Sales and Distribution
A case study guiding through the order-to-cash process of a Product Service System Provider based on a practical use case
Table of Contents
John and Louis were sitting in the cafeteria of GBS, looking at the Frauenkirche, which was illuminated by the rising sun.
`What a great morning!’, Louis said dreamily ‘and we can enjoy it, while doing some work! So, let us go through the main steps of the sales business process’, said Louis and started his iPad. A pleasantly colored screen appeared, asking for logon credentials. ‘There are some differences compared to the old sales process of the GBI Company that you need to consider – after all, we don’t sell our bikes anymore, but offer a rental service. This has some implications on how the business process is running in the backend system’.
Looking at the modern appearance of the program Louis was running on his iPad, John was very excited to hear everything about the new order-to-cash process.
‘In order to run any kind of process, you first need to have the necessary master data, stored in the system’ explained Louis. ‘It will help you to write down the process steps as a flow – then you can go into deeper detail and run through each and every step’.
The master data, which is necessary in order to sell or rent products and offer services to customers, is related to the product that will be offered as a service or sold to the customer, whom the service or product is offered to.
The order-to-cash process starts with the creation of a sales order in the backend system. This is a document containing relevant product and customer master data as well as information about quantities, prices, conditions and delivery details.
When a customer rents a bike and unlocks it in order to use it, an outbound delivery in the backend system is created. It contains information about the rented bike and its storage location. Based on this outbound delivery, a goods issue is posted and the product quantities are updated accordingly. When a customer returns a bike to a bike station after using it, a post goods receipt is created, increasing the number of available bikes for rent on stock.
‘At last, when the customer returns the bike to the bike station, the billing documents are created and he can either pay for the rental per direct debit or his balance will be updated accordingly. That’s all!’ Louis smiled and pressed on a button that showed a nice graphic, indicating sales increase.
‘Well that’s really not complicated’ John thought with a smile on his face, finishing the process flow he was drawing while Louis has been showing the process steps. ‘Thank you so much, Louis! Now that I know the basic process steps, I can take a closer look at them and get familiar with the process specific terms’.
‘OK, where should I start’ John thought to himself. ‘Oh, yes, with the master data – Louis said that this data is essential in order to start the sales process.’ John looked for the definition of master data on the SAP Help Portal, which was recommended by several of his new colleagues as a great source of any kind of SAP related information. After going through the definitions of the master data terminology, John decides that it would make most sense to start with the creation of a material master first, since this data must be available bevor starting the sales process. Furthermore, customer master and condition master have to be defined in order to create a sales order later on.
1. To create a material master record for the bikes, that Global Bike Sharing rents to its customers, John first logs on to Fiori using the user credentials and the client number provided by the technical administrator. Afterwards, he opens the app “Create Material”, since he wants to create a material master for the bikes that are stored on the GBS bike stations and available for renting.
2. He enters material name DXTRG1###, Industry sector Retail, and material type Trading Goods. Furthermore, since there is already a rental bike in the system, he enters material DXTL1000 in the Copy from… section. The documentation that his colleagues provided to him states, that copying from data entries that already exist in the system would save time and be less error prone than creating each entry manually from the beginning. To confirm the entries he has just made, John presses enter.
3. ‘Select Views…’, John reads out loud, while scrolling to the screen that has just appeared. He remembers Louis, talking about all the different views on data available in the system and looks at the SAP Help Portal for more information on that regard.
“The material master record contains all information needed for managing a material. This data is arranged in views. In addition to sales and distribution, other departments of the company such as accounting or materials management access the master data.”[footnoteRef:1] [1: https://help.sap.com/viewer/a428aae377ba4a1199c3ecc8b7f5f33d/6.18.06/en-US/4b46be532789b44ce10000000a174cb4.html]
‘Alright, so I will then create all the data that is necessary in order to create a sales order for a bike that a customer rents from a bike station’, John thinks and selects the corresponding material master views:
· Basic Data 1
· Basic Data 2
· Sales Org. Data 1
· Sales Org. Data 2
· Sales: General/Plant Data
· General Plant Data / Storage 1
· Accounting 1
4. Next, John has to define the organizational levels for the material master. He enters plant MUC0, Sales Org. DB01 and Distr. Channel BS. He enters these values for both the organizational levels and copy from values. Afterwards, he presses Enter.
5. Since all necessary values have been already copied from material DXTL1000, John just confirms all views by pressing enter six times. He notices the information that the currency is converted to other currencies after confirming the view “Accounting 1”, and finally presses Save on the bottom right. Thereby, the material is created.
