sales and distribution blue print document

Table of Contents

1 SALES ORGANIZATION..........................................................................................................4

1.1 BUSINESS REQUIREMENT......................................................................................................41.2 BUSINESS BLUEPRINT...........................................................................................................4

1.2.1 Sales Organization Structure.....................................................................................51.2.1.1 Sales Organization.............................................................................................................51.2.1.2 Distribution Channel...........................................................................................................51.2.1.3 Division...............................................................................................................................5

1.2.2 Shipping Organization................................................................................................51.2.2.1 Plant...................................................................................................................................61.2.2.2 Shipping Point....................................................................................................................61.2.2.3 Storage Locations..............................................................................................................6

2 CUSTOMER & BUSINESS PARTNER....................................................................................8

2.1 BUSINESS REQUIREMENT......................................................................................................82.2 BUSINESS BLUEPRINT...........................................................................................................8

2.2.1 Customer master and partner functions.....................................................................82.2.1.1 Sold-to party.......................................................................................................................92.2.1.2 Ship-to party.......................................................................................................................92.2.1.3 Bill-to party:........................................................................................................................92.2.1.4 Payer..................................................................................................................................92.2.1.5 Sales Representative.........................................................................................................92.2.1.6 Intercompany.....................................................................................................................9

2.2.2 Customer Account Group...........................................................................................92.2.3 Terms of Payment....................................................................................................102.2.4 Incoterms................................................................................................................. 102.2.5 Other Relevant Customer Master Information..........................................................11

2.2.5.1 Sales District....................................................................................................................112.2.5.2 Customer Group..............................................................................................................112.2.5.3 Sales Group.....................................................................................................................112.2.5.4 Sales Office......................................................................................................................122.2.5.5 Account Assignment Group – Material & Customer........................................................12

3 SALES AND DISTRIBUTION BUSINESS PROCESSES......................................................13

3.1 BUSINESS REQUIREMENT....................................................................................................133.2 BUSINESS BLUEPRINT.........................................................................................................14

3.2.1 Types of Business Processes..................................................................................143.2.1.1 OTB (Order to Billing )Sales Process..............................................................................143.2.1.2 OTB Stock Return Process..............................................................................................15

3.2.2 Document Types and Number ranges......................................................................16

4 PRICING PROCEDURES......................................................................................................17

4.1 BUSINESS REQUIREMENT....................................................................................................174.2 BUSINESS BLUEPRINT.........................................................................................................17

4.2.1 Pricing Condition Types...........................................................................................174.2.1.1 Standard Price.................................................................................................................184.2.1.2 Actual Price......................................................................................................................184.2.1.3 Net Factory Price.............................................................................................................184.2.1.4 Price Discount..................................................................................................................184.2.1.5 Additional Discount..........................................................................................................194.2.1.6 Sales Tax Advance..........................................................................................................194.2.1.7 Sales Tax Payable...........................................................................................................194.2.1.8 Health Tax........................................................................................................................204.2.1.9 Add-On Tax......................................................................................................................204.2.1.10 Net Std Price....................................................................................................................204.2.1.11 Rvsl Sales Tax Adv..........................................................................................................204.2.1.12 Rvsl Sales Tax Pay..........................................................................................................214.2.1.13 Rvsl Health Tax................................................................................................................214.2.1.14 Rvsl Add-On Tax..............................................................................................................21

4.2.1.15 Merchandizing Price........................................................................................................214.2.1.16 Service Tax......................................................................................................................224.2.1.17 Net Merch. Price..............................................................................................................224.2.1.18 Sales Tax – JV brand.......................................................................................................224.2.1.19 Health Tax – JV brand.....................................................................................................224.2.1.20 Add-On Tax – JV brand...................................................................................................224.2.1.21 CPTO...............................................................................................................................224.2.1.22 Distribution Fee................................................................................................................234.2.1.23 VPRS...............................................................................................................................23

5 ACCOUNTING POSTINGS....................................................................................................24

5.1 BUSINESS BLUEPRINT.........................................................................................................245.1.1 Accounting Posting...................................................................................................24

5.1.1.1 Goods Issue.....................................................................................................................245.1.1.2 Invoice/Billing...................................................................................................................24

6 CREDIT CONTROL...............................................................................................................28

6.1 BUSINESS REQUIREMENT...................................................................................................286.2 BUSINESS BLUEPRINT........................................................................................................28

