resources. It plays a vital role in
running a business for several reasons.
Human Resource:
Human Resources (HR) refers to both the people working for an organization
and the department responsible for managing the life cycle of each
employee.
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Manufacturing:
Manufacturing is the process of turning raw materials or parts into finished
goods through the use of tools, human labor, machinery and chemical
processing.
Marketing:
Marketing is the process of attracting customers to your company in order
to generate revenue. It involves a well-thought-out strategy that allows a
company to research, promote, distribute products or services, and sell
them for a profit.
Sales:
Sales are the lifeblood of any business, driving business growth and
sustainability. In simple terms, Sales is the process of selling goods/services
for monetary value or asset. It can occur via direct interactions, online
platforms, or through intermediaries such as retailers. Effective Sales
strategies involve understanding customer needs, building trust, and
persuading potential buyers to make a purchase .
Finance:
What Is Financial Accounting?
Financial accounting is a specific branch of accounting involving a process of
recording, summarizing, and reporting the myriad of transactions resulting
from business operations over a period of time. These transactions are
summarized in the preparation of financial statements—including the
balance sheet, income statement, and cash flow statement—that record a
company’s operating performance over a specified period.
How Financial Accounting Works
Financial accounting utilizes a series of established principles. Which
accounting principles are used depends on the regulatory and reporting
requirements of the business.
Example, In India, companies are required to produce a financial statement
with Indian Accounting Standards (IAS) Whereas in U.S. public companies are
required to perform financial accounting in accordance with generally
accepted accounting principles (GAAP). Their purpose is to provide
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consistent information to investors, creditors, regulators, and tax
authorities.1
Main objective of Financial Accounting:
The primary aim of financial accounting is to produce general-purpose
financial statements that meet regulatory requirements to help outsiders
make an informed decision about a company's value and fiscal status.
The statements used in financial accounting cover the five main
classifications of financial data, which are:
Revenues – Included here is income from sales of products and services,
plus other sources, including dividends and interest.
Expenses – These are the costs of producing goods and services, from
research and development to marketing to payroll.
Assets – These consist of owned property, both tangible (buildings,
computers) and intangible (patents, trademarks).
Liabilities – These are all outstanding debts, such as loans or rent.
Equity – If you paid off the company’s debts and liquidated its assets, you
would get its equity, which is what a company is worth.
Process of financial accounting:
The financial accounting process is the series of steps required to compile,
record, analyse and interpret financial statements. It standardizes the
function of businesses and allows them to create consistent and relevant
information for stakeholders.
Most sources provide eight steps in the financial accounting cycle:
Identifying transactions: The first step is to identify the transactions to
record during a specific period. This ensures that all the revenue, expenses
and receivables are recorded accurately.
Ex, The nature of transactions may include sales, purchase of raw materials,
debt payoff, acquisition of an asset, payment of any expenses etc.
Journal entry: This is the recording of each transaction in a journal entry.
Public corporations record their transactions using accrual accounting, which
requires making entries for revenues and expenses at the time of sale. Ex,
GL postings.
Posting: Accountants/end users post every transaction in a journal in the
general ledger, which records all the account activities of a business. When
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it's time to prepare the financial statements, accountants rely on the records
in the ledger.
Trial balance: This step requires calculating a trial balance. The trial
balance shows the unadjusted balances in each account.
Reconciliation: In this step, accountants/end users create a worksheet to
balance credits and debits. At the end of the analysis, it's a requirement that
the debit side equals the credit side. If there are errors, the accountants
adjust the accounts until it balances the transactions.
Journal adjustments: The next step is to adjust journal entries to ensure
accuracy and consistency.
Generation of financial statements: Once the firm has adjusted all
accounts, it develops different financial statements detailing its revenue,
expenses, liquidity, profits, and liabilities. The three financial statements are
the cash flow statement, the balance sheet, and the income statement.
Closing the books: This marks the end of a financial accounting year. It
provides reports with a detailed analysis of the company's fiscal performance
during the period under review. The team sends the reports to owners,
investors, tax authorities and concerned stakeholders.
Financial Accounting process flow
Sales & Distribution
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What is Sales & Distribution
• It helps businesses manage everything related to selling their products
or services, from taking orders to delivering them to customers.
• It's like having a smart system that keeps track of what needs to be
sold, who wants to buy it, and how to get it to them quickly and
smoothly.
Essentially, SAP SD makes the sales process easier and more organized for
companies, so they can focus on making sales and keeping customers happy
Use of Sales & Distribution
• Whenever a User interested to buy the product, Initially he will inquire
about the product
• If the user finds it to be relevant after negotiation based on his
specification, price then he will get the product to be quoted for certain
price and quantity
• After all user will place order for that particular product and the same
product will be delivered to his desired location
• As per the delivery the customer will be eligible to bill
• This scenario will be given with an example in below slide to
understand the business process
Example Scenario on sales Process
• Whenever a customer is interested to Buy a car, He will reach out to
dealer and inquire about the Car
• After the Inquiry company will provide the quotation including price of
the car, validity period
• If customer is still more interested to buy, then he will place order to
the company and company will promise the Car to be delivered on so
and so date
• Now company will deliver the car to customer
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• Here as the company delivered the car to customer company will Bill to
customer.
• In this scenario, We could identify that it is Business scenario which will
be applicable to process Order, delivery and Billing.
Sales & Distribution
What is Sales & Distribution
• It helps businesses manage everything related to selling their products
or services, from taking orders to delivering them to customers.
• It's like having a smart system that keeps track of what needs to be
sold, who wants to buy it, and how to get it to them quickly and
smoothly.
