gelinas-dull 8e chapter 10 revised september 2009

8/17/2019 Gelinas-Dull 8e Chapter 10 Revised September 2009

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Chapter 10The Order Entry/Sales

(OE/S)Process

Accounting Infor ation Syste s !e"lric #$ %elinas and &ichard 'ull

010 Cengage *earning$ All &ights &eser+ed$ ,ay not -e copied. scanned. or duplicated.in hole or in part. e cept for use as per itted in a license distri-uted ith a certain product

or ser+ice or other ise on a pass ord protected e-site for classroo use


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*earning O-2ecti+es• Describe the relationship between the OE/S process and its

business environment.

• Illustrate the potential of the OE/S process to assist managementdecision making.

• Summarize how E ! add"ons# e"business# and other technologiescan improve the effectiveness and efficienc$ of the OE/S process.

• Depict the t$pical logical and ph$sical characteristics of the OE/Sprocess.

• !repare a control matri% for some t$pical OE/S processes#including e%planations of how business process control plans canaccomplish OE/S operations and information process controlgoals.

2


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Introduction• &he order entr$/sales 'OE/S( process

includes the first four steps in the order"to"cash process

). pre"sales activities*. sales order processing+. picking and packing the goods,. shipping

• -illing and processing the customerpa$ment# are described in hapter ))# thebilling/accounts receivable/cash receipts'-/ / ( process.


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4

Process 'efinition and

3unctions• &he primar$ function of the OE/S

process is to create information flowsthat support the following0

1 epetitive work routines of the sales orderdepartment# the credit department# and

the shipping department. 1 Decision needs of those who manage

various sales and marketing functions.


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4ori5ontal 6ie OE/S

). ustomer

placesorder.


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4ori5ontal 6ie OE/S

*. Sales orderdepartmentre2uests

creditapprovalfrom creditdepartment.


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4ori5ontal 6ie OE/S

+. reditdepartmentinformssales orderdepartmentofdispositionof creditre2uest.


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4ori5ontal 6ie OE/S,. Sales order

departmentacknowledgesorder to thecustomer ',a(#

and notifies thewarehouse',b(# shipping',c( and-/ /

process ',d( ofthe sales order.


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4ori5ontal 6ie OE/S

3. 4arehousesends

completedpickingticket toshipping.


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4ori5ontal 6ie OE/S 5. Shipping

departmentinformscarrier '5a(#-/ /

process '5b(#the generalledgerprocess '5c(#and the sales

orderdepartment'5d( of theshipment.


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11

6ertical Perspecti+e of the OE/SSyste


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,anage ent 7uestions• 4here is sales volume '2uantit$ and dollars(

concentrated6

• 4ho are the specific ma7or customers 'b$ salesand b$ profitabilit$(# both present and potential6

• 4hat opportunities e%ist to sell after"salesservices8 to cross sell and to up"sell6

• 4hat kinds of advertising and promotions havethe greatest influence on customers6


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"sing 'ata ,ining to Support

,ar8eting• Intended to allow the use of sophisticated

statistical and other anal$tical software to

help an organization9s members developinsights about customers# processes# andmarkets.

• Data warehousing and data mining havebecome common application to increasethe effectiveness of pricing and promotions.


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%lo-al e -usiness• E"business s$stems are divided into two categories0

1 -u$ Side• S$stems use the Internet to automate and manage

corporate vendors and purchases.• &he predominant technolog$ in this area is electronic data

interchange ' EDI (. 1 Sell Side

• S$stems are designed to allow a compan$ to market# sell#deliver# and service goods and services to customersthroughout the world via the Internet.

• pplications can handle both -*- and -* businesstransactions.

• One facet is known as customer relationship management(CRM) applications.


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C&, Syste s• Designed to manage all data related to customers.

1 :ocus of E ! vendors who realize the need to tap intothis market and to integrate ; data with the other dataalread$ residing within the E ! s$stem9s database.

• Software supports the organizing and retrieving ofinformation on historical sales activities and promotionsplanning. 1 :acilitates matching sales promotions with customers9

bu$ing trends.

1 -uzzword is


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The OE/S Process 9Conte t 'iagra

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OE/SProcess

*e+el 0'iagra


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TheOE/S

Process 9

'iagra1:

6alidateSalesOrder


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'iagra 1: 6alidate Sales Order • ).) " 6erify in+entory a+aila-ility

1 &riggered b$ a customer order.

1 In2uir$ of inventor$ master file to check inventor$ availabilit$.

1 < vailable to promise ' &!(= can be complicated.

1 :acilitated b$ an enterprise system that can look worldwide and upand down the suppl$ chain to determine when goods can bedelivered.

1 If inventor$ is on hand# the order is forwarded for further processing#as depicted b$ the data flow


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'iagra 1: 6alidate Sales Order

• ).* " Chec8 credit 1 !rocess ).* establishes the customer9s e%istence and then

approves credit.

1 4ith an enterprise system one record should e%ist for each

customer# wherever located and from whatever parts of theorganization he or she makes purchases.

• &his allows an organization to readil$ determine the amountof credit available to a customer worldwide.

• 4ithout a central database a customer could incur multiplereceivable balances that in total e%ceed their credit limit.


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'iagra 1: 6alidate Sales Order

• 1$; Co plete sales order 1 !rocess ).+ receives an accepted order from !rocess ).*.

