• Sale and service of products is one of the most critical processes of any organisation
• Supporting this process effectively is one of the first requirements for any organisation from an ERP
system. Sales and distribution is one of the first modules that ERP vendors came up.
• ERP automates all routine sales and order management related transactions, if effectively used it
can also achieve
• Increasingly companies are becoming global and export constitutes a major percentage of a
revenue these days. ERPs had come up with specialised module and functionality to support export
Sale and distribution process.
• Enquiry by customer (verbal/phone/mail/order form).
• Availability checks of the material and inform the customer about availability (or non-availability of
• material). In case of non-availability of ready stock, inform customer the date by when the material
• can be delivered (as now this need to be manufactured or procured). Sometimes the response
• the enquiry can be in the form of quotation where the price of the item, date of delivery and other
• commercial terms are mentioned.
• Order confirmation after doing the credit check of customer. If applicable at this stage, sales
• incentive also can get updated. Check for completeness and accuracy of order entry. This process
• also called sales order processing.
• Inventory sourcing: This process defines from where the material need to be sourced, externally
• vendor or internally need to be produced. Based on the source, a set of action need to be triggered
• ensure availability of material on committed date.
• Locate the nearest warehouse from where order can be served and order information is transmitted
• warehouse. Order is picked at warehouse. This process is also called shipping.
• Transportation department arranges for shipment. This process is also part of shipping process.
• Billing and invoicing.
• Dispatch of goods
• Receipt of goods by customers and signing proof of delivery
• Collection of payment
Managing Pre-sales Activities
• This may include proactive sales activities like creating and tracking customer contacts and mailing
• Inquiries may also result from specific marketing measures like trade fair. Some of the customers
may also request for quotation.
• ERP systems helps in generating such quotations and these can be saved as documents.
• quotations convert to customer order,
• Data on pre-sales activities and marketing activities is also important to formulate marketing and
• For example, if there is repeated sales loss from a particular customer, the analysis of same can
help the company to come up with a better pricing or service strategy for the customer to win his
business. Business intelligence tools helps in this kind of analysis.
Material Availability Date Check
• After enquiry, if the customer now wants to go ahead and place an order, it is important to check the
availability of material.
• There can be two situations i.e. the material is available or it is not available.
• In case material is available, the next step is simple, i.e. to go ahead and book an order.
• If the material is not available in finished goods stock and need to be manufactured or procured,
the customer need to be informed the expected delivery date. Once the customer is OK with that,
the order is placed.
• ERP system check material availability date working backwards from the customer’s requested
delivery date and taking account the time required for:
• picking, packing, loading and transporting the goods.
• For example, an organisation can do availability check only based on the stock available at
warehouse or based on the stock available at factory and warehouse or the availability check can
also consider stock expected in future (from vendors against purchase orders or from factory
against production orders).
Sales Order Processing
• A sales order is an electronic document that records customer’s request for goods or services and
contains all information to process the customer’s request.
• ERP systems makes sales order entry simple as it automatically proposes data from master records
(like customer master, material master, etc.) and control tables that is previously stored in the
system and thus, reducing possible input errors occurring during sales order entry.
Standard order normally contains:
• Customer and material information
• Pricing conditions for each item
• Delivery dates and quantities
• Shipping information
• Billing information
• ERP can trigger different set of actions like:
• Trigger make-to-order production (Production)
• Create purchase requisition from external suppliers (Purchase)
• Organise the outbound delivery from another warehouse (Stock transfer)
• This include all the processes needed to make delivery of items and may involve activities like
• Creating outbound deliveries
• Picking in the warehouse
• Packing in the warehouse
• Planning and monitoring of transport
• Posting the goods issue
ERP transportation order
• An ERP transportation order, can have variety of information like
• Means of transport: Indicates the specific vehicle type with which the goods are to be transported,
• such as 10t truck, 20t truck or bulk container.
• Shipping type: This is used to define the characteristics of the mode of transport, such as road, rail,
• or sea.
• Special processing indicator: Indicates whether there are any special requirements to be met during
• shipping such as express delivery.
• When finally goods issues are posted, the system automatically:
• Updates the quantities in inventory management and delivery requirements in materials planning
• Updates the value change in the balance sheet accounts for inventory accounting
• Generates additional documents for accounting, for example, for controlling
• Generates the billing due list
• Updates the status in all relevant sales documents.
• Once the material is ready for despatch, a billing document needs to be created for the customer.
• ERP systems help in this by copying data from the sales order and the delivery document to the
The billing document functions
• it helps to generate invoices and this is the basis for financial
accounting team to monitor and process customer payments.
• During billing, ERP system carries out a debit posting on the
customer receivables account
• credit posting on the revenue account.
• Payment is a process that is part of financial accounting module (accounts receivables module) of
ERP systems. Payment process supports
• Receiving payments from customer
• Making entry in the system, i.e. posting payment against invoices
• Reviewing differences
When a payment posting is done, the relevant general ledger accounts gets updated automatically
and during this process, the ERP system carries out a debit posting to the cash account and a credit
memo to the customer receivables account.