SD Blue Print

Table of Contents 1 SALES ORGANIZATION ............................................................................................................4 1.1 BUSINESS REQUIREMENT ..............................................................................................................4 1.2 BUSINESS BLUEPRINT.....................................................................................................................4 1.2.1 Sales Organization Structure...........................................................................................5 1.2.1.1 Sales Organization ....................................................................................................................5 1.2.1.2 Distribution Channel...................................................................................................................5 1.2.1.3 Division....................................................................... Division.......................................................................................................................................5 ................................................................5

1.2.2 Shipping Organization.....................................................................................................5 1.2.2.1 Plant...........................................................................................................................................6 1.2.2.2 Shipping Point............................................................................................................................6 1.2.2.3 Storage Locations......................................................................................................................6

2 CUSTOMER & BUSINESS PARTNER........................................................................................8 2.1 BUSINESS REQUIREMENT.................................................................................................................8 2.2 BUSINESS BLUEPRINT.....................................................................................................................8 2.2.1 Customer master and partner functions..........................................................................8 2.2.1.1 Sold-to party...............................................................................................................................9 2.2.1.2 Ship-to party...............................................................................................................................9 2.2.1.3 Bill-to party: ...............................................................................................................................9 2.2.1.4 Payer..........................................................................................................................................9 2.2.1.5 Sales Representative.................................................................................................................9 2.2.1.6 Intercompany.............................................................................................................................9

2.2.2 2.2.3 2.2.4 2.2.5

Customer Account Group................................................................................................9 Terms of Payment.........................................................................................................10 Incoterms.......................................................................................................................10 Other Relevant Customer Master Information...............................................................11

2.2.5.1 Sales District............................................................................................................................11 2.2.5.2 Customer Group.......................................................................................................................11 2.2.5.3 Sales Group.............................................................................................................................11 2.2.5.4 Sales Office..............................................................................................................................12 2.2.5.5 Account Assignment Group – Material & Customer.................................................................12

3 SALES AND DISTRIBUTION BUSINESS PROCESSES..........................................................13 3.1 BUSINESS REQUIREMENT...............................................................................................................13 3.2 BUSINESS BLUEPRINT...................................................................................................................14 3.2.1 Types of Business Processes.......................................................................................14 3.2.1.1 OTB (Order to Billing )Sales Process.......................................................................................14 Process.......................................................................................14 3.2.1.2 OTB Stock Return Process......................................................................................................15

3.2.2 Document Types and Number ranges...........................................................................16 4 PRICING PROCEDURES...........................................................................................................17 4.1 BUSINESS REQUIREMENT...............................................................................................................17 4.2 BUSINESS BLUEPRINT...................................................................................................................17 4.2.1 Pricing Condition Types.................................................................................................17 4.2.1.1 Standard Price.........................................................................................................................18 4.2.1.2 Actual Price .............................................................................................................................18 4.2.1.3 Net Factory Price ....................................................................................................................18 4.2.1.4 Price Discount ....................................................................................................................... .18 4.2.1.5 Additional Discount .................................................................................................... ........ ....19 4.2.1.6 Sales Tax Advance..................................................................................................................19 4.2.1.7 Sales Tax Payable...................................................................................................................19 4.2.1.8 Health Tax ...............................................................................................................................20 4.2.1.9 Add-On Tax .............................................................................................................................20 4.2.1.10 Net Net Std Price ....................................................................................................................... .20 4.2.1.11 Rvsl Sales Tax Adv. ........................................................................................................... ..20 4.2.1.12 Rvsl Sales Tax Pay. ..............................................................................................................21 4.2.1.13 Rvsl Health Tax......................................................................................................................21 4.2.1.14 Rvsl Add-On Tax....................................................................................................................21 4.2.1.15 Merchandizing Price...............................................................................................................21

4.2.1.16 Service Tax ...........................................................................................................................22 4.2.1.17 Net Merch. Price ...................................................................................................... ........ ....22 4.2.1.18 Sales Tax – JV JV brand brand ..........................................................................................................22 4.2.1.19 Health Tax – JV brand ........................................................................................... ........ .....22 4.2.1.20 Add-On Tax – JV brand ......................................................................................... ........ .....22 4.2.1.21 CPTO ........................................................................................................................... .......23 4.2.1.22 Distribution Fee .................................................................................................................. .23 4.2.1.23 VPRS ....................................................................................................................... ........ ...23

5 ACCOUNTING POSTINGS........................................................................................................24 5.1 BUSINESS BLUEPRINT...................................................................................................................24 5.1.1 Accounting Posting .......................................................................................................24 5.1.1.1 Goods Issue.............................................................................................................................24 5.1.1.2 Invoice/Billing...........................................................................................................................24

6 CREDIT CONTROL....................................................................................................................27 6.1 BUSINESS REQUIREMENT..............................................................................................................27 6.2 BUSINESS BLUEPRINT..................................................................................................................27 7 FORMS, REPORTS AND INTERFACES...................................................................................28 7.1 BUSINESS REQUIREMENT...............................................................................................................28 BUSINESS BLUEPRINT........................................................................................................................28 7.1.1 Forms............................................................................................................................28 7.1.2 Reports..........................................................................................................................28 7.1.2.1 Standard SAP Reports.............................................................................................................28 7.1.2.2 Customized Reports....................................................................... Reports.................................................................................................................28 ..........................................28

7.1.3 Interfaces.......................................................................................................................29

