Chapter 5

The Fulfillment Process

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 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. Effectively use SAP® ERP to execute the key steps in the
fulfillment process.
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 Learning Objectives (Continued)
6. Explain how and why fulfillment is integrated with other
processes.
7. Utilize SAP ERP to extract meaningful information about
the fulfillment process.

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A Basic Fulfillment Process

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 Organizational Data
 Client
 Company code
 Sales organization
 Distribution channel
 Division
 Sales area
 Plant (shipping plant)
 Storage location
 Shipping point
 Credit control area
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 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

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GBI Sales Organizations

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 Distribution Channel
 Responsible for getting materials to customers
 Used to
 Differentiate distribution strategies or approaches
 Different pricing, responsibilities
 Wholesale sales, retail sales, Internet sales
 Statistics and reporting at the DC level
 A sales organization must have at least one distribution
channel

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GBI US Distribution Channels

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 Division
 Used to consolidate materials with similar characteristics
 Different sales strategies, pricing agreements
 Statistics and reporting at the DC level
 Associated with product lines
 A sales organization must have at least one division
 Can be assigned to multiple sales organizations

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GBI US Divisions

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GBI DE Divisions

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 Sales Area
 Made up of three other organizational elements
 Sales organization
 Distribution channel
 Division

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GBI Sales Areas

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 Distribution Chain
 A unique combination of sales organization and division
 Some master data are maintained at this level
 Material master
 Pricing conditions

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 Plant
 Plant
 Manufacturing facility
 Warehouse
 Office
 A company code must have at least be at least one plant
defined in a company code.
 A plant must be uniquely assigned to a company code.
 A plant can be assigned to deliver products or services for
multiple distribution chains.

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Plants and Distribution Chains

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 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

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Shared Shipping Points

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Multiple Shipping Points

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Shipping Point Example

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Shipping Point Example

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Shipping Point Example

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 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

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Centralized Credit Control Area

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Decentralized Credit Control Area

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 Master Data
 Material master (what views?)
 Customer master (what segments?)
 Customer-material info record
 Conditions
 Output master data
 Credit management master record

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 Material Master Data
 Basic Data
 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)

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 Demo 5.1 Review Material Master
 Review some of the data included in a material master

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 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

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Segments Of Customer Master Data

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 Customer Master Data
 General data
 Account number
 Address
 Communication
 Company code data (FI)
 Reconciliation account
 Payment terms

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 Customer Master Data
 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

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Multiple Definitions of a Customer

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GBI Customers

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 Demo 5.2 Review Customer Master
 Review some of the data included in a customer master

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Customer - Material Information Record
 Intersection data for one customer and one material
 Data specific to the combination of customer and material
 Supersedes data in customer master and material master
 Examples of data
 Cross references customer material numbers, descriptions
 Specific terms (e.g., shipping, tolerances, partial deliveries,
delivering plant)
 Alternate delivery plant, shipping terms/methods, tolerances,
partial deliveries (e.g. not accepted for this material)

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RMB and GBI Material Numbers

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Demo 5.3 Review Customer-Material
Information Record
 Review some of the data included in a customer-material
information record

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 Pricing Conditions
 Prices
 Material price
 Customer specific price
 Freight
 InCoTerms
 Surcharges and discounts
 For customer, material, or combination
 Taxes

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Demo 5.4 Review Pricing Conditions
 Review some of the data included in a pricing conditions

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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

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 Credit Management Master Record
 Extension of the customer master record
 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
 Overview (key data from other areas)

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Fulfillment Process Steps

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 GBI Scenario
 Customer: RMB, Denver, CO.
 Silver Deluxe Touring bikes: 40
 Delivery 30 by May 10, 10 by June 10
 T-shirts: 100 (qualifies for 10% disc)
 Delivery all by May 10
 Deliver to racing location in Colorado Springs

Selling price Cost price

Silver deluxe touring bike $2,800 $1,400
T-shirt $30 $15

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 Pre-sales Activity
 CRM light – establishing and maintaining customer
relationships
 Activities include
 Creating and tracking customer contacts
 Mailing campaigns
 Responding to customer inquiries and request for quotation
 Quotations
 Outline agreements
 Contracts
 Scheduling agreements

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Elements of the Pre-sales activity

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Data in a Quotation

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Reference Documents for a Quotation

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 Demo 5.5 Create a Quotation
 Review how to create a quotation

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Elements of a Sales Order

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 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

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Data in a Sales Order

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Relationship between Quotations and
Sales Orders

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Structure of a Sales Order

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 Sales Order Document
 Header
 Dates, terms, customer data, etc
 Line items
 Item number
 Quantity
 Schedule lines
 Date
 Order quantity
 Delivery quantity

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Backward Scheduling

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 Demo 5.6 Create a Sales Order
 Review how to create a sales order

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 Inventory Sourcing
 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
 Picking (optional)
 Packing (optional)
 Transfer requirement (if WM is enabled)
 Post goods issue

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Elements of the Shipping Step

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Data in a Delivery Document

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Structure of a Delivery Document

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 Delivery Document Structure
 Header
 General data
 Line Item
 Item number
 Material
 Quantity
 Weight

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Relationship between Schedule Lines
and Delivery Items

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 Deliveries
 One order >> multiple deliveries
 Multiple orders >> one delivery
 Constraints?
 Same customer
 Same shipping point
 Same delivery date
 Same ship-to-address

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Relationship between Sales Order and
Deliveries

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Relationship between Delivery
Documents and Transfer Requirements

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Delivery Quantity vs. Pick Quantity

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Packing Options

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 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)

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Outcomes of Shipping (Goods Issue)

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FI Impact of the Shipping Step

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 Demo 5.7 Process Shipment for a
Sales Order
 Review how to create the shipment for a sales order

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 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

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Elements of the Billing Step

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Data in a Billing Document

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Relationship between Deliveries and
Billing

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Structure of a Billing Document

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 Billing Document Structure
 Header
 Payer, billing date, totals, etc.
 Line items
 Item number
 Material
 Quantity invoiced
 Value

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 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)

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Outcomes of the Billing Step

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FI Impact of the Billing Step

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 Demo 5.8 Process Billing for a Sales
Order
 Review how to bill for a sales order

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 Payment
 Post incoming payment
 GL accounts are updated and an FI document is created
 Cash/Bank account
 Customer account -> AR reconciliation account

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Elements of the Payment Step

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Data in a Payment Document

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FI Impact of the Payment Step

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Customer Payment with Discount

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Processing Customer Payment

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Demo 5.9 Process Payment for a Sales
Order
 Review to process a payment for a sales order

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 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
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Credit Management Process

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Integration with Other Processes

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 Reporting
 General SAP reporting options
 Online lists
 Work lists
 Analytics
 Fulfillment specific reporting options
 Document flow

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Document Flow

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 Demo 5.10 Display Document Flow
 Review how to display document flow

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Work Lists

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 Demo 5.11 Display Work List
 Review how to display a work list

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List of Sales Orders

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 Demo 5.12 Display an Online List
 Review how to display an online list

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Information Structures

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Example of Standard Analysis

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