An Overview of Fitter Snacker A) The Business of Fitter ...poheshawn.tripod.com/SAP_project_lowresolution.pdf · An Overview of Fitter Snacker A) ... pack and ship order is then printed

JAG Inc: SAP Consultants Management Report: Using SAP R/3 to Enhance Business Processes at Fitter Snacker

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An Overview of Fitter Snacker A) The Business of Fitter Snacker

FS is a company that markets, produces and sells 2 types of nutritious snack bars, NRG-A and NRG-B. FS is organised into 4 functional areas: Marketing & Sales, Production, Accounting and Human Resource. The Sales Division comprises the Wholesale and Direct Sales Division. The former sells the products to middlemen who distribute them to small shops, vending machine operators and other health food stores while the latter sells directly to large grocery stores, sporting goods stores, and other large chain stores. A value-added chain diagram of Fitter Snacker is shown in Figure 1 of Appendix A. B) The Organizational Structure of Fitter Snacker

The key roles that have to be performed will be modelled upon the different functional areas that FS has in its business. FS will be organised into separate departments, for each of these areas, to carry out the necessary activities. There will be a person heading each of these departments who will then report to a higher authority (e.g. CEO). Each department is then further segmented into different sections, based on an area of specialisation, and will by headed by a section head. Sections will be staffed by normal employees. Figure 1: A Possible Organisational Chart of Fitter Snacker

Chief Executive Officer

Sales & Marketing Director

Chief Financial Officer

Chief Production Engineer

HR Director

Wholesale Division

Direct Sales Division

Accounting Invoicing

Warehousing Production Procurement Training & Development

Recruiting & Compensation

Sales Clerks

Salespersons

Sales Clerks

Salespersons

Credit Manager Accounting Manager

Production Manager

Purchasing Manager

Warehouse Supervisor

Receiving Supervisor Note: Appendix B Figure 3 shows another possible organizational chart.


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C) The Sales Order Process

The purpose of this process is to produce key transaction data such as generating quotations, recording sales amount and terms, estimating shipping/delivery dates, performing credit checks. A process-oriented function tree is included in Figure 2 of Appendix A. Though this process is able to support the business, albeit to a certain extent, it is far from optimum and can be substantially improved to benefit FS as a whole The problem faced by the Sales Order Process stems from a lack of integration of the sales order system and 2 other information systems, the warehouse and accounting information system. This has caused an inefficient use of transaction data, which often entailed information sharing between systems through manual file transfers or paper printouts. As such, information produced by the sales order system is not real-time. This is undesirable because activities downstream in the value-added chain can not be carried out effectively and efficiently due to the lack of timely sales order information. Description of the Sales Order Process & its Implications

1) Generating Quotations During a sales call, the salesperson generates a quotation which is handwritten on a 3-sheet carbonless form, one each for the customer, sales office (faxed) and salesperson. Customers are to call the sales office to place their order.

2) Checking of Delivery Date Upon customers request for delivery date, in-office clerk contacts warehouse supervisor to when customer’s order can be shipped. The warehouse supervisor can only estimate the shipping date due to lack of information regarding inventory count and number of sales orders. Upon a given estimated shipping date, the sales clerk calculates the delivery date.

3) Checking of Credit Status For new customers, a paper-credit check form is prepared for new customers and given to Accounting which performs the credit check and sets a credit limit. For existing customers, the sales clerk checks the weekly paper report from Accounting to obtain customer’s current balance, credit limit and available balance.

Implications:

¡ Incorrect pricing and discretionary discounts by sales persons may lead to profit erosion. ¡ Greater possibility of data entry error causes problems downstream in the value-added

chain such as incorrect accounting. ¡ Customers have to make an order twice. This could result in poor customer satisfaction

due to time wasted.

Implications:

¡ Long delays in order processing may lead to customer dissatisfaction. ¡ Inaccurate estimation of shipping and delivery dates could disrupt customers’ business

plans thus resulting in greater dissatisfaction if FS do not deliver on the agreed date.


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4) Sharing Sales Order Data Clerk enters customer order which is stored in the customer’s order database. A packing list and shipping labels for warehouse to pick, pack and ship order is then printed. A data file is transferred to Accounting department via floppy disk to be transferred to PeachTree Software.

