SAP Sales and Distribution Module Configuration

This comprehensive text serves as a detailed guide to SAP (Systems, Applications, and Products in Data Processing), specifically focusing on the SAP SD (Sales and Distribution) and FI (Financial Accounting) modules. The content meticulously outlines the step-by-step creation and management of organizational structures within SAP, including companies, company codes, plants, sales organizations, distribution channels, and sales offices. Furthermore, it covers the setup of financial accounting elements like fiscal year variants, posting period variants, and chart of accounts, alongside the material master data and the entire Order-to-Cash (O2C) sales cycle. The document provides transaction codes (T-codes) and menu paths for each process, offering a practical walkthrough for users to perform various functions such as creating, displaying, and editing entries for customers, materials, and sales documents.

SAP Navigation: T-Codes and Easy Access Paths Explored

Navigating the SAP system is fundamental to utilizing its various modules and functionalities. The system provides multiple ways to access specific processes and information, catering to different user preferences.

SAP Screen Overview

When you log into SAP, you are presented with a main SAP screen. This screen typically includes several options and components:

• Menu Bar: Located at the top, it provides options like Menu, Edit, Favorites, Extras, System, and Help.
• Command Box: This is a crucial element for direct navigation. SAP uses a coding language, and you fill in specific commands or transaction codes (T-codes) in this box. Once a command is entered, SAP executes it and takes you directly to the relevant process. For example, if you want to create a company, you might enter OX15 in the command box. To switch between screens or start a new transaction, you often use slash n (e.g., /nOX02) before the T-code.
• Favorites: This section allows you to save frequently used options for quick access.
• Other Options: The screen also includes options for saving data, backing up, logging off, printing, searching (Find, Find Next), navigating between pages (first page, second page, previous page, next page, last page), and adding new windows.

Navigation Methods: T-codes vs. Easy Access Paths

SAP offers two primary ways to navigate to functions and processes:

1. Transaction Codes (T-codes): These are short alphanumeric codes that provide direct access to specific SAP transactions, bypassing the menu hierarchy. They are entered into the command box. For instance, OX15 is the T-code for company creation, and MM01 is for master material creation. T-codes are globally consistent, meaning OX15 will create a company whether you are in India or any other country.
2. Easy Access Path (Menu Path): For users who prefer not to use coding language or T-codes, SAP offers an easy access path. This involves navigating through a series of menus and sub-menus to reach the desired function. For example, to define a company, the menu path is SPRO > Reference IMG > Enterprise Structure > Definition > Financial Accounting > Define Company.

Practical Application of Navigation in SAP SD

The sources provide numerous examples of how these navigation methods are used for various configurations and master data creations within SAP, particularly for the Sales and Distribution (SD) module and related financial and logistics structures. Below are several examples illustrating T-codes and their corresponding menu paths:

