SAP S/4HANA uses a range of organizational units designed exclusively for mapping sales and distribution processes, such as the sales organization, the distribution channel, and the division. Other organizational units, such as the company code or plant, belong to further areas but are also used for order fulfillment processes.
A company code can represent a company within a corporate group, or a subsidiary, for example. The company code is relevant for sales and distribution processes since the revenues of the sales department must be assigned to it.
A sales organization defines who sells a product.
To use the sales and distribution functions in the system, at least one sales organization is needed. All sales and distribution documents, including orders, outbound deliveries, and billing documents, are assigned to a sales organization.
Sales Organizations are responsible for:
- Distributing goods and services
- Negotiating sales conditions
- Product liability and rights of recourse
A distribution channel describes how a product is sold.
The distribution channel characterizes the way in which goods and services are distributed. To use the sales and distribution functions, at least one distribution channel in the system must be defined. The Bike Company uses different distribution channels to separate domestic sales from export sales. They might also use a sales distribution channel (for selling products) and a service distribution channel (for selling maintenance and repair services).
A division defines what is sold.
Materials and services can be grouped using divisions. A division represents a certain product group. One reason to use divisions within the sales structure could be that some people in the sales department are very familiar with a certain product group (for example, bikes), while others have technical knowledge about a different product group (for example, spare parts). Using the corresponding divisions, this can be considered when setting up the sales structure. To use the sales and distribution functions in the system, at least one division must be defined in the system.
Let’s examine how organizational units crucial to Sales and Distribution in SAP S/4HANA collaborate with each other.
The Bike Companyhas two distinct sales organizations, in Frankfurt and Berlin. Each of the two sales organizations acts independently and is responsible, for example, for price management, product liability, and product replacement if there are customer complaints.
Frankfurt
 | Distribution Channel |
| The sales organization Frankfurt has two different distribution channels, retail trade and direct sales via internet. While retail trade sells the bikes indirectly to customers via retail stores, customers can also purchase the bikes directly from the manufacturer via internet bypassing stores. | |
 | Division |
| The distribution channel retail trade in Frankfurt is furthermore split into two divisions. Via the first division, bikes and spare parts are sold to retail stores who again sell them to customers. Since it is considered too much effort to also sell spare parts over the internet directly to customers, the distribution channel internet only has the division bikes. To that end, customers can only purchase bikes directly from the supplier. In contrast, spare parts must be purchased at stores where the customer can consult with employees to ensure that they receive the correct spare part. |
Berlin
| Distribution Channel |
| The Berlin sales organization only sells bikes and spart parts via the distribution channel wholesale trade. | |
| Division |
| The distribution channel has only one division selling spare parts. |
Material
Material can also play a central role in the sales and distribution processes. Bikes that are defined as finished materials are sold to customers. Therefore, the Sales department enriches the material master of the finished product to enable the sales and distribution process.
The sales department maintains the views Sales: Sales Organization and Sales: General/Plant Data. The former is valid for the combination of sales organization and distribution channel, and the latter is valid for the corresponding delivery plant.
For example, the sales department maintains on the Sales: Sales Organization view from which manufacturing plant a product is shipped to the customer and how much tax must be paid (for example, normal or reduced tax).
On the Sales: General/Plant data, the sales department enters how the material must be shipped and packaged (for example, on pallets or in boxes), and approximative shipping times that the system takes into account when calculating the latest possible date when a product must leave a company’s premises to be at the customer site at the desired delivery date.
And just like that, we’re back to where we started. Trent, who began this journey a few months back, is now happily riding his brand new, shiny bike. Off in the world of business, the Bike Company has managed to get through all its tasks and projects.
Through hard work and careful planning, it looks like things have worked out great for both sides. Trent is off having a blast on his new bike, while the Bike Company wraps up their plans successfully.
As we wind down this story, we hope that you've gotten a good look into how SAP’s business processes work. They help many businesses run smoothly and efficiently, making everything easier and more effective.