Evaluation of the Sales Order Information system

The information system (IS) used in the sales order process are utilised only to record sales transactions and are run on stand-alone PCs. All other activities in the sales order process are manually performed such as performing credit checks and estimating delivery dates. Furthermore, the lack of integration between all the information systems does not make efficient use of the data to carry out the entire sales order process effectively. As such, its IS are not able to support the sales order process well and hence would not be well-aligned with a corporation’s objectives of earning profits.

Implications:

The lack of integration of data with the sales order IS and the: (i) warehouse IS may result in a failure to meet the designated delivery date if there is no

stock in the warehouse. Since FS products are made-to-stock items, the production department may then have to work overtime and extra costs will be incurred to compensate for overtime pay and/or wages for part-time workers to solve the problem of stock-out quickly. Furthermore, the procurement function may be also unable to obtain raw materials from suppliers at such a short notice thus further delaying the production process. Additionally, economies in scale in procurement and production may not be realised due to erratic amounts being ordered and produced respectively.

The lack of integration will either result in stock-outs or excess inventory. Either way, this will ultimately affect profitability in the short term as cost of goods sold will be higher or holding costs of inventory will be incurred, and in the long term as dissatisfied customers will be unlikely to purchase from FS again.

(ii) accounting IS may result in inaccurate financial, tax and managerial accounting that will have serious implications from a legal standpoint and for day-to-day operations. Using a floppy disk to transfer 3 days a week is a process that is unreliable, unsafe and untimely; the data could be easily corrupted, modified or deleted.

Accounting information is necessary for FS to analyze the profitability of various products and for the marketing and sales department to develop a sales forecast which is then used as an input for the production department to develop production schedules. The information is also required to evaluate the performance of the employees so that remuneration can be given out appropriately.

Implications: ¡ Long delays in creating credit check accounts (for new customers) or checking credit status

(for existing customers) may lead to customer dissatisfaction. ¡ Untimely information regarding credit balance of existing customers could result in

extension of credit to the credit-unworthy customers who may delay payment or not make payment at all, thus eroding profitability.

¡ Inefficient use of resources as duplication of work arises due to entering customer’s details twice.


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TUTORIAL Creating and Generating Customer Inquiry & Quotation SAP R/3: Sales & Distribution Process (SD) The Customer Inquiry & Quotation processes in SAP R/3 were configured and modified to align the system with the sales practices currently adopted by Fitter Snacker. These practices include discount pricing, credit limit checks, item availability checks and terms of payment. A multitude of configurations had to be performed in order to operationalise the above features into the SAP’s ERP system. These configurations form an integral part of the tutorial as it allows users to better appreciate the way the SAP system relates to the business of Fitter Snacker. A description of the configurations performed is included in Appendix B. In this tutorial, each of these processes will be first illustrated by an eEPC. This will be followed a tutorial outlining the various steps for configuring SAP R/3 to generate an inquiry and a quotation. Throughout the tutorial, important notes will be included in boxes similar to the one below.

I Customer Enquiry A) The eEPC View (Extended Event-Driven Process Chain) The Customer Inquiry Processing function is triggered when a customer initiates an inquiry for Fitters Snacker’s Products. A Function Allocation Diagram showing the various views (informational, organizational and control views) associated with the function is included in Appendix B Figure 1. Following the inquiry, the items in the inquiry are either rejected, if for example, customers fail the credit limit check or when stock is unavailable to fulfill the request, or a quotation will be subsequently created based on the inquiry items. Figure 1 illustrates the events prior to and after the Customer Inquiry Processing function.

These boxes contain information to allow managers to understand the basis for the various configurations as they relate the business processes of Fitter Snacker with SAP R/3 software. As such, the versatility of the SAP system can be appreciated.

Figure 1: eEPC for Customer Inquiry Processing

: Either one of the events will occur but not both.


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B) Creating a Customer Inquiry in SAP R/3

A Possible Business Scenario: Eshawn Inc inquired on the following products: 20 cases of NRG-A1, 10 cases and 10 boxes

of NRG-B. Delivery is to take place on 18.04.2004 and the order can be fulfilled in multiple deliveries.

1) Navigate to ‘Logistics’ é ‘SD’ é ‘Sales’ é ‘Inquiry’ é 2) Fill in the details as shown in Figure 2.

