SAP SD Process Flow

SAP SD Flow, short for Sales and Distribution, forms a vital module within the SAP ERP ecosystem. Focused on seamless sales operations, it empowers organizations to oversee the entire sales lifecycle – from crafting orders to final delivery and invoicing. With SAP SD Flow, businesses can effortlessly configure pricing and discounts, tailoring them to customer profiles, products, and geographic regions. Additionally, SAP SD Flow offers tools to monitor inventory and oversee stock movements, enhancing overall operational efficiency.

SAP SD Flow is a strategic compass for businesses aiming to optimize their sales processes. Integrating order management, delivery tracking, and invoicing into a unified platform streamlines operations and minimizes complexities. This module empowers organizations to tailor pricing strategies to specific market segments, facilitating dynamic adjustments and promoting competitiveness.

Moreover, SAP SD Flow goes beyond sales to encompass the entire distribution landscape. It enables real-time monitoring of inventory levels, ensuring timely replenishment and preventing stockouts. The module's comprehensive reporting and analytics capabilities offer insights into sales performance, customer preferences, and market trends, aiding informed decision-making. With its user-friendly interface and seamless integration, SAP SD Flow is a cornerstone in enhancing sales and distribution operations, driving growth and customer satisfaction.

SAP SD Flow  - Table of Contents

• What is SAP SD?
• Introduction to SAP Sales and Distribution
• What is the Process of SD?
• SAP SD Process Flow
• SAP SD Flow with Examples
• FAQs

What is SAP SD?

SAP SD was designed to handle all a company's sales and distribution processes daily. A business can plan and carry out the steps required in receiving sales orders, executing availability checks, and so on; supplying the supply chain with the requirements, including those derived from sales predictions; and then converting them to expertise production planning, scheduling, production, production scheduling, and purchasing. 

Apart from being a sales order management system, SAP SD includes features for managing shipping and transportation, including packing, labelling, and shipping documents.
SAP SD provides various tools for managing customer information, such as customer master data, sales history, and credit management. SAP SD allows organizations to create invoices and billing documents based on sales orders and other relevant data. 

SAP SD also includes various reporting and analytics tools that allow organizations to gain insights into their sales and distribution processes and make data-driven decisions. The SAP SD module is the most vital ERP module developed by SAP. It helps better manage sales and customer distribution data and processes in organizations. The essential components of the SAP Sales and Distribution module are master Data, sales, shipping of material, billing-related, sales support, transportation of products, and foreign trade

Some essential features of SAP SD module include -

• Price and Taxation: It helps you to evaluate the cost of goods and services under various conditions like rebate or discount, which is granted to a customer.
• Availability Check: Check a product's availability in an organization's warehouse.
• Billing & Invoice: Helps you to generate bills or invoices.
• Material Determination: This helps you to determine the details of materials based on a specific condition.
• Credit Management: It is a method of managing customers' credit limits. It can be figured in two different ways simple credit check and automatic credit check.
• Account Determination: This helps you determine customer details based on a given condition type.

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Introduction to SAP Sales and Distribution

 SAP Sales and Distribution or SD is an essential module of SAP ERP consisting of business processes required for selling, shipping, and billing a product. The module is tightly integrated with SAP MM & SAP PP. Key sub-modules of SAP SD are Customer and Vendor Master Data, Sales, Delivery, Billing, Pricing, and Credit Management.

What is the Process of Sales and Distribution (SD)?

1. Activity of Presales

In real-life scenarios, before the sale takes place, the business needs to collect primary data and create master records in the system for either existing or potential customers or create data for people, sales prospects, and existing customers. 

Once this has been completed, the actual contact or sales deal with the sales prospects is made and can be recorded as an SAP ERP SD document in the form of an inquiry or quotation. We can also specify important sales-related data that can be accessed for reporting purposes, evaluate sales activities, manage marketing funds, and convert sales orders. All those activities fall under the Presales activity in SAP SD.

2. Processing of Sales Order

Order processing starts with recording the actual sales order or sales request; Sales orders are recorded either by back-office staff or the sales team or directly. It could be by the customer via a web application or electronic data interchange (EDI). Or XML interface. 

The sales order contains the customer, partner (sold-to, ship-to, bill-to, payment terms), material, quantity, pricing, delivery date, and shipping and transportation information required for delivery. Material/ Product availability check is performed when the order creation triggers the potential procurement requests as needed. The requirements created by the sales order can be filled from available in-house stock inventories procured by the replenishment team.