Table of Figures FIGURE 1-1 MATERIAL BRANDS.................................................................................................4 FIGURE 1-2 SALES AREAS...........................................................................................................4 FIGURE 1-3 SALES ORGANIZATIONS.........................................................................................5 FIGURE 1-4 DISTRIBUTION CHANNEL........................................................................................5 FIGURE 1-5 DIVISION....................................................................................................................5 FIGURE 1-6 SHIPPING ORGANIZATION......................................................................................6 FIGURE 1-7 PLANT........................................................................................................................6 FIGURE 1-8 SHIPPING POINT.......................................................................................................6 FIGURE 1-9 STORAGE LOCATION...............................................................................................7 FIGURE 2-10 CUSTOMER PARTNER FUNCTIONS......................................................................9 FIGURE 2-11 CUSTOMER ACCOUNT GROUPS & NO. RANGE ............. ........................... .......10 FIGURE 2-12 PAYMENT TERMS.................................................................................................10 FIGURE 2-13 INCOTERMS...........................................................................................................11 FIGURE 2-14 SALES DISTRICT...................................................................................................11 FIGURE 2-15 CUSTOMER GROUP..............................................................................................11 FIGURE 2-16 SALES GROUP......................................................................................................11 FIGURE 2-17 SALES OFFICE......................................................................................................12 FIGURE 2-18 ACCOUNT ASSIGNMENT GROUPS.....................................................................12 FIGURE 3-19 OTB SALES PROCESS.........................................................................................14 FIGURE 3-20 STOCK RETURN PROCESS.................................................................................15 FIGURE 3-21 SALES ORDER TYPES..........................................................................................16 FIGURE 3-22 DELIVERY TYPES..................................................................................................16 FIGURE 3-23 BILLING TYPES.....................................................................................................16 FIGURE 3-24 SALES, DELIVERY & BILLING TYPES.................................................................16 FIGURE 5-25 GOODS ISSUE ACCOUNTING ENTRIES.............................................................24 FIGURE 5-26 COGS GL ACCOUNTS..........................................................................................24 FIGURE 5-27 INVENTORY ACCOUNTS......................................................................................24 FIGURE 6-28 CREDIT CONTROL AREA.....................................................................................27

1

Sales Organization

1.1

BUSINESS REQUIREMENT

ABC Egypt (ABCE) has established a joint venture with Eastern Corporation (EC), a local company, for the manufacturing of cigarettes. The joint venture is for the following effort: 1. EC produces on behalf of ABCE for the ABC brands Kent and Rothmans. ABCE owns all the raw materials and monitors EC’s production of these brands. ABCE will pay EC a fee for the manufacturing effort. 2. ABCE assists EC with the production planning and the sales of the Viceroy brand. EC will in turn pays ABCE a distribution cost and a part of the profit from the sales of Viceroy. ABCE has also previously sold Cut Rag to EC and fixed assets. The current focus is on sale of cigarettes and pre-packed cigarettes with merchandizing items Below are the cigarette brands being sold by ABCE: Local Manufactured Brands ROTHMANS KING SIZE FILTER ROTHMANS KING SIZE LIGHTS

KENT KENT KENT KENT

9 6 3 1

MG MG MG MG

VICEROY FILTER VICEROY LIGHTS VICEROY MENTHOL

Figure 1-1 Material brands

1.2

BUSINESS BLUEPRINT

In the Sales and Distribution (SD) module of SAP R/3 system, the organizational entities are important in that these entities form a platform for the creation of master data, transaction data and SD reporting. ABCE organizational set-up is two company codes and only one sales organization. company code will represent ABCE and one to represent EC.

One

In SAP R/3, the SD module uses Sales Area as a mean to control the channels out of which certain products may be sold. A Sales Area is derived from a combination of the Sales Organization, Distribution Channel and Division. The following sales areas are defined for ABCE.

Figure 1-2 Sales Areas

1.2.1 SALES ORGANIZATION STRUCTURE 1.2.1.1 Sales Organization Sales organization in SAP refers to an organizational unit, which sells and distributes the organization’s products, negotiates the terms of sales with customers and assumes legal responsibilities for these activities. It is a basic requirement and pre-requisite for the creations of master data and for the execution of business transactions in the SD module. In ABCE, sales organizations EG01 is shown below: Sales Organization EG01

Description ABC Egypt

Figure 1-3 Sales organizations A sales organization can only be linked to one company code. 1.2.1.2 Distribution Channel Distribution channel in SAP refers to the sales type, which a company utilizes in distributing its products to its customers. The distribution channel code to be used is as follows: Distribution Channel 01

Description Domestic

Figure 1-4 Distribution Channel 1.2.1.3 Division Division refers to the grouping of products for sales purposes. ABCE carries solely cigarettes as its company’s product. The division code to be used is as follows; Division 02

Description Cigarettes & Cigars

Figure 1-5 Division

1.2.2 SHIPPING ORGANIZATION A Shipping Organization comprises of sales organization, plants and shipping points. The following diagram shows the shipping organization that will be setup for ABCE.

Sales Organization

Plants

EG01

ABC Egypt

EG01

ABC Egypt

EG01

Shipping Point

ABC Egypt

FG03 Nasr City Cairo

FG04 Monsoura Monsoura (Delta)

FG05 Giza Giza

HH01 All Routes Routes All

FG06 Menya Menya FG07 Alexandria Alexandria FG08 Tanta Tanta

Storage Locations

Figure 1-6 Shipping Organization 1.2.2.1 Plant In SAP, plant is a location of operation within a company code and the level at which a material stock is managed. In ABC Egypt, only plant EG01- ABC Egypt is applicable for sales and distribution. Plant EG01

Description ABCE Plant

Figure 1-7 Plant 1.2.2.2

Shipping Point

Shipping point in SAP represents an entity from which delivery orders and good issues are processed. It is also a fixed location that carries out shipping activities to the customers. In a shipping organization, a shipping point can be allocated to several plants. In ABCE, the shipping point to be used in the shipping processes is EG01. Shipping Point EG01

Description ABCE Shipping Point

Figure 1-8 Shipping Point 1.2.2.3 Storage Locations In SAP, storage location is a location of physical storage of stocks within a plant. A storage location is used in the delivery orders for goods issues and returns receipt. In ABCE, storage locations are called depots. ABCE’s sales reps will receive stocks from their respective depots which are located across Egypt. In SAP, stocks for all vans will be received

from a phantom storage location – HH01. All sales will be issued out from this storage location with ABCch 1. Storage locations for plant EG01 which are applicable for sales is as follows: : Storage Location Description HH01 All routes Figure 1-9 Storage Location

2

Customer & Business partner

2.1


ABCE sells to cash and credit customers via ABCE sales representatives with the use of a handheld system, RP32, which is named Fanous. Customers’ information is stored in Fanous to enable invoice creation for on-the-spot sales. There are instances whereby sales to a customer’s HQ will be delivered to another location. Currently in ABCE, there are no sales to employees, duty free customers, or export customers.

