SALES AND DISTRIBUTION

BLUEPRINT FOR VIRGO VALVES

SUBMITTED BY
RELIANCE GLOBAL SERVICES PVT LTD

SD
BUSINESS BLUEPRINT SAMPLE SALES &
DISTRIBUTION

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INDEX

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Process Process Sub Process Sub Process Description
Number Description Number
SD 1.0 Enterprise SD 1.1
Sales organization
Structure
SD 1.2 Distribution channel

SD 1.3 Division

SD 1.4 Sales Office

SD 1.5 Sales Group

SD 1.6 Sales Area

SD 1.7 Shipping Point

SD 2.0 Master Data

SD 2.1 Customer Master

SD 2.2 Material Master

SD 2.3 Customer Material information

SD 2.4 Conditions Techniques

SD 2.5 Output

SD 2.6 Routes / Stages

Sales Order
SD 3.0 Processing

SD 3.1 Sales Order Cycle

SD 3.2 Sales Order Types

SD 3.3 Number ranges for Sales document

SD 3.4 Credit Management

SD 3.5 Free of Charges

SD 3.6 Debit Memo Request and Credit Memo Request

Processing

SD 4.0 Shipping

SD 4.1 Number range for delivery documents

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SD 5.0 Billing

SD 5.1 Number range for billing documents

Complaints SD 6.1
SD 6.0 Processing Complaints

SD 6.2 Returns Process

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Business Process Overview

SD 1.1 Sales organization

Virgo Sales & Marketing has focused on manufacture and sales of automated and manually operated
quarter turn valves. Over the years Virgo has acquired several prestigious international quality
certifications and approvals from major Oil and Engineering companies, becoming one of the leaders
in the Ball Valve industry.

Functionally, VIRGO is responsible for:

A. Marketing, through Product Managers who take decision on pricing, business planning and
profitability of sales of steel materials in various sales regions.

B. Sales, viz., Outside sales through Sales Managers and Technical Service Managers based at various
locations and responsible to book orders and manage customer relationships. Inside Sales through
Sales-coordinators, who interface with Customers and respective mills

C. Planning, through Planning Managers responsible to monitor the load on aggregates in respective
Mills, and

D. Finance responsible for financial and raw material operations.

E. Planning logistics.

Geographically, VIRGO Valves is responsible for sale of different products of valves to International
customers like Far East 1 and 2, Europe, Middle East and USA.

Director(Sales)

Product Managers Country Managers Planning Manager General Manager (Finance)

MARKETING Sales & TS Managers Load Planning FINANCIAL & RM Operations

Sales Coordinators

SALES

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Virgo Organizational Chart

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SAP System Functions (Process Flow)

SD 1.1 SALES ORGANIZATION

To facilitate sales transactions in SAP, it is mandatory to define following sales organizational units for present
business scenario. Each selling transaction is processed within a sales organization. Subsequently new sales
organization can be added by customizing transactions in SAP Configuration.

Sales Organization In SAP Description

VSO1 Virgo Pune

VSO2 Virgo Bangalore

Each sales organization is assigned to only one company code.

SD 1.2 DISTRIBUTION CHANNELS

01 Direct Sales= Sale transaction that leads to Sales to Direct Sales Customers.

02 Distributors = Sale transaction that leads to Sales to Distributors.

Distribution Channel In SAP Description

D1 Direct sales (PUNE)

D2 Distributors (PUNE)

D3 Direct sales (BANGALORE)

D4 Distributors (BANGALORE)

Define Common Distribution Channels

In this menu option, you define common distribution channels.

You use this menu item to define distribution channels which have common master data. The allocation is
valid within a sales organization.

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 Common Distribution Channel In SAP Description

C1 Common Distribution Channel Pune

C2 Common Distribution Channel

Bangalore

SD 1.3 DIVISIONS

Main product categories are represented as Division. Following Divisions are required to define in
system.

Division in SAP Description

11 SS VALVES (Pune)
22 SC VALVES (Pune)
33 INCONALS (Pune)
44 SS VALVES (Bangalore)
55 SC VALVES (Bangalore)
66 INCONALS (Bangalore)

Define Common Divisions

In this step, you define the divisions that common master data should apply to. The definition is valid within
each sales organization.

