Implementing Order to Cash Process in SAP: An end-to-end guide to understanding the OTC process and its integration with SAP CRM, SAP APO, SAP TMS, and SAP LES

BIRMINGHAM—MUMBAI

Implementing Order to Cash Process in SAP

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Writing a book on implementing the Order to Cash process in SAP was an eventful journey as it took a considerable amount of time and effort to complete. I would like to acknowledge all my friends and colleagues with whom I have been associated during my SAP career till now, and while implementing SAP Order to Cash solutions in various projects. I would like to extend my thanks to my mentors who have helped me to gain knowledge at each phase of my projects and who have given me the opportunity to lead projects in the customer and supply chain domains.

I would like to acknowledge the contributors from SAP Help and SAP Community Network (SCN) who helped me to understand and resolve critical issues. This book would not have been possible without me contributing to SAP Help and SCN. My special thanks to the whole Packt Publishing team, especially the production team, and Vaishali Ramkumar, in particular, for helping me to bring this book together.

I would like to thank my parents; without their blessings, this book would not have been possible. I would like to first and foremost thank my loving and patient wife, Pallavi, and both of my sons, Divyang and Arjun, for their continued support, patience, and encouragement throughout the long process of writing. My wife and kids have sacrificed a lot during this journey and their unconditional support was the driver for me to write and finish this book.

Last but not the least; this book is dedicated to the memory of my late brother, Ravi Agarwal.

Contributors

About the author

Chandrakant Agarwal primarily works within the customer and supply chain domains as an architect, and has 18 years of SAP experience, ranging from SAP project implementation to SAP upgrade projects to SAP rollout projects. He has had exposure to global assignments in customer-facing roles, ranging from business consulting, solution implementation, rollouts, and production support/development to quality assurance.

He is a certified SAP CRM and SAP ERP MM consultant, with advanced business knowledge of Order to Cash processes. Chandrakant has implementation experience in SAP CRM Marketing, Sales, and Service, SAP APO (DP, SNP, and GATP), SAP TMS, and SAP LES. He has also worked on SAP cloud technologies, including Sales Cloud, SAP Ariba, and SAP IBP, and UI technologies such as SAP Fiori. He has led multiple projects that span across different areas, including SAP CRM, SCM, and TMS, as well as across different regions, such as Asia, Europe, and America.

About the reviewer

Murtaza Kapadia primarily works within the customer relationship management domain as a solutions architect, with over 15 years of SAP experience ranging from SAP project implementation and upgrades to rollout projects. Murtaza has implementation experience in SAP CRM Sales, Service, and Marketing, SAP ECC, and ISU. He has led multiple projects with various end clients globally in Asia and Europe and currently works in America. His technical expertise (over 10 years of hands-on experience) includes SAP-ABAP, ABAP on HANA, BSP, and Python programming.

