Unique Sales Scenario of Pre-Order - has any one got suggestion?

[Former Member]

Hello All,

I have a unique requirement from Business.

We have a very classic scenario of Pre-Order Sales. We need to create a Pre-Order Sales in the Sales Order system for an item which has not yet been released. Consider that Item is still in R&D, but we have some kind of Target release date. The idea by the Marketting team to allow customer to reserve their own personal copy of that Item.

Pre-orders will allow customers to guarantee immediate delivery on release of the product. And also production team can gauge how much demand there will be and hence how large initial production runs should be.

Has any one come accross this scenario? And how did you implement in SD or should I say in SAP over all ?

Thanks,

Dipankar Biswas

[moazzam_ali · Accepted solution]

Hi

This is an interesting scenario. I have never faced this kind of requirement but I have feelings that you can achieve this by simply creating an inquiry for that item. When material is under R&D process or in production process you must have created material master for that. You can create inquiry for that material by using IN document type. For this you are not going to bill or deliver right?? It is just for analysis purpose as you said for production team and customers for confirming deliveries. You can also modify it as per your requirement like for delivery dates etc.

Let me know if you think this is not workable for you.

Thank$

[former_member184065 · Accepted solution]

Dear,

I think ,may be Make to order process fit for this .

Whats your opinion on this.

Thanks,

Naren

[Former Member · Accepted solution]

To some extend, I am also thinking in the same way. But instead of Inquiry, I am thinking of creating a Quotation document (QT). Because we know for sure that eventually they will be converted to Sales Order. Unfortunately, I cannot reserve material based on Material on quotation. Unless you know a way to do it.

Also, I will need to create a delivery and Billing document. And to do that, I have to convert the Quote into a Sales Order and then do the delivery and Billing.

But I am expecting that SAP would have a solution without even creating this extra Quotation document. Hoping to get some answer staright from Sales Order document.

But I appreciate for your input. That's very good suggestion.

regards,

Dipankar

[moazzam_ali · Accepted solution]

Hi

Thank you appreciating. You are right, It can be quotation or inquiry. What you need to do is to change them as per your requirement. You can also create sale order from inquiry. For reserving stock, let me tell you that we can do that only if we have stock at the time of order creation. If you have stock in unrestricted location of your store then you can reserve that at the time of sales document creation. It is done in schedule line settings. Confirmed stock will be reserved for that stock. You can't reserve stock in sale order or quotation untill you have enough stock in storage location. I don't think so there is some other special process for this kind of requirement. Wait and see if someone else have some better solution. It will be a good learning for me as well.

Thank$

[Lakshmipathi · Accepted solution]

I cannot reserve material based on Material on quotation

If material code is already exists, then you can create a sale order for that material and assign Reason for Rejection so that the requirements wont be passed on to MRP

G. Lakshmipathi

[former_member205178 · Accepted solution]

Hi,

Good point !

Another Option: 

Based on what Dipankar is saying this is a Made to Stock and not Made to Order so passing on to MRP is okay as long as the delivery of the goods is not made and the delivery date is controlled.

As per what I see, production needs to be aware of the requirements and thus as long as they are part of MRP it should be fine. Only thing is that they should not be produced, which can be controlled in PP based on Delivery Date. 

We could put a Delivery Block too to make this work with the delivery date in future. 

Dipankar should now look at all the proposals / likely directions and pick the least of the painful ones.

Thanks.   

[Jelena]

I checked with our local sales folks and they said they do pre-orders using either quotations or just regular orders. There is no special process per se, they just set the delivery date in future and the rest (e.g. communication with the engineering team) is handled outside of SAP. But we normally do not have large amount of orders due to the specific of our business.

It's quite important to look at the whole picture for this scenario. Some good questions have already been raised (quite surprisingly OP didn't find those posts helpful). And I can throw in some more from the technical perspective. Is this a one-time event or a regular process? What is the amount of pre-orders expected? Are the orders entered manually or through an interface (or multiple channels)? What is the link to PP (e.g. are planning/production orders supposed to be created)? What kind of reporting is expected? Do the customers need to be notified before the actual delivery date? (E.g. Amazon sends a reminder for the pre-orders before shipping to make sure people didn't change their mind.)

This could be as simple as just using a regular order with a quick query for manufacturing and then moving the material into some reserved stock when it's available. Or it could be much more complex, especially if there is large number of transactions involved.

[Former Member]

Thanks Jelena ! I think you raised some good questions here.

