Sales Area

[Former Member]

Hi SD Guru's.

I just want to know what is the purpose of creating a sales area? What factors should i take into consideration when i create my sales org, distribution channel and division? I also want to know, how can i report on my profitability, would that be based on any of these three independently or salea area as a whole? Also what is the relevance of attaching business area to my sales area.

I would appreciate a vey meaningful reply with few examples.

Thankyou so much.

Kind Regards

Ravi D M

[Manoj_Mahajan78]

Hi Ravi,

Sales Area is a combination of Sales Organization, Distribution Channel and Division

Sales Organisation

A sales organization is assigned to exactly one company code. A plant can be assigned to a sales organization through a distribution channel.

Distribution Channel

o You allocate a distribution channel to one or more sales

organizations.

o You allocate one or more plants to a distribution channel.

o Within a distribution channel, you can define your own master data

for customers or materials as well as your own conditions and

pricing.

o You can create master data for a representative distribution channel

which is then also used in other distribution channels. To do this,

you have to additionally create the allocation of the representative

distribution channel to the other distribution channels.

o For a distribution channel, you can determine your own sales

document types.

o You can determine sales offices for a distribution channel.

o All items of a sales document belong to a distribution channel. The

entire sales document is therefore entered for a distribution

channel.

o The items of a delivery can belong to different distribution

channels.

Division

A product or service is always assigned to just one division. From the point of view of sales and distribution, the use of divisions lets you organize your sales structure around groups of similar products or product lines. This allows the people in a division who process orders and service customers to specialize within a manageable area of expertise.

REWARD if u finds this as helpful...

Regds

MM

[Former Member]

Hi Manoj,

Why are you repeating the copy paste again the response that has already been copy pasted from help.sap.com by Lakshmipathi?

Please do not do that.

Hi Ravi,

<b>Please read the rules of engagement before you post.</b>

What other guys(except for G PRASHANTH)have done here is copy paste from help.sap.com

<b>

Step 1: Finding An Answer</b>

Rule number one: Try to find the answer first. There are tons of resources out there, show that you have tried to find the answer. A question that shows that the person is willing to try and help themselves is more likely to be answered than one which simply demands information. Tell us what you have done to try and solve the problem yourself - often we can learn from that too!

Search the forums, the articles, the blog posts and the Frequently Asked Questions (FAQ) in the Wiki for your topic.

[Lakshmipathi]

Dear Ravi

The basic answer is without creating Sales area, you CANNOT create customer master or a sale order. Let me try to explain what is Sales Area.

Sales Area is a combination of Sales Organization, Distribution Channel and Division

<b>Sales Organisation</b>

A sales organization is assigned to exactly one company code. A plant can be assigned to a sales organization through a distribution channel.

<b>Distribution Channel</b>

o You allocate a distribution channel to one or more sales

organizations.

o You allocate one or more plants to a distribution channel.

o Within a distribution channel, you can define your own master data

for customers or materials as well as your own conditions and

pricing.

o You can create master data for a representative distribution channel

which is then also used in other distribution channels. To do this,

you have to additionally create the allocation of the representative

distribution channel to the other distribution channels.

o For a distribution channel, you can determine your own sales

document types.

o You can determine sales offices for a distribution channel.

o All items of a sales document belong to a distribution channel. The

entire sales document is therefore entered for a distribution

channel.

o The items of a delivery can belong to different distribution

channels.

<b>Division</b>

A product or service is always assigned to just one division. From the point of view of sales and distribution, the use of divisions lets you organize your sales structure around groups of similar products or product lines. This allows the people in a division who process orders and service customers to specialize within a manageable area of expertise.

<b>Business Area</b>

An organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated.

You can create financial statements for business areas, and you can use these statements for various internal reporting purposes.

<b>Why we should assign Business Area to Sales Area</b>

For automatic business area account determination the system then finds the corresponding business area for account assignment using the sales area for:

o Revenue postings

o Value postings due to material movements

Thanks

G. Lakshmipathi

[Former Member]

Business Areas in SAP are used to differentiate transactions originating from different points/lines/locations in business. Let me give some examples to elucidiate:-

A company (say, ABC) is a huge company and has a variety of businesses under it. Let us say that it typically operates in 3 different domains like machinery manufacturing, trading and assembling of machine parts.

There are 2 options here now -

1. Either create different company codes for the 3 business operations (which would be the easiest and require no creativity)

or

2.) Create each of these business lines into business areas (the better option).

The advantages of using the second option is:

1. You can use these business areas if other company codes require the same areas

2. The configuration is simpler as in case of company code, you would require to go through the entire configuration of creating Chart of Accounts, Fiscal Year variants, posting periods variants and so on. In the business area option, you just need to attach it to the company code and the rest of the details in Business area is attached by default from the company code you are using it in.

3. Using the options in controlling (EC-PCA, Enterprise Controlling, Profit Centre Accounting), you can even draw up Balance Sheets and PL statements for your business areas and hence this is used for management accounting in some companies (like HP, Dell, etc) when it wants to know the operating profits for different business areas/lines.

The above was an example when the company wanted to separate entries according to the lines it operates in... the other case could be when it wants to find out profitability during its operations in cities and differentiates these cities into Business

Areas...

Business Areas are not much relevant in FI but are much more relevant in CO