chapter 5 the fulfillment process

The Fulfillment Process

Chapter 5

1 Magal and Word | Integrated Business Processes with ERP Systems | 2011

General recap

1. Client: is the highest organizational level in SAP ERP 1. Better knows as the Enterprise level

2. Company Code: each company within the enterpeise is

represented by a company code (CC)

- A client can have multiple company codes, but a company

code must belong to only one client.

2 Magal and Word | Integrated Business Processes with ERP Systems | 2011

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. Explain how and why fulfillment is integrated with other

processes.

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Magal and Word | Integrated Business Processes with ERP Systems | 2011

A Basic Fulfillment Process

Magal and Word | Integrated Business Processes with ERP Systems | 2011 4

Mainly focusing on these steps of the fulfillment process

Organizational Data

Client

Company code

Sales organization

Distribution channel

Division

Plant (shipping plant)

Storage location

Shipping point

Credit control area


Sales Organization

Responsible for

Distributing goods and services

Negotiating sales conditions

Product liability and rights of recourse

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


GBI Sales Organizations


Distribution Channel

Responsible for getting materials to customers

Differentiate distribution strategies or approaches

Different pricing, responsibilities

Wholesale sales, retail sales, Internet sales

A sales organization must have at least one distribution

channel to reach customers

DC = Distribution Channel


GBI US Distribution Channels


Division

Used to consolidate materials with similar characteristics

Typically divisions are associated with a companys

product line

Div_1 = Accessories Vs. Div_2 = Bicycles

Different sales strategies, pricing agreements

Associated with product lines

A sales organization must have at least one division


GBI US Divisions


Distribution Chain

A unique combination of sales organization and division

Some master data are maintained at this level

Material master

Pricing conditions


Plant

Plant

Manufacturing facility

Warehouse

Others..

A plant can be assigned to deliver products or services for

multiple distribution chains.


Plants and Distribution Chains


Shipping Point

A physical location from which outbound deliveries are sent

Loading dock

Mail room

Rail depot

Group of employees (to handle expedited orders)

A plant must have at least one shipping point

A shipping point can be assigned to many plants


Shipping Point Example


Credit Control Area

Responsible for customer credit

Centralized

One credit control area for all company codes in the enterprise

All customers in all company codes are managed by one credit

control area

Decentralized

More than one credit control area in the enterprise

Each credit control area manages credit for one or more

company codes


Centralized Credit Control Area


Decentralized Credit Control Area


Master Data (in fulfillment)

Material master (what views?)

Customer master (what segments?)

Conditions

Output master data

Credit management master record


Material Master Data

Basic Data

Which are relevant to all processes, are defined at client level

Sales: Sales Organization

Includes data specific to a combination of sales organization and

distribution channels

Examples include: delivering plant, sales units (unit of

measure), minimum quantities (order, delivery)

Sales: General/Plant

Includes data specific to a plant

Examples include: handling requirements (refrigeration),

loading (hand cart, forklift)


Customer Master Data

General Data

Specific to a client

Valid across company code and sales area

Financial/ Accounting data

Specific to a company code

Sales Area data

Specific to a sales area


Segments Of Customer Master Data



General data

Account number

Address

Communication

Company code data

Reconciliation account

Payment terms



Sales Area data (Sales)

Sales related

Sales area, pricing, currency

Shipping

Delivering plant, priorities, methods, tolerances, partial delivery

Billing

Terms, tax-related,

Partner functions: multiple roles

Sold-to-party, ship-to-party, bill-to-party, payer

A customer can be served by multiple sales areas


Multiple Definitions of a Customer


GBI Customers


Pricing Conditions

Prices

Material price

Customer specific price

Freight

InCoTerms (International Commercial Terms)