If you look at my some very initial comments, I also agreed on the quotation. But since in this scenario, I will be collecting a partial payment (some thing like 10% downpayment) against the pre-order, I cannot do this in quotation scenario.

Also to answer your question, this is NOT a one time process. Since we develop many inovative products for the mass, there are situation where we build a prototype and marketting team wants to take pre-orders. Even though the product is not officially released, they want to generate revenue as much as possible with a expectation that it will be released soon and customers will like it.

These orders can cme manually to our call center. Who manually key in the Orders. Or they can come thru EDI transactions.

Since it's a Make To Stock, the forecasting department provides the PP to produce. So there is no direct link. There is no reporting requirement defined yet, but we have a back order report. So if we decide to capture this orders in the Sales Order with expected delivery dates and for some odd reason, the launch date is pushed out, they will effect the Back order reporting. We don't send any reminder for pre-orders before shipping yet. We assume that customer will get the order based on Delivery due date. But would like to see your recomendadtion on how to send such notification.

Thanks,

Dipankar

[Jelena]

An interesting question (not sure who is that person that just goes around and rates everything with 2 stars).

Search for "preorder" in SAP domain only points to some functionality in AFO module. But this scenario is hardly unusual in Sales - e.g. Amazon regularly does pre-orders for books, DVDs, etc. Quite surprisingly there seem to be no perfect way in "plain vanilla SD" to accomodate pre-orders.

From what I see, the biggest challenge here is to make sure to reserve the stock, so that the pre-orders are shipped first (in the order they were placed, I presume). Is this correct?

[former_member182378]

Jelena,

Very nice!

Business examples are "gold-dust" for functional consultants / staff!

e.g. Amazon regularly does pre-orders for books, DVDs, etc.

Thinking about this example. It is an example of Sales (and not so much of pre-order).

I.e. Customer makes an order, stock is available, billing process, payment by customer

& then the delivery process.

In this pre-order process, there is no stock and there is no payment by customer.

It is just an advance booking.

From what I see, the biggest challenge here is to make sure to reserve the stock, so that the pre-orders are shipped first (in the order they were placed, I presume). Is this correct?

I agree that this would be a challenge!

[former_member184065]

Dear,

Based on IN o QT ,the company may not be decide that customer will purchase from that company.if any another company offer with lowest price then there can be 100 % chances go for purchasing goods from them.I dont think,the above process is good why because you have already passed requirement to PP to produce goods for that customer. If he dont purchase then what will happen ?

Try to create below process,

VA01-VF01 ( F2 ) -VL01N-VF01 ( F8 ).I have simulated this scenario until VL01N. It is possible.

Note: Make sure,order quantity should be equal to picking quantity in delivery level.

Kindly let me know you want further help

Thanks,

Naren

[Former Member]

Hi Narendra,

That's a very good suggestion. The process flow you have suggested looks very promising. Cn you share more detail on this? My email address is: dbiswas at MSN dot com.

If your documents are specific to client, then you can take them off and I can assure you that I will use it only for study purpose.

thanks in advance.

regards,

Dipankar

[former_member205178]

Hi,

All others have given you useful inputs. If the need is rare and limited to only few customers and specific material combination, you can try one more approach.

Play around with MARA-MSTAV : Cross-distribution-chain material status

Example: The material may be a part under development or one to be discontinued.

I have seen this being used in one of my client's. You can define your own values and assign them to the Material at Sales Org + Dist. Channel level.

I may be wrong on this but nothing wrong in exploring.

Thanks.

[former_member182378]

D Sea,

It is an interesting suggestion!

For the SD process (i.e. to block the creation of sales order) for a material fields: MVKE-VMSTA (DChain-spec. status) Or X-distr. chain status (MARA-MSTAV) in Tab Sales: sales org1 could be used.

But if a material is being sold and at the same time a pre-order is made for it, then this option / suggestion would not work.

[former_member205178]

Hi TW,

Narendra is correct that Inquiry and Quotation are different stages of probability of order being placed with you and Sales Order is a firm commitment to buy a product from you[ alas even this is not really firm and can be cancelled ]

The main thing here seems to be that the Product is Still NOT Released, so my assumption is that this is not an existing product as such and is still in development, hence it is not really available for sale.

On closure inspection, this is more like for an example Made to Order / Engineer to Order type kind of scenario [As Narendra as pointed out]. This will ultimately create a Sales Order Stock and only at that stage you are committing to deliver the goods.

Further, for another way to look at, as you and MoazzaM's are pointing out IN/QT can also be used as a possible solution, but the main thing is to know what really happens between the customer placing the Pre Sales Order and the Sales Order. Standard Order to Billing flow is fairly simple here.