Common Division In SAP Description

C3 Common Division (Pune)

C4 Common Division (Bangalore)

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SD 1.4 SALES OFFICE

From Virgo Sales & marketing perspective, Sales Regions are configured as Sales Offices in SAP.

SAP sales office entity represents REGION of Virgo Valves marketing: -

Sales Office in SAP Description

PVQ1 PUNE

PVQ2 BANGALORE

New sales offices can be defined in system if required.

SD 1.5 SALES AREA

Sales area is a combination of Sales organization - Distribution channel - Division. Following sales area
combinations are defined.

Sales organization Distribution channel Division

D1 11
VS01
VS01 D1 22
VS01 D1 33
VS01 D2 11
VS01 D2 22
VS01 D2 33
VS02 D3 44
VS02 D3 55
VS02 D3 66
VS02 D4 44
VS02 D4 55
VS02 D4 66

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SD 1.6 SHIPPING POINT

Shipping point is an organizational unit where deliveries are planned and executed. A delivery is always
carried out by one shipping point only. It is proposed to use one shipping point for all company codes.

Company
Shipping Point Delivering Plant
Code

1000 SHP1 MP01

1000 SHP2 VI01

2000 SHP3 TP01

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 Table SALES AREA

As explained in above table SALES AREA is only for Virgo valves manufacturing Unit. Similar sales area will be
created for all sales organizations.

Following diagram shows sales area combination in Virgo Sales Organization + Distribution Channel + Divisions.
Similar Sales area combinations can be formed for other sales organizations (other company codes).

Sales Area

Company Code Sales Org

V100 (PUNE) VS01

Distribution
Division
Channel
Plant MP01 (MM) Plant VI01 (MM)

SALES OFFICE DIRECT SALES SS VALVES

CS VALVES
DISTRIBUTORS

INCONALS

SHP1 SHP2

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 SD 2.0: Master Data

SD 2.1 CUSTOMER MASTER DATA

The customer master record is the basis for all sales transactions as well as deliveries and payments. It
represents the data relevant to the entity being dealt with.

Here, we maintain Customer related information for all the customers of VIRGO VALVES in the following fields.

• General Data - Address & Communication

• Company Specific I.e. Company Code Related Data – Reconciliation Account, Payment Terms &
Cash Management Group.
• Sales Area Related Data- Pricing, Delivery, Billing & Partner Function
The sales data is specific to one sales area and is therefore dependent on the sales organization. The four
standard customer account groups will be used by VIRGO in conjunction with 1 more as given below.

Account Groups Name

0001 Sold-to party

0002 Ship-to party

0003 Payer
0004 Bill-to party

SAP allows only one address per customer record. The standard address in group will be maintained as Sold-
to-Party customer in SAP and the other addresses associated with the account will be defined as additional
partners in the Ship to, Bill to or Payer account groups and linked to the customer record with the standard
address through partner functions. SAP allows a 10 –digit number for the customer master record, which
means potentially a billion customer records can be created with the same starting digit.

VIRGO will have external number range for all account groups. The total number of customer records (including
different ship to, bill to and payers’) will be based on VIRGO’s estimate of their customer base and accordingly
a number range will be assigned for the customer master records.

SD 2.2 MATERIAL MASTER DATA

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 • The material master data is used by the system to represent the data pertinent to the products
your company is selling or producing.
• It is configured much the same way as the customer master record with different views.

Maintain Material related information for all the materials of VIRGO VALVES ltd. in the following fields

1. Industry Sector
2. Material Types
3. Plants
4. Sales Organization
5. Distribution Channel

The process will be managed in SAP as follows:

The material master will be maintained centrally for SD and MM purposes using transaction MM01.

Material Numbers will be created externally for all products and services.

A product hierarchy will be assigned to each material. Product hierarchy will be created based on the products
or service group.

Scenario: Material Master Creation Transaction: MM01 Organizational Level Plant Sales Organization
Distribution Level

Basic data 1 (To be maintained by MM)

Base Unit of Measure, Material Group, Material Group Packaging Material, Sales Organization, Delivering Plant,
Cash Discount Option, Product Hierarchy, Material Pricing Group, Account Assignment Group, Transportation
Group &Loading Group, Foreign Trade Export, Export / Import Group, Country of Origin, Region of Origin,
Exemption Certificate, Sales Text, Long Text& Short Text.

