Last Updated on January 10, 2023 by Pradeep
What is SAP SD – An Introduction
SAP SD is related to the Selling & Distribution of products & services of a business. It handles the whole process of sales starting from receiving orders to the delivery of the product. Likewise, it manages requests for Quotations, Sales Orders, setting up prices, managing transportation, packaging, shipping, billing & final sales of products. In other words, the whole logistics cycle is taken care of by the SAP SD module.
What is there in this article:-
- Intro to SAP SD
- Components of SAP SD
- Organizational Structure
- Benefits of SAP SD
- SAP SD Sub-Modules
- SAP SD-FI Integration
- S4HANA Logistics – Future of SAP SD
- Who Should Learn
- Conclusion
Although all SAP Modules used in an ERP system are integrated, however, this module works in close integration with SAP Material Management & Production Planning. Sales & Distribution has a bulk of such functions which enhance the efficiency of the order-to-cash cycle.
An interesting fact
“Procurement with a purpose”. The SAP promoted this message at the Ariba Live conference 2018, which means that you can use the procurement to serve high-value purposes than just profits like social, legal, regulatory etc.
SAP SD – Key Components
- Customer and Vendor Master Data
- Sales Support
- Shipping of Material
- Sales Activities
- Billing-related
- Transportation of products
- Credit Management
- Contract Handling and Management
- Foreign Trade
- Information System
In coordination with other modules, SD allows an order-to-cash cycle in the related business process. Further, it takes care of all the information and activities on the sales & distribution part.
Organisational Structure of SAP SD
The structure has majorly two parts:
- Organisational element creation in the SAP ecosystem
- Interconnection of all elements as per business requirements
Sales Organizations
These are the first-level activity department and the main player in this Module. These are the one which is mainly responsible for the distribution of goods & services. Ideally, an organization should so have only one Sales Organization to keep the reporting process easy and simple or else organizations should keep a very less number of sales organizations as per SAP’s recommendations.
Distribution Channel
At the second level, it is the
Another section is called Division. This section represents a product or service line in a single organization.
Sales Area
In an organization, we require the Sales Area for the processing of an order. It consists of a sales organization, distribution channel and a division.
Just like other modules, in Sales and Distribution also, we assign each sales organization to a company code. Likewise, we assign the distribution channel and divisions to the sales organization. Consequently, all of these when combined, make a sales area.
We assign each sales organization to a company code which further leads to defining a distribution channel and then division to a sales organization.
Benefits of SAP SD
Revenue Reporting
Revenue is generated through the SD module. It reports all reports related to revenue and integrates with various other departments strategically.
Earning is the most important aspect of any organization. The SAP SD helps in managing and reporting all revenue and profits.
Integration of SD with other modules
SD is one module that works in integration with other key modules of SAP i.e. FI and MM.
SD-MM:- The SD MM integration works when we create sales orders in SD. Here all the details filled in the sales order are extracted from MM (Material Management) itself. It includes some other things such as Price or MRP of the product, availability of the concerned product, shipping point determination, details related to the sales area to which the material pertains in the sales order etc.
SD-FI:- With every movement of delivery about the sales order, Goods move from one place to another. This puts an impact on the GL account as well as Finance. It includes debit and credit notes, Product invoices etc. These are to be noted in the SAP FI module also. These data are fetched from SD itself with the help of its FI Integration.
Also Read: Interview Questions on SAP FI SD, FI MM Integration
Information on the fly
With its functionalities, we can see up-to-date information on the inventory status, pending and completed invoices, customer orders and their credit status as well.
All this SAP SD avails us in real-time for better management.
Track KPI
The Sales & Distribution module helps us improve and track our key performance indicators. Hence, we can accurately measure our ROI (return on investment) and improve our profits. It also allows us to keep a watch on the changes in prices so that we can make our plans better for future investments and transactions.
Advanced Reporting Tool
With SAP Sales & Distribution’s modern and intelligent reporting tool, we can do a detailed analysis of the company sales, orders, deliveries, their completion status and pending ones.
Improved customer communications
Not only businesses, but customers also get benefits from the SAP SD functionalities. They can know the order status, communicate well with the business providers, track shipments and communicate in a better way. This helps in a good customer experience.