• Organizational Structure:
• Company Creation:
• T-code: OX15
• Menu Path: SPRO > Reference IMG > Enterprise Structure > Definition > Financial Accounting > Define Company
• Company Code Creation:
• T-code: OX02
• Menu Path: SPRO > Display IMG > Enterprise Structure > Definition > Financial Accounting > Edit, Delete, Check Company Code
• Assign Company Code to Company:
• T-code: OX16
• Menu Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to Company
• Plant Creation:
• T-code: OX10
• Menu Path: SPRO > SAP Reference IMG > Enterprise Structure > Definition > Logistics General > Define Plant
• Sales Organization Creation:
• T-code: OVX5
• Menu Path: SPRO > Enterprise Structure > Definition > Sales and Distribution > Define Copy Delete Sales Organization
• Assign Sales Organization to Company Code:
• T-code: OVX3
• Menu Path: SPRO > Display IMG > Enterprise Structure > Assignment > Sales and Distribution > Assign Sales Organization to Company Code
• Distribution Channel Creation:
• T-code: OVX1
• Menu Path: SPRO > Display IMG > Enterprise Structure > Definition > Sales and Distribution > Define, Copy, Delete, Check Distribution Channels
• Assign Distribution Channel to Sales Organization:
• T-code: OVXK
• Menu Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Sales and Distribution > Assign Distribution Channel to Sales Organization
• Sales Office Creation:
• T-code: OVX1
• Menu Path: SPRO > IMG > Enterprise Structure > Definition > Sales & Distribution > Maintain Sales Office
• Sales Group Creation:
• T-code: OVX4
• Menu Path: SPRO > IMG > Enterprise Structure > Definition > Sales and Distribution > Maintain Sales Group
• Division Creation:
• T-code: OVXB
• Menu Path: SPRO > IMG > Enterprise Structure > Definition > Logistics General > Define, Copy, Delete, Check Division
• Assign Division to Sales Organization:
• T-code: OVXA
• Sales Area Creation:
• T-code: OVXG
• Menu Path: SPRO > Reference IMG > Enterprise Structure > Assignments > Sales and Distribution > Setup Sales Area
• Assign Sales Office to Sales Area:
• T-code: OVXM
• Menu Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Sales and Distribution > Assign Sales Office to Sales Area
• Shipping Point Determination:
• T-code: OVL2
• Financial Structure (FI-CO Integration for SD):
• Fiscal Year Variant Creation:
• T-code: OB29
• Menu Path: SPRO > SAP Reference IMG > Financial Accounting > Financial Accounting Global Settings > Ledgers > Fiscal Year and Posting Period > Maintained Physical Year Variants
• Assign Fiscal Year Variant to Company Code:
• T-code: OB37
• Posting Period Variant Definition:
• T-code: OBBO
• Define Open and Close Posting Period:
• T-code: OB52
• Assign Posting Period Variant to Company Code:
• T-code: OBBP
• Chart of Accounts Creation:
• T-code: OB13
• Menu Path: SPRO > Display IMG > Financial Accounting > General Ledger Accounting > Master Data > General Ledger Accounts > Preparations > Edit Chart of Accounts List
• Assign Company Code to Chart of Accounts:
• T-code: OB62
• General Ledger Account Group Creation:
• T-code: OBD4
• Menu Path: Display IMG > Financial Accounting > General Ledger Accounting > Master Data > General Ledger Accounts > Preparations > Define Account Group
• Field Status Variant Creation:
• T-code: OBC4
• Menu Path: Display IMG > Financial Accounting > Financial Accounting Global Settings > Ledgers > Field Status Variants > Define Field Status Variants
• Assign Company Code to Field Status Variants:
• T-code: OBC5
• Retained Earnings Account Creation:
• T-code: OB53
• Menu Path: Display IMG > Financial Accounting > General Ledger Accounting > Master Data > General Ledger Account > Preparations > Define Retained Earnings Account
• Logistics (Materials Management and SD):
• Storage Location Creation:
• T-code: OX092
• Menu Path: STRO > Reference IMG > Enterprise Structure > Definition > Material Management > Maintain Storage Location
• Customer Creation:
• T-code: XD01
• Menu Path: SPRO > IMG > Logistics > Sales and Distribution > Master Data > Business Partner > Customer > Create
• Change Customer:
• T-code: XD02
• Display Customer:
• T-code: XD03
• Material Type Creation:
• T-code: OMS2
• Material Group Creation:
• T-code: OMSF
• Master Material Creation:
• T-code: MM01
• To Change: MM02
• To Display: MM03
• Order to Cash (O2C) Process (SD):
• Inquiry Creation:
• T-code: VA11
• Change Inquiry:
• T-code: VA12
• Display Inquiry:
• T-code: VA13
• Inquiry Report:
• T-code: VA15
• Quotation Creation:
• T-code: VA21
• Change Quotation:
• T-code: VA22
• Display Quotation:
• T-code: VA23
• Quotation Report:
• T-code: VA25
• Sales Order Creation:
• T-code: VA01
• Change Sales Order:
• T-code: VA02
• Display Sales Order:
• T-code: VA03
• Delivery Creation:
• T-code: VL01N
• Invoice Creation:
• T-code: VF01
• Rush Order Creation:
• T-code: VA01

Navigating the SAP system is like driving a car where T-codes are like setting a GPS destination directly, quickly taking you where you need to go, while easy access paths are like following road signs step-by-step, guiding you through the full journey. Both methods lead to the same destination, offering flexibility based on user preference and expertise.

