Introduction to Sales and Distribution in an ERP

Today, you will learn about ERP and how Sales and Distribution is handled comprehensively by the ERP software.

Overview of ERP

What is ERP?

Enterprise resource planning (ERP) is business management software—typically a suite of integrated applications—that a company can use to collect, store, manage and interpret data from many business activities.

ERP Processes

Organization Goal

  • Revenue 
  • Selling Products/Services

Who is a Customer?

A customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product, or idea, obtained from a seller, vendor, or supplier for a monetary or other valuable consideration.

Sales and Distribution

Sales Process Flow

Quotation

A quotation presents the customer with a legally binding offer for delivering a product or providing a service within certain fixed conditions. This offer is legally binding for the company within a specified time period. 

A customer quotation comprises one or more items that contain the quantity of a material or service that the customer asked for. 

The total quantity can be subdivided between the schedule lines in different amounts and relevant delivery dates.

Sales Order

Sales Order 

Sales Order is a confirmation document sent to the customers before delivering the goods or services 

Sales order is a document that specifies products and/or services ordered by a specific business partner (customer), as well as the price and terms.

Blanket Sales Order

Blanket Orders are typically used when there is an agreement with a customer that he/she will buy X amount of product over a specified period of time at a specified price 

Blanket orders are often used when a customer buys large quantities and has obtained special discounts. 

Based on different delivery dates, blanket release is created for the specified quantity

Pick List

A pick list is a report which shows a list items to be retrieved or “picked” from a warehouse and placed into the numbered bins for outgoing (order) shipments.

Lot

Definite quantity of an item produced/Purchased under uniform conditions and passing as a unit through the same series of operations.

Packing Slip

A packing slip (also known as a bill of parcel, unpacking note, packaging slip, (delivery) docket, delivery list, manifest or customer receipt), is a shipping document that accompanies delivery packages, usually inside an attached shipping pouch or inside the package itself. 

Every shipment to a customer should contain a shipping list that includes the order date, the products included within the box, and the quantity of each product.

Bill of Lading

A bill of lading (sometimes abbreviated as B/L or BoL) is a document issued by a carrier which details a shipment of merchandise 

The principal use of the bill of lading is as a receipt issued by the carrier once the goods have been loaded onto the vessel. 

This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver. 

Details of Packages are also included with this document

Sales Invoice

An invoice or bill  is a commercial document issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities, and agreed prices for products or services the seller had provided the buyer. 

Payment terms are usually stated on the invoice. These may specify that the buyer has a maximum number of days in which to pay, and is sometimes offered a discount if paid before the due date.

Cash Receipts

  • Payment received by a company for goods or services
  • Payment can be received against an Invoice or a Sales order

Return Material Authorization (RMA)

A return material authorization (RMA) is a part of the process of returning a product in order to receive a refund, replacement, or repair during the product's warranty period.

Credit Memo

 A credit note or credit memorandum (memo) is a commercial document issued by a seller to a buyer. The seller usually issues a credit memo for the same or lower amount than the invoice, and then repays the money to the buyer or sets it off against a balance due from other transactions.

Sales Pricing, Commission and other details

Sales Pricing

  • When sales order is created, the system calculates a sales price of an item (based on various conditions).
  • Pricing could be based on cost of procurement (Purchase or manufacturing) and then applying margin %age.
  • Pricing Could be based on Different Customer Groups

 

Company can sell same item to 3 different groups with different price

1. To 'Wholesaler' for $15

2. To 'Retailer' for  $18

3.To 'Consumer' for  $22

Sales Representative and Commission

Sales Representative

Sales representatives sell retail products, goods and services to customers. He receives sales commission against each sale of the product. 

Sales Commission

The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. A commission is generally a percentage of the sales price of an item. 

Sales Tax

A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow (or require) the seller to collect funds for the tax from the consumer at the point of purchase.