Sub-Modules of SAP SD
Sales & Distribution has some sub-modules that work closely with the main module. Here I provide details about it:-
SAP SD-MD – Master Data
This Sub-module Master Data mainly tracks the transactions of all the data within SD. This means It keeps a record of the complete Order to Cash Flow and all its transactions.
SAP SD-BF – Basic Functions
As the name suggests, the basic functions are submodule, monitors Picking, Packing, Inventory, pricing, output etc. So if we need to have a look at these aspects we need to get into the Basic Functions module in it.
SAP SD-SLS – Sales
The sales module handles the Sales process of the business. I mean, having the product details, customer data, customer feedback, price information and the sales flow is here.
SAP SD-SHP- Shipping
The shipping and delivery of the product, their delivery status, dates when the orders are shipped and delivered etc. are managed here. It ensures the correct and timely delivery of the order to the correct customers. It also notes if there is any return of the orders for any reason.
SAP SD-TBA- Transportation
The transportation segment works in sync with the previously mentioned sub-module that is shipping.
It majorly notes the modes of transport, transportation way (manual or courier), etc. and all in-between activities while the transportation happens.
SAP SD-FTT- Foreign Trade
This module tracks and handles the functioning of products that the particular business imports and exports. I.e. the transactions related to the foreign trade of the company.
SAP SD-BIL- Billing
Billing is one of the most important parts of any sales department. In SAP SD, it handles the mode of payment, billing type etc. For example, Payment via Debit or credit card, the option of Cash on Delivery and in case of foreign payments, it may be PayPal etc. All these things fall under BIL or billing sub-module.
Also read: Accounts Payable in SAP
SAP SD-CAS- Sales Support
Sales support mainly means providing customer support at all phases of the sales process. Starting from the pre-sales, sales, maintenance, distribution or delivery, and post-sales activities or issues, this department keeps track of all data exchanged between the customer and the sales team. It further helps them to keep a record and analysis of the issues and history later.
The SAP SD-FI Integration – An important subject to understand
For SD as well as SAP FI Consultants, one important subject to understand here is the SD-FI Integration Process Flow. This SAP SD-FI integration is a very important daily basis work in an SAP-enabled organization.
To understand credit finance, SD integrates with Finance in a streamlined manner. Whenever a customer pays us for the goods sold to him, we pass journal entries and post the sales invoice into the Finance module. The sales invoice document is part of the SD module but due to financial involvement, we need to integrate SD with FI.
There are some Pre-Requisites for SAP FI-SD Integration. These are:-
- Material Master
- Customer Master
- Condition records
- Pricing Procedure
- GL Accounts (Sales, Discount, Commission etc).
You need to understand the functioning of all these points to understand the integration of SD-FI properly.
Read Related: SAP FI-MM Integration Interview questions in SAP FICO
S/4HANA Logistics – The Future of SAP SD
SAP has migrated its database to the HANA platform which is based on cloud technology. This has improved the functionalities and
ECC-based functional modules such as SD, MM, PP, and PM have been integrated under S4HANA Logistics, and FI, CO, Cash Management, Bank Account Management, and Receivable management have been integrated under SAP S4HANA Finance.
However, even with the S4HANA being the latest version, the popularity of SAP ECC modules is still not less.
Who should Learn it
People having experience in sales or related work should do this. Or those who have an interest in sales procedures and their workflow can opt for this module as their SAP career. department work. People with post-graduation in Sales subject or even in Marketing, procurement etc can also go for it. It is basically for those who are somehow related to sales work or subject.
Many SAP end-users choose this module as per their interest considering their educational background as well.
Although many people from finance, marketing or production department too, switch to SD and vice-versa. So it all depends on your hold on the particular subject you wish to choose.
Conclusion
For a beginner, SD, MM, PP, and FICO are still very important to learn the basics of SAP. So, if you are from a Sales & Distribution background with some experience, you can choose it. Or even also a fresher with an interest in the Logistics sector of SAP ERP, learning SAP SD is important and worthful.
Watch related video: SAP FI SD Integration