Table of Contents

Preface

Chapter 1: Introduction to the Order to Cash Cycle

Understanding order to cash with CRM, APO, TMS, and LES

Understanding sales

Understanding order fulfillment

Understanding transportation planning and shipment creation

Understanding shipping

Understanding customer billing

Understanding the order to cash process flow

Getting to know UI technologies

Understanding the SAP CRM WebClient UI

Understanding the NetWeaver Business Client

Understanding the Fiori UI architecture

Summary

Further reading

Chapter 2: Master Data in SAP CRM

ECC master data – client of record

CRM master data elements and their concepts

Organization management overview

Division usage in SAP CRM

Organization data setup

Org determination in a sales transaction

Business partner master data

Business partner concepts

Business partner functions

Role Employee for HR Integration in CRM

Duplicate checks for the Accounts and Contacts

Pre-requisite steps to replicate customers from ECC to CRM

Customer master data replication

Product master data

Attributes and set types

Categories and hierarchy

Relationships

Product functions

Products download

Pricing overview

Pricing procedure determination

Downloading the pricing procedure and condition types

The concept of pricing routines in SAP CRM using IPC

Vendors

Downloading vendors

Plant settings

Summary

Further reading

Chapter 3: Master Data in SAP APO

Introduction to master data in SAP APO

Location master data concepts in SAP APO

Product master data in SAP APO

Resource master data

Transferring master data from SAP ECC to SAP APO

Creating an integration model

Activating the integration model

Background jobs

Summary

Further reading

Chapter 4: Master Data in SAP TMS

TMS master data elements and its concept

Organizational structure overview

Maintaining organization structure in TMS

Business partners

Business partner concepts

Business partner functions

Products

Transportation network

Locations

Transportation zones

Transportation lanes

Transshipment locations

Resources

Summary

Further reading

Chapter 5: Master Data in SAP LES

Warehouse master data in LES

Warehouse structure

Storage type

Storage sections

Storage bin

Defining storage bin types

Quants

Concept of lean and full warehouse management

Data in material master WM views

Summary

Further reading

Chapter 6: Basic Functions in Sales Document

Overview of the order to cash cycle

Business transactions in SAP CRM

The design and structure of business transactions

Transaction types, their elements, and their functions

Summary

Further reading

Chapter 7: Sales Document Processing in SAP CRM

Sales contracts

Sales contract functions

Configuring sales contracts

Quotation

Configuring quotations

Sales orders

Configuring sales orders

Data exchange for sales transactions from CRM to ERP systems

Standard data exchange scenario

Interdependent change scenario

Summary

Further reading

Chapter 8: Order Fulfillment with SAP APO

Availability check overview

SAP CRM order integration with global ATP

Availability check using APO

Availability check using ECC

ATP configuration in SAP CRM with an ATP check in SAP APO

Additional information around CRM order integration with ATP

General settings to activate an ATP check in SAP APO

Maintaining global settings for an availability check

Maintaining the category

Business events

Check mode

Check instructions

GATP basic methods

Product availability check

Production allocation

Checking against a forecast

GATP advanced methods

A combination of the basic methods

Rule-based availability check

Multi-item single delivery

Capable-to-Promise

MATP

Transportation and scheduling with GATP

Step 1 – defining a condition table for scheduling

Step 2 – maintaining access for scheduling

Step 3 – maintaining control for scheduling

Step 4 – condition record maintenance

Backorder processing

Maintaining the filter type

Defining the sort profile

Running BOP

Summary

Further reading

Chapter 9: Transportation Requirements in SAP TMS

Transportation management

Transportation management functional overview

Technology/architecture overview

Transportation requirements and sales order processing

SAP TMS documents integration with SAP ERP

Summary

Further reading

Chapter 10: Transportation Planning and Freight Order Management in SAP TMS

Transportation planning

Freight unit

Freight unit building rule

Profiles

Interactive planning with the transportation cockpit

Automatic planning

Freight order management

Carrier selection and tendering

Tendering

Summary

Further reading

Chapter 11: Logistics Execution in SAP LES

Freight order integration with shipment and shipment processing

Message flow between freight orders in SAP TM and shipment documents in the SAP ERP system

Integrating text types between freight orders and shipment documents

Shipment statuses

Picking

Packing

Post goods issue

Transportation charge management

Freight settlement and carrier invoicing processing

Cost distribution

Freight settlement document

Carrier invoicing

Summary

Further reading

Chapter 12: Customer Billing

Billing process

Billing document type processing

Customer billing

Credit memo

Debit memo

Pro forma invoice

Intercompany billing

Cancellation invoice

Methods of billing

Individual billing

Collective billing

Invoice split

Billing document type configuration

Summary

Further reading

Chapter 13: Analytics

Analytics overview

CRM analytics

Sales analytics

Customer analytics

Product analytics

Interaction center analytics

Report assignment function

Interactive reporting

TMS analytics

Analytics powered by HANA

Summary

Further reading

Why subscribe?

Other Books You May Enjoy

Preface

SAP has extended the functionalities in SAP Customer Relationship Management (CRM), SAP Advanced Planning and Optimization (APO), and SAP Transportation Management System (TMS) beyond those available within SAP Enterprise Central Component (ECC). With this book, you'll not only cover the Order to Cash process with SAP ECC, but also with SAP CRM, SAP APO, SAP TMS, and SAP Logistics Execution System (LES), exploring their key functionalities and configuration.

Using different SAP systems in an integrated manner to gain maximum benefits in the running of your business is made possible by this book. The book covers how to effectively implement Order to Cash processes with SAP CRM, SAP APO, SAP TMS, SAP LES, and SAP ECC.

