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Chapter 3
SALES AND DISTRIBUTION IN ERP
An ERP system can improve a company’s sales order process in several ways. Because an ERP
system uses a common database, it can minimize data entry errors and provide accurate
56 information in real time to all users. An ERP system can also track all transaction data (such
as invoices, packing lists, RMA numbers, and payments) involved in the sales order process.
We will look at how one ERP system, SAP ERP—in particular, its Sales and Distribution
module—manages the sales order process. (Other ERP software handles the process in a
similar fashion.) In SAP ERP, important transactions and events are assigned a number for
record-keeping purposes. The electronic evidence of a transaction in SAP ERP is called a
“document.”
The SAP ERP Sales and Distribution module treats the sales order process as a cycle
of events. SAP ERP defines up to six events for any sale:
• Presales activities
• Sales order processing
• Inventory sourcing
• Delivery
• Billing
• Payment

Presales Activities
The first step in the SAP ERP sales and distribution process is presales activities. At this
phase, customers can get pricing information about the company’s products, either
through an inquiry or a sales quotation. The difference between an inquiry and a
quotation is that a quotation is a written, binding document; the seller guarantees the
buyer that, for some specified period of time, he can buy the product at the quoted price.
An inquiry is simply a statement of prices, with no guarantee implied. In either case, the
event is recorded in the central database.
Presales activities also include marketing activities such as tracking customer
contacts—including sales calls, visits, and mailings. A company can maintain customer
data in the ERP system and generate mailing lists based on specific customer
characteristics, which enhances targeted marketing efforts.

Sales Order Processing
In the SAP ERP system, sales order processing is the series of activities that must take place to
record a sales order. The sales order can start from a quotation or inquiry generated in the
presales step. Any information that was collected from the customer to support the quotation
(contact name, address, phone number) is immediately included in the sales order.
Critical sales order processing steps include recording the items to be purchased,
determining the selling price, and recording the order quantities. Users can define
various pricing alternatives in the SAP ERP system. For example, a company can use
product-specific pricing, such as establishing quantity discounts for a particular item,
or it can define discounts that depend on both the product and a particular customer.
Configuring a complex pricing scheme requires a significant amount of programming
work, but once the system is in place, it will automatically calculate the correct
price for each customer, eliminating many of the problems that Fitter currently
experiences.

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