Cash customers Customers are only sold based on cash sales. ABCE’s sales representative will collect cash during sales visit and deliver the cash to the cashier in the warehouse at the end of the day. There are currently approximately 30,000 cash customers. Cash customers can be divided into retailers and wholesalers. • •

• •

Credit customers Customers are sold only based on cheques and credit. ABCE’s sales representative will collect cheques or cash owed f rom previous visit during current sales visit. Each customer has a specific credit period and credit limit, and customer’s account balance is controlled by ABCE’s account receivable department, that tracks the payment due dates via the Debtors’ Aging report. Credit terms to customers are 7 days, 14 days, 21 days, 30 days, 60 days, 90 days, and 180 days. There are currently approximately 1,000 credit customers. Credit customers can be divided into retailers and wholesalers. • •

•

•

• •

2.2

BUSINESS BLUEPRINT

Cash customers 2 cash customers – Cash Retailers and Cash Wholesalers, will be created in SAP for each depots. This is to cater for PA reporting by depots. There will also be cash customers created for sales representatives. •

•

Credit customers All credit customers in Fanous will be created in SAP. The AR Collection Plan will be by sales reps and customers. Partner function Sales Rep will be assigned to each of the credit customers. At the time of sales order creation in SAP, the Sales Rep partner function value will be overwritten by the actual Sales Rep provided by Fanous. Credit limits will be assigned to customers in SAP. As a control, this information will be interfaced from SAP to Fanous. For Profitability Analysis purpose, Sales District and Customer Group will be maintained in the customer master record. • • •

•

•

2.2.1 CUSTOMER MASTER AND PARTNER FUNCTIONS In SAP R/3, the following business partner functions are defined for ABCE as required.

Partner Function SP SH BP PY ZE

Description Sold-to Party Ship-to Party Bill-to Party Payer Sales Representative

Figure 2- 10 Customer Partner Functions 2.2.1.1 Sold-to party In most cases, the sold-to party is the partner who places an order, accepts the delivery of goods or the rendering of services receives the invoice and make payment on the invoice. Typically this partner encompasses the roles of the ship-to party, bill-to party and payer. For this reason, when a sold-to party is created in the SAP system for ABCE’s customer, the internal number assigned to this new sold-to party will be defaulted to the ship-to, bill-to and payer functions. All credit customers and 2 cash customers for each depot will be created as sold-to party in SAP. 2.2.1.2 Ship-to party The ship-to party is the partner that accepts delivery of goods. For this reason, definition of a shipto party in the SAP customer master only requires pure shipping data (i.e. ship-to address, shipping point, etc.) 2.2.1.3 Bill-to party: A bill-to party is the partner that receives the invoice for delivered goods. For this reason, definition of a bill-to party in the SAP customer master requires address, data on output, and possibly data on electronic communication. 2.2.1.4 Payer A payer is the partner who settles the invoices for delivered goods or rendered services. For this reason, definition of a payer in the SAP customer master requires payment data. 2.2.1.5 Sales Representative A sales representative in ABCE is responsible for providing sales services to the customer. This partner is an employee of the company and is responsible for all sales made to the customer. All ABCE’s sales representative will be created as partner function Sales Representative and assigned to customers. 2.2.1.6 Intercompany Inter-company customers comprise of ABC companies around the world. Global CORE requirement is to create a customer account group ZINT for inter-company customer. Currently, there are no Intercompany customers in ABCE.

2.2.2 CUSTOMER ACCOUNT GROUP All business partner creations are determined via Account Groups. In SAP R/3, account groups for each partner functions will determine the screens and fields that are required. The account groups and number ranges are created for ABCE’s partner functions as follow: Business Partner

Account Group

No. Range Assignment

Number Range

EG Sold-to party EG Ship-to party EG Bill-to party

ZEG1 ZEG2 ZEG3

A1 A1 A1

0000100000-0000199999 0000100000-0000199999 0000100000-0000199999

EG Payer

ZEG4

A1

0000100000-0000199999

EG-Non Trade Customers

ZEG5

A2

0000030000-0000039999

EG Sales Rep

ZEG6

XX

EGxxxx

Inter-company

ZINT

XX

A - ZZZZZZZZZZ

Figure 2-11 Customer Account Groups & No. range Internal number range assignment refers to a system provided sequential number for each customer master data created. This enable ease of tracking the number of customer created, and provides a uniform numbering convention. All ABCE’s partner functions, with the exception of Sales Rep will have system generated numbers. External number range assignment XX refers to a user defined number at the time of business partner creation in SAP. All Inter-company customers created in the system will require external numbers. These external numbers will be as per assigned by Global CORE. Sales Rep number in SAP will be as per Sales Rep’s number in Fanous with a prefix of EG.