3) Under the ‘Item Overview’ tab (or ‘Sales’ tab) in the Main Inquiry Screen, enter the order

information. Refer to Figure 3 for items (i) to (v) and Figure 4 for item (vi).

a) Required Fields i) ‘Sold-to-Party’: Enter 20016 for Eshawn Inc, the customer making the inquiry. SAP

automatically populates the ‘Address’ & ‘Ship-to-Party’ fields. ii) Req. Delivery Date: The default delivery date is the current date. Amend as necessary.

In our example, Eshawn Inc requested it delivery on 18.04.2004. iii) Payment Terms: ZB50 reflects the current FS payment terms: 2-10/net 30. (2%

discount for payments within 10 days and net if within 30 days) iv) Complete Delivery: The checkbox specifies if customers are willing to accept separate

deliveries in the event of inadequate stock. In our example, Eshawn Inc allows for multiple deliveries, so the checkbox is not marked.

v) Inquiry Items list: To populate the list, enter the: ¡ ‘Material’ (NRGA-03 or NRGB-03) code; ¡ ‘Order Quantity’; and ¡ appropriate ‘SU’ (Sales Unit) ¡ ‘Price Group’ (‘bulk-buyer’: 10 cases of NRGB-03) for all the items that are the subject of the customer’s inquiry. The rest of the fields will be populated automatically including the ‘Net Value’ of the entire order, which is shown at the top right hand corner of the screen. To check that adequate stock is on-hand to satisfy the inquiry, highlight the line item and click to ‘display availability’. Refer to Appendix B part D for details on how availability control can be configured to work in an inquiry.

1 NRG-A and NRG-B were created as NRGA-03 and NRGB-03 in SAP. Refer to Appendix B for details.

The purpose of this screen is to configure SAP to create an: ¡ end-customer inquiry (Distribution

Channel: 10) ¡ for the Sales Group: 301 ¡ at the Philadelphia Sales Office:

3000 ¡ of the FS Wholesale Division ‘Sales

Organization’ 3000

Figure 2: Populating fields for the initial screen of ‘Inquiry’


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vi) Pricing Conditions: Different variant pricing conditions can be used to assign

prices/discounts based on the circumstances of each sale. Referring to Figure 8, discounts can be assigned through this screen by:

(1) double-clicking the ‘Material’ field of the line item for which a discount is to be given or the ‘Item Conditions’ icon; and

(2) clicking the ‘Conditions’ tab. The screen shows the value, the cost and the standard margin of the order.

(3) In the next available row, key in K020 under ‘CnTy’ (‘Condition Type’) or choose from the list (Price Group).

(4) Hit ‘Enter’. The 10% discount should automatically be populated. The costs and standard margin will then be re-calculated. The salesperson can observe if a loss has resulted and then take appropriate corrective actions.

(5) Click ‘Back’ to return to the main Inquiry screen if the result is satisfactory, To remove the discount, highlight the row and click ‘Delete Line’ at the bottom of the screen.

Figure 4: Assigning the 10% Discount for Bulk

Purchase of NRGB-03

Figure 3: Populating the Fields of the Main Inquiry Screen

under the ‘Sales’ tab view


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b) Non-Required Fields

4) Check that all necessary information has been entered and click ‘SAVE’ to save the inquiry. An inquiry number will be generated and displayed in the status bar. In our example, the inquiry was assigned a number of ‘10000030’.

Note down the inquiry number so that quick reference (e.g. salesperson to follow-up on

quotation) can be made to it in the future. 5) After the inquiry has been created, SAP allows the inquiry to be displayed and/or changed.

This can be done by accessing:

‘Logistics’ é ‘SD’ é ‘Sales’ é ‘Inquiry’ é or It is also possible to print out a hard-copy for filing purposes.

The purpose of the other fields is to record details that would facilitate recognition and understanding by the salesperson, and thereby enhancing the ability communicate to customers who wish to follow up with a quotation. Using the ‘Valid from’ and ‘Valid to’ fields, the validity of the inquiry can be specified. The ‘Delivery Plant’, if known, can be included. The ‘Order Reason’ field serves to remind salespeople the reason for the inquiry as well as for the marketing department to analyse the main reasons why customers inquire about products. ‘Incoterms’ can be used to specify the type of freight to be used. NOTE: It would be necessary to specify the validity and type of freight must be specified when creating the quotation.