7 FORMS, REPORTS AND INTERFACES...............................................................................29

7.1 BUSINESS REQUIREMENT....................................................................................................29BUSINESS BLUEPRINT...................................................................................................................29

7.1.1 Forms....................................................................................................................... 297.1.2 Reports..................................................................................................................... 29

7.1.2.1 Standard SAP Reports.....................................................................................................297.1.2.2 Customized Reports........................................................................................................29

7.1.3 Interfaces................................................................................................................. 30

Table of Figures

Figure 1-1 Material brands_________________________________________________________4Figure 1-2 Sales Areas___________________________________________________________4Figure 1-3 Sales organizations_____________________________________________________5Figure 1-4 Distribution Channel_____________________________________________________5Figure 1-5 Division_______________________________________________________________5Figure 1-6 Shipping Organization___________________________________________________6Figure 1-7 Plant_________________________________________________________________6Figure 1-8 Shipping Point_________________________________________________________6Figure 1-9 Storage Location_______________________________________________________7Figure 2-1 Customer Partner Functions______________________________________________9Figure 2-2 Customer Account Groups & No. range_____________________________________10Figure 2-3 Payment terms________________________________________________________10Figure 2-4 Incoterms____________________________________________________________11Figure 2-5 Sales District_________________________________________________________11Figure 2-6 Customer Group_______________________________________________________11Figure 2-7 Sales Group__________________________________________________________12Figure 2-8 Sales Office__________________________________________________________12Figure 2-9 Account Assignment Groups_____________________________________________12Figure 3-1 OTB Sales Process____________________________________________________14Figure 3-2 Stock Return Process___________________________________________________15Figure 3-3 Sales Order Types_____________________________________________________16Figure 3-4 Delivery Types________________________________________________________16Figure 3-5 Billing Types__________________________________________________________16Figure 3-6 Sales, Delivery & Billing Types____________________________________________16Figure 5-1 Goods Issue accounting entries___________________________________________24Figure 5-2 COGS GL Accounts____________________________________________________24Figure 5-3 Inventory Accounts_____________________________________________________24Figure 6-1 Credit Control Area_____________________________________________________28

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 BrandsROTHMANS KING SIZE FILTERROTHMANS KING SIZE LIGHTS

KENT 9 MGKENT 6 MGKENT 3 MGKENT 1 MG

VICEROY FILTERVICEROY LIGHTSVICEROY 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. One company code will represent ABCE and one to represent EC.

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 Description

EG01 ABC Egypt

Figure 1-3 Sales organizations

A sales organization can only be linked to one company code.

1.2.1.2 Distribution ChannelDistribution 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 Description01 Domestic

Figure 1-4 Distribution Channel

1.2.1.3 DivisionDivision 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 Description02 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.

Figure 1-6 Shipping Organization

1.2.2.1 PlantIn 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 DescriptionEG01 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 DescriptionEG01 ABCE Shipping Point

Figure 1-8 Shipping Point

1.2.2.3 Storage LocationsIn 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

StorageLocations

Sales Organization

Plants

EG01 ABC Egypt

ABC Egypt

FG06Menya

FG03Nasr City

FG05Giza

FG04Monsoura

(Delta)

FG07Alexandria

FG08Tanta

HH01All Routes

EG01

Shipping PointABC EgyptEG01

StorageLocations

Sales Organization

Plants

EG01 ABC Egypt

ABC Egypt

FG06Menya

FG03Cairo

FG05Giza

FG04Monsoura

FG07Alexandria

FG08Tanta

HH01All Routes

EG01

Shipping PointABC EgyptEG01

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 DescriptionHH01 All routes

Figure 1-9 Storage Location

2 Customer & Business partner


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 from 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.


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 Description

SP Sold-to PartySH Ship-to PartyBP Bill-to PartyPY PayerZE Sales Representative

Figure 2-10 Customer Partner Functions

2.2.1.1 Sold-to partyIn 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 partyThe ship-to party is the partner that accepts delivery of goods. For this reason, definition of a ship-to 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 PayerA 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 RepresentativeA 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 IntercompanyInter-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 ZEG1 A1 0000100000-0000199999EG Ship-to party ZEG2 A1 0000100000-0000199999EG Bill-to party ZEG3 A1 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

Sales Text Explanation

A000 Payable immediately Due netA090 Net 007 daysA190 Net 014 daysA290 Net 021 daysA400 Net 030 daysA735 Net 060 daysA855 Net 090 daysA940 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 DescriptionCFR Costs and freightCIF Costs, insurance & freightCIP Carriage And Insurance Paid ToCPT Carriage Paid ToDAF Delivered At frontierDDP Delivered duty paidDDU Delivered duty unpaidDEQ Delivered Ex quay (cleared)DES Delivered Ex shipEXW Ex worksFAS Free along side ship