Sales Order and Invoice

Addresses on Sales Order and Invoice

  • Customer Address:  Address of the Customer who has booked the order 
  • Billing Address: Invoice is sent to this address 
  • Shipping Address: Goods are shipped to this address

Back Order 

A product that has been ordered but not sent to the customer because it is not yet available.

Promised Ship Date

Date on which goods are to be shipped from the Company's premises.

Promised Delivery Date

Date on which goods are to arrive at the customer's premises.

Payment Terms

  • Payment terms are the conditions under which a company completes a sale 
  • Payment terms cover: When payment is expected. Any conditions on that payment. Any discounts the customer will receive. 
  • Payment terms "NET 30 days" means, Payment is expected within 30 days of the invoice date 
  • Payment terms '1% 7 days Net 30' means, Payment is expected within 30 days of the invoice date. If paid within 7 days of invoice date - 1% discount is given on invoice amount.

Ship Via (or shipping method)

A 'Shipping method or ship via' is a way to fulfill delivery to customers of the goods.

Booked Sales 

When a customer commits to spend money with your company, that is a 'booking'. 

So booked sales is the orders booked (sales order) over a period of time.

Invoiced Sales

When sales actually happens –Order is shipped and invoice is sent to customer.


Quiz - Pre-Training

What is an ERP?

  • Enterprise Resource and Plant Management
  • Employee Resource Planning
  • Enterprise Resource Planning
  • Enterprise Revenue Production

Which one of these is an ERP module (business Process)?

  • Sales and Distribution
  • Purchase and Planning
  • Manufacturing
  • All of the above

Who is Customer?

  • One who supplies raw materials to the organization
  • Accounting Person for maintaining company accounts
  • Buyer for the company’s goods/Services
  • Sales representative of the company

What are the stages in 'Sales and Distribution' process?

  • Delivery (Packing Slip), Sales Order, Invoice,Quotation
  • Quotation, Packing Slip, Invoice, Sales Order
  • Invoice, Sales Order, Quotation, Packing Slip
  • Quotation, Sales Order, Packing Slip, Invoice

Why 'Sales and Distribution' is important for any organization?

  • Increases Productivity
  • Responsible for Revenue Generation
  • Maintains Vendor Information
  • Responsible for accounting activities of the organization

Quiz- Post Training

What is Blanket Sales Order?

  • Bulk order with Agreement on price and delivery dates for a period of time
  • Order for purchasing Blankets
  • Customer orders multiple items for same delivery date
  • Sales order with zero value

Difference between booked sales and invoices sales?

What is RMA?

  • Return Material Authorization
  • Revenue Material and Accounts
  • Return Money Authorization
  • Return Material to Accounts

Invoice Amount is $1000. Commission is 5%. How much sales commission will the sales representative get?

  • $54
  • $50
  • $5
  • $500

Two items are shipped. Item A is Shipped 20 Qty. (in 2 cartons. Each carton having 10 Qty.). Item B is shipped 15 Qty. (in one carton). Which screen is used to record this data? How many labels are required for this shipment?

Customer has purchased ITEM A - 100 [email protected]$5 & 7 % Sales Tax. Payment Term is '1% 10 days Net 30'. Invoice Date is 10-Aug-2015. What is the Invoice Amount and Payment Due Date? If customer pays the amount by 15-Aug-2015 what is the amount to be paid?

On 23-Aug-2015, Customer returns 2 Qty as 2 pieces were damaged. Customer wants to return the 2 pieces and demands a refund what documents are used to record the returns? What is the Refund Amount? Which document is used for Refund?

In Sales Order, What will be the price of ITEM A if Customer "A0002" is selected which is a Distributor? If Customer "A0001" is selected ? If Customer "A0003" is selected which is a Wholesaler’?

For ITEM A, 4 pricing setups are there.

‘Distributor’ - 1 Qty for $20

‘Retailer’ - 1 Qty for $22

Customer ‘A0001’ - 1 Qty for $18 (A0001 is a Retailer)

Item only - 1 Qty for $25