SAP Organizational Structure: Definitions and Assignments

Navigating SAP begins with understanding its foundational organizational structure, which defines how a company’s various entities and functions are represented and interlinked within the system. This structure is crucial as it underpins all subsequent processes, from creating customers and materials to executing sales and financial transactions. SAP allows for navigation to define these elements either directly using Transaction Codes (T-codes) or by following Easy Access Paths (Menu Paths) through a series of menus.

Here’s a detailed breakdown of the key components of the organizational structure in SAP, along with their T-codes and menu paths, as described in the sources:

• Company
• Definition: Represents a basic organization for which individual financial statements can be created according to relevant commercial law. It typically consists of one or more company codes. Creating a company is mandatory for internal trading and inter-company transactions.
• T-code (Creation): OX15.
• Menu Path (Creation): SPRO > Reference IMG > Enterprise Structure > Definition > Financial Accounting > Define Company.
• Configuration Details: When creating, you provide a 5-digit code, name (e.g., “Toyota Private Limited”), street, PO Box, postal code, city, country (e.g., IN for India), language (e.g., EN for English), and currency (e.g., INR for Indian Rupees).
• Company Code
• Definition: Represents an independent balancing legal accounting entity, used for external purposes by a company with independent accounts within a corporate group. Financial statements required by law can be created at the company code level. Company codes are often seen as “branches” of a main company (e.g., a company might have branches in Mahendragarh, Sonipat, and Delhi, each represented by a company code).
• T-code (Creation): OX02.
• Menu Path (Creation): SPRO > Display IMG > Enterprise Structure > Definition > Financial Accounting > Edit, Delete, Check Company Code.
• Configuration Details: Requires a 4-digit code, company name, city, country, currency, and language.
• Assignment (Company Code to Company): This links the company code to its overarching company.
• T-code: OX16.
• Menu Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to Company.
• Plant
• Definition: This is the placement or location where machines operate and business activities occur. It is a physical, independent organizational unit within a company code, primarily used for logistics.
• T-code (Creation): OX10.
• Menu Path (Creation): SPRO > SAP Reference IMG > Enterprise Structure > Definition > Logistics General > Define Plant.
• Configuration Details: Involves providing a 4-digit code and the plant’s name.
• Sales Organization
• Definition: Groups the company according to its sales and distribution requirements. Its main responsibilities include selling and distributing services and materials. A sales organization can operate at national or regional levels.
• T-code (Creation): OVX5.
• Menu Path (Creation): SPRO > Enterprise Structure > Definition > Sales and Distribution > Define Copy Delete Sales Organization.
• Configuration Details: Requires a 4-digit code for the sales organization, along with street, house number, postal code, city, country, region, PO box, and language.
• Assignment (Sales Organization to Company Code):
• T-code: OVX3.
• Menu Path: SPRO > Display IMG > Enterprise Structure > Assignment > Sales and Distribution > Assign Sales Organization to Company Code.
• Distribution Channel
• Definition: While a company may have only one sales organization, a single sales organization can manage multiple distribution channels. These channels represent the strategies for distributing products and services to customers, such as wholesale, retail, internal trade, or online marketing.
• T-code (Creation): OVX1. Note: The source also lists OVX1 for Sales Office creation, which might suggest a shared T-code or an inconsistency within the provided material.
• Menu Path (Creation): SPRO > Display IMG > Enterprise Structure > Definition > Sales and Distribution > Define Copy Delete Check Distribution Channels.
• Configuration Details: Involves creating codes (e.g., TO for wholesale, YO for retail) and descriptions.
• Assignment (Distribution Channel to Sales Organization):
• T-code: OVXK.
• Menu Path: SPRO > Display IMG > Enterprise Structure > Assignment > Sales and Distribution > Assign Distribution Channel to Sales Organization.
• Sales Office
• Definition: Business offices established away from the main head office or headquarters to penetrate the market deeply. Sales offices are often situated in different geographical areas and are used for sales reporting to analyze performance.
• T-code (Creation): OVX1. Note: As mentioned above, the source also lists OVX1 for Distribution Channel creation, which might suggest a shared T-code or an inconsistency within the provided material.
• Menu Path (Creation): SPRO > IMG > Enterprise Structure > Definition > Sales & Distribution > Maintain Sales Office.
• Configuration Details: Requires a 4-digit code, description (e.g., “Sales Office for Toyo”), company name, search term, street, postal code, city, country, region, PO Box, and language.
• Sales Group
• Definition: Employees belonging to a specific sales office are referred to as a sales group. This group is considered a subset of the sales office and is assigned to its respective sales office.
• T-code (Creation): OVX4.
• Menu Path (Creation): SPRO > IMG > Enterprise Structure > Definition > Sales and Distribution > Maintain Sales Group.
• Configuration Details: Involves a code and description (e.g., “Sales Group for Toyo”).
• Division
• Definition: Represents a product line within the company, encompassing various products manufactured (e.g., mobiles, laptops). Companies can create any number of products under a division.
• T-code (Creation): OVXB.
• Menu Path (Creation): SPRO > IMG > Enterprise Structure > Definition > Logistics General > Define Copy Delete Check Division.
• Configuration Details: Requires a 2-digit code and a descriptive name (e.g., TO for mobile, YO for laptop).
• Assignment (Division to Sales Organization):
• T-code: OVXA.
• Menu Path: The provided source indicates the T-code but does not explicitly list the full menu path for this specific assignment. However, based on the pattern of other assignments, it would typically be found under SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Sales and Distribution.
• Sales Area
• Definition: A crucial combination of a Sales Organization, Distribution Channel, and Division. A sales area can only be established after its constituent sales organization, division, and distribution channel have been created.
• T-code (Creation): OVXG.
• Menu Path (Creation): SPRO > Reference IMG > Enterprise Structure > Assignments > Sales and Distribution > Setup Sales Area.
• Configuration Details: Involves specifying the Sales Organization, Distribution Channel, and Division it comprises.
• Assignment (Sales Office to Sales Area):
• T-code: OVXM.
• Menu Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Sales and Distribution > Assign Sales Office to Sales Area.
• Shipping Point Determination
• Definition: This is a location within a plant where goods are loaded for dispatch to customers or raw materials are unloaded from vendors. Shipping points can be manual (requiring labor), automatic (using machines), or immediate (for very rapid delivery).
• T-code (Creation): OVL2.
• Configuration Details: Involves defining shipping conditions (e.g., 001 for standard), a loading group (e.g., 01), the plant code, and a proposal shipping point.