FCA Free CarrierFOB 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 Yes

04 Direct Customer

05 Export Customer

06 Duty Free Customer

07 Inter-Company

08 Employee09 Gratis Customer

Figure 2-15 Customer Group

2.2.5.3 Sales GroupSales group will be used to represent the type of customers – Credit or Cash

Sales Office Description Sales Group DescriptionEG01 EG Sales Office 002 Cash Sales GroupEG01 EG Sales Office 003 Credit Sales Group[

Figure 2-16 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 DescriptionEG01 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 Usage01 Local Manufactured Local manufactured Cigarettes02 Imported Imported Cigarettes06 Non Tobacco Merchandizing materials07 JV Brand Eastern Corporation brand –

Viceroy

Customer Account Assignment GroupAcct Assignment Group Description Usage01 Domestic Revenues Domestic customers

Figure 2-18 Account Assignment Groups

There is no Internal ABC customer for ABCE.

3 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-packsFor 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 FOCABCE 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 IssuesFor 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 BrandsViceroy is a co-op brand which is being sold via the handheld system. The following is the current process of co-op brands:

1. EC issues stocks to ABCE2. ABCE receives stocks into FG Warehouse3. Transfer stocks from FG Warehouse to depots4. Transfer stocks from depots to vans5. 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.


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 TYPES 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 ProcessReturned 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 re-claimable 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 TYPES 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. Doc Type No. range code From ToOTB Std Order ZOTB A1 0010000000 0019999999OTB D&D Returns ZREA A4 0040100000 0040199999OTB Gd Returns ZREB A4 0040100000 0040199999

Figure 3-21 Sales Order Types

Delivery Types description Doc Type No. range code From ToOTB Delivery ZLFA A2 0020000000 0029999999OTB D&D Returns Dlvy ZLRA A5 0040200000 0040299999OTB Gd Returns Dlvy ZLRB A5 0040200000 0040299999

Figure 3-22 Delivery Types

Billing Types Description Doc Type No. range code From ToOTB Invoice ZF2A A3 0030000000 0039999999OTB D&D Returns ZREA A6 0040300000 0040399999OTB Gd Returns ZREB A6 0040300000 0040399999OTB Invoice Cancel ZS1A A7 0050100000 0050199999OTB Returns Cancel ZS2A A7 0050100000 0050199999

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 Delivery Type Billing TypeOTB Std Order (ZOTB) OTB Delivery (ZLFA) OTB Invoice (ZF2A)OTB D&D Returns (ZREA) OTB D&D Returns Dlvy (ZLRA) OTB D&D Returns (ZREA)OTB Gd Returns (ZREB) OTB Gd Returns Dlvy (ZLRB) OTB Gd Returns (ZREB)

Figure 3-24 Sales, Delivery & Billing Types

4 Pricing Procedures


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;

Actual Pricing StructurePrice Element Value DescriptionRetail Selling Price 5.500 Price to end-consumer

Retail Margin 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


4.2.1 PRICING CONDITION TYPES

The pricing elements to be created for ABCE are shown as below:

ZEG1 Standard Price ZEG2 Actual Price ZEG3 Net Factory Price ZEG4 Price Discount ZEG5 Additional Discount TOTAL DISCOUNT = ZEG4 + ZEG5 ZEG6 Sales Tax Advance ZEG7 Sales Tax Payable ZEG8 Health Tax ZEG9 Add-On Tax (1% of Net Factory Price) TOTAL TAX = ZEG6+ZEG7+ZEG8+ZEG9 ZEGA Net Std Price (ZEG1 – TOTAL TAX)

Z001 Rvsl Sales Tax Adv. Z002 Rvsl Sales Tax Pay. Z003 Rvsl Health Tax Z004 Rvsl Add-On Tax ZEGB Merchandizing Price ZEGC Service Tax (10% of Merchandizing Price % Inclusive) ZEGD Net Merch. Price (ZEGB – ZEGC) ZEGE Sales Tax – JV brand ZEGF Health Tax – JV brand ZEGG Add-On Tax – JV brand ZEGH CPTO ZEGI Distribution Fee VPRS Cost PROFIT MARGIN = 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 PriceStandard 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 Description Key CombinationZEG1 Standard Price 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 CombinationZEG2 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.