• Order is completed b$ adding price information.

• ould be a complicated calculation based on who andwhere the customer is and if the item is to be discounted.

1 >e%t !rocess ).+ performs the following activitiessimultaneousl$0

• ?pdates the inventor$ master data to allocate the 2uantit$ordered to the sales order.

• ?pdates the sales order master data to indicate that acompleted sales order has been created.

• Disseminates the sales order.


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'iagra 1 'isse ination 'ata3lo s: 6alidate Sales Order

• pic8ing tic8et authorizes the warehouse to


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SAP Sales Order In


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The OE/S Process='iagra :

Co plete Pic8ing Tic8et


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The OE/S Process='iagra ;:

E ecute Shipping >otice


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The OE/S Process='iagra ;'isse ination of 'ata 3lo s:

E ecute Shipping >otice• Shipping?s -illing notification " notifies billing to begin the billing

process.

• @ill of lading " contract between the shipper and the carrier in whichthe carrier agrees to transport the goods to the shipper9s customer. 1 &he carrier9s signature on the bill of lading# and/or the customer9s

signature on some other form of receipt# substantiates the shipment.

• ! ac8ing slip " attached to the outside of a package8 identifies the

customer and package contents.• %eneral ledger in+entory sales update " notifies the general ledger

process that inventor$ has been sold and that cost of goods sold hasincreased.


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OE/S 'ata Stores

• ;arketing data

• ustomer master data

• Sales order master data

• master data

• Inventor$ master data


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Entity&elationship(E &) 'iagrafor the OE/S

Process


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OE/S Process &elational Ta-les

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Auto ated 'ata Entry

• @ar code readers are devices that use lightreflection to read differences in bar codepatterns in order to identif$ a labeled item.

• Optical character recognition (OC&) issimilar to bar code readers work# but recognizea pattern of handwritten or printed characters.

• Scanners are input devices that captureprinted images or documents and convert theminto electronic digital signals that can be storedon computer media.


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'igital I age Processing• omputer"based s$stems for capture# storage# retrieval# and

presentation of images of real or simulated ob7ects.• ;a7or steps in a t$pical digital image processing s$stem0

1 Scanners are generall$ used to capture images or documents. 1 etrieve the image of a source document which ma$ be printed.

1 fter input# additional processing ma$ take place.• dditional data related to the document might be added# or

someone might act on data contained in the document.• etrieval and processing capabilities ma$ be incorporated

into e%isting applications.• @inking these images in an enterprise system makes

accessibilit$ easier. Information can readil$ be distributedthroughout the organization to where it is needed.


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The OE/S Process 3lo chart

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The OE/S Process 3lo chart• Starts with customer calls received in the

customer service center.

• ustomer service representatives ' S ( ma$perform a number of services for a customerincluding0 1 hecking the availabilit$ of inventor$

1 Determining the status of open orders

1 Initiating orders

1 onfirming orders


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The OE/S Process 3lo chart• S enters a sales order and sees a screen like the S ! screen in :igure )A.5 'Slide *A(.

• S$stem prompts the S to enter the customer number.

• If the customer number is not found# s$stem re7ects the order and the event recording isterminated.

• If the customer number is valid# s$stem retrieves standing data from the customer master

data such as customer name# address and credit terms.


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The OE/S Process 3lo chart• S enters the other data in the sales order 'i.e.

items and 2uantities ordered(# guided b$ the cursor#moving to each new position in the preformattedscreen. 1 S$stem automaticall$ displa$s the description and price for

each item ordered.

• If the total amount of the current order# an$ openorders# and the outstanding receivable balancee%ceeds the customer9s credit limit# the S iswarned# the order is suspended# and creditre7ection procedures are initiated.


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The OE/S Process 3lo chart• If the total amount is within the customer9s creditrange# the processing continues.

• If the balance shown on the inventor$ data is less thanthe 2uantit$ ordered# back order procedures areinitiated.

• &he computer updates the sales order and inventor$master data and gives the S a sales order numberthat is rela$ed to the customer.

• Simultaneousl$# a picking ticket# containing a bar codeof the sales order number# is printed in the warehouse.


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• s each item is picked# warehousepersonnel insert the picked 2uantities onthe picking ticket.

• 4hen all the goods have been picked#the$ compare the goods to the pickingticket# initial the ticket# and move thegoods and completed picking ticket tothe shipping department.


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• Shipping personnel scan the barcode on the picking ticket to bringthe sales order up on their computerscreen.

• fter confirmation that the order and2uantities are correct# the option torecord the shipment is selected.


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• omputer updates the sales order# inventor$#and general ledger master data to reflect theshipment and to print a packing slip and bill oflading.

• Boods are packed# with the packing slipinside# the shipping label 'bill of lading( isattached to the bo%# and the bo% is given to

the carrier for deliver$.• &he completed picking ticket is discarded.


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• Error routines would be initiated if0 1 customer record did not e%ist

1 customer9s credit limit was not sufficient 1 goods were not available in the correct

2uantit$

1 goods to be shipped did not match thepicking ticket and the sales order


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Sa ple SAP Sales Analysis

&eport

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Control ,atri for OE/S

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Control ,atri for OE/S (Cont?d)$

gelinas-dull 8e chapter 10 revised september 2009

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