Forward Sales Cycle

SAP Best Practices for Forward Sales Cycle

1. Definition

The Forward Sales Cycle in SAP Sales and Distribution (SD) refers to a scenario where sales orders are created in advance of actual delivery. The key purpose is to manage future sales effectively, including forecasting, production planning, and managing customer relationships. This is particularly useful in industries with long lead times, seasonal demand, or custom production processes.

2. Purpose

The primary purpose of the Forward Sales Cycle is to ensure efficient order management and customer satisfaction by planning sales activities in advance. This cycle helps businesses to:

• Align production schedules with demand forecasts.
• Optimize inventory levels.
• Improve cash flow forecasting.
• Enhance customer relationship management by offering reliable delivery dates.

3. Process Flow

The Forward Sales Cycle process flow typically involves the following steps:

1. Sales Inquiry or Quotation: Begin with a sales inquiry or quotation where the customer expresses interest in purchasing goods in the future.
2. Sales Order Creation: Convert the inquiry or quotation into a sales order. The sales order specifies the future delivery date and other terms of the sale.
3. Availability Check: Perform an availability check to ensure that the required materials will be available on the promised delivery date.
4. Delivery Scheduling: The system automatically schedules the delivery date based on material availability and transportation lead times.
5. Production Planning: If the materials are not available, the system triggers production planning or procurement processes to ensure that the goods are available when needed.
6. Goods Issue: Closer to the scheduled delivery date, the goods are picked, packed, and delivered to the customer.
7. Billing: Once the goods are delivered, an invoice is generated, and billing is processed.
8. Customer Payment: The final step is the receipt of payment from the customer, completing the sales cycle.

4. Key Tables

• VBAK: Sales Document Header
• VBAP: Sales Document Item
• VBEP: Sales Document Schedule Line
• VBBE: Sales Requirements: Individual Records
• LIKP: Outbound Delivery Header
• LIPS: Outbound Delivery Item
• VBFA: Document Flow
• BSID: Accounting: Secondary Index for Customers (Open Items)
• BSIK: Accounting: Secondary Index for Vendors (Open Items)

5. Configuration

Configuring SAP SD for the Forward Sales Cycle involves several steps:

1. Sales Document Types: Customize sales document types (e.g., Inquiry, Quotation, Sales Order) to accommodate future sales processes. Ensure that the appropriate document type is selected during order creation.
2. Item Categories: Define item categories that allow forward scheduling. This includes setting up appropriate item categories for different types of sales (standard items, made-to-order items, etc.).
3. Schedule Line Categories: Configure schedule line categories to manage delivery dates and lead times. This ensures that future delivery dates are handled correctly.
4. Availability Check and Transfer of Requirements: Configure the availability check to consider the lead time for production or procurement. This ensures that the system can correctly schedule future deliveries.
5. Pricing Procedures: Set up pricing procedures that accommodate discounts, surcharges, and taxes relevant to future sales.
6. Output Determination: Configure output determination to ensure that documents like quotations, order confirmations, and delivery notes are generated and sent to the customer at appropriate stages.

6. Integration

The Forward Sales Cycle in SAP SD is tightly integrated with other SAP modules:

• SAP MM (Materials Management): Integration ensures that the system considers material availability and triggers procurement when necessary.
• SAP PP (Production Planning): The system triggers production planning processes if the required goods are not in stock, ensuring timely availability for future delivery.
• SAP FI/CO (Financial Accounting/Controlling): Integration with FI/CO ensures accurate billing, revenue recognition, and profitability analysis.
• SAP WM (Warehouse Management): Integration with WM ensures that the goods are efficiently picked and packed for future deliveries.

7. Testing

Testing the Forward Sales Cycle involves several scenarios to ensure that the system functions as expected:

1. Sales Order Creation: Test the creation of sales orders for future dates and verify that the system correctly schedules delivery dates.
2. Availability Check: Test the availability check to ensure that it correctly considers lead times and triggers procurement or production when necessary.
3. Delivery and Billing: Test the delivery and billing process for orders created in the future. Ensure that goods issue and billing are processed correctly.
4. Integration Testing: Conduct end-to-end integration testing to ensure that all relevant SAP modules (MM, PP, FI/CO, WM) are working together seamlessly.
5. Exception Handling: Test how the system handles exceptions, such as changes in delivery dates or cancellations of future orders.

8. Examples and Test Data

• Customer: 1000 (XYZ Corp)
• Material: M-100 (Finished Product)
• Sales Org: 2000
• Distribution Channel: 10
• Plant: 3000
• Sales Order Date: 01/08/2024
• Requested Delivery Date: 01/10/2024
• Quantity: 500 units

Example Scenario: A customer places an order on 01/08/2024 for 500 units of material M-100, with a requested delivery date of 01/10/2024. The system performs an availability check, finds that the material is not available, and triggers a production order. The production order is completed on 01/09/2024, and the goods are delivered on 01/10/2024. Billing is processed, and the customer pays on 01/20/2024.