The meticulous definition and assignment of these organizational elements are foundational in SAP. They ensure that all business processes are accurately linked, integrated, and managed within the company’s operational framework.

The SAP organizational structure can be thought of as the LEGO baseplate and the initial bricks for building a company’s operations. Just as you first lay down a sturdy baseplate and connect the fundamental blocks (like the main building, the garage, and the shop) before adding intricate details, SAP requires you to establish these core organizational units (Company, Company Code, Plant, Sales Organization, etc.) and their connections. This foundational setup dictates how all subsequent, more complex business processes—like creating a specific product or processing a customer order—will flow and interact within the system. Without a clear and connected base structure, the entire operational model would lack coherence and functionality.

SAP Financial Accounting: Core Structure and Integration

In SAP, Financial Accounting (FI) is a core module that is deeply integrated with the overall organizational structure and other modules like Sales and Distribution (SD), Materials Management (MM), Warehouse Management (WM), and Transportation Planning (TP). It forms the backbone for managing a company’s financial transactions and reporting.

Here’s a comprehensive discussion of Financial Accounting within SAP, drawing from the provided sources:

Foundational Financial Entities within Organizational Structure

The initial setup of a company’s organizational structure directly impacts its financial accounting capabilities:

• Company
• Definition: Represents a fundamental organizational unit for which individual financial statements can be created in accordance with commercial law. It typically encompasses one or more company codes.
• Purpose: Its creation is mandatory for internal trading and inter-company transactions.
• Creation (T-code): OX15.
• Creation (Menu Path): SPRO > Reference IMG > Enterprise Structure > Definition > Financial Accounting > Define Company.
• Configuration Details: Requires a 5-digit code, name, address details, country (e.g., IN for India), language (e.g., EN for English), and currency (e.g., INR for Indian Rupees).
• Company Code
• Definition: Represents an independent balancing legal accounting entity. It is used for external financial reporting and requires independent accounts within a corporate group.
• Purpose: Financial statements required by law can be created at the company code level. Company codes often represent branches of a main company.
• Creation (T-code): OX02.
• Creation (Menu Path): SPRO > Display IMG > Enterprise Structure > Definition > Financial Accounting > Edit, Delete, Check Company Code.
• Configuration Details: Requires a 4-digit code, company name, city, country, currency, and language.
• Assignment to Company (T-code): OX16.
• Assignment to Company (Menu Path): SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to Company.