Coming back to Engineer to Order scenarios, the product development would go through iterations and the final product would be released only when the customer is happy with what he sees as the product he wants. At that time it becomes a firmed up sales order. Dipankar can confirm on my understanding of the same.

Also at this stage, while this may not impact the overall process, I am curious to know if there any Variant Configuration being used in the Order Creation Process ?

Hope I have not added to the confusion.

Thanks.

[Former Member]

Coming back to Engineer to Order scenarios, the product development would go through iterations and the final product would be released only when the customer is happy with what he sees as the product he wants. At that time it becomes a firmed up sales order. Dipankar can confirm on my understanding of the same. 
Also at this stage, while this may not impact the overall process, I am curious to know if there any Variant Configuration being used in the Order Creation Process ?

Hello TW,

This is not a MTO scenario. It's more of a Make - To -Stock kind of thing.

Think of how Microsoft releases X-Box, before they are released to retail shop. As a consumer, I go to some retails and place a Pre-order by paying 30% down payment. At the time of payment, the product is not even released, but the retailer is able to create a Sales Order. And once Microsoft has released the product, I get my hands on X-box first. I pay the remaining 70% at the delivery.

Hope this helps to explain the scenario.

regards,

Dipankar

[former_member205178]

Hi,

A small correction first. I am not TW [ I wish I was an expert like him ] .

Are you saying Microsoft X-Box as a similar example or a generic one ?

I think if it is simple Made to Stock scenario, then I have been going in a different direction.

I think you should good with some of the solution idea given by MoazzaM. I have not gone into full details of his or Narendra's solution. 

Thanks.

[former_member184065]

Dear,

So,if this s the case,go by Down payment process.

VA01-F-29-VlL01N-VF01-F-39

Kindly ,let me know if want any further help.

Thanks,

Naren

[former_member182378]

Narendra,

From my understanding during the pre-order stage there is no payment by customer. Furthermore, payment is done (by customer) only after he/she receives the goods.

1. Does the customer pay the entire amount during the Pre-order stage itself?
No, the customer will be paying at the time of delivery completion. Just like any Sales Order.
In other words, the actual delivery process does not involve any payment (by the customer)

If there is no "Payment up-front" would downpayment functionality work? (apply)

[former_member184065]

Hello,

read below example provided  by him

Think of how Microsoft releases X-Box, before they are released to retail shop. As a consumer, I go to some retails and place a Pre-order by paying 30% down payment. At the time of payment, the product is not even released, but the retailer is able to create a Sales Order. And once Microsoft has released the product, I get my hands on X-box first. I pay the remaining 70% at the delivery.

Thanks,

Naren

[former_member205178]

HI TW and Narendra,

Dipankar is still fully unraveling his requirements. We really need to get the full picture. He hasn't replied yet if the Microsoft Example is a similar scenario or just a generic one.

All of us are doing a good job of defining and clarifying his requirements. That will finally make a good solution.

Being fairly new to the forum the thing that I see is that people are not giving good requirement details initially and people like us are really getting it out of them, going around in hoops to figure out what it is. It is the classic case of people trying to define an elephant based on what part of the elephant they are able to sense and feel.

While, it is natural that requirements evolve and get clarified but, sometimes it seems that the questions are not articulated properly initially which is something that makes things difficult for you and me.

You guys have fun trying to give logical and sensible solutions.

[Jelena]

D Sea wrote:
Being fairly new to the forum the thing that I see is that people are not giving good requirement details initially and people like us are really getting it out of them, going around in hoops to figure out what it is.  

Yes, this has been an ongoing problem on SCN - check out this blog.

[Former Member]

My Scenario is similar to Micrsoft X-box example. Right now, if you go to microsoft site, you will be able to reserve a unit with a small amount of down payment. But most probably, the product is not even released status, it might be still in design stage.

But once the product is released, customers who have created the pre-orders, will get their unit first. But most probably Microsoft will send them a email with reminder to pay the complete payment first. And once that's been done, the unit will be shipped.

And after going thru all the suggested solution / ideas, I see a good match with T W.

Possible document flow - 

Pre-order>Billing>Actual delivery order>Actual delivery>PGI>Billing

[former_member205178]

Hi Jelena,

Thanks for your reply and the link.

I guess, some of the participants in a discussion are also aggravating the situation and I am also a culprit in that. We are all going over each other to try to give solutions with hardly any solid robust requirements being given.

That I believe is also a problem. Speaking for myself, I will make sure not to waste time if the requirements are not clear. Sometimes it is some practice in SAP and not real business requirement and we are breaking our head for that.