3. Processing of Deliveries

On the shipping due date, the delivery documents are created, and the route is determined & the process of picking. Packing. Staging. And loading started in Warehouse Management. The transfer order includes data copied from the delivery document. Standard SAP functionality provides grouped deliveries, wave picking, and two-step. Transfer orders can be processed as printed pick tickets or in electronic form using radio frequency (RF) devices on the warehouse floor with confirmation of the transfer order completing the picking activities in the warehouse. 

If transportation management functionality is activated, we can start collaborating with freight service providers, begin the tendering process, and finish 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 initiated picking. Posting 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 SAP ERP Financials (SAP ERP FI).

4. Invoicing and Revenue Identification, Reporting

The last step before collecting a customer's payment is creating a billing document or invoice sent to the customer's bill-to-party for the payment request. As with the delivery document, data is copied from either the sales or delivery documents and other billing documents, creating credit or debit memos. When we create the billing document, account determination is performed, and appropriate SAP General Ledger (G/L) account postings have been executed that debit the customer's receivables and credit the revenue account.

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 account payable entry, and the customer's incoming payment was also posted against the invoice or billing document.

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Steps of SAP SD Process Flow

Step 1: Sales Inquiry

The first step in SAP SD flow inquiry is a sales document that keeps track of the information concerning the customer's queries. Customers inquire about the availability of a specific product, how much it costs if it is available, and whether the product will be available on a specific date. It is nothing more than a request from a customer.

Step 2: Quotation

The second step in SAP SD flow quotation is a sales document prepared in response to a customer request after creating the inquiry document. We can create a quote based on the inquiry. A source is a document in which a vendor offers products or services to a buyer at a specific price and under specified terms.

The price the company has determined to charge for the service or items that will be provided should be included in the quotation. The information in a quotation document pertains to the delivery of a specified quantity of a product at a specific price on a particular date. It has a validity term, during which the customer could place an order using the quotation. This is a legal document in which a corporation agrees to lLaunch the SAP SD screen.

Step 3: Sales Order

The third step in SAP SD flow Sales Order is a contract between a Customer and a Sales organization to provide specific goods and services over a set period. The sales order receives all required information from the Customer master record and the Material master record. A 'preceding document,' such as an inquiry/quotation, may be used to construct the sales order. In this scenario, the sales order receives all the beginning data from the preceding document. T-code -VA01.

Step 4: Delivery/Shipping

The fourth step in SAP SD flow. You use the SAP System to produce and process delivery orders based on information from the customer's pick-up sheets.

Process Flow

• There is an outlined agreement between you and the customer. In this case, a separate scheduling agreement for delivery order processing.
• Then, the customer prepares data for delivery and sends it to you on a pick-up sheet based on this scheduling arrangement (and the forwarding agent).
• Electronic Data Interchange (EDI) subsystem receives an inbound pick-up sheet is which is converted into an intermediate document (IDoc), subsequently saved in your SAP system.
• An Electronic Data Interchange (EDI) subsystem receives the inbound pick-up sheet, which converts it to an intermediate document (IDoc) that is subsequently saved in your SAP system. The system uses this information to determine the corresponding scheduling agreement and generates schedule lines in the delivery order that meet the customer's needs. The delivery order is handled similarly to a standard order.
• To prepare the things for pick-up, you create a regular delivery. For each unloading point, delivery is made.
  The supplies are picked up by the customer's forwarding agent on time.
• The invoice for the delivery has been generated. The consumer refers to the billing document's pick-up sheet number to pay.

Step 5: Billing/Invoice

Billing is the final stage of the SAP Sales and Distribution module's business transaction execution. Billing information is available at each step of the order processing process, including when the order is completed and delivered.

Return goods credit and debit memos, create invoices for deliveries and services., Cancellation of Billing transactions, Functions of Pricing, Discount and Rebates, transferring billing data to Financial Accounting FI are some components make up Billing:

Key Functions in Billing

• Billing Types
• Match codes
• Number Range
• Blocking Reasons
• Display billing list
• Display billing duels.

Document Types for Billing

A billing document is created for a credit memo, debit memo, invoice, or cancel transaction. A header and a list of items appear on each billing sheet. The billing type is usually responsible for the billing documents.In the header of a billing document, general information like as date of Billing, payer identification number, billing value, currency, partner Identification numbers like ship-to-party, sold-to-party, and pricing Elements.

Material Number, quantity of goods, volume and weight, value of Individual items, pricing element for individual items are some information you should keep in the item list.