Trade terms published by the International Chamber of Commerce (ICC)

that are commonly used in both international and domestic trade

contracts

Surcharges and discounts

For customer, material, or combination

Taxes


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Output Conditions

Sent to customers using a variety of media

Examples of output

Quotation, order confirmation, invoices

Media

Mail, fax, EDI

Master data includes

Output type, medium, time (immediate or later), partner

function


Credit Management Master Record

- Extension of the customer master record that includes data

relevant to managing credit for that customer

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 (how risky it is to extend credit to the customer)

Overview (key data from other areas)


Fulfillment Process Steps


Pre-sales Activity

CRM light establishing and maintaining customer

relationships

Activities include

Creating and tracking customer contacts

Mailing campaigns

Workshops

Responding to customer inquiries and request for quotation

Outline agreements

Contracts

Scheduling agreements


Elements of the Pre-sales activity


Data in a Quotation


Elements of a Sales Order


Sales Order Processing

Typical data in a sales order

Customer and material data

Delivery dates and quantities

Pricing conditions

Shipping information

Billing information

Source of data

Customer order

Master data

Contracts


Data in a Sales Order


Structure of a Sales Order


Sales Order Document

Header

Dates, terms, customer data, etc

Line items

Item number

Quantity

Schedule lines (illustration next slide)

Date

Order quantity

Delivery quantity


Backward Scheduling


Inventory Sourcing

- Related to material staging (prepare materials for shipment)

- Transfer of requirements (materials management / materials

planning)

From stock

Materials management

Internal procurement

In-house production process

External procurement

Procurement process


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Shipping

Create outbound deliveries (plan transportation)

Picking (optional)

Packing (optional)

Transfer requirement (if WM is enabled)

How best to transport the materials

Goods Issue (recording the financial impact of shipping

goods)


Elements of the Shipping Step


Data in a Delivery Document


Structure of a Delivery Document


Delivery Document Structure

Header

General data

Line Item

Item number

Material

Quantity

Weight


Relationship between Schedule Lines

and Delivery Items


Deliveries

One order >> multiple deliveries

Multiple orders >> one delivery

Constraints?

Same customer

Same shipping point

Same delivery date

Same ship-to-address


Relationship between Sales Order and

Deliveries


Relationship between Delivery

Documents and Transfer Requirements


Packing Options


Impact of Post Goods Issue

A material document is created

GL accounts - Stock accounts and cost of goods sold account

- are updated, and an accounting document is created

A controlling document is created

Fulfillment provides COGS data to profitability analysis in

controlling

The billing due list is updated

Sales documents are updated (status)


Outcomes of Shipping (Goods Issue)


FI Impact of the Shipping Step


Billing

Create invoices

Crete credit and debit memos

Many deliveries >> one billing document

Same payer, billing date and destination country

One delivery >> many billing documents


Elements of the Billing Step


Data in a Billing Document


Relationship between Deliveries and

Billing


Structure of a Billing Document


Billing Document Structure

Header

Payer, billing date, totals, etc.

Line items

Item number

Material

Quantity invoiced

Value


Impacts of a Billing Document

GL accounts are updated and an FI document is created

Customer account > AR reconciliation account

Sales revenue account

A controlling document is created

Fulfillment provides revenue data to the profitability analysis

process

Sales documents are updated (status)


Outcomes of the Billing Step


FI Impact of the Billing Step


Payment

Post incoming payment

GL accounts are updated and an FI document is created

Cash/Bank account

Customer account -> AR reconciliation account


Elements of the Payment Step


Data in a Payment Document


FI Impact of the Payment Step


Customer Payment with Discount


Processing Customer Payment


Credit Management Process

Used to determine if credit should be granted to a customer

(i.e., should process continue?)

Credit is checked when:

Sales order is created or changed

Delivery is created or changed

Post goods issue

Approval based on

Credit exposure = sum of open orders, deliveries, open

invoices, and current order value

Outcomes: warn & continue, error & terminate, block

delivery


Credit Management Process


Integration with Other Processes


Reporting

General SAP reporting options

Online lists

Work lists

Analytics

Fulfillment specific reporting options

Document flow


Document Flow


Work Lists


List of Sales Orders


Information Structures


Example of Standard Analysis