Detailed Financial Structure Components

After establishing the basic organizational units, SAP requires the definition of a detailed Financial Structure, which primarily follows a “Variant Principle” or three-step method: Define (create the variant), Determine Value (specify parameters for the variant), and Assign (link the variant to an organizational object like a company code). This approach makes it easier to maintain properties common across multiple business objects.

• Fiscal Year Variant
• Definition: Relates to the financial year and is identified by a two-digit alpha-numeric key.
• Types:
• Year Independent: The number and dates for the periods remain consistent every year. This can be defined as a Calendar Year (starts January, ends December) or a Non-Calendar Year (uses +1 and -1 indicators for periods that shift across years).
• Year Specific: Periods can vary from year to year, meaning start and end dates are not fixed.
• Configuration Details: Involves defining the number of posting periods (12), corresponding to the months in a year, and special periods (4), typically used for auditing or year-end adjustments (e.g., for ITR filing in India, four extra months beyond the March 31st closing).
• Creation (T-code): OB29.
• Creation (Menu Path): SPRO > Display IMG > Financial Accounting > Financial Accounting Global Settings > Ledgers > Financial Year and Posting Periods > Maintain Fiscal Year Variants.
• Assignment to Company Code (T-code): OB37.
• Posting Period Variant
• Definition: Denoted by a four-digit alpha-numeric key.
• Three-Step Method:
• Define Variant (T-code): OBBO.
• Define Open and Close Posting Periods (T-code): OB52. This step determines values by specifying accounts (e.g., A for assets, D for customers, K for vendors, M for materials, S for GL Accounts) and the periods (e.g., 12 periods for normal months and 4 for special periods).
• Assign to Company Code (T-code): OBBP.
• Chart of Accounts (COA)
• Definition: Represents the highest level of hierarchy for all general ledger accounts. It defines the structure for financial reporting.
• Purpose: Accounts, particularly General Ledger (GL) accounts, are created within the COA. A company might define a specific length for GL accounts (e.g., six digits) and establish various GL account groups with their respective number ranges (e.g., Assets, Liabilities, Expense, Revenue).
• Examples of Accounts to Prepare: Cash Account, Bank Account, Zero Balance Clearing Account, Retained Earning Account, Expense Accounts, Revenue Accounts, Trade Receivables Account, Trade Payable Account.
• Types of Chart of Accounts:
• Operating Chart of Accounts: The main COA used by the company.
• Group Chart of Accounts: Used by multiple company codes within a corporate group.
• Country Chart of Account: A country-specific COA, used only once for a particular country.
• Creation (T-code): OB13 (to define the properties of the Chart of Accounts).
• Assignment to Company Code (T-code): OB62.
• General Ledger Account Groups: These groups define number ranges for different types of GL accounts, ensuring no overlaps. They also control the field properties (Suppress, Display, Required Entry, Optional Entry) for GL Master data.
• Creation (T-code): OBD4.
• Field Status Variant
• Definition: Controls the fields of transactions at a line item level, providing control over data entry and display.
• Control Mechanisms: It determines whether a field is hidden (suppressed), displayed, a required entry (mandatory), or an optional entry. For example, the date field during ledger posting can be made optional or mandatory. If not created, all fields are hidden.
• Configuration Details: Identified by a four-digit alpha-numeric key. SAP provides predefined field status groups (e.g., 0001 for General Ledger) that can be copied.
• Creation (T-code): OBC4.
• Creation (Menu Path): SPRO > Display IMG > Financial Accounting > Financial Accounting Global Settings > Ledger > Field Status > Define Field Status Variants.
• Assignment to Company Code (T-code): OBC5.
• Retained Earnings Account
• Definition: A critical account for the Profit and Loss (P&L) Statement. During year-end closing, the balance of the P&L statement is carried forward to this account, which helps calculate the company’s results and sets the P&L statement to zero.
• Purpose: It is reported in the shareholders’ equity section of an organization’s balance sheet and is considered a liability. It is created on the liability side of the balance sheet.
• Configuration Details: A plus (+) key is assigned to the account to enable balance sheet carry forward. It is mandatory to create a retained earnings account before creating a ledger.
• Creation (T-code): OB53.
• Creation (Menu Path): Display IMG > Financial Accounting > Journal Ledger Accounting > Master Data > Journal Ledger Accounts > Preparations > Define Retained Earnings Account.