Anyways, I am signing off of this discussion. Dipankar has enough inputs for this. He should consolidate all responses and decide what he has to.

Thanks everyone.

[former_member182378]

Dipankar,

Is payment done by customer at the pre-order stage?

This is a very important point in order to design this process. You have not been consistent and you have supplied unclear information.

1. Does the customer pay the entire amount during the Pre-order stage itself?
No, the customer will be paying at the time of delivery completion. Just like any Sales Order.
In other words, the actual delivery process does not involve any payment (by the customer)

As initially understood that there is no payment at the pre-order stage, then you can go with IN, QT.

But if there is payment (or payments) then you have to go with order at the per-order stage.

Right now, if you go to microsoft site, you will be able to reserve a unit with a small amount of down payment. But most probably, the product is not even released status, it might be still in design stage.
But once the product is released, customers who have created the pre-orders, will get their unit first. But most probably Microsoft will send them a email with reminder to pay the complete payment first. And once that's been done, the unit will be shipped.

Moreover, you recently said that ONLY after complete payment, the unit shall be shipped.

You can probably go with the below process -

Pre-order (VA01) > Billing (VF01) > Collection process (multiple payments)* > Delivery > PGI

In the pre-order you can set a default delivery block. The staff shall check if the complete payment is done, only then remove the delivery block from the pre-order, for the delivery creation.

*Check with your FI consultant about multiple payments in the collection process, the G/L postings etc. etc.

[former_member182378]

Narendra,

Thanks for paste an extract written by the OP.

Dipankar,

Here too there is an unclear -

Does the entire amount have to be paid by the customer ONLY THEN the delivery document is created?

[former_member182378]

Dipankar,

Please answer the below points -

1. Does the customer pay the entire amount during the Pre-order stage itself?

In other words, the actual delivery process does not involve any payment (by the customer)

A connected question is about G/L accounts and account determination (in the case of amounts in the Pre-order process)

2. The material in the Pre-sale order and the actual delivery are the same?

3. In Pre-order process, there is no movement of goods, so there should not be any delivery. Does the business / client agree?

4. Is there any scenario where the Pre-order (billing doc) would be cancelled?

5. Does client want any "connection" between Pre-order process and the actual delivery process?

In other words, document flow needed?

6. In the actual delivery process, would the client be ok with having a sales order?

Possible document flow -

Pre-order>Billing>Actual delivery order>Actual delivery>PGI>Billing (if needed)

[Former Member]

Hello T W, Please see my response. You have really asked some good question and tried my best to answer. But I am really curious to understand the last scenario of the document flow that you have mentioned. Can you give me an example of the industry soution that one applies too?

regards,

Dipankar

Dipankar,

Please answer the below points -

1. Does the customer pay the entire amount during the Pre-order stage itself?
No, the customer will be paying at the time of delivery completion. Just like any Sales Order.

In other words, the actual delivery process does not involve any payment (by the customer)

A connected question is about G/L accounts and account determination (in the case of amounts in the Pre-order process)
Account posting are same as any stanadard Sales

2. The material in the Pre-sale order and the actual delivery are the same?
Yes, they are the same Material number

3. In Pre-order process, there is no movement of goods, so there should not be any delivery. Does the business / client agree?
That's a good question. The material will be sitting in special stock which is blocked for any Sales Order to pick. In fact that Material will sit in some kind of Blocked stock. But would like to place reservation, so no two pre-sales Order picks the qty. And also make sure that any new demand via other pre-orders considers the blocked stock qty.

4. Is there any scenario where the Pre-order (billing doc) would be cancelled?
Yes, they are subject to Cancel. So I can go and cancel the order and the qty will be relieved for other to pick it up.

5. Does client want any "connection" between Pre-order process and the actual delivery process?

In other words, document flow needed?
Yes, they want to document to connect.

6. In the actual delivery process, would the client be ok with having a sales order?
Yes, and I think you are leading to pre sales document like Quotation or inquiry and converting to Sales Order. But again I would gladly seek your advise.

Possible document flow -

Pre-order>Billing>Actual delivery order>Actual delivery>PGI>Billing (if needed)

Not exactly, but very curious on the above document flow you mentioned? What scenario is this and can that be done in SAP?

[former_member182378]

Dipankar,

MoazzaM has given good input.

Probably you can go with QT > Sales order > Delivery > PGI > Billing.

As QT is created when the material is not yet complete. Thus no stock at that moment, the availability check should be done during creation of the sales order.