With reference to Figure 3 on page 6: ¡ For the 1st line item: The ‘Net Price’ of NRGA-03 is shown as 1,80/EA instead

of 2,00/EA, which is the standard wholesale price configured under ‘Material Price’. This is due to the variant pricing condition that was specified to sell NRGA-03 to Eshawn Inc at 1,80/EA.

¡ For the 2nd line item: The ‘Rate’ and ‘Net Price’ of NRGB-03 are 3,00/EA and 2,70/EA respectively. This is because of the variant pricing condition that is to be added in by the salesperson as 10 cases would be considered a bulk order. Figure 8 shows how the variant pricing condition is added.

¡ For the 3rd line item: The purpose is to highlight that SAP can be configured to recognize the various forms in which goods can be shipped. For FS, products can be ordered and shipped either in boxes or cases. SAP allows both types of these orders to be fulfilled.

¡ Pricing Conditions: A variety of pricing conditions such as discounts by material, by material group, by customers etc) can be configured to suit a myriad of business needs. The 2 pricing conditions highlighted are more relevant for FS.

¡ Credit Check: Currently, Eshawn Inc has not exceeded his credit limit of 1.000 USD. As such, the credit check function did not display any warning messages.


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II Customer Quotation Processing A) The eEPC View (Extended Event-Driven Process Chain) The Customer Quotation Processing function is triggered by either one of these activities: when a quotation is generated from sales activity (e.g. sales call made by a salesperson from direct sales division), when a quotation is being created from an inquiry that has been validated and when a reason for quotation occurs (e.g. when customers call up to request directly for a quotation). A Function Allocation Diagram showing the various views (informational, organizational and control views) associated with the function is included in Appendix B Figure 2. At the end of the quotation processing function, the customer will be notified of the outcome regardless of whether the quotation is valid or not. Figure 5 illustrates the events prior to and after the Customer Quotation Processing function.

Figure 5: eEPC for Customer Quotation Processing

: Either one of the events will occur but not both.

: Both events must occur.


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B) Creating a Quotation in SAP R/3

A Possible Business Scenario (cont’d): Eshawn Inc decides to go ahead with the quotation based on the previous inquiry that it

had made.

1) Navigate to ‘Logistics’ é ‘SD’ é ‘Sales’ é ‘Quotation’ é 2) Fill in the ‘Quotation Type’ as ‘QT’ or choose from the list as shown in Figure 4 below.

Ignore the rest of the fields and click ‘Create with Reference’ .

3) Ensure that the Inquiry tab is selected and enter the inquiry number that was previously

generated. Click ‘Copy’ to copy the details of the inquiry to populate the Quotation. Alternatively, if the inquiry number is not known, fill in 1 or more of the fields listed in the

search criteria and click ‘Search’ . A list of inquiries matching the criteria will be returned. In Figure 5, the existing inquiry number is ‘10000030’.

Figure 4: Populating fields for the

initial screen of ‘Quotation’

The purpose of this screen is to create a Quotation of type ‘QT’ with reference to an existing inquiry. As such, it is not necessary to enter the details for ‘Organizational data’. This function saves precious time for salespeople as order details will be copied from the inquiry and need not be re-entered into the quotation. However, the inquiry number is required. If it is not known, the search function can be used to find it.

Figure 5: Creating a quotation with reference to an

existing inquiry


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4) All the information from the inquiry has been copied to the quotation over as shown in Figure 6. To create the quotation, it would be necessary to enter the: ¡ validity period of the quotation in the ‘Valid from’ and ‘Valid to’ fields; and ¡ ‘incoterms’. In this case, the freight-free option (‘CPT’) was chosen. as these two fields were not specified earlier in the inquiry.

5) To check that adequate stock is on-hand to satisfy the customer’s quotation, highlight the line

item and click to ‘display availability’ of that item. Refer to Appendix B part D for details on how availability control can be configured to work in an quotation.

6) Check that all necessary information has been entered and click ‘Save’ to save the quotation. A quotation number will be generated and displayed in the status bar. In our example, the quotation was assigned a number of ‘20000024’.