Integration with Other Modules

The sources emphasize that SAP modules, including Financial Accounting (FI), are interlinked and integrated. For instance, when creating material masters, maintaining sales organization and plant organization data is crucial because it directly impacts financial aspects like pricing and delivery processes. Similarly, customer creation involves linking to company code, sales organization, distribution channel, and division, which feeds into the overall financial reporting structure.

In essence, Financial Accounting in SAP is like the central nervous system of a business, constantly processing and recording every financial pulse from operations across various departments. Just as the brain relies on signals from all parts of the body to understand its overall state and make decisions, SAP’s FI module integrates data from sales, materials, and other areas to provide a complete and accurate financial picture, ensuring compliance and supporting strategic decision-making.

SAP SD: Sales & Distribution Module Explained

Sales and Distribution (SD) in SAP is a core logistics module that manages a company’s customer relationships, sales processes, and the entire sales cycle from customer acquisition to product delivery. It is considered a crucial part of SAP’s Enterprise Resource Planning (ERP) software.

Here’s a detailed discussion of SAP SD:

1. Purpose and Scope of SD Module

The SD module is a component of the SAP Logistics module. Its primary function is to manage customer relationships, starting from raising a quotation, moving to a sales order, and then billing for products and services. This encompasses the entire process of how customers are acquired and how products are delivered to them, including all associated postings. The SD module helps manage shipping, billing, selling, and transportation of products and services. It’s essentially an “offset module” within SAP ERP.

2. Integration with Other Modules

A key characteristic of SAP modules, including FI and SD, is their deep interlinking and integration. The SD module is closely integrated with other modules such as Materials Management (MM), Financial Accounting (FI), Warehouse Management (WM), and Transportation Planning (TP). This means that data maintained in one module, like sales organization or plant data, directly impacts processes in other modules, such as pricing and delivery. For example, when creating a customer, information like company code, sales organization, distribution channel, and division are linked, which then feeds into the financial reporting structure.

3. Key Organizational Elements in SD

To support the sales and distribution processes, SAP requires the definition of specific organizational entities:

• Company: A mandatory foundational unit for which individual financial statements can be created. It encompasses one or more company codes and is essential for internal trading and inter-company transactions.
• T-code: OX15
• Menu Path: SPRO > Reference IMG > Enterprise Structure > Definition > Financial Accounting > Define Company
• Company Code: An independent legal accounting entity for which financial statements required by law can be created. It often represents branches of a main company.
• T-code: OX02
• Menu Path: SPRO > Display IMG > Enterprise Structure > Definition > Financial Accounting > Edit, Delete, Check Company Code
• Assignment to Company: OX16
• Plant: A physical, independent organizational unit within a company code, primarily used for logistic purposes. It represents the location where business activities occur, such as where machines operate.
• T-code: OX10
• Sales Organization: Groups the company according to its sales and distribution requirements. Its main responsibilities include selling and distributing services and materials. Sales organizations can be national or regional.
• T-code: OVX5
• Assignment to Company Code: OVX3
• Distribution Channel: Represents the means by which products and services are distributed to customers, such as wholesale, retail, or internet trade. One sales organization can have multiple distribution channels.
• T-code: OVX1
• Assignment to Sales Organization: OVXK
• Division (Divis): Represents a product line. A company can have any number of divisions (products).
• T-code: OVXB
• Assignment to Sales Organization: OVXA
• Sales Area: A combination of the Sales Organization, Distribution Channel, and Division. A sales area can only be created once these individual components exist.
• T-code: OVXG
• Assignment to Sales Office: OVXM
• Sales Office: Business offices set up apart from the head office to reach the market in depth. Sales reporting can be executed at this unit to analyze performance.
• T-code: OVX1 (note: this T-code is also listed for Distribution Channel creation)
• Sales Group: Employees belonging to a certain sales office are referred to as a sales group. It is a subset of the sales office and is assigned to its respective sales office.
• T-code: OVX4
• Storage Location: A physical location within a plant where goods (semi-finished, finished, or raw material) are stored. It functions like a warehouse for storing goods.
• T-code: OX092
• Shipping Point: A location within a plant where goods are loaded or unloaded for dispatching to customers or receiving raw materials from vendors.
• T-code: OVL2
• Types: Manual (labor-based), Automatic (machine-based), Immediate (for urgent deliveries like medicines or military supplies).