6. Since John just created a new material, the stock for it is initially empty. However, a new supplier of GBS provided an initial test bike for the rental services. Since the material DXTRG1### was only created today, this test bike has not been captured in the system so far. Therefore, John opens the app “Post Goods Movement” to create an initial inventory for the bike.
7. He selects Goods Receipt with the additional selection Other. In the items section of detail data, he enters material DXTRG1### in the folder Material, a quantity of 1 in the folder Quantity, and in the folder Where the following: Movement type 561, plant MUC0, and storage location BS01. In the application toolbar, he clicks on post. Thereby, an initial inventory is created.
8. ‘Within our new business model, we do not only sell a product, but also offer a service with the product’, Louis said to John earlier that day. ‘I have to create a separate service material for this in the system’, John remembers. Therefore, he opens the app “Create Material” again. A service material is different from the material master for the bike itself, because it does not belong to any physical good. Hence, different values have to be entered when in the starting screen of the “Create Material” app. John enters the following values:
· Material: DXTBS1###
· Industry Sector: Retail
· Material type: Service Materials
· Copy from Material: DXTS1000
9. Since a service material does not belong to a physical good, the number of views that can be selected for the creation of materials is reduced. John selects the following views:
· Basic Data 1
· Sales Org. Data 1
· Sales Org. Data 2
· Sales: General/Plant Data
· Accounting 1
10. Next, John has to enter the organizational levels. Equivalent to the creation of material DXTRG1###, he enters plant MUC0, Sales Org. DB01 and Distr. Channel BS for Organizational levels and Copy from values. Afterwards, he presses enter.
11. Since all necessary values were already copied from material DXTS1000, John again confirms all views by pressing enter for each view. Finally, he saves the service.
12. John finished the creation of the materials that are necessary to offer a bike sharing service. Next, Louis told him that the creation of customer master data is necessary. Previously, Global Bike mainly sold bikes to other organizations, e.g. retailers. Now, by offering a bike rental service, the main customer group of GBS are private persons. Therefore, John wants to create an exemplary customer master for a private person. He opens the app “Maintain Business Partner”.
13. On the top of the screen, John first clicks on Locator On/Off, in order to remove the locator on the left. Afterwards, he clicks on Person, as he wants to create a new private person as customer of GBS.
14. In the field Create in BP role, John chooses “FI Customer”. When he is asked if he wants to save the current values when changing the role, he clicks on Create, since he wants to create a completely new customer master record.
15. Finally, John can start entering customer data. In the address tab, he enters the following values:
· Title: His title
· First name: His first name
· Last name: His last name
· Correspondence lang.: EN
· Search Term 1/2: ###
· Street/House number: His street and house number
· Postal Code/City: His postal code and city
· Country: DE
16. Next, John wants to maintain the company code specific data. Therefore, on the top of the screen, he clicks on Company Code (depending on the screen size, the Company Code button can be found either directly in the menu bar or in the submenu More->Company Code). He enters company code DE01, confirms the entry, and enters Reconciliation acct. 110000. Thereby, he specifies that customer invoices are posted to the Trade Accounts receivables.
17. Afterwards, John saves the first part of the customer data. He writes down both the customer number in the customer field, and the business partner number on the bottom of the screen:
· Customer Number: ____________________
· Business Partner: _____________________
18. In the application toolbar, John clicks on General Data, to go back to the general customer data. He clicks on Switch Between Display and Change. Afterwards, he changes to the role Customer. In the application toolbar, he clicks on Sales and Distribution (depending on the screen size, the Sales and Distribution button can be found either directly in the menu bar or in the submenu More->Sales and Distribution).
19. John now wants to maintain the sales organization specific data. Therefore, he enters Sales Org. DB01, Distr. Channel BS, and Division BI. He confirms the entries, and enters Sales District DE0002 and Price Group 02 in the Orders tab.
20. Next, John goes to the Shipping tab and enters the following values:
· Delivery Priority: 2 (Occasional buyer)
· Delivering Plant: MUC0
· Shipping Conditions: 01
21. Furthermore, he enters the following values in the Billing tab:
· Incoterms: FOB
· Inco. Location1: Munich
· Payment terms: 0001
· Output Tax: Output Tax classific.: 0
22. Finally, John presses the Save button, and thereby finishes maintaining the customer master data.
23. As last step, John remembers how Louis explained him a third type of master data in Sales and Distribution, the condition master data. Condition master records allow defining individual pricing for either a certain customer, a certain product, or a combination of customer and product. In this case, John wants to maintain individual conditions for his newly created customer when he or she uses the bike rental service.