7) After the quotation has been created, SAP allows the quotation to be displayed and/or

changed. This can be done by accessing:

‘Logistics’ é ‘SD’ é ‘Sales’ é ‘Quotation’ é or

It is also possible to print out a hard-copy for filing purposes. C) Credit Limit Check Function Previously, the example assumed that Eshawn Inc has yet to exceed his credit limit and hence, it passed the credit check. To illustrate how the credit limit check function works, we assume a scenario whereby Eshawn Inc has exceeded its credit limit of 1.000 USD because it has purchased 15 cases of NRGA-03 from FS but has yet to settle the outstanding debt amounting to 7.776 USD . Prior to the settlement of this debt, any quantity of an item entered into an inquiry or quotation for Eshawn Inc will cause the credit limit check function to display a warning message. Figure 7 shows the warning message as the result of a failed credit limit check. This happened when an inquiry for 10 cases of NRGA-03 valued at 518,40 USD was created for Eshawn Inc. The amount displayed will be the same as the total price of the items entered into the inquiry or quotation.

Figure 6: Checking the Main

quotation screen

Figure 7: Warning Message Displayed

JAG Inc: SAP Consultants Appendix A

A-1

Appendix A Figure 1: Value Added Chain Diagram of Fitter Snackers

Fitter Snackers

Materials Management

Sales & Distribution Production Accounting Human

ResourcesCustomer Services

Cash Sales/Rush Order

Handling

Complaints Processing

Consignment Processing

Pre-Sales Handling

Rebate Processing

Sales Order Processing

Sending Samples & Advertising

Materials

Customer Inquiry

Processing

Customer Quotation

ProcessingBilling Risk/Credit

Management Sales Order Shipping Warehouse Management

Back Order Processing

* Refer to Tutorial Part II Figure 4 for eEPC diagram * Refer to Tutorial Part II Figure 1 for eEPC diagram

* Refer to Appendix A Figure 2 below.

* Refer to Appendix C Figure 4

JAG Inc: SAP Consultants Appendix A

A-2

Figure 2: Process-Oriented Function Tree: Sales & Distribution

JAG Inc: SAP Consultants Appendix B

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APPENDIX B: INITIAL CONFIGURATION STAGE Rationale: Prior to creating the customer’s inquiry, SAP R/3 was configured to recognize the 2 products that are being sold by Fitter Snacker, NRG-A and NRG-B, and to assign prices to each of products. 2 variants of pricing conditions involving discounts were also specified. In addition, a credit check function was also embedded within the inquiry and quotation creation process. A brief description of the configuration process is provided. A) Creating FS Products in Master Data 1) The 2 products were created as Materials ‘NRGA-03’ and ‘NRGB-03’ and classified as

‘Food and Related Products’ via: ‘Logistics’ é ‘SD’ é ‘Master Data’ é ‘Products’ é‘Materials’

é ‘Trading Goods’ é 2) Data was entered in the following 4 views: ; ;

and . The products were associated with the Plant at New York (3000), the Sales Organisation at Philadelphia2’ and was assigned for ‘Final Customer Sales’ via ‘Distribution Channel 10’.

3) Under view, the ‘Base Unit of Measure’ for both products were specified to

be ‘EA’ or ‘each’. Under ‘Additional Data’, 2 more ‘Units of Measure’, ‘BOX’ and ‘CSE’ (case), were specified so as to configure each ‘BOX’ to contain 24 ‘EA’ of FS energy bars and each ‘CSE’ contained 288 ‘EA’ or 12 ‘BOX’ of health bars. This is shown in Figure 1.

4) Under view, an arbitrary cost (standard price and moving price) of ‘1,00’

and ‘1,50’ were assigned to NRGA-03 and NRGB-03 respectively. This is to facilitate the analysis of profitability during Customer’s Inquiry and Quotation Processing stage when discount pricing is factored in.

5) To create stock of each product in the system, ‘Purchase Orders’ were ‘created’ to order

10,000 ‘EA’ for each product. The goods were subsequently received by the system.

2 Sales Organisation 3000 (Philadelphia) is designated to be the Wholesale Division of Fitter Snacker.

Figure 1: Additional Units of Measure

for NRGA-03

This is to reflect the actual unit of measures used in the business process of FS and will be necessary for specifying the different quantities as per customer’s requirements.


