Sales Order Processing

Sales order processing is at the core of Sales & Distribution module. Sales allow execution of various business transactions which get recorded in the system as sales documents. There are four basic groups of sales documents:

• Customer Inquiries and quotations
• Sales orders
• Agreements like contracts and scheduling agreements.
• Complaints like returns and credit & debit memo requests.

Sales order processing in turn triggers basic functions like availability check, pricing, credit check etc. Other subsequent documents like delivery & billing can be generated from sales order based on business requirements.In SAP system the sales order is linked with previous and subsequent documents like a chain and can be viewed in document flow storing a history of events.

The cycle of sales order process goes as pre-sales, order creation, delivery, and billing

Customer Inquiry

Customer Inquiry is part of the pre-sales process, it represents in SAP system the request of the customer for a sales quotation or information. Customer inquiries created in the system can be used for subsequent sales processing, these are also used when the record of the complete sales cycle is necessary. An inquiry in the system contains one or more items consisting of a quantity of material or service as asked by a customer. Quantity specified by the customer can be split into different schedule lines and dates. Pricing conditions are determined as maintained in records. Inquiry document gets status as ‘Complete’once it is used as a reference for quotation.

Quotation

Quotation represents an offer which is legally binding to deliver the product or provide a service in some fixed conditions. In the specified time period of quotation, the company needs to agree to the conditions. Quotations can be referenced from Inquiries and also copied on to sales orders as a reference via Copy control. These are normally used when companies are dealing with Government or large organizations. In a system where quotations are created analysis can be done to check quotations to sales order conversion ratio for Sales analysis. Like inquiries the order quantities can be split into multiple schedule lines and pricing data is also available.

Sales Document Structure

Sales documents including inquiry and quotation explained earlier have the same basic structure. Any sales document is made up of a document header and any no of items. Items can, in turn, be divided into schedule lines. General data applicable to entire document is recorded at header level like Sold to party, Document currency. Item data applies to specific items like Material no, delivering plant etc. Schedule line data contains information needed for delivery. Sales document in the system has a user-friendly interface which facilitates easy navigation and switching between screens.

The sales order is a contractual agreement between a sales organization and a Sold-to party on delivering the product or providing service on agreed terms. The creation of sales document hence requires that all proper terms are available, to aid this system proposes much of the data from various sources i.e

• Data from Master records
• Data determined from system
• From preceding documents

Various features in sales order processing are provided in the system which is common across sales documents.

• Making Fast changes: This function allows changes for several or all items at same time. Data that can be changed with this function include Reason for rejection, Plant, Delivering block, Billing block, Delivery date, Delivery priority.
• Additional Data: Sales document contains Additional data A and B tabs which contain fields like Customer group 1-5 and Material group 1-5, these can be copied from Customer and material master respectively and can be used for analysis or inputs in pricing etc.
• Displaying Changes: This is an important feature in sales order which helps in displaying changes made to sales document, which can be very useful for audit purpose. It displays a list with following points
  • The situation before and after the change.
  • Change date and time
  • User name of person making changes.
• Derivation of Sales Area: Processing of any sales document is for a sales area and derivation of sales area is important. If Sales area is not specified at the initial screen this can be derived from Sales area of Sold-to party or Ship-to party customer master record. For customer belonging to multiple sales, areas system prompts for user input in a dialog box.
• Item Proposal: To aid the user and reduce time system can propose items in sales order from two sources, Existing documents like quotation or sales order and an Item proposal.

Special Sales Orders

Cash Sales: the Standard system has order type CS (or BV) for cash sales. On creation of Cash sales order by sales employee system proposes the current date for delivery and billing, on the saving of order system creates delivery of type BV immediately in background and Invoice output from cash sales order is printed. The output type for this in standard system is RD03. Delivery can be processed manually as it is already picked up. Billing index is created and invoice can be created by a background job. The order type can be customized in configuration to suit specific business process as required.

Rush Order: Rush order is a special sales order where Customer picks up the goods or company delivers the goods on the same day as the order is placed. In standard system sales document type RO is used on saving of which creates delivery of type LF immediately. Goods are picked and goods issue posted. Invoice is created later and papers are posted.

Tutorial on sales orders processing with an example

In this Exercise on Sales Order Processing (PDF), you will be processing a customer order for the fictitious Fitter Snacker company—a manufacturer of snack bars.

1. Creating an inquiry – An inquiry is a non-binding price quotation to a customer that tells them the price of a specific quantity of your product.
2. Create a Sales Order from an Inquiry – If the customer wants to place an order after receiving the inquiry, we can create a sales order from the inquiry so that we don’t have to reenter the basic data.
3. Create a Delivery for the Sales Order – In the SAP R/3 system, a delivery is a status that allows the warehouse to pick, pack and ship the order.
   • Stock/Requirements List – The stock requirements list shows the current inventory level, any outstanding sales orders as well as any planned production orders.
     Logistics ->Production ->MRP ->Evaluation ->Stock/Requirements List
4. Picking the order – With the delivery created, the order can be picked, packed and shipped. The SAP R/3 system has many capabilities to schedule these processes.
5. Post Goods Issue – In the SAP logistics terminology, we receive goods into inventory and issue goods from inventory to the production floor or to the customer. In the accounting world, we record business transactions by posting them to an account. Thus, when we post the goods issue, we record the change in stock level and financial position of the company as a result of sending the goods on their way.
6. Invoice the Customer – Perhaps as important as delivering the customer’s order on time and in good condition is properly billing the customer for their purchase. If we don’t invoice the customer, we aren’t likely to be paid. Thus, it is important to be able to determine which customers still need to be billed.
7. Receive payment from the Customer – Hopefully the invoice has prompted the customer to send in a payment for the snack bars they have received.