With this book, readers will follow a step-by-step implementation of the various techniques involved in the integration touchpoints of different systems to optimize the complete Order to Cash process with mySAP Business Suite. This will help you to implement mySAP Business Suite and understand the shortcomings in your existing SAP ECC environment. The book starts with an introduction to the UI technologies in SAP systems followed by the chapters on master data covering different SAP environments. From there, this book will take you to the Order to Cash cycle, including order management in SAP CRM, order fulfillment in SAP APO, transportation planning in SAP TMS, logistics execution in SAP LES, and billing in SAP ECC.

By the end of this SAP book, you will have a thorough understanding of how different SAP systems work together with the Order to Cash process in SAP.

Who this book is for

This book is for SAP consultants, subject-matter experts, solutions architects, and key users of SAP with end-to-end knowledge of Order to Cash business processes. Customers operating SAP CRM, SAP APO, SAP TMS, and SAP LES as part of their daily operations will also benefit from this book by understanding their key capabilities and integration touchpoints. Working knowledge of SAP ECC, SAP CRM, SAP APO, SAP TMS, and SAP LES is required before getting started with this book.

What this book covers

Chapter 1, Introduction to the Order to Cash Cycle, offers an overview of the Order to Cash process with SAP CRM, SAP APO, SAP TM, and SAP ECC-LES functions and its architectural view. This chapter provides the reader with knowledge on how SAP systems are integrated to fulfill the Order to Cash process. You will also learn about the UI technologies used in these systems.

Chapter 2, Master Data in SAP CRM, covers the topic of master data in SAP CRM, including organization management, business partners, products, pricing, vendors, and plants. It also covers the configuration required to set up the master data in SAP CRM, including replication from SAP ECC to SAP CRM. The key takeaway from this chapter is understanding the significance of master data usage in SAP CRM.

Chapter 3, Master Data in SAP APO, covers master data in SAP APO, including locations, products, and resources. This chapter covers the setup of master data in SAP APO, including how to replicate data from SAP ECC to SAP APO. The key takeaway from this chapter is understanding the significance of master data usage in SAP APO.

Chapter 4, Master Data in SAP TMS, covers master data in SAP TMS, including organization management, business partners, products, transportation networks, and resources. This chapter covers the setup of master data in SAP TMS, including how to replicate the data from SAP ECC to SAP TMS. The key takeaway from this chapter is understanding the significance of master data usage in SAP TMS.

Chapter 5, Master Data in SAP LES, covers the setup of warehouse master data that is required during picking, including warehouse structure, storage types, storage sections, storage bins, and quants. This chapter covers the setup of the warehouse master, including its configuration in SAP LES. The key takeaway from this chapter is understanding the significance of the warehouse master data setup required in order to pick, pack, and ship products to customers.

Chapter 6, Basic Functions in Sales Documents, teaches the foundations of business transactions in the SAP CRM system. It covers the basic functions, including the structure of sales transactions, partner processing, text management, date management, status management, credit management, and actions.

Chapter 7, Sales Document Processing in SAP CRM, covers sales transaction processing, its key concepts, and how to configure these transactions in SAP CRM as per your business needs. Sales document processing in SAP CRM allows companies to perform sales transactions with the customer. This chapter helps readers to understand the extent of sales document processing, including sales contracts, sales quotations, and sales orders.

Chapter 8, Order Fulfillment with SAP APO, provides information on how to fulfill orders based on customer-requested dates. This chapter helps readers to understand true global available-to-promise (GATP) and how to provide accurate product availability and substitution possibilities with the SAP APO system. Key takeaways within this chapter are understanding and building the order fulfillment capabilities with configuration setup in the SAP APO environment.

Chapter 9, Transportation Requirements in SAP TMS, covers the transportation requirement processes and its integration with the SAP ECC system. This chapter covers the complete functionality around how transportation requirements are realized in SAP TMS. The transportation process starts with the request for transportation services and this chapter provides an understanding of different transportation requirement options, including order-based and delivery-based transportation requirements.

Chapter 10, Transportation Planning and Freight Order Management in SAP TMS, teaches you about the transportation planning processes and freight order management in SAP TMS. This chapter covers the planning constraints and key concepts around the freight order document, including its configuration. You will also learn the concepts of carrier selection and tendering processes within this chapter.