4. Key SD Processes

The “Order to Cash” (O2C) process is a central concept in SD, covering the entire sales cycle from order creation to cash receipt.

• Customer Creation: Customers are individuals or organizations that buy goods and services in exchange for money or other value.
• T-code: XD01
• Change Customer: XD02
• Display Customer: XD03
• Material Master Creation: The material master is the central source of material-specific data in SAP and is essential for SD operations. It integrates with multiple modules including SD, MM, PP, and FI. Proper maintenance of sales organization and plant organization data during material master creation is crucial for delivery and pricing processes.
• T-code: MM01
• Material Types: Classified based on business use (e.g., Raw Material (ROH), Semi-finished (HALB), Finished (FERT)).
• Material Type Creation: OMS2
• Material Group: Used to group items with similar attributes (e.g., metals, plastics).
• Material Group Creation: OMSF
• Pre-sales Activities:
• Inquiry: The first step where a customer asks about material availability, quantity, price, or expiry dates.
• T-code: VA11
• Change Inquiry: VA12
• Display Inquiry: VA13
• Inquiry Report: VA15
• Expired Inquiry Check: VF (T-code listed, though context indicates a specific report/function for checking expired inquiries by date/customer)
• Quotation: Prepared after a customer inquiry, providing details on pricing, quantity, expiry dates, and other terms for dealing.
• T-code: VA21
• Change Quotation: VA22
• Display Quotation: VA23
• Quotation Report: VA25
• Sales Order Creation: A formal request from a customer to a company for goods or services.
• T-code: VA01
• Change Sales Order: VA02
• Display Sales Order: VA03
• Rush Order: A specific type of sales order (order type RO) where delivery is required immediately. In a rush order, creation of the sales order automatically triggers delivery and invoice creation in the background, requiring an immediate shipping point.
• Delivery: The process of preparing and shipping goods to the customer.
• T-code: VL01 (or VL01N)
• Note: Delivery creation might face issues if stock is unavailable, requiring coordination with the production team or vendors for raw materials.
• Billing/Invoice: The process of generating an invoice for the delivered goods or services, representing the company’s claim for payment.
• T-code: VF01
• Note: Invoice creation depends on successful delivery and stock availability.
• Cash Receipt: The final step in the O2C cycle, where payment is received from the customer (implied as the “Cash” part of Order to Cash).

In essence, SAP SD acts as the front office and logistical hub for a business, much like a well-organized fulfillment center. It takes in customer requests (inquiries and quotations), processes them into actionable orders, coordinates the movement and delivery of products, and ensures that the financial implications of every sale are captured, thereby ensuring a smooth journey from the customer’s initial interest to the company’s realized revenue.

SAP Material Management: Concepts and Operations

Material Management (MM) in SAP is a critical logistics module that plays a central role in managing a company’s materials and their flow, from acquisition to storage and distribution. It is deeply integrated with other key SAP modules, forming an interconnected network for business operations.

Here’s a detailed discussion of Material Management based on the provided sources:

1. Purpose and Integration

The Material Management (MM) module is part of SAP’s broader logistics functionality. It serves as the central source of material-specific data in SAP. MM is closely integrated with other modules such as Sales and Distribution (SD), Financial Accounting (FI), Production Planning (PP), Warehouse Management (WM), and Transportation Planning (TP). This means that data managed in MM impacts processes in these other modules, and vice versa. For instance, maintaining proper sales organization and plant organization data during material master creation is crucial for smooth delivery and pricing processes in SD.

