SAP ERP is a powerful tool. You can do so much with it, it’s tempting to dive into the complexity and use features just for their own sake. But that’s not a good way to set up your SAP. Rather, you need to let business needs drive your SAP complexity.
Today, we’ll be talking about SAP distribution channels and divisions and how you can set them up for minimal data maintenance. We’ll also talk about what this means for an SAP e-commerce integration--something to consider even if you aren’t currently doing e-commerce. (See our previous blog post announcing Corevist interface for eCommerce)
Let’s dive in. Caveat: How granular does your internal financial reporting need to be?
When it comes to distribution channels and divisions, financial reporting is a big driver in complexity. One way to get highly granular financial data for internal purposes is to let your distribution channels and divisions “go forth and multiply.” This gives you financial data tied to each division.
But is this the best approach? What’s the cost of using distribution channels and divisions to zero in on internal financial reporting?
It can be quite high, actually. We’ve encountered scenarios with 35+ distribution channels and divisions. That’s a lot of data to manage.
Problem: Duplicate master data across divisions
In Sales and Distribution, master data like Customer Master, Condition Records, and so on are created with respect to the Sales organization, distribution channel, and division. If you create multiple distribution channels and divisions, you have to maintain different customer master records.
Sounds fine, except that the same customer might use multiple distribution channels (e.g. Retail, Wholesale, Web Channel Sales) or divisions (for example, Pumps, Consumables, or Electricals). This results in tremendous data proliferation, especially if there are many distribution channels and divisions and many customers using more than one.
Recommendation: Consolidate distribution channels and divisions as much as possible
To simplify your ongoing data maintenance, we recommend consolidating distribution channels and divisions as much as possible. This helps you minimize the cost of creating and maintaining the master data.
If you do not need the master data (customer, material or condition master data differentiation) according to distribution channel or division, then you should set up a common distribution channel and a common division. This practice reduces Master Data maintenance. That means it minimizes potential incongruous Master Data. You can use these common data elements to prevent the multiplication of master records.
The master data shared by several distribution channels applies to conditions, customer and material master data. That’s a lot to maintain separately.
A single product line also makes it easier to launch e-commerce initiatives like a Magento-SAP Integration. Even if e-commerce isn’t on your plate for this year, it’s important to understand that that’s where the B2B market is headed--and it’s never too early to prepare. You’ll save yourself some headaches if you follow best practices for data maintenance now.
What about exclusions?
If you need to prevent a material from being sold in a channel, you should consider using listing and exclusions to manage this process. It’s simpler to assign this property once for a material than to undergo ongoing maintenance of multiple distribution channels and divisions.
What about granular data for internal financial reporting?
For internal financial reporting that doesn’t go to auditors, consider using CO-PA for granular financial data. This is simpler than using separate distribution channels and divisions for the same purpose. Why use a bulldozer when a shovel will do? CO-PA helps you minimize data maintenance, which saves you money. CO-PA is used to determine profitability, and you can use this SAP module to differentiate your data for internal management reporting needs.
CO-PA and a common distribution channel or division are the best solution. However, realize that if that doesn’t work for your business, multiple distribution channels and divisions will add complexity and increase maintenance costs.
The Takeaway
As much as possible, IT professionals should try to use the lowest possible number of distribution channels and divisions. This will save your organization money, simplify the customer journey, and save you some headaches, too. In other words, the lower the number of distribution channels and divisions you have, the more efficient your organization is.
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