Chapter 11, Logistics Execution in SAP LES, covers the freight order integration with shipment documents in SAP ECC, along with shipment processing and posting goods issues. You will also learn the concept of transportation charge management and how to settle freight with the carrier in this chapter. The key takeaway here is understanding how shipment execution takes place and the steps required to pick, pack, and ship the products.

Chapter 12, Customer Billing, covers processing bills in the SAP ECC system. It teaches you about different billing document types, methods of billing, their functions, and the configuration required to set up billing document types. Key takeaways in this chapter are understanding how billing documents are processed after the freight settlement steps.

Chapter 13, Analytics, covers high-level reporting capabilities in SAP CRM and SAP TMS, including how to measure the accuracy of the Order to Cash cycle. You will also understand the concepts involved with the HANA Sidecar approach in the SAP environment and how you can leverage the reporting capabilities with HANA Sidecar.

To get the most out of this book

Working knowledge of SAP ECC, SAP CRM, SAP APO, SAP TMS, and SAP LES is required before getting started with this book. You will be following a step-by-step implementation of the various techniques involved in the integration of different systems to optimize the complete Order to Cash process with mySAP Business Suite.

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Conventions used

There are a number of text conventions used throughout this book.

Code in text: Indicates code words in text, database table names, folder names, filenames, file extensions, pathnames, dummy URLs, user input, and Twitter handles. Here is an example: You can use any partner functions based on your requirements; the most commonly used are Sold-To Party, Ship-To Party, Bill-To Party, and Payer.

Bold: Indicates a new term, an important word, or words that you see on screen. For example, words in menus or dialog boxes appear in the text like this. Here is an example: If the Block field on the partner function configuration is active, it blocks the source partner from being determined when the partner determination takes place.

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Chapter 1: Introduction to the Order to Cash Cycle

The Order to Cash (O2C) cycle in SAP supports businesses involved in handling and receiving orders from customers, including planning and shipping items to customers and processing payments. In essence, the O2C process is the process of receiving and managing customer sales orders. In this chapter, we'll provide an overview of processing the O2C cycle in SAP and its integration with the SAP business suite, which includes SAP Customer Relationship Management (SAP CRM), SAP Advanced Planner and Optimizer (SAP APO), SAP Transportation Management System (SAP TMS), and SAP Logistics Execution System (SAP LES). In addition, we'll learn about how a business can integrate these systems when they're implementing the Order to Cash cycle with SAP. In this chapter, you will learn the benefits of running your Order to Cash cycle with CRM, APO, TMS, and LES. Later in this chapter, you'll find further information about the Order to Cash process flow and the user interface technologies that are used by SAP CRM and SAP TMS.

The following topics will be covered in this chapter:

Understanding order to cash with CRM, APO, TMS, and LES

Getting to know UI technologies

By the end of this chapter, you will understand the significance of integrating different SAP systems such as CRM, APO, TMS, and LES within the Order to Cash process. You will also learn about the UI technologies that are used in these systems.

Understanding order to cash with CRM, APO, TMS, and LES

The Order to Cash business process is important to any company when it comes to satisfying their customer needs. Order to Cash impacts the complete supply chain of the business if it's not run efficiently. Another impacted area is the cash flow; any delay in receiving payment from the customer can impact the cash flow of any business. Therefore, considering these factors, it is imperative to effectively and efficiently run this process by eliminating inefficiencies across the entire business.

Within SAP, you can implement the Order to Cash process within the Sales and Distribution (SD) module if your business doesn't require advanced features from SAP CRM, SAP APO, and SAP TMS. Running the Order to Cash cycle with these SAP business suites helps you leverage advanced features in each system. To implement these systems with the Order to Cash cycle, you should have a good understanding of how to integrate these systems. This section will provide you with an overview of each of these elements. You will discover and understand each element of this cycle in more detail as we move along with the chapters in this book.

Understanding sales

The Order to Cash cycle begins with a customer calling and placing an order. When it comes to the sales process, it is split into pre-sales activities and sales order processing. Pre-sales activities include generating and targeting leads, creating opportunities for these leads, and converting these leads into customers. Once the leads have been converted into customers, the sales representatives can create a contract or a quotation for them.

When a customer starts buying products, the customer service representative will initiate creating the sales order, that can reference quotation or a sales contract. All these pre-sales activities and sales order processes are executed in the SAP CRM environment. Chapter 7, Sales Document Processing in SAP CRM, will cover pre-sales activities such as quotation and sales contract processing, as well as sales order processing, its functionality, and how to set up its configuration.

