SAP – Sales and Distribution Module - Lesson 1

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SAP – Sales and Distribution Module - Lesson 1

SAP – Sales and Distribution Module - Lesson 1

Enterprise Structure Definition

Enterprise structure is a representation of Legal and Organizational structure of the company.

It helps to set up the structure for all business functions like

  • Finance and Controlling(FI-CO)
  • Sales & Distribution (SD)
  • Materials Management (MM)
  • Logistics General (LO) and Logistics Execution (LE)

It allows necessary integration among these functions (SAP calls these as Modules) within enterprise structure to manage transaction processing.

Enterprise structure of Sales and Distribution has the following basic organizational elements

  • Sales organization
  • Distribution channel
  • Division
  • Sales office
  • Sales group

Graphic representation of Sales Enterprise structure

Sales Area


1.1 Sales Organization

Sales organization is the basic organizational element in SD. All sales documents are created for a sales organization. Definition of Sales organization is basic and mandatory in SD configuration.

It is used for creation and processing of sales documents from sales to cash. Sales Organization can have its own customer and material master data in system.

Sales organization can be defined based on

  • Division of sales function of the company based on
  • Geography or sub-businesses of the company
  • Any other sales criteria.

Example - A company wants to divide its sales organization structure separately for North America, rest of the US, Europe and Asia-pacific, then it can have 4 different sales organizations.

  • This will help to have sales to cash cycle run separately for each of this region.
  • Statistical sales reporting can be managed per sales organization.


Configuration in SAP

Sales organization is defined as a 4-digit alpha numeric code with external numbering.


Follow Menu Path: IMG-> Enterprise structure –> Definition -> Sales and Distribution -> Define, copy, delete, check sales organization

Click clip_image001

Following pop-up is displayed

Define Sales Organization

Click on “define sales organization” and click on clip_image003

Define Sales Organization

Here the three options explained in background are applicable.

  1. If existing Sales organization is to be modified, choose the Sales organization from list and click on clip_image006 to get into details
  2. For copying existing Sales organization to new one select the Sales organization to be copied and click on clip_image007.
  3. For creating a new Sales organization click on clip_image008

Here we will follow option ‘a’ and select Sales organization 3020 and click clip_image006[1]. To search for Sales organization, click on clip_image009 and enter the key.

  Define Sales Organization

Following screen is displayed

  Define Sales Organization

Maintain Key controls as below


Field Name

Field Description and Value

Sales organization

4-character key for the Sales organization. Description is next to it

Statistics currency

Currency is proposed as default currency when statistics is generated for the sales organization

Reference Sorg. Sales Doc Type

All document types assigned to the reference sales organization, 3000 are also allowed for sales organization, 3020

Customer Inter- company billing

When the sales organization is the ordering sales organization in a inter- company sales scenario, then the customer assigned here is the inter- company customer

Sales organization calendar

This is working day calendar for the sales organization


It is a standard text, which can be called in layouts used for order confirmation outputs


  Define Sales Organization

Click on the “Address” icon and maintain address as shown below.

  Define Sales Organization

1.2 Distribution channel


Distribution channel is an organization element, which represents the way goods or services are distributed to the customers. Distribution channel represents the way goods are distributed to the customers. Examples of distribution channel are retail, wholesale, direct.

  • A sales organization can have more than 1 distribution channel. These distribution channels must be assigned to sales organization in enterprise structure.

                Example - A computer manufacturer can sell computers through channel partners or can sell to the corporate clients directly.

  • A distribution channel can be used by more than 1 sales organization.

                 Example - Distribution channel like “Direct sale” can be used by North American as well as European sales organizations of a company as a channel for selling.

Configuration in SAP

Follow Menu Path: IMG –>Enterprise structure –>Definition –>Sales and Distribution –>Define, copy, delete, check distribution channel

  Define Distribution channel

Click clip_image004[4]

Define Distribution channel

Double click on “Define distribution channel”


As seen, distribution channel is just a code created in configuration.

1.3 Division

It is necessary to understand the concept division before we learn about setup of Sales area. Generally “Division” is used to classify products into certain product groups or families.

Example - A consumer and electronic goods company can have divisions as

  • Consumer electronic – TVs, DVD players
  • Home Appliances – Washing machines, Refrigerators
  • Company can sell bulk TVs to corporate client directly; therefore sales organization can use distribution channel as “direct sale” and division as “Consumer electronics”

1.4 Sales Area

It is used to control which distribution channel is used to sell products belonging to a division in a sales organization. It is a combination of Sales organization, Distribution channel and Division. Therefore, all sales documents are created and processed in a sales area.

Use of sales area allows different business control or parameters to be set for the same customers like

  • Customer’s currency
  • Partial delivery agreement
  • Payment terms
  • Taxes

1.5 Define Sales Office

Sales Office – Use of Sales Office in SAP is optional unlike sales area. Sales office of a company is an office, which has sales persons associated with it. Sales office has an address. One sales office can be assigned to more than one sales area. It represents a sales office/branch of the company. Different sales areas can use one sales office

Example – When the sales organization and distribution channel are same but division is different (e.g. Home Appliances and Consumer electronics), the sales areas are different but still sales group associated with these divisions can use the same sales office.

Configuration in SAP


Follow Menu Path: IMG –>Enterprise structure –>Definition –>Sales and Distribution –>Maintain sales office

  Define Sales office

Click on clip_image008[4]

  Define Sales office

Click on clip_image010[7]


Define Sales office

1.6 Define Sales group

Sales group is group of sales persons responsible for sales items in a sales order. Sales group is determined in the sales order as per customer master, sales area data or it can be maintained manually

Sales group is not a mandatory configuration. Sales order processing can work without sales group configuration.

One sales group can be associated with different sales offices as in business a sales group taking care of one product family can work for different sales office.

Configuration in SAP

Follow Menu Path: IMG –>Enterprise structure –>Definition –>Sales and Distribution –>Maintain sales group

  Define Sales group

Click clip_image012

Define Sales group

It is just a code defined.

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