SAP Sales and Distribution Beginner Notes: Key Concepts Explained

Introduction to SAP Sales and Distribution (SD) Module

SAP Sales and Distribution (SD) is a crucial module in SAP ERP, responsible for managing all transactions from order to delivery. Whether you’re a student, SAP consultant, or business analyst, understanding the core concepts of SD is essential. 

What is a Sales Organization in SAP SD?

A Sales Organization is the top-level organizational unit in the SAP SD module. It represents the entire sales structure of a business responsible for distributing goods or services.
  • Represented by a 4-character code.
  • Associated with multiple distribution channels.
  • Linked to one or more plants, which are in turn assigned to a company code.
  • A single company code can encompass multiple sales areas.
This structure ensures seamless transaction processing and reporting across multiple regions or product lines.

What is a Distribution Channel?

A Distribution Channel describes the path through which goods or services reach the customer. It plays a pivotal role in determining pricing, delivery conditions, and customer reach. Common Distribution Channels:
  • Retail
  • Wholesale
  • Direct Sales
In SAP, a distribution channel is represented by a 2-character code and is associated with one or more sales areas.

Understanding the Distribution Chain

The Distribution Chain is the combination of a Sales Organization and a Distribution Channel. It forms a unique path for product flow and determines how pricing, taxes, and delivery are managed.

What is a Sales Order in SAP?

A Sales Order is a legally binding agreement between a customer and a sales organization for the supply of goods or services over a specified timeframe.

A Sales Order Includes:

  • Organizational Data: Company code, sales area, plant
  • Header Data: Customer name, delivery date, terms
  • Item Data: Products or services ordered
  • Schedule Line Data: Quantity and delivery dates for items
Sales orders are central to tracking revenue, managing inventory, and fulfilling customer requirements.

Special Sales Document Types in SAP SD

Document Type Description
SO Rush Order
G2 Credit Memo
RE Return Order
KN Free of Charge (FOC) Subsequent Delivery Order
RK Invoice Correction Request

What is the Consignment Stock Process?

The Consignment Stock Process allows businesses to store goods at a customer’s location or reserve specific stock for them at their own warehouse.
  • Customer is billed only for what is consumed.
  • Stock is tracked by customer and material.
  • Standard order type: KB
  • Delivery type: LF
This process enables better customer service and reduces the burden of inventory holding for clients.

Standard Output Types in SAP SD

Output Purpose Output Type
Sales Order Confirmation BA00
Outbound Delivery Note LD00
Billing Document RD00
Cash Sales RD03
Inquiry AF00
Quotation AN00
Contract KO00
Picking List EK00

Fields in Pricing Procedure

The Pricing Procedure in SAP SD controls how prices and discounts are calculated in a sales document.

There are 16 core fields:

  1. Step
  2. Counter
  3. Condition Type
  4. Description
  5. From
  6. To
  7. Manual
  8. Mandatory
  9. Statistical
  10. Print
  11. Subtotal
  12. Requirement
  13. Alternative Calculation Type
  14. Alternative Condition Base Value
  15. Account Key
  16. Accrual
These fields allow companies to define and automate complex pricing rules tailored to their business needs.

What is a Condition Type?

A Condition Type defines how a particular condition behaves in a pricing scenario. It’s the building block of the pricing mechanism in SAP.

Usage Areas:

  • Pricing
  • Output control
  • Material determination

Examples in Pricing:

  • PR00 – Basic Price
  • KFOO – Freight
  • K007 – Customer Discount
Each condition type is linked to an Access Sequence, which determines where and how the system retrieves data from Condition Tables.

Frequently Asked Questions (FAQs)

1. What is the primary role of SAP SD?

SAP SD manages sales transactions, including order processing, shipping, billing, and customer management.

2. Can one sales organization serve multiple distribution channels?

Yes, one sales organization can be linked to multiple distribution channels to serve different markets.

3. What is a sales area in SAP SD?

A sales area is a combination of sales organization, distribution channel, and division, used for processing sales orders and reporting.

4. How does SAP handle customer-specific pricing?

Through condition types and pricing procedures, SAP can customize prices, discounts, and taxes per customer.

5. What is the significance of output types in SD?

Output types determine how documents like sales orders, invoices, and delivery notes are printed or sent electronically.

6. What is the difference between a rush order and a normal sales order?

A rush order is processed and delivered more quickly than a standard sales order, often using special document type SO.

Conclusion

The SAP Sales and Distribution module plays a vital role in business operations, from managing customer relationships to ensuring accurate billing and delivery. These beginner notes offer a solid foundation to understand core concepts such as sales organization, distribution channels, pricing, and sales orders. 
 

Read also:
Text Determination Procedure in SAP SD

SAP SD Books :-
SAP Sales and Distribution, Interview Questions, Certification and Configuration Books

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