Sales order processing ties all activities to customer demand, with a series of tightly integrated processes. Sales order management provides you with this integrated processing by building a series of logical processing steps on each other.
The sales process begins with presales activities and ends with customer payments for goods received and services rendered. In sales, each of these process steps creates electronic documents linked to each other and represents a document flow that you can use for evaluations.
The activities involved in a sales process are as follows:
- Presales activities:
You begin with presales activities. For example, in response to a Request For Quotation (RFQ), you create and send a quotation.
- Order processing:
You create a sales order when you receive a requirement from the customer. The system checks for the availability of goods and creates delivery proposals.
- Procurement alternatives:
The system triggers a procurement process if the contents of the order are no longer in stock or cannot be in stock (such as materials or services not kept in stock).
The system distinguishes between internal and external procurement. For internal procurement, the system can trigger a production process. For external procurement, the system can determine the correct vendor and procurement conditions based on any data stored in purchasing. The relevant documents are generated during the procurement process.
- Delivery:
The system generates a delivery document when the delivery is posted to the customer.
- Billing:
For billing, you create a billing document. The billing document transmits a request for payment to the customer.
- Payment:
When a customer's payment is posted, the general ledger in Financial Accounting (FI) is automatically updated.
The document flow of sales order management makes the management and evaluation of the sales order process easier.
Order Management – Pre-Sales Activities
Pre-sales activities may include the following:
- Mailing lists
- Phone call records kept in the SAP ERP System
- Inquiries
- Quotations
Importance of Pre-Costing
A sales cycle begins with a sales query, such as an inquiry or an opportunity. Sales queries help you enter and use important, sales-related information for subsequent sales order processing. You can also use pre-sales information to develop sales strategies or to help build and maintain a long-term relationship with the customer.
Pre-sales information is useful for the following tasks:
- Tracking lost sales
- Recording pre-sales data to help negotiate large contracts
- Selling to large organizations that requires documentation of the entire process
Note
Order Management – Order Processing
Customers place orders with a customer service representative.
A standard order contains the following information:
- Customer and material information
- Pricing conditions for each item
- Schedule lines and delivery information
- Billing information
Costing information is required for individual items due to the following reasons:
- A sales order is an electronic document that records customer orders for goods and services.
- A sales order contains all pertinent information for processing the sales order and the entire sales process.
- Sales and Distribution automatically proposes appropriate data from relevant master records to minimize errors and redundant partial processes. You can enter a sales order with many items on a single screen or create a complex order using an expanded order view.
Order Management – Procurement Alternatives
Procurement alternatives determine whether a product is available and the manner in which you can procure it.
A product can be procured from the following:
- Stock
- Replenishment activities (production order, purchase order)
- Make-to-order (MTO) production
- External supplier
- Another warehouse
The customer requirement fulfillment for tangible and intangible goods can occur in the following ways:
- Tangible goods can be in stock and can be simply withdrawn. Alternatively, you can produce them in-house or externally.
- Intangible goods are, by nature, never in stock but can be provided internally or externally procured.
Depending on the situation, the procurement process for goods and services produced in-house can be mapped by a cost object as follows:
- Without prepared quantity structures
- With prepared quantity structures, such as Bill of Materials (BOM’s) and routings
- With variant manufacturing
For external procurement, the system can determine the correct vendor and procurement conditions based on data stored in logistics.
The system generates the corresponding documents for all processing.
Order Management – Delivery
Delivery supports the following tasks:
- Creating delivery documents
- Creating transfer orders (picking)
- Packing (if required)
- Posting goods issue
Delivery creates a delivery document. The system transfers certain data from the sales order, such as materials and quantities, to this document. The delivery document is the electronic means to help you manage all the activities of delivery processing, including rational product selection, packing, planning and monitoring shipments, preparing shipping papers, and posting goods issues.
In enhanced material processes, creating a transfer order includes copying information from the delivery document to the transfer order. The transfer order is essential for controlling the movement of goods within your warehouse. It is based on a simple principle that states the source location and the destination location within your warehouse. There is a source location and a destination location for every transfer order.
When you post a goods issue, you see the following updates to the general ledger:
- The expense account is debited
- The stock account is credited
- Both quantity-based and value-based stocks are decreased
- Costs are increased
Order Management – Billing
Billing supports the following tasks:
- Creating invoices for deliveries and services
- Creating credit and debit memos based on orders
- Canceling business transactions
Billing creates a billing document using data from the sales order and the delivery document. The billing data (Revenue) are transferred to FI and — if the sales order item is a cost object — to the sales order item.
The billing document serves the following important functions:
- The system creates the FI invoice document based on the billing document. The billing document serves as a source for FI and helps you with the monitoring and management of customer payments.
- When you create a billing document, you see the automatic update to the general ledger. The system debits the customer's accounts receivable account, and credits the revenue account.
Order Management – Payment
Payment is the final step of the sales order management cycle.
A customer payment includes the following:
- Posting payments against invoices
- Reconciling differences, if necessary
When you post a customer's payment, the system automatically updates the general ledger.
The cash account is debited and the customer's accounts receivable account is credited.