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B) Configuring Customer Master Data, Credit Limit, and Credit Limit Checks 1) Customers must be created in the master data records in the SD module in ‘Logistics’ before

products can be sold to that customer. Customer code ‘20016’ has been created for ‘Eshawn Inc’ by accessing the following:

‘SD’ é ‘Master Data’ é ‘Business Partners’ é ‘Customer’ é ‘Create’ é

It was assigned to the ‘Account Group: sold-to-party’ for ‘Company Code: 3000’3 and ‘Sales

organization: 3000’ (Wholesale Division). As Eshawn Inc was the final customer, the ‘Distribution Channel’ was assigned as ‘10’ (Final Customer Sales).

2a) The credit limit for the customer has to be specified before the inquiry or quotation can check

if that limit has been violated. To set the credit limit, the ‘FI’ module had to be configured to set the credit limit of ‘Eshawn Inc’ to 1.000 USD. This was done as follows:

‘Accounting’ é ‘Financial Accounting’ é ‘Accounts Receivable’ é ‘Credit Management’ é ‘Master’ Data’ é

b) In the ‘Customer Credit Management Change: Initial Screen’, customers have to be assigned to a ‘Credit Control Area’ 4 . Eshawn Inc was assigned to ‘Credit Control Area: North America’ where Fitter Snacker is located. While the ‘Central Data checkbox under ‘General Data’ is the only one necessary for configuring credit limit, the rest were marked to for the purposes of completeness. This is shown in Figure 2 below.

c) In the ‘Central Data’ screen, we set the ‘Individual Credit Limit’ to 1.000 USD for ‘Credit

Control Area: 3000’. ‘Total Amount’ was set to 1.000 USD as well. This means that the maximum credit available to Eshawn Inc for all ‘Credit Control Areas’ is 1.000 USD.

3 Company Code 3000 appears as IDES US Inc but is meant to represent Fitter Snacker Inc. 4 The ‘Credit Control Area’ is an organizational unit that represents an area responsible for granting and monitoring credit.

Figure 2: Initial Screen for Customer Credit Management Change

Figure 3: Setting the Credit Limit for Eshawn Inc

Although the credit limit is set in the ‘Accounting’ module, the information will be available to the ‘SD’ module as well for performing the credit limit check. This highlights the ability of SAP to share information via a common database.


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3) To implement the credit check function within the Inquiry and Quotation process, it was necessary to perform a one-off configuration via SAP Implementation Guidance for R/3 Customizing or ‘IMG’ in short. This entailed the assignment of a type of credit check to a sales document. For the Inquiry and Quotation document type at FS, ‘a simple credit check’ was assigned. This function allows ‘warning messages’ to be displayed only when the customer does not have an adequate credit balance. Figure 4 shows the configuration screen.

The credit check function was demonstrated in Part C of the tutorial section. C) Configuring Product Pricing using Condition Technique While setting prices of products is a critical component in all businesses, giving out appropriate discounts to customers are equally essential. In SAP R/3, both prices and discounts can be configured using the condition technique. This is especially helpful for salespersons in Fitter Snacker as both divisions provide discounts to customers. Configuring the correct discount conditions will ensure that profitability will not be eroded as SAP will allow the salesperson to know the gross margin of each product when discounts are factored in.

Pricing conditions, including discounts, of each product is configured via:

‘Logistics’ é ‘SD’ é ‘Master Data’ é ‘Conditions’ é 1) For NRGA-03, the ‘Material Price’ was set to 2,00/EA under ‘Prices’ the default

‘Configuration Type’ (‘PR00’) as shown in Figure 5. Additionally, a variant pricing condition was configured using ‘Individual Pricing’ based on

the default ‘Configuration Type’ (‘PR00’) was used to set the price for NRGA-03 to be 1,80/EA for Customer 20016: Eshawn Inc as shown in Figure 6.

The pricing conditions are configured to align the practices of the Wholesale Division in giving discounts. The Division usually sets a ‘lower fixed price’ for its customers due to the large orders. Assuming Eshawn Inc has a contract with FS that stipulates it has to order in bulk (assumed to be 10 cases), the condition ensures Eshawn Inc will be charged a price of 1,80/EA for every purchase of NRGA-03 and will override the ‘Material Price’ settings. However, all customers other than Eshawn Inc would still be charged 2,00/EA.