2.2.3 TERMS

OF

PAYMENT

Customers’ terms of payment are defined in the customer master record. This information will be automatically copied into the sales document and will be printed out in the invoices. Payment terms to be used will follow Global CORE payment terms defined for vendor. Below are the payment terms to be used: Payment Terms A000 A090 A190 A290 A400 A735 A855 A940

Sales Text Explanation Payable immediately Due net Net 007 days Net 014 days Net 021 days Net 030 days Net 060 days Net 090 days Net 180 days

Figure 2-12 Payment terms

2.2.4 INCOTERMS Incoterms are the internationally recognized shipping terms that establish the respective liabilities of both the shipping party and the recipient. The Incoterms defined in the customer master are as per Global CORE definition below; Incoterms CFR CIF CIP CPT DAF DDP DDU DEQ DES EXW

Description Costs and freight Costs, insurance & freight Carriage And Insurance Paid To Carriage Paid To Delivered At frontier Delivered duty paid Delivered duty unpaid Delivered Ex quay (cleared) Delivered Ex ship Ex works

FAS FCA FOB

Free along side ship Free Carrier Free on board

Figure 2-13 Incoterms

2.2.5 OTHER RELEVANT CUSTOMER MASTER INFORMATION 2.2.5.1

Sales District

Sales District in SAP is used to represent a geographical sales district or region. The following are the Sales District breakdown required for ABCE’s reporting in Profitability Analysis. Sales District

Description

EG0001

Cairo

EG0002

Mansoura

EG0003

Giza

EG0004

Menya

EG0005

Alexandria

EG0006

Tanta

Figure 2-14 Sales District 2.2.5.2

Customer Group

Customer Group in SAP is used to represent Channel. The following are the Customer Groups created as Regional Components. For ABCE’s reporting requirement in Profitability Analysis, customers are created either as Wholesaler or Retailer. Customer group

Description

ABCE

01

Wholesaler

Yes

02

Distributor

03

Retailer

04

Direct Customer

05

Export Customer

06

Duty Free Customer

07

Inter-Company

08

Employee Gratis Customer

09

Yes

Figure 2-15 Customer Group 2.2.5.3 Sales Group Sales group will be used to represent the type of customers – Credit or Cash Sales Office EG01 EG01

Description EG Sales Office EG Sales Office

Figure 2-16 Sales Group

Sales Group 002 003

Description Cash Sales Group Credit Sales Group[

2.2.5.4

Sales Office

In SAP, Sales Group has a mandatory assignment to Sales Office. There is only one Sales Office created for ABCE. Sales Office EG01

Description EG Sales Office

Figure 2-17 Sales Office 2.2.5.5

Account Assignment Group – Material & Customer

In SAP, the combination of Material Account Assignment Group and Customer Account Assignment Group are used to determine the accounting postings. The following are the Material Account Assignment and Customer Account Assignment Groups for ABCE; Material Account Assignment Group Acct Assignment Group Description 01 Local Manufactured 02 Imported 06 Non Tobacco 07 JV Brand

Customer Account Assignment Group Acct Assignment Group Description 01 Domestic Revenues Figure 2- 18 Account Assignment Groups There is no Internal ABC customer for ABCE.

Usage Local manufactured Cigarettes Imported Cigarettes Merchandizing materials Eastern Corporation brand – Viceroy

Usage Domestic customers

3 3.1

Sales and Distribution Business Processes


ABCE captures all domestic sales and sales returns via Fanous. All handheld sales by sales representatives are created as invoice documents, with payment received in the form of cash or cheques. Cash sales average 5000 per day and credit sales averages 100 per day. There are currently approximately 200 sales reps in ABCE. On a daily, twice weekly, weekly, bi-weekly or monthly basis, sales reps will make sales visits to customers. At this time, sales are entered directly into the handheld system. During sales visits, the following occurs: 1. Sales rep takes the order from the customer. 2. Invoice details are entered into the handheld. 3. An Invoice is printed and given to customer. 4. If it is a cash customer, sales rep will collect the cash. 5. If it is a credit customer, sales rep will issue an invoice and obtain customer’s signature. Cash or cheques are collected on due dates. 6. Products are delivered to the customer. At the end of the sales visit day, sales rep will go back to the depots and dock their handheld systems to download all sales information into RP32. They will also deliver the cash collected from customers to the cashier in the warehouse. Post-dated cheques received from credit customers are treated as payment to clear off invoices. This will immediately reduce the customer’s outstanding credit exposure. Sales reps will bear all discrepancies between stocks and cash receipts. A cash sale to sales reps will be created to offset the discrepancies. All returns of stocks will be entered into Fanous as returns invoice. A Credit Note will be issued to customers for the stocks returned. Stocks returned by one customer may be sold to another customer if it is still good stock. Damaged stocks will be transferred to a damage warehouse location and will be written off and destroyed. ABCE has 300 to 400 returns per year. There is no requirement for credit or debit note processing. The following are variations on the standard sales process: Sales of combo-packs For sales of cigarettes with promotional items, e.g. radios, by law, the radio must be sold and cannot be issued free. Merchandizing materials will be sold at a loss. In Fanous, the issues of combo packs are as individual items in the same invoice. The merchandizing items are entered as service items. Service tax of 10% is included in the sales price for merchandizing items. Price Discounts A sales price with taxation will be charged, and a discount will be applied. The taxation applied is Sales Tax, Health Tax and Add-On Tax. The difference between Actual Sales Price to customer and Standard Sales Price is the price discount provided to customer. FOC Discounts FOC discount is a quantity of stocks given to customer free of charge. FOC items will be given to customer together with standard items sold in an invoice. Taxation for FOC items is to be expensed to brand spend.