Essentially, SAP SD makes the sales process easier and more organized for
companies, so they can focus on making sales and keeping customers
happy
Use of Sales & Distribution
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Whenever a User interested to buy the product, Initially he will
inquire about the product
If the user finds it to be relevant after negotiation based on his
specification, price then he will get the product to be quoted for
certain price and quantity
After all user will place order for that particular product and the
same product will be delivered to his desired location
As per the delivery the customer will be eligible to bill
This scenario will be given with an example in below slide to
understand the business process
Example Scenario on sales Process
• Whenever a customer is interested to Buy a car, He will reach out to
dealer and inquire about the Car
• After the Inquiry company will provide the quotation including price of
the car, validity period
• If customer is still more interested to buy, then he will place order to
the company and company will promise the Car to be delivered on so
and so date
• Now company will deliver the car to customer
• Here as the company delivered the car to customer company will Bill
to customer.
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• In this scenario, We could identify that it is Business scenario which
will be applicable to process Order, delivery and Billing.
Master Data:
• It is the data which is stored centrally and used in day-to-day
transactions.
• Customer master data: This includes details about customers such as
their names, contact Information etc.
• Material master data: This includes information about the products or
services the company offers, such as descriptions, prices, and stock
levels
YouTube Link: https://www.youtube.com/watch?v=l1n98F5NGaY
Business Process:
Follow below Link to check the you tube channel for different scenario.
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https://www.youtube.com/@avrc999/videos
Order to cash process:
Inquiry: Whenever customer inquiries about the product, we
create Inquiry document
Quotation: After creating inquiry document we create quotation
document with reference to inquiry and send this quotation to
customer
Order: After creating quotation we send the quotation to
customer, if customer is satisfied with the quotation, then he will
place order with reference to quotation.
Delivery: The product which is to be delivered and qty details are
maintained in delivery document
Invoice: The product which is delivered to customer we will send
Invoice to the customer.
YouTube link: https://www.youtube.com/watch?v=5YiIB4kLSn4
Customer Return Process:
Customer will return the goods if the goods are damaged, expired, or
defective.
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Cash Sale Process:
Cash sale process is also called as counter sale process i.e. The Customer
will walk into outlets, pick the materials and go to the counter, pay the cash,
take the bill and leave the counter.
Rush Order Process:
It means immediate delivery order, when customer request the medicines to
be delivered on urgent basis then we will do delivery on immediately
Free of Charge Process:
Free of charge is also called as sample process. Whenever we are sending
sample to customers free of cost.
Here customer is buying 1000 t shirts, For which company will send them 1
sample t shirt for free.
Subsequent delivery free of charge process:
If we want to replace the goods to customer without charging, then we do
subsequent delivery free of charge.
Here customer will be given as replacement, When customer ordered a L
size T shirt and he would need now with M size t shirt there by customer can
ask for replacement.
Contract Process:
It is an agreement between company and customer for supplying the goods
for a particular quantity within a specific validity period.
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Here when customer is trying to buy Nike shoe in bulk, he will go for
agreement with company for supplying those products for some special
price.
Scheduling Agreement process:
In this process, When customer is asking every 1st day of month he would
request to send 10 shoes to him. Here we will have pre defined delivery
dates available to deliver the shoe to customer these kind of business process
is called scheduling agreement. Here company and customer agreed to
deliver the product on specific date every month.
Consignment Process:
The consignment process involves transferring the goods from seller to the
customer without actual sale taking place until the goods are
consumed by end customer.
Example, Let’s say I have TATA company which manufactures Car. Now
the company will place the manufactured car in dealer premises. The end
customers like you and me will go and buy the car then only the actual sale
happens for the Tata company.
Third Party Business process:
The third-party process involves a scenario where a company sells products
to a customer, but instead of stocking those products themselves, they
arrange for a third party to deliver the goods directly to the customer on their
behalf.
Example, Imagine you're running a lemonade stand, but you don't have
lemons or a juicer. Instead of buying lemons and making the juice yourself,
you ask your neighbor, who has a lemon tree and a juicer, to provide you
with lemonade whenever you get an order
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Individual Purchase Order:
We do IPO process if vendor is not ready to do our packing (vendor will
deliver the goods to company and company will deliver the goods to
customer after packing with the same qty which received from vendor).
Example, You order Nike shoe over Amazon then Nike company will give
the Nike to Amazon there by Amazon will pack in the Amazon box and then
they will send to customer.
Make to order:
When customer place order, then only the company will start the process of
manufacturing finished products because the specification of the product is
not standard. Every customer will place order with their own specification.
Example, Let’s say customer is ordering a car now customer will ask with
his own specification like, White Color with Grey top, Sunroof, Alloy wheel
so on. In this case we can go for this process.
Intercompany sales and billing:
Sale transaction between two plants which belongs to two different company
codes of same group company
Example, I have my manufacturing plant for this plant when I get request
from customer for buying the specific product in this case If the plan is not
having that product then company will see any alternate plant can supply the
same product in this case we can go for this scenario.
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Free goods:
Whenever customer is requesting for sample product then as a company they
will provide the product free of cost.
Text Determination:
Text is the piece of information we get from customer; Example let’s say the
customer says take care fragile Items while delivering the product. This
information will be captured as a text in master data like Customer master.
Output Determination:
When ever you place order in the amazon application you will receive an
email as a acknowledgment similarly in sap when customer place order
output will be triggered to the customer.
Cross selling:
Whenever you get the newspaper sometime you will also get
advertisement letter for their promotions the same way in SAP we also have
such process.
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