2. Key Material Concepts and Objects

The sources identify three essential concepts related to materials in SAP: Material Type, Material Group, and the Material Master.

• Material (The Substance)
• A material is described as the substance something is made of or can be made from.
• Examples include chalk, glass, cloth, plastic, and iron.
• Material Type
• Definition: Material Type classifies material based on its characteristics and purpose, influencing various functions such as costing, number ranges, and inventory management. It also controls views, number ranges, valuation, and price control.
• Configuration: Material types are defined at the configuration level.
• Types of Materials:
• Raw Material (ROH): Materials that are purely raw and are used to first create semi-finished, then finished products. An example is milk, flour, and sugar in a biscuit factory.
• Semi-finished (HALB): Materials that are “half raw and half cooked”. These are partially processed and only need conversion to a finished product. An example is a pre-mixed powder containing biscuit ingredients, needing only baking.
• Finished (FERT): Products that are directly created and ready for sale after packing. An example is baked biscuits ready for packaging and sale.
• Transaction Code for Creation: OMS2.
• Process: Material types can be created by copying existing ones, and their “Quantity and Value Updating” needs to be activated.
• Material Group
• Definition: A Material Group is used to group together items with similar attributes.
• Examples: All metals or different grades of plastic. This allows for the creation of many diverse materials from a single group (e.g., plastic can be used for toys, chairs, tables, utensils).
• Transaction Code for Creation: OMSF.
• Master Material (Material Master)
• Definition: The Material Master is the main material record, built upon the concepts of material type and material group. It is the central source of material-specific data in SAP.
• Importance: It is essential for SD operations. Proper maintenance of sales organization data and plant organization data during its creation is crucial for ensuring smooth delivery and pricing processes.
• Transaction Codes:
• Create Material: MM01
• Change Material: MM02
• Display Material: MM03
• Creation Process (MM01): Involves selecting an industry type and crucial organizational levels such as the plant code, sales organization, storage location, and distribution channel. Other details to fill include the unit, material group, division, gross and net weight, item category group, purchasing group, MRP type (e.g., PD for Material Requirements Planning), MRP controller, and lot size procedure.

3. Logistical Organizational Elements Related to Materials

Beyond the core material objects, MM works closely with organizational structures that define where and how materials are handled:

• Storage Location
• Definition: A Storage Location is a physical location within a plant where goods are stored. This includes semi-finished, finished, and raw materials, effectively functioning as a warehouse.
• Transaction Code: OX092.
• Menu Path: SPRO > Reference IMG > Enterprise Structure > Definition > Material Management > Maintain Storage Location.
• Shipping Point
• Definition: A Shipping Point is a location within a plant where goods are loaded or unloaded for dispatch to customers or for receiving raw materials from vendors.
• Transaction Code: OVL2.
• Types:
• Manual Shipping Point: Involves human labor for loading and unloading goods, suitable for delicate or luxury items like glass products.
• Automatic Shipping Point: Uses machines for loading and unloading, ideal for heavy products that cannot be handled manually.
• Immediate Shipping Point: Designed for urgent deliveries where goods must reach the customer very quickly, such as medicines or military supplies. This type is mandatory for creating a “rush order”.

In essence, Material Management acts as the inventory and logistical backbone of a business in SAP. It defines every aspect of a material, from its fundamental characteristics and how it’s categorized, to where it’s stored and how it’s moved. Just as a well-stocked pantry is crucial for a kitchen to prepare any meal, MM ensures that a company’s “pantry” of materials is meticulously organized and always ready for production, sales, and delivery.

By Amjad Izhar
Contact: amjad.izhar@gmail.com
https://amjadizhar.blog

Affiliate Disclosure: This blog may contain affiliate links, which means I may earn a small commission if you click on the link and make a purchase. This comes at no additional cost to you. I only recommend products or services that I believe will add value to my readers. Your support helps keep this blog running and allows me to continue providing you with quality content. Thank you for your support!