Service Contract FOC ABCE also issues FOC cigarettes to customers as part of the service contract terms. In the handheld system, cigarettes will be issued together with a service item that acts like a non-stock return to negate the total price of the cigarettes (material price plus taxes). The service item in Fanous is created as a material with a material code. This scenario is only applicable for Kent and Rothmans brands. Taxation for Service Contract items is to be expensed to brand spend. Staff Issues For cigarettes allowance to staff, stocks are transferred to a FOC warehouse and issued out. Adjustments to stock balances are adjusted at period end. Sales of Cooperation Brands Viceroy is a co-op brand which is being sold via the handheld system. The following is the current process of co-op brands: 1. 2. 3. 4. 5.

EC issues stocks to ABCE ABCE receives stocks into FG Warehouse Transfer stocks from FG Warehouse to depots Transfer stocks from depots to vans Sales reps create Co-op Invoice in Fanous

In the Co-op Invoice, the price of the materials include excise. Both ABCE brands and Viceroy is in the same invoice.

3.2

BUSINESS BLUEPRINT

A standard sales and distribution process consists of the creation of sales order, delivery order, and billing order. Each order creation in SAP is by using different document type. Each document generated will have unique SAP document number assigned. All document numbers are internally assigned by the system.

3.2.1 T YPES OF BUSINESS PROCESSES 3.2.1.1

OTB (Order to Billing )Sales Process

Sales to domestic customers will be made directly into Fanous, the handheld system by ABCE’s sales reps. On a daily basis, the sales information in Fanous will be interfaced into SAP. OTB sales process is depicted in figure below.

Figure 3-19 OTB Sales Process • • •

•

•

•

Sales invoices are placed into Fanous at the time of sales reps’ visits to customers. On a daily basis, sales information will be interfaced into SAP A daily ABCch Run will be scheduled in SAP to trigger the OTB process with the sales information received. SAP will automatically create sales orders, create delivery orders, perform goods issue, and generate invoices Cash sales will be consolidated by customer group type – wholesaler or retailer and sales district. These sales will be interfaced to SAP and be created as one sales order for cash customer type per depot. Sales to credit customers will be interfaced individually. The Incoming Payment process will clear all invoices with payments received.

Variations in OTB Sales Process: 3.2.1.1.1

Sales of combo-packs

Merchandizing items in a combo pack will be interfaced into SAP as individual items. A generic set of service materials will be created in SAP to represent different merchandizing materials. In the sales order, item price and item value will be interfaced in from Fanous. No pricing will be maintained for merchandizing items in SAP. 3.2.1.1.2

Price Discount

Both Standard Sales Price and Actual Sales Price will be interfaced in from Fanous. The difference between Standard Sales Price and Actual Sales Price is treated as a price discount and post according to accounting. 3.2.1.1.3

FOC

In the interface file from Fanous, there will be an indication to identify FOC items in an invoice. The Actual Sales Price for FOC items is set as zero. All taxation for FOC items will be expensed to brand spend. 3.2.1.1.4

Service Contract FOC

In SAP, cigarettes will be interfaced from Fanous with prices. The service item will be mapped into SAP as a service material. The price of the service material will be equalled to the price of the cigarettes plus all taxes. Taxation will be expensed to brand spend. 3.2.1.1.5

Staff Issues

Staff allowances will be issued out from warehouse in SAP via IM module. Manual journals will be created to expense out the cost of the materials. 3.2.1.1.6

Co-operation Brand

Sales of ABCE brands (Rothmans & Kent) and Viceroy will be in 1 invoice. However there is no sales tax in the pricing for Viceroy, as sales tax is included in Viceroy’s price. ABCE pays EC when stocks are transferred from EC to ABCE. Customers will pay ABCE and ABCE will invoice EC for 50% of the marketing expenses and other charges, and a share of the JV profit via the AR module. 3.2.1.2 OTB Stock Return Process Returned stocks from retailers will be part of the information received from Fanous. Returns will be created as a returns order and during goods receipt posting, the returns stocks will be received into either unrestricted stock or blocked stock in the respective storage locations . A credit for returns will be posted to customer’s account. Sales Tax, Health Tax and Add-On Tax are reclaimable from the tax authorities for stock returns. Returned stocks received back into blocked stock may be transferred accordingly to unrestricted stocks if stocks can be resold or scrapped if damaged. OTB Stock Return process is depicted in figure below.

Figure 3-20 Stock Return Process • • •

•

•

Return orders are placed into Fanous at the time of sales reps visits to customers. On a daily basis, this information will be interfaced into SAP A daily ABCch Run will be scheduled in SAP to trigger the OTB process with the returns information received. SAP will automatically create returns orders, create return delivery orders, perform goods receipt and generate credit memo for returns The Incoming Payment process will clear all invoices with credit given to customers.

In Fanous, there will be an indication of whether a return is of good stocks or of damaged stocks. There will be 2 return order types created in SAP to cater for return of good stocks and return of damaged stock. At post goods receipt of good stocks, stocks will be received into unrestricted stock type, and damaged goods will be received into blocked stock type.

3.2.2 DOCUMENT T YPES AND NUMBER RANGES In SAP R/3, each process is described by using different document types. Each document generated will have specific number assigned to it. The following are the sales order, delivery order, billing document types defined in SAP for ABCE and the SAP system number ranges assigned. All document numbers are internally assigned by the system.