You produce, change, and delete billing documents such as invoices, credit memos, debit memos, and so on while performing billing processing. Billing processing also entails the preparation of billing documents, to a sales order, to a delivery or to external transactions you can refer to an entire document, specific items, or fractions of objects.

A billing document could also be created explicitly. A billing document is created in situations like - when a system runs a background operation to process a billing duellist
or by using a worklist to process manually.

SAP SD Flow with Examples

The SAP SD (Sales and Distribution) process typically begins with a customer inquiry or request for quotation and ends with the delivery of goods and the creation of an invoice. Let's take a look at the different steps involved in the process and provide an example for each step:

• Inquiry - The SAP SD process starts with a customer inquiry or requests for a quotation. In this step, the customer expresses their interest in a product or service and requests more information. For example, a customer may inquire about purchasing 100 units of a particular product.
• Quotation - Once the inquiry is received, the sales team creates a quote based on the customer's request. The source includes pricing, delivery dates, and payment terms. For example, the sales team may provide a quotation for 100 units of the product for $10 per unit.
• Sales order - If the customer accepts the quotation, a sales order is created in the SAP system. The sales order contains all the transaction details, including the customer's information, product details, pricing, and delivery information. For example, a sales order is created for the 100 units of the product at $10 per unit.
• Delivery - Once the sales order is created, the warehouse team picks and packs the products for delivery. The SAP system generates a delivery document that contains details of the products being shipped and the delivery location. For example, the warehouse team packs and sends 100 units of the product to the customer's site.
• Billing - After the delivery, an invoice is created based on the sales order details. The invoice includes information such as the number of products shipped, the price per unit, and any applicable taxes or discounts. For example, the invoice is created for 100 units of the product at $10 per unit, costing $1,000.
• Payment - Finally, the customer pays the invoice based on the agreed-upon payment terms. The price is recorded in the SAP system and closes out the transaction. For example, the customer pays the $1,000 invoice according to the agreed-upon payment terms.

This is a simplified SAP SD flow example. Still, it gives an idea of the steps involved and how they work together to manage sales and distribution processes in an organization.

Learn Top SAP SD Interview Questions and Answers that help you grab high paying jobs

SAP SD Flow FAQs

1. What is the SD flow in SAP?

SAP Sales and Distribution is a crucial component of the SAP ERP system that manages the shipping, billing, selling, and transportation of products and services inside a business. 

2. What are the steps in SAP SD?

Sales inquiries, quotations, sales orders, delivery/shipping, and billing/invoices are the steps in SAP SD.

3. What is the life cycle of SD in SAP?

Inquiry->Quotation->Sales Order->Delivery->Billing

4. How do I get document flow in SAP SD?

To view SAP sales document flow, go to either VA22 or VA23 transactions. Sales Document Flow – Sales Quotation > Viewing SAP Sales Document Flow To view the document flow, press either the button or Shift+F5 on the keyboard.

5. What is the first step in SAP SD?

Sales Inquiry is the first step in SAP sales and distribution.

6. What is OTC in SAP SD?

OTC, or order-to-Cash, is an integration point between Finance (FI) and Sales (SD). It is also known as OTC or O2C in short form. It is a business process that involves sales orders from customers to delivery and invoice. It comprises SO, Delivery, Post Goods Issue (PGI), and customer billing.

7. What is the role of SD in SAP?

Some of the primary roles of SD in SAP include the implementation of business processes used in the selling and billing of goods and services and the integration of data flow to the remaining modules of SAP.

8. Why is document flow important?

Document flow is crucial because it allows you to set work and compensation schedules based on milestones, such as phases of completion and specific task fulfilment.

9. What are forms in SAP SD?

SAP Smart Forms is used to create and maintain forms for mass printing in SAP Systems. As an output medium, SAP Smart Forms support a printer, fax, e-mail, or the Internet (using the generated XML output). SAP introduced Smart Forms in 1998 to overcome the limitations of SAP Scripts

10. How do you create a flow in SAP?

Here is how you can create a flow in SAP - 

• Navigate to Admin Center > Manage Organization Pay and Job Structures > Create New > Workflow;
• Manage Organization Pay and Job Structures in British English;
• Enter a Workflow ID (only 32 characters allowed);
• Enter a Workflow Name (only 32 characters allowed);
• Enter the details of the Step Approvers in each step;
• Enter the approver type and fill in all related fields;
• Click Save.

Conclusion

SAP SD is a powerful and flexible module that can help organizations streamline their sales and distribution processes and improve efficiency and profitability. However, implementing and using SAP SD requires significant expertise and training, and organizations may need to invest in resources to ensure successful implementation and use of the module.