Figure 4: Assigning Credit Check to

Inquiry and Quotation Documents


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2) For NRGB-03, the ‘Material Price’ was set to 3,00/EA under ‘Prices’ the default

‘Configuration Type’ (‘PR00’) as shown in Figure 7. Additionally, a variant pricing condition for discounts was created under ‘Price Group’

based on the default ‘Condition Type’ (K020). This is to allow salespersons to give a 10% discount for a bulk buyer of any product, not necessarily NRGB-03, by choosing that option at the Customer Inquiry and/or Quotation Generation stage. Figure 8 shows the configuration screen.

Figure 5: Assigning Price of 2,00/EA for NRGA-03 via ‘Prices’ é ‘Material price’

Figure 6: Creating the Pricing Condition for NRGA-03 at 1,80/EA for Eshawn Inc

Figure 7: Assigning Price of 2,00/EA for NRGA-03 via ‘Prices’ é ‘Material price’

Figure 8: Creating the Variant Pricing Condition where a Bulk Buyer is Given a 10% Discount


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D) Stock Availability Control in Inquiry The default settings in SAP for inquiry items (‘AFN’) or quotation items (‘AFG’) are not configured to check for availability of stock automatically unlike for sales order items (‘TAN’). However, an optional feature has been included whereby the availability control function is made available for inquiry items. Quotation items can be configured similarly. This information is necessary because Fitter Snacker salespersons might require the shipping/delivery dates during the inquiry process so as to advise customers on an alternative delivery proposal when stock is not readily available on the requested date. The availability control function automatically activates when it detects an insufficient amount of available-to-promise (ATP) goods. The configuration is performed using the SAP Implementation Guide for Customizing R/3 (IMG) by accessing the following:

‘Sales and Distribution’ é ‘Sales Document’ é ‘Sales Document Item’ é

Under ‘Sales Document Type: Inquiry’ (‘SaTy: IN’), the default item category (‘DfItc’) for Standard Goods (‘NORM’) displays the type ‘AFN’ or inquiry item. As these items are not assigned to perform an availability stock check for each line item in the inquiry, an additional item type for which an availability check would be performed was included as ‘Manual Item Category’ (‘MItCa’). This item type is ‘Standard Item’ (‘TAN’). Figure 9 shows the addition of the additional item type under ‘MItCa’. To activate the availability control function, salespersons can manually choose ‘TAN’ as the item category ‘ItCa’ in the items list on the main inquiry page. Figure 10 shows the 2 ‘ItCa’ options available for a line item in the main inquiry screen.

The pricing conditions are configured to align the practices of the Direct Sales Division in giving discounts. The Division usually gives ‘discretionary discounts” to its customers to encourage bulk orders which often resulted in erosion of profitability. Here, a discount of 10% is pre-configured so that salespersons could assign the discount when a bulk order (assumed 10 cases) is received NOTE: In actual fact, a separate ‘Sales Organisation’ has to be created for the Direct Sales Division and both pricing conditions would be configured under the appropriate ‘Sales Organisation’ code instead.

Figure 9: ‘TAN’ added in ‘MItCa’ for ‘IN’ Figure 10: ‘TAN’ option available in ‘ItCa’

JAG Inc: SAP Consultants Appendix C

C-1

Appendix C Figure 1: Function Allocation Diagram for Customer Inquiry Processing


C-2

Figure 2: Function Allocation Diagram for Customer Quotation Processing

CustomerQuotation

Processing

ProductionManager

CreditManager Salesperson Sales Clerk

AccountingDivision

WholesaleDivision

Direct SalesDivision

Production andMaterials

Management

ExpiredQuotationsQuotations List Completed

Quotations

ActualOverhead:

Sales Order

DisplayQuotation

CustomerInquiry

CustomerMaster

DatabaseSales Database

Materials CustomerQuotation

CreateQuotations

ActualSettlement:

Sales Orders

CollectiveProcessing for

Quotations

ChangeQuotation

List ofIncompleteQuotations

ExpiringQuotations

Inventory LevelDatabase


C-3

Figure 3: Fitter Snackers Organizational Chart

Fitter Snackers Management

Accounting WarehouseProductionMarketing & Sales

Marketing & Sales Manager

Accounting Manager

Warehouse Supervisor

Production Manager

Purchasing Manager

Production Personnel

PickerSales ClerksSalespersons Receiving Personnel

Receiving

Receiving Supervisor

Credit Manager


C-4

Figure 4: Sales Order Process