24. John opens the app “Create Condition”. He enters Condition type PR00, and chooses Customer/material with release status as combination in the following popup.
25. In the following screen, John enters Sales Organization DB01, Distribution channel BS, and his customer number from task 18. Furthermore, he determines both the prices of his rental good and the bike rental service by entering the respective material numbers DXTRG1### and DXTBS1###, an amount of 4.000€ for the bike and 0,10€ per minute for the rental service.
26. Finally, John saves the conditions. He now finished creating the necessary master data to process a bike rental service in SAP S/4HANA.
Creating master data is an important prerequisite to go through the sales process in SAP S/4HANA. As Louis told John already, the new business model to provide a bike rental service instead of selling bikes is accompanied by a severe change of master data. John completed these important steps and is now ready to go through the sales process within the new business model. Compared to the previous sales process of Global Bike, the new process contains additional steps, since the core in sales at GBS is not to deliver a physical bike, but to offer a rental service. This includes the provision and also the return of a bike, with the additional task to charge the service to the customer. John directly starts with the creation of the sales order for the bike rental process.
1. John wants to retrace what happens when a customer rents a bike. Therefore, he imagines himself as customer renting a bike. He initially determines to rent a bike for 50 minutes. Therefore, he opens the app Create Sales Order to create a new sales document.
2. He enters order type TA, sales organization DB01, distribution channel BS, and division BI. Afterwards he clicks on Continue.
3. John gets to the view of creating a sales order. He enters his customer number of step 17 within task 1 as Sold-to Party and Ship-to Party. Furthermore, he enters ### as Cust. Reference, the current date as Cust. Ref. Date, and MUC0 as Deliver. Plant. Then, he presses enter.
4. In the items section, John enters both the rental good and the rental service as line items. He enters the respective material numbers, as well as an order quantity of 1 for the bike, and 50 minutes for the rental service. Afterwards, he saves the sales order, and writes down his order number: __________________
5. With the creation of the sales order, John recorded the purpose of the customer to rent a bike. To check if there is really a bike available for rent, John opens the app “Transfer Stock”. He enters plant MUC0, and material DXTRG1999 (in this order). There, he sees one available bike for unrestricted use. This is exactly the one for which John posted the goods receipt in task 1.
6. John wants to finally start the usage of the bike. For this, an outbound delivery has to be created and executed. John opens the app Create Outbound Deliveries. He uses the search function to find his delivery. After he found it, he selects the respective document in the list, and clicks on Create Deliveries. Afterwards he goes back to the Fiori Launchpad by pressing the home icon.
7. To complete the outbound delivery process, John opens the Outbound Deliveries app. He searches for his delivery document by entering his customer number as Ship-To Party and changing the Overall Status to All. He opens the document. He completes the picking by adding a picking quantity of 1 and pressing on the arrow next to the item. He enters BS01 as storage location, and clicks on OK within the bottom toolbar.
8. Next, John selects his entry, and clicks on Copy Picking Quantity within the toolbar. Finally, he clicks on Post GI to post the goods issue.
9. John finished the tasks to start the rental process. From the perspective of the bike rental process, we now reached the part where the customer uses the bike. To check the current stock situation, John again opens the “Transfer Stock” app. He notices that the stock is now empty, because the bike is in use.
John now went through the process of starting the bike rental. Finally, after the customer finished his bike tour, he or she will bring the bike back. Therefore, in this part, he will go through the process of returning the bike.
1. In order to record the bike return, John has to create a new sales order. This order is assigned to a special order type, which only contains the return of the physical good, without any financial impact. Therefore, John again opens the Create Sales Order app.
2. John enters order type GR, sales organization DB01, Distribution channel BS, and Division BI. Afterwards, he presses enter.
3. Again, he enters his customer number of step 17 within task 1 as Sold-to Party and Ship-to Party. Furthermore, he enters ### as Cust. Reference, the current date as Cust. Ref. Date, and MUC0 as Deliver. Plant. Then, he presses enter.
4. As line item, John enters material DXTRG1###, with a quantity of 1. This is exactly the bike that was used for the rental service. Finally, he presses Save, and writes down the goods return number: ___________________
5. Similar to the Outbound Delivery for the start of the bike rental process, John uses the App Create Outbound Delivery in order to start the return process. He selects his sales order in the list, and clicks on Create Deliveries.
6. Next, the physical goods receipt has to be posted in order to finish the return process. For this, John opens the app Change Outbound Delivery. He searches for his outbound delivery, and presses enter.