Condition Type Description Key CombinationZEG3 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.


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 postedDR Discount Own Manufacture External Domestic Cigarette CR Customer

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.


Condition Type Description Key CombinationZEG5 Additional Discount Manual entry via Interface

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

Accounting entries:Account Key Description of account postedDR Discount Own Manufacture External Domestic Cigarette CR Customer

4.2.1.6 Sales Tax AdvanceSales 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 CombinationZEG6 Sales Tax Advance Material

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

Accounting entries:Account Key Description of account postedDR Customer Account CR Advance Payment Sales Tax

4.2.1.7 Sales Tax PayableSales 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 CombinationZEG7 Sales Tax Payable Material


Accounting entries:Account Key Description of account postedDR Customer Account CR Sales Taxes

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 CombinationZEG8 Health Tax Material


Accounting entries:Account Key Description of account postedDR Customer Account CR Health Tax

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 CombinationZEG9 Add-On Tax Material


Accounting entries:Account Key Description of account postedDR Customer Account CR Add-On Tax

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 CombinationZEGA Net Std Price Formula


Accounting entries:Account Key Description of account postedDR Customer Account CR Sales Own Manufactured External Domestic Cigs

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 CombinationZ001 Rvsl Sales Tax Adv. Material


Accounting entries:Account Key Description of account postedDR Brd Trade - Free of Charge

CR Advance Payment Sales Tax

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 CombinationZ002 Rvsl Sales Tax Pay. Material


Accounting entries:Account Key Description of account postedDR Brd Trade - Free of Charge CR Sales Taxes

4.2.1.13 Rvsl Health TaxReversal 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 CombinationZ003 Rvsl Health Tax Material


Account Key Description of account postedDR Brd Trade - Free of Charge CR Health Tax

4.2.1.14 Rvsl Add-On TaxReversal 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 CombinationZ004 Rvsl Add-On Tax Material


Account Key Description of account postedDR Brd Trade - Free of Charge CR Add-On Tax

4.2.1.15 Merchandizing PriceMerchandizing 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 CombinationZEGB Merchandizing Price Manual entry via Interface


Account Key Description of account postedDR Customer

CR Non Tobacco – Other Revenue

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 CombinationZEGC Service Tax Material


Account Key Description of account postedDR Customer CR Sales Tax Payable

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 CombinationZEGD Net Merch. Price Formula


Account Key Description of account postedDR Customer CR Non Tobacco – Other Revenue

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 CombinationZEGE 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 CombinationZEGF 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 CombinationZEGG 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 CombinationZEGI 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 CombinationVPRS Cost Not applicable

5 Accounting Postings


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 Description of account postedDR Cost of goods sold CR 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 GL Accounts DescriptionCigarettes Local Local 415000 Variable Cost Goods Other ManufacturingCigarettes Local Imported 415001 Variable Cost - Imported Finished GoodsViceroy Local Local 390102 Non-tobacco Clearing

Figure 5-26 COGS GL Accounts

Inventory accounts

GL Accounts Description143000 Own Manufacture Finished Goods - Cigarettes144000 Goods for Resale - Cigarettes144400 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 Description of account posted 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 Description of account posted


CR Non-Tobacco Clearing 390102

Sales of Merchandizing item



CR Non-Tobacco Other Revenue 390101


Free of Charge item


DR Dr Brd Trade - Free of Charge 549008

CR Advance Payment Sales Tax 127103


CR Health Tax 201003

CR Add-On Tax Payable 207103

Service Contract Item


DR Sales Own Manufactured External Domestic Cigs 324100

DR Dr Brd Trade - Free of Charge 549008

CR Customer Account 1xxxxx

Credit for Returns


DR Sales Own Manufactured External Domestic Cigs 324100

DR Advance Payment Sales Tax 127103

DR Sales Taxes 207100

DR Health Tax 201003

DR Add-On Tax Payable 207103

CR Customer Account 1xxxxx

6 Credit Control


ABCE has the following check point on credit control:

1. Fanous will prevents any entry of new invoices for the credit customer if credit limit is exceeded.

2. The Receivable Accountant monitors the period credit limit through Debtors Aging reports in the CS3.

3. Each credit customer is given a credit limit level.4. Credit control process will be controlled completely through the RP32 handheld system.


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 DescriptionEG01 ABC Egypt

Figure 6-28 Credit Control Area

7 Forms, Reports and Interfaces


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 Reports5. 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.

sales and distribution blue print document

Documents