Sales & distribution module
The sales and distribution (SD) module manages the entire order‑to‑cash process. It handles customer inquiries, quotations, sales orders, pricing, availability checks, shipping, and billing. Seamless integration with inventory and finance ensures accurate, real‑time information.
1. Order‑to‑cash (OTC) cycle
The OTC cycle is the lifeblood of revenue. It starts when a customer shows interest and ends when cash is received. ERP automates handoffs between sales, warehouse, and accounting, reducing errors and delays.
2. Customer & material master data
Customer master: Stores customer-specific information: address, payment terms, currency, price group, shipping instructions, and credit limit.
Material master: Contains product data: description, weight, dimensions, storage conditions, and selling units. Critical for pricing and availability.
3. Quotations & sales orders
Sales reps create quotations for customers. If accepted, the quote can be copied into a sales order. The sales order is the central document that triggers fulfillment. It includes items, quantities, prices, requested delivery date, and shipping details.
4. Pricing & conditions
ERP pricing is highly flexible, using condition techniques:
- Base price lists
- Customer‑specific discounts
- Quantity breaks
- Promotional pricing
- Freight and handling charges
The system automatically calculates the final price and taxes at order entry.
5. Availability check (ATP)
Available‑to‑promise (ATP) checks real‑time stock against existing sales orders. It can also consider planned production receipts and purchase orders. If stock is insufficient, the system suggests a delivery date based on replenishment lead times.
6. Delivery & shipping
Once the order is released to the warehouse, a delivery document is created. It guides picking, packing, and shipping. Key features:
- Picking lists and bin location suggestions
- Packing (cartonization, shipping labels)
- Shipment tracking and integration with carriers
- Goods issue posting (reduces inventory)
7. Billing & invoicing
After shipment, an invoice is generated (often automatically). The invoice updates accounts receivable in the finance module and can be sent electronically (EDI, email). Credit notes are created for returns or adjustments.
8. Returns & credit memos
Sales returns (reverse logistics) are handled through returns orders. The system inspects returned goods, updates inventory, and creates a credit memo. Integration with quality management may trigger inspection steps.
| Integration with | How they work together |
|---|---|
| Inventory | ATP check, goods issue reduces stock |
| Finance (AR) | Invoices post to accounts receivable; revenue recognized |
| CRM | Customer data sync; sales history visible to service |
| Manufacturing | Make‑to‑order: sales order triggers production |
Key Takeaways
- Sales & distribution module manages the entire order‑to‑cash process.
- Pricing, availability check, and shipping are automated and integrated.
- Real‑time integration with inventory and finance ensures accuracy.
- Supports complex scenarios: intercompany sales, consignment, third‑party drop shipments.
What is a backorder? A sales order line that cannot be fulfilled immediately due to stock shortage. ERP tracks backorders and automatically fulfills when stock arrives.
Can ERP handle partial deliveries? Yes, the system allows multiple deliveries against one sales order, with corresponding partial invoices.
What is list vs net price? List price is the base price; net price includes discounts and surcharges. ERP calculates both automatically.
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