SD 2.3 CUSTOMER-MATERIAL INFORMATION

Customer Material Info Records also known as CMIRs are used to store customer specific information about a
material such as Customer’s number and name of a material, customer’s preference on material specific
shipping like delivering plant, under delivery and over delivery allowed, complete/partial delivery preference
etc.

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SD 2.4 Pricing Procedure

Condition technique is a method by which system determines the values from the information stored in
condition record during sales order processing.

• Pricing Procedure

The following factors influence condition technique:

• Condition Table

In a condition table, you define the combination of fields for which you can create condition records.

• Condition Table Description

CONDITION TABLE DESCRIPTION

701 Customer/Material
702 Sales Org./Customer
703 Sales area/ Material/Customer
704 Material
705 Freight
706 Domestic Taxes

MAINTAIN CONDITION TYPE (V/06)

Price elements are represented in the SAP system by condition types. Price elements can be, for example,
prices, surcharges, discounts, taxes or, freight, and are stored in the system in condition records.

COND TYPE DESC ACC SEQ DESC

VR00 Price VR00 Price
V004 Material Discount V004 Material Discount
V007 Customer Discount V007 Customer Discount
VF00 Freight VF00 Freight
MWST Output Tax MWST Output Tax

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MAINTAIN ACCESS SEQUENCE (V/07)

The access sequence is a search strategy, which the SAP System uses to search for condition records valid for
a condition type.

COND TYPE DESC

VR00 Price
V004 Material Discount
V007 Customer Discount

VF00 Freight
MWST Output Tax

Maintain Pricing Procedure

Maintain Pricing Procedure

VIRGO VALVES
Procedure Description
VRG010 Direct Sales
VRG011 Distributers Sales

MAINTAIN PRICING PROCEDURE DETERMINATION

Pricing Procedure Determination for Company Code

1000
eel castings
Limited
Sales Dist
Org Channel Division Doc. Pricing Proc Cust. Pricing Proc Pricing Proc Condition Type
VS01 D1 11 A 1 VRG010 VR00
VS01 D1 22 A 1 VRG010 VR00
VS01 D1 33 A 1 VRG010 VR00
VS01 D2 11 A 1 VRG011 VR00
VS01 D2 22 A 1 VRG011 VR00
VS01 D2 33 A 1 VRG011 VR00
VS02 D3 44 A 1 VRG010 VR00
VS02 D3 55 A 1 VRG010 VR00
VS02 D3 66 A 1 VRG010 VR00
VS02 D4 44 A 1 VRG011 VR00
VS02 D4 55 A 1 VRG011 VR00
VS02 D4 66 A 1 VRG011 VR00

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CONDITION TECHNIQUE:

CONDITION TABLE

ACCESS SEQUENCE CONDITION RECORD

CONDITION TYPE

PRICING PROCEDURE

• Customer Pricing Procedure

It is one of the elements to determine the pricing procedure. We specify the customer determination
procedure in the customer master record for each sales area.

Cust. Pricing
Procedure DESC
1 Standard

• Document Pricing Procedure

It is also one of the elements to determine the pricing procedure. We specify the document pricing procedure
for each sales document type.

Sales area: We define sales area in enterprise structure.

We maintain Condition Records for pricing elements in VK11.

Cust. Pricing
Procedure DESC
A Standard

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SD 2.5 OUTPUT DETERMINATION

Outputs are an important media for communicating with Business Partners or with your own employees in
sales processing. Sales and distribution output can be sent both electronically and by mail. Output control
which is dependent on various criteria allows output to be processed and sent subject to certain conditions
and restrictions.

You have to define the following:

• Rules of output determination

• Print parameters

• When the sending of output is to be initiated

Output Determination Using the Condition Technique

You can use the condition technique to propose output in SD documents. This can be done according to criteria
which you freely define. There are however some limitations to the condition technique in picking list. For
more information, see the chapter on output determination for picking lists in the Implementation Guide.

In this case, we can control output processing individually for each output recipient.