Understanding order fulfillment

When placing a sales order, the system checks if the product that's been ordered is available and whether the company will be able to deliver the product based on the customer's delivery date. The sales order provides the request date, and the system runs a product availability check. Based on this product availability check, the system provides the best date for when the product can be delivered to the customer. This product availability check has various options that can be executed in SAP APO.

Chapter 8, Order Fulfillment with SAP APO, will look at the different product availability options, such as basic product availability checks and advanced product availability checks, in SAP APO.

Understanding transportation planning and shipment creation

Once the product availability check has been executed in SAP APO, the next step is to execute the transportation planning, carrier selection, and tendering process and initiate the shipment creation process. SAP provides an optimizer that helps evaluate various transportation constraints and resource capacities before providing optimal transportation dates.

Various activities of transportation planning including the carrier selection and tendering process, its functionality, and profile set up all are done in the SAP TMS system. Chapter 10, Transportation Planning and Freight Order Management in SAP TM, covers how to plan and create transportation and shipment creation triggers within SAP TMS.

Understanding shipping

Once transportation planning and shipment creation have been completed, shipping activities such as picking the product, packing it, loading it, and shipping it out from the warehouse are executed in SAP LES. As soon as the product is shipped out from the warehouse, the customer is notified that the product has been shipped and is provided with tracking information.

Chapter 11, Logistics Execution in SAP LES, covers key functions such as the stock pick and stock putaway strategies within SAP LES, including initiating freight settlement for the carrier invoicing in SAP TMS.

Understanding customer billing

As soon as the goods have been shipped out of the warehouse, the system generates a billing document. This billing document is sent to the customer to process the account receivables. Once the customer has paid for the goods they've ordered, the account receivables are updated, showing the payment that was received by the customer.

Chapter 12, Billing Processing in SAP ECC, covers the key billing functionality in SAP ECC, including understanding different billing document types, their functionality, and their configuration details.  

Understanding the order to cash process flow

If you have a good understanding of how SAP business suites integrate, you can automate the Order to Cash process, which results in improved customer service and reduced errors. This leads to greater customer satisfaction and maximizing your profits.

The following diagram shows the Order to Cash cycle process flow with SAP CRM, SAP APO, SAP TMS, and SAP ECC:

Figure 1.1 – The Order to Cash process flow with SAP CRM, SAP APO, SAP TMS, and SAP ECC

The following steps are what happens in the Order to Cash process flow:

The lead places an inquiry and shows interest in buying goods from the company.

The sales representative creates an opportunity for the lead and goes on to the opportunity life cycle with that lead.

The leads are converted into customers as the lead confirms that they're buying the goods from the company.

The sales representative creates a sales quotation or sales contract based on certain terms and conditions between the buyer and the seller. These transactions are created in SAP CRM.

The customer calls and confirms the date when they would like to buy the goods from the seller.

The customer service representative places a sales order and applies a sales contract or quotation price in SAP CRM.

When creating the sales order, the system undergoes an ATP check based on the requested delivery date on the sales order. A product availability check is done in SAP APO.

The sales order is confirmed on the date when the product is available. The sales order is then saved in SAP CRM. Once the sales order has been saved, the order is replicated to SAP ECC.

The sales order that was replicated in SAP ECC is also replicated to SAP TM for transportation planning.

SAP TMS executes the transportation planning process and a freight order is created. Carrier selection takes place in the freight order and the tendering process is executed.

The carrier confirms the pickup date and the seller awards the tender to the carrier.

A delivery and shipment proposal is sent from SAP TMS to SAP ECC.

The shipment process of picking, packing, and loading is initiated in SAP ECC.

The delivery process executes the goods issue from the warehouse in SAP ECC.

Once the goods have been issued and the products have been shipped out from the warehouse, a customer billing document is generated in SAP ECC. Billing confirmation is triggered and the customer receives the billing document.

Separately, the freight settlement document is created to settle the invoice for the carrier.

The process flow described here will be covered in detail throughout this book. We will cover each function, including master data and how to configure it in each of the SAP business suites, including SAP CRM, SAP APO, SAP TMS, and SAP ECC. Before we look at these functions, let's understand the user interface (UI)