Order Types description. OTB Std Order OTB D&D Returns OTB Gd Returns

Doc Type ZOTB ZREA ZREB

No. range code A1 A4 A4

From 0010000000 0040100000 0040100000

To 0019999999 0040199999 0040199999

Doc Type ZLFA ZLRA ZLRB

No. range code A2 A5 A5

From 0020000000 0040200000 0040200000

To 0029999999 0040299999 0040299999

Doc Type ZF2A ZREA ZREB ZS1A ZS2A

No. range code A3 A6 A6 A7 A7

From 0030000000 0040300000 0040300000 0050100000 0050100000

To 0039999999 0040399999 0040399999 0050199999 0050199999

Figure 3-21 Sales Order Types Delivery Types description OTB Delivery OTB D&D Returns Dlvy OTB Gd Returns Dlvy Figure 3-22 Delivery Types Billing Types Description OTB Invoice OTB D&D Returns OTB Gd Returns OTB Invoice Cancel OTB Returns Cancel Figure 3-23 Billing Types The following figure shows the delivery document types created from the sales document types and the billing document types created from the delivery document types. Sales Order Type OTB Std Order (ZOTB) OTB D&D Returns (ZREA) OTB Gd Returns (ZREB)

Delivery Type OTB Delivery (ZLFA) OTB D&D Returns Dlvy (ZLRA) OTB Gd Returns Dlvy (ZLRB)

Figure 3-24 Sales, Delivery & Billing Types

Billing Type OTB Invoice (ZF2A) OTB D&D Returns (ZREA) OTB Gd Returns (ZREB)

4

Pricing Procedures

4.1


ABCE’s pricing structure encompasses the pricing conditions below. There is currently no royalty payable for any brands. This may change in the future once ABCE turns profitable. There are 2 ways ABCE gives discounts; Cash discounts which can be on value, quantity or monthly target. Free of charge products.

• •

ABCE is legally restricted from giving anything for free. In the case of free of charge sales, a sales invoice with priced items will be issued together with FOC items. Sales Tax, Health Tax and Add-on Tax are applicable in standard sales. These taxes are fixed values and are paid on a monthly basis except for Add-on Tax which is paid on a quarterly basis. Sales Tax, Health Tax and Add-On Tax are payable by customers as total excise. These taxations are applicable for finished goods and service contract items. Service tax is applicable for service items such as merchandizing items. In Returns order, all taxes are reclaimable. Below is an example of the current ABCE’s pricing structure for Rothmans KSFF;

Price Element Retail Selling Price Retail Margin

Actual Pricing Structure Value Description 5.500 Price to end-consumer 0.225 Retail margin to customer

Ex-factory Price

5.280

Total price to customer

Excise

1.750

Sales Tax, Health Tax & Add-On Tax

Net Factory Price

3.525

Cigarette Price to customers

Cost

2.160

Cost of sales

Gross Margin

1.370

Net Factory Price less Cost

4.2

BUSINESS BLUEPRINT

4.2.1 PRICING CONDITION T YPES The pricing elements to be created for ABCE are shown as below: • • • • • • • • • • •

ZEG1 ZEG2 ZEG3 ZEG4 ZEG5 TOTAL DISCOUNT ZEG6 ZEG7 ZEG8 ZEG9 TOTAL TAX

Standard Price Actual Price Net Factory Price Price Discount Additional Discount = ZEG4 + ZEG5 Sales Tax Advance Sales Tax Payable Health Tax Add-On Tax (1% of Net Factory Price) = ZEG6+ZEG7+ZEG8+ZEG9

• • • • • • • • • • • • • •

•

ZEGA Z001 Z002 Z003 Z004 ZEGB ZEGC ZEGD ZEGE ZEGF ZEGG ZEGH ZEGI VPRS PROFIT MARGIN

Net Std Price (ZEG1 – TOTAL TAX) Rvsl Sales Tax Adv. Rvsl Sales Tax Pay. Rvsl Health Tax Rvsl Add-On Tax Merchandizing Price Service Tax (10% of Merchandizing Price % Inclusive) Net Merch. Price (ZEGB – ZEGC) Sales Tax – JV brand Health Tax – JV brand Add-On Tax – JV brand CPTO Distribution Fee Cost = Actual Price/Net Merch. Price - Total Discount - Total Tax - Cost

All pricing elements such as prices, tax and discounts are created as pricing condition records in SAP. There is no pricing condition records created for merchandizing items. During sales order processing, SAP will automatically retrieve certain pricing information from Fanous. These prices will in turn be copied into the billing document at the time of billing creation. 4.2.1.1 Standard Price Standard Price represents the standard price per SKU. This is the standard selling price plus all taxation. This price will be interfaced into SAP by Fanous. There are no accounting postings for this condition as it is a statistical value. The condition type is: Condition Type ZEG1

Description Standard Price

Key Combination Manual entry via Interface

4.2.1.2 Actual Price Actual Price represents the selling price to customer. This price is the Standard Price less a discount. This price will be interfaced into SAP by Fanous. There are no accounting postings for this condition as it is a statistical value. The condition type is

Condition Type

Description

Key Combination

ZEG2

Actual Price

Manual entry via Interface

4.2.1.3 Net Factory Price Net Factory Price represents the Standard Price less all taxation. This price is maintained in SAP pricing master. There are no accounting postings for this condition as it is a statistical value. The condition type is

Condition Type

Description

Key Combination

ZEG3

Net Factory Price

Material

4.2.1.4 Price Discount Price Discount is the price difference between Standard Price and Actual Price. This amount will be calculated and posted to accounting. The condition type is

Condition Type

Description

Key Combination

ZEG4

Price Discount

Formula

The accounting entries at the time of billing are as follow; Accounting entries:

Account Key

Description of account posted

DR

Discount Own Manufacture External Domestic Cigarette Customer

CR

4.2.1.5 Additional Discount Additional Discount is the additional discount that may be given to customer. This price will be interfaced into SAP by Fanous. The condition type is

Condition Type

Description

Key Combination

ZEG5

Additional Discount


The accounting entries at the time of billing are as follow; Accounting entries:

Account Key


DR

Discount Own Manufacture External Domestic Cigarette Customer

CR

4.2.1.6 Sales Tax Advance Sales Tax Advance is an amount of sales tax already paid by ABCE to the tax authorities at the time of cutrag purchase. This amount will be recovered from customer at the time of invoicing. This is a fixed amount per pack to be paid by customers for Finished Goods. The condition type is:

Condition Type

Description

Key Combination

ZEG6

Sales Tax Advance

Material

The accounting entries at the time of billing are as follows; Accounting entries:

Account Key


DR

Customer Account Advance Payment Sales Tax

CR

4.2.1.7 Sales Tax Payable Sales Tax Payable is the remainder sales tax amount to be paid to the tax authorities by customer. This is a fixed amount per pack to be paid by customers. The condition type is:

Condition Type

Description

Key Combination

ZEG7

Sales Tax Payable

Material


Account Key


DR

Customer Account Sales Taxes

CR

4.2.1.8 Health Tax Health Tax is a fixed amount per pack to be paid by customers. The condition type is:

Condition Type

Description

Key Combination

ZEG8

Health Tax

Material


Account Key


DR

Customer Account Health Tax

CR

4.2.1.9 Add-On Tax Add-on Tax is a tax to be paid by customers and is applicable for Finished Goods. It is calculated at 1% of Net Factory Price. The condition type is:

Condition Type

Description

Key Combination

ZEG9

Add-On Tax

Material


Account Key


DR

Customer Account Add-On Tax

CR

4.2.1.10 Net Std Price Net Standard Price is the Standard Price less all taxation. This amount is a calculation and will be posted to accounting as the revenue amount. The condition type is:

Condition Type

Description

Key Combination

ZEGA

Net Std Price

Formula


Account Key


DR

Customer Account Sales Own Manufactured External Domestic Cigs

CR

4.2.1.11 Rvsl Sales Tax Adv. Reversal Sales Tax Advance is used to reversed out the Sales Tax Advance and expense out the amount to brand spend. This condition is only applicable for FOC items. The condition type is:

Condition Type

Description

Key Combination

Z001

Rvsl Sales Tax Adv.

Material

The accounting entries at the time of billing are as follows;

Accounting entries:

Account Key


DR

Brd Trade - Free of Charge Advance Payment Sales Tax

CR

4.2.1.12 Rvsl Sales Tax Pay. Reversal Sales Tax Payable is used to reversed out the Sales Tax Payable and expense out the amount to brand spend. This condition is only applicable for FOC items. The condition type is:

Condition Type

Description

Key Combination

Z002

Rvsl Sales Tax Pay.

Material


Account Key


DR

Brd Trade - Free of Charge Sales Taxes

CR

4.2.1.13 Rvsl Health Tax Reversal Health Tax is used to reversed out the Health Tax and expense out the amount to brand spend. This condition is only applicable for FOC items. The condition type is:

Condition Type

Description

Key Combination

Z003

Rvsl Health Tax

Material


Account Key


DR

Brd Trade - Free of Charge Health Tax

CR

4.2.1.14 Rvsl Add-On Tax Reversal Add-On Tax is used to reversed out the Add-On Tax and expense out the amount to brand spend. This condition is only applicable for FOC items. The condition type is:

Condition Type

Description

Key Combination

Z004

Rvsl Add-On Tax

Material


Account Key


DR

Brd Trade - Free of Charge Add-On Tax

CR

4.2.1.15 Merchandizing Price Merchandizing Price is the selling price to customer for merchandizing items. This price includes 10% service tax. This price will be interfaced into SAP from Fanous. This is a statistical condition without any postings to accounting. The condition type is:

Condition Type

Description

Key Combination

ZEGB

Merchandizing Price



Account Key


DR

Customer Non Tobacco – Other Revenue

CR

4.2.1.16 Service Tax Service Tax is currently at charged at 10% of Merchandizing Price for all merchandizing items. The condition type is:

Condition Type

Description

Key Combination

ZEGC

Service Tax

Material


Account Key


DR

Customer Sales Tax Payable

CR

4.2.1.17 Net Merch. Price Net Merchandizing Price is derived from Merchandizing Price less Service Tax. This price will be posted to accounting. The condition type is:

Condition Type

Description

Key Combination

ZEGD

Net Merch. Price

Formula


Account Key


DR

Customer Non Tobacco – Other Revenue

CR

4.2.1.18 Sales Tax – JV brand Sales Tax – JV brand is to capture the Sales Tax for Viceroy brand. This is a statistical condition for PA reporting. The condition type is:

Condition Type

Description

Key Combination

ZEGE

Sales Tax – JV brand

Material

4.2.1.19 Health Tax – JV brand Health Tax – JV brand is to capture the Health Tax for Viceroy brand. This is a statistical condition for PA reporting. The condition type is:

Condition Type

Description

Key Combination

ZEGF

Health Tax – JV brand

Material

4.2.1.20 Add-On Tax – JV brand Add-On Tax – JV brand is to capture the Add-On Tax for Viceroy brand. This is a statistical condition for PA reporting. The condition type is:

Condition Type

Description

Key Combination

ZEGG

Add-On Tax – JV brand

Material

4.2.1.21 CPTO CPTO is the Consumer Price Turnover price. This is a statistical condition for PA reporting. The condition type is:

Condition Type

Description

Key Combination

ZEGH

CPTO

Material

4.2.1.22 Distribution Fee Distribution Fee is the outbound cost for the sale of Viceroy. This is a statistical condition required by Product Costing (PC) module as per Global CORE. The condition type is:

Condition Type

Description

Key Combination

ZEGI

Distribution Fee

Material

4.2.1.23 VPRS VPRS is the Cost condition. The value is automatically derived from the price in the Material Master. The condition type is:

Condition Type

Description

Key Combination

VPRS

Cost

Not applicable

5 5.1

Accounting Postings

BUSINESS BLUEPRINT

5.1.1 ACCOUNTING POSTING Accounting Posting in SD takes place during Delivery Processing and Billing Processing.

5.1.1.1

Goods Issue

During delivery processing, posting of goods issue generates an accounting posting. Accounting entries are as stated below: Goods Issue accounting entries Account Key DR CR