Maintain Output Determination for Sales Documents

CONDITION TABLE DESCRIPTION

707 Customer/Material
702 Sales Org./Customer
704 Sales area/ Material/Customer

OUTPUT TYPE DESCRIPTION

AF00 Inquiry
AN00 Quotation
BA00 Order Confirmation
K000 Contracts
LP00 Scheduling Agreements
RD03 Cash Sales

ACCESS SEQUENCE DESCRIPTION

VASE Virgo Access Sequence

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SD 2.6 ROUTE

For each and every line item in the Sales Order Route can be determined automatically. The material can
be transported from source to destination by using different mode of transports with different shipment
types. Route can be determined for a line item in the Sales Order.

1) Departure zone or country of the delivering plant.

2) Destination zone or country of the Ship to Party.
3) Shipping condition from the customer master.
4) Transportation group from the material master.

Mode of transport:-

Key Description
10 Road
20 Rail

Define Shipping Type:-

Key Description
30 Truck
40 Train

Define Transportation Connection Point:-

Transportation Connection Point can be an Airport, Border Crossing or Railway Station.

Transportation connection point represents source or destination.
.

Key Description
50 Railway Station

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SD 2.6.2 ROUTE DETERMINATION

Define Transportation Zone: Transportation Zone represents Ship to Party. System uses Transportation
Zone as a one of the factor to determine the route for a line item in the Sales Order.

Zone Description
0000000001 North Zone
0000000002 South Zone

Maintain Route Determination:

System automatically determine route for a line item in the Sales Order by taking 4 factors into
consideration.
a. Country of Departure Zone
b. Country of Destination Zone
c. Shipping Conditions (From Sales Document Header)
d. Transportation Group (From Material Master)

SD 3.0 SALES ORDER PROCESSING

SD 3.1 SALES ORDER CYCLE

The sales cycle in SAP starts with entering a sales order. The sales order contains customer details like sold-to
party, ship-to party, address etc., material details like material number and quantity, and a delivery schedule.

The delivery schedule can be changed before the delivery document is created – once the delivery document
is created, Shipping will start working on delivering the product.

Sales orders will be created using the SAP transaction code VA01.

SD 3.2 SALES ORDER TYPES

When entering sales orders, it is important to distinguish between order types. VIRGO will use the following
order types.

1. VIRGO Regular sales orders: These include the regular orders, special orders and will call orders.
(SAP Standard Order including third party orders)
2. Credit memo requests

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 3. Debit memo requests
4. Returns order: This includes normal customer returns with reference
5. Free of Charge delivery will be a separate order type. The pricing will be automatically adjusted
for free delivery.
6. Rush Order process with automatic delivery creation as standard.
7. Consignment process.

Sales Document Types

S/No Sales doc Standard Descriptions Virgo Documents Type

1 OR Standard Order VO
Credit Memo
2 CR Request VC
3 DR Debit Memo Request VD
4 KB Consignment Fill-up VB
5 KE Consignment Issue VE
6 KA Consignment Pick-up VA
7 KR Consignment Returns VK
8 RE Returns VR
9 SO Rush Order VS
10 BV Cash Order VV

SD 3.3 NUMBER RANGES

When creating a sales document, a unique number is assigned which identifies the sales document. The
number comes from the number range which is provided for the document type.

There are two possible types of number assignment:

• Internal number assignment (The SAP System automatically assigns a consecutive number from the defined
number range.)

• External number assignment (You specify a number from the external number range.)

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Virgo Valves Limited is following the internal number ranges only.

Number ranges for sales document types (Comp code -)

Sales Doc Type No Range From Number To Number

IN 1 1 10000
QT 2 10001 20000
OR 3 20000 30000
KB 4 30001 40000

SD 3.4 Credit Management

When a sales order is being created, after the user enters a material number and quantity, SAP performs the
following functions:

Customers will be divided into three credit Risk categories

• Prepay/Collections Customers (High Risk)

• New Customers (Medium Risk)
• Established Customers (Low Risk)

For online orders, if the document value exceeds a certain preset limit for High and Medium Risk
Customers, a credit block should be placed on the order. For orders other than web orders, this block
should not be applied. For this reason, a separate internet order type has been envisaged for Regular and
Custom order types.

3.4.2 Availability Check

When creating a sales order, SAP performs an availability check. Availability check will behave differently for
Make-to-Stock items. Whether a material is MTS is determined by the planning strategy assigned to the
material in the MRP3 view on the material master.