7. John now has to change the delivery for the bike return. For this, he clicks on the Picking tab. There, he enters Storage Location BS02 manually (although it is not part of the entry help). Thereby, John wants to simulate the process of returning the bike to another location from where the rental process was initially started. Finally, after entering the storage location, John clicks on Post Goods Receipt. Thereby, the bike is finally back in the local storage of GBS.
8. To verify that the bike really is back on stock, John again opens the “Transfer Stock” app. After entering plant MUC0 and material DXTRG1###, he notices that the number of bikes in storage location BS01 is still zero. However, in storage location BS02, there is now one bike on stock.
9. Since John noticed that the bike was used for 60 minutes instead of 50 minutes, the sales order has to be adapted in order to ensure the correct financial billing. For this, he opens the Change Sales Order app. He enters his sales order number from step 10 of task 2.
10. Again, the sales order view is opened. There, John changes the line item for the bike sharing service from 50 minutes to 60 minutes, noticing that the net value of the order changes from 5€ to 6€. H saves the changed sales order. Thereby, the bike return process is finished.
Finally, to end the bike rental process, an invoice for the service used by the customer has to be created. Since the payment models in the bike sharing market may differ, the financial department is responsible for the payment processes. However, every bike rental service has to be financially recorded with the creation of an invoice. Therefore, John wants to create an invoice for the bike rental process he just went through.
1. To create an invoice, John opens the app Create Billing Documents. He searches for his sales document, which should appear in the list.
2. First, John clicks on the billing settings in the bottom toolbar. He activates the automatic posting of billing documents, and switches off all the other options.
3. Then, he selects the document, and clicks on Create within the toolbar. A popup window appears, containing two warning messages. The first one reports that one line item cannot be invoiced. This is completely fine, since the rental bike shall not be invoiced, only the bike rental service. The second one can be simply ignored, since there is no output determination such as an automatic invoice printing configured in the S/4HANA system of GBS.
4. With this simple step, John completed the creation of an invoice for the bike rental service, and goes back to the home page.
John finally wants to review the sales and distribution process. For this, he first displays the central sales order documents. Afterwards, he takes a deeper look at the material documents. Finally, he displays the financial statement to review the financial impact of the executed transactions.
1. To review the sales documents, John opens the app “Manage Sales Orders”. He enters his customer number from task 1 as Sold-to-Party, and presses Go.
2. Two sales orders should appear in the system. One is for the bike rental service, which was created in task 2 of the case study and should have a net value of 6€. The other one is for the bike return and should have a net value of 0€.
3. To get a look at the process, John clicks on the status Completed of the order with a net value of 6€. He gets to the document flow.
4. The document flow shows the single documents created as part of the sales order. It started with the sales document itself, which has the status Completed. Afterwards, a delivery document was created, followed by the invoice creation. Finally, an accounting document which clears the invoice will follow. However, since this is in the responsibility of the financial department, this step was not done yet.
5. The sales document with a net value of 0€ does not have a separate document flow. This order only consisted of the bike return process, without having a financial impact. Therefore, it only appears as a single material document.
6. In order to take a deeper look at the material documents, John opens the app “Material Documents Overview”. He enters material DXTRG1###, and presses Go.
7. The results show three different material documents. The first one is for the goods receipt of a single bike, which was executed in task 1. The second one is for the start of the bike rental process. The third one is for the bike return. By clicking on the single documents, John gets more details about the documents.
8. To finally see the financial impact of the transactions, John opens the app “Display Financial Statement”. He enters company code DE01, Financial Statement Version GL00, and presses Go.
9. With the unexpected goods receipt at the beginning, the inventory for trading goods increased. John goes to Assets->Short-Term Assets->Inventory-Trading Goods, and clicks on the Period Balance.
10. He selects “Display G/L Line Items”, and filters for the current date. Thereby, a financial document is shown, which increased the inventory of trading goods by 4.000€.
11. Next, John wants to see the financial impact of the bike rental service. For this, he goes back to the financial statement, and goes to Assets->Cash & Cash Equivalents -> Trade Accounts receivables, and clicks on the Period Balance.
12. John selects “Display G/L Line Items”, and filters for the current date. He notices a journal entry that increases the Trade Accounts receivables by 6€. This is exactly the amount of the bike rental service John previously went through in the system.
13. Finally, John finished reviewing the transactions he completed in the system. Therefore, he goes back to the home page, and logs off from the system. Satisfied from the completion of the whole sales and distribution process, he gets up to make a short break.
Manage Master Data
Create Sales Order
Create Outbound Delivery
Post Goods Issue
Create Goods Return
Post Goods Receipt
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