Description of account posted Cost of goods sold Inventory

Figure 5- 25 Goods Issue accounting entries Costs of goods sold and Inventory accounts are dependent on the product group. For Viceroy a different valuation class will determine the different accounting postings during goods issue. The following are the costs of goods sold accounts: Cost of goods sold accounts COGS Market Origin Cigarettes Local Local Cigarettes Local Imported Viceroy Local Local Figure 5-26 COGS GL Accounts

GL Accounts 415000 415001 390102

Description Variable Cost Goods Other Manufacturing Variable Cost - Imported Finished Goods Non-tobacco Clearing

Inventory accounts GL Accounts Description 143000 Own Manufacture Finished Goods - Cigarettes 144000 Goods for Resale - Cigarettes 144400 Trading Goods for Resale (for Viceroy) Figure 5- 27 Inventory Accounts 5.1.1.2

Invoice/Billing

At the time of billing processing, postings to accounting are automatically processed by the system. Accounting entries are stated below: Standard Sales

Account Key


GL Account

DR

Customer Account

1xxxxx

DR

Discounts own manufacture external domestic cig

344100

CR

Sales Own Manufactured External Domestic Cigs

324100

CR

Advance Payment Sales Tax

127103

CR

Sales Taxes

207100

CR

Health Tax

201003

CR

Add-On Tax Payable

207103

Sales of Viceroy Brand

Account Key


DR

Customer Account

1xxxxx

Non-Tobacco Clearing

390102

CR

Sales of Merchandizing item

Account Key


DR

Customer Account

1xxxxx

CR

Non-Tobacco Other Revenue

390101

CR

Sales Taxes

207100

Free of Charge item

Account Key


DR

Dr Brd Trade - Free of Charge

549008

CR


127103

CR

Sales Taxes

207100

CR

Health Tax

201003

CR

Add-On Tax Payable

207103

Service Contract Item

Account Key


DR


324100

DR

Dr Brd Trade - Free of Charge

549008

Customer Account

1xxxxx

CR Credit for Returns

Account Key


DR


324100

DR


127103

DR

Sales Taxes

207100

DR

Health Tax

201003

DR

Add-On Tax Payable

207103

Customer Account

1xxxxx

CR

6

Credit Control

6.1 BUSINESS REQUIREMENT ABCE has the following check point on credit control: 1. 2. 3. 4.

Fanous will prevents any entry of new invoices for the credit customer if credit limit is exceeded. The Receivable Accountant monitors the period credit limit through Debtors Aging reports in the CS3. Each credit customer is given a credit limit level. Credit control process will be controlled completely through the RP32 handheld system.

6.2 BUSINESS BLUEPRINT Since all credit control will be performed through the handheld system, all sales transactions in SAP will be confirmed transactions. Customers’ credit information will be maintained in SAP but credit control will not be activated. Credit Control Area EG01

Description ABC Egypt

Figure 6-28 Credit Control Area

7

Forms, Reports and Interfaces

7.1


ABCE’s sales reps will enter all sales invoices and returns into Fanous and generate out invoices, cash receipts and credit notes to customers from Fanous. At the end of the day, all sales invoices and returns in Fanous will be interfaced into SAP. Creation and changes to customer master, customer credit master and price master will be interfaced from SAP into Fanous.

BUSINESS BLUEPRINT

7.1.1 FORMS There is no requirement for any forms to be printed from SAP.

7.1.2 REPORTS Below are the standard SAP reports, and customized reports requirement for ABCE. 7.1.2.1 •

Standard SAP Reports Sales order listing SAP provides a standard functionality for viewing online all orders or open orders, and all orders per sold-to-party or material via transaction VA05. These lists may be printed out as required. 1. Delivery order listing SAP provides a standard functionality for viewing online all outbound deliveries with various statuses via transaction VL06O. These lists may be printed out as required.

. 2. Billing document listing SAP provides a standard functionality for viewing online all open billings and all billings per payer or material via transaction VF05. These lists may be printed out as required. 3. Pricing Report A standard Pricing Report will be created to display all ABCE pricing conditions. 4. Credit Reports The following are the standard credit reports in SAP: a. Credit Overview This report lists by customer, the Credit Limit, the value and % of Credit Exposure, customer’s balances, highest 6 and 12 months balances, current and previous year’s sales, days in arrears by net due date. b. Credit Master Data List This report lists by customer, the credit limit, credit exposure, total sales value, receivables, last payment and total of over due items.

7.1.2.2

Customized Reports 5. Billing List A comprehensive billing report in ALV format. In comparison with the standard billing listing, this report provides a wider report selection criteria and more detailed billing information.

6. Net Sales by Salesman This report lists the cash sales, credit sales and cash collection by each salesman. 7. Total Cash and Total Credit Invoices by Docking Date by Outer This report lists by brand, the Discount Rate, Unit Price, Total Invoices, Total Returns, Total Quantity, Total Discount, Gross Sales and Net Sales. 8. Open Credits by Salesman Report This report lists by salesman by customer, the Invoices, Invoices Date, Invoice Due Date, Invoice Quantity, Invoice Value and Invoice Open amount. 9. Wholesales Credit by Brand Report This report lists by branch (Cairo, Giza, Menya, Alexandria, Mansoura & Tanta), the Customer, Fanous customer ID, Credit Limit, Credit Days, Amount Outstanding, Actual Credit in days (Collection plan) and Sales Rep.

10. Credit Report This report lists by Customer and Route, the DSO (Days of Sales Outstanding), % Credit of total sales and by route.

The above list of customized reports will be consolidated into the project Consolidated Report List and development of any customized reports is to be approved by Project Management.

7.1.3 INTERFACES The interface design between Fanous and SAP is documented in a separate blueprint. Please refer to blueprint file AME_EG_BB_HH_vx.

SD Blue Print

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