For VIRGO, Daily requirements type will be used for availability check.

SD 3.5 FREE OF CHARGE (FD)

In VIRGO, have Samples sales processing. For that normal order type will be used. Some line items can be
sample. In case the line item is a sample being offered at no charge, CSA will manually insert a 100% discount
in the pricing procedure.

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SD 3.6 DEBIT MEMO REQUEST AND CREDIT MEMO REQUEST PROCESSING-
The scenario in SAP consists of the following steps:

• A Sales Order (type Debit Memo or Credit Memo request) is created and a billing block is assigned
automatically – by Sales
• The billing block is removed - by Sales
• The billing is created – by Finance.

Standard Debit Memo Request (DR) and Credit Memo request (CR) will be used. These requests can be created
with reference to an existing sales order/ Invoice or without any document reference. The requests upon
creation will be blocked automatically for billing. Upon release of the block, respective Debit Memo or Credit
Memo can be created.

SD 4.0 SHIPPING

Shipping of stock to a customer starts with the creation of the delivery document, and ends with a Post Goods
Issue on the delivery document.

Standard SAP process will be followed for delivery creation in VIRGO. The sales order should be free of all
delivery blocks and credit check blocks before the delivery can be created. The requested delivery date in the
sales order will be defaulted to ‘order entry date’ which will be the system date.

All items will be picking relevant and packing relevant. Individual transfer orders will be created for items based
on the storage location/storage type.

All these separate Transfer orders will be combined and packed. Packing will be done with packing stations
defined in the system.

4.1 Number range for delivery documents.

Number Range
S/No Doc with Descriptions From No. To No.
1 Delivery 80000000 83999999

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 SD 5.1 BILLING

Billing represents the final processing stage for a business transaction in Sales and Distribution. Information
on billing is available at every stage of order processing and delivery processing.

This component includes the following functions:

Creation of:
• Invoices based on deliveries or services
• Request for Down payment
• Issue credit and debit memos
• Pro forma invoices
• Cancel billing transactions
• Issue rebates
• Transfer billing data to Financial Accounting (FI)
For VIRGO, the SAP standard billing document type F1 will be used for Order related billing and F2 will be
used for Delivery related billing.

Majority of VIRGO processes require physical delivery of material and hence delivery related billing will be
used for major part of business. In case a down payment is to be secured from a customer before delivering
the goods, order related billing will be done.

Pricing will be recalculated during billing to take into account any quantity variance during the picking
process.

5.1 Number range for billing documents.

Number Range
S/No Invoice doc with Descriptions From No. To No.
1 Invoices (F1/F2) 90000000 94999999
2 Credit Memos(G2) 90000000 94999999
3 Cancellation Invoice(S1/S3) 90000000 94999999
4 Debit memos( L2 ) 90000000 94999999

F1 is used for order related billing and F2 is used for delivery related billing.

S1 is used to cancel normal F2 invoices and S3 is used to cancel cash sales.

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 SD: 6.1CUSTOMER COMPLAINTS
Scenario
Following is the list of different scenarios which can be part of this customer complaint process:

S. No. Description
Scenario 1. If customer returns the goods
Scenario 2. If customer wants refund for the amount
Scenario 3. If customer wants replacement
Scenario 4. The customer does not send the goods back
Scenario 5. For damaged replacement

Following is the list of different documents which can be part of handling customer complaints:

Document 1. Returns Order

Document 2. Invoice Correction Request
Document 3. Debit Memo Request & Debit Memo
Document 4. Credit Memo Request & Credit Memo
Document 5. Subsequent Delivery Free of Charge

Returns Order Process

Sales Document Type RE

Item Category REN
A returns order is a sales document that is used
Purpose in customer complaints processing, when a customer
sends goods back.

You can create the returns order in one of the following ways:

• without any reference

• with reference to an existing Order

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 • with reference to an existing Invoice
• with reference to an existing Contracts
• with reference to an existing Contract Release Orders

It may be worthwhile ensuring the returns order reason was entered on the sales document. Thus,
it may be necessary to add this in an incompletion procedure for returns order.
It is advisable to indicate a shipping condition that is specifically used for returns order. This is
useful when running delivery due list (VL04).

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