Concepts in Enterprise Resource Planning 2nd Edition Chapter 3 Marketing Information Systems and the Sales Order Process
Fitter Snacker’s • Fictitious case study • Easy to play Monday morning quarterback but many, many, many companies have had similar experiences • Many, many companies have made similar transitions after enough pain, suffering, and costs • Many, many companies need to make this type of transition – Opportunity! • Keep in mind the scale of this company – 2 products • More products=more complexity, it only gets worse!
Chapter Objectives • Describe the chaos associated with an un-integrated sales process • Could this keep a small company from becoming a mid-sized company? • Could this keep a mid-sized company from becoming a large company? • Could this make the difference between making money and losing money? • Discuss how integrated data sharing increases company-wide efficiency • Describe the benefits of CRM, a useful extension of ERP
Transactional Data • What is “transactional data”? Examples? • Is integration of transactional data across functional areas important?
Overview of Fitter Snacker • What does Fitter Snacker make? • What are the names of the products? • How many sales divisions does Fitter Snacker have? • What are these sales divisions and who do they each sell to?
Overview of Fitter Snacker • Both divisions offer terms of 2-10, net 30. What does this term mean? • Fitter Snacker also sells bars in store-brand wrappers for some chains. What kind of challenges does this present?
Problems with Fitter Snacker’s Sales Process • How many different information systems does Fitter Snacker operate and what do they each do? • What information flows do we need between these systems to conduct business?
Problems with Fitter Snacker’s Sales Process • How does accounting get information regarding sales transactions? • How does sales get information from accounting regarding credit? • What happens with manual transactions and this type of information flows?
Quotations • What kind of problems does Fitter Snacker have with their quotation process?
Sales Order • Customers want delivery information when placing an order. How do they estimate delivery time? • How do sales clerks get information regarding credit? • Does this information reflect recent purchases, payments, or returns? • How do integrated information systems solve this problem?
Sales - Order Entry • Stores customer order data for sales analysis • Prints out packing labels for warehouse (twice a day!) • Produces the data to create invoices • Provides data file for accounting department for financial, tax and managerial accounting purposes
Whoops! Out of Stock • What can they do when they accept an order and find out that they are out of stock for part of the order? • How difficult is it to decide on the best option? • How many people needed to make the decision? • How do integrated information systems solve this problem?
Important Customers • Custom wrappers, custom display boxes • What if I have enough product but it is not in the right wrappers or not in the right display boxes? • How do integrated information systems solve this problem?
Invoicing • How often does Accounting prepare invoices? • What information do they need to do this? • Does the customer receive the invoice with the shipment? • How do integrated information systems solve this problem?
Payment • What kinds of problems occur when processing payments? • How do integrated information systems solve this problem?
Returns • What kind of challenges does Fitter Snacker have to deal with when products are returned? • What happens when the customer forgets to include the RMA number? • How do integrated information systems solve this problem?
Payment and Returns • What kind of problems are encountered if return credits are not properly credited in a timely basis?
SD FI MM CO R/3 PP AM Client / Server PS QM PM WF HR IS Sales and Distribution in ERP • There may be up to six events for a sales order • Pre-sales activity • Sales order processing • Inventory Sourcing • Delivery • Billing • Payment One Integrated Database
Pre-Sales Activity • What kind of pricing information is provided to customers? • What checks the validity of discounts? • How do the order entry clerks know the terms and conditions of a particular quote?
Sales Order Processing • With an integrated system, where does the data come from when creating an order? • What steps make up this process?
Inventory Sourcing • With an integrated system, how do we know if we have what we need to fill the order? • In addition to what we have in stock today, what else do we know with an integrated system? • If a big order comes in, what can we trigger with an integrated system?
Delivery • What does “Delivery” mean in an SAP system?
Billing • With an integrated system, where does the information for the invoice come from? • With an integrated system, what happens automatically in accounts receivable?
Payment • When a payment is received, how quickly is this reflected in the customer’s credit for order entry?
Taking an order in SAP’s R/3 • To enter a sales order in SAP’s R/3, the sales order clerk must identify the customer and material ordered to the system • SAP identifies customers and materials via a unique number • Search functions allow the sales order clerk to find a customer or material number easily
Taking an order in SAP’s R/3 Sold-to party: Where the customer’s identification number is entered P.O. Number: The number assigned by the customer to this sales order Req. deliv. date: The date when the customer would like to receive the order Material and Order quantity: What the customer is ordering Figure 3-2 SAP R/3 order entry screen
Customer Search Clicking on Sold-to party field produces a search icon. Clicking on the search icon calls up a search window with numerous search options Figure 3-5 Search screen for customers
Customer Search Results Figure 3-6 Results of customer search
Sales Order Data • What is “Master Data” and what parts of the order are comprised of “Master Data”? • What does the “Organizational Structure” allow us to do? • What are our “Distribution Channels”? • Does pricing vary based on any of this?
Complete Order Screen Figure 3-7 Order screen with complete data
Inventory Sourcing • What is “Inventory Sourcing”? • Do I really care what is in the warehouse now or do I need to know what will be in the warehouse on the shipping date? • What will make inventory go up or down between now and then? • What does ATP let me do?
Order Proposals Three options proposed by SAP R/3 Figure 3-8 Order proposals
Document Numbers • Assume each of your orders is assigned a unique order number • What is a customer’s “Purchase Order Number” and why do I care to keep track of this?
Audit Trail &Document Numbers • From the initial price quote to the processing of the check by accounts receivable, how do we keep track of who has done what in each step of the process? • What are “documents”? • What is “document flow”?
Document Flow Accounting Document 90000002 is linked to sales order 5 Figure 3-9 The Document Flow tool, which links sales order documents
Pricing • Do I offer identical pricing regardless of items ordered, size of order, or customer placing the order? • What is “condition technique”?
Pricing Net price for order, including discounts Base price is $240/case The production cost of the 10 cases is $1,992 Discount is 10 percent Figure 3-10 Pricing conditions for sales order
Price Discounts If a line in the order is over $1000, the discount is 5 percent If a line in the order is over $1500, the discount is 10 percent Figure 3-11 West Hills Athletic Club price discount
Integration of Sales and Accounting • With an integrated system, do we need to: • Notify accounting of sales via FTP? • Notify the warehouse of sales via printed shipping documents? • Let accounting know about partial shipments before they create invoices? • Worry about sales over extending credit or not accepting a sale due to old credit information?
Accounting Detail Accounting document 90000002, accessible from the document flow screen Accounts affected by the sales order Figure 3-12 Accounting detail for the West Hills sales order
Customer Relationship Management • CRM helps a company streamline interactions with customers and make them consistent • Goal is to provide a “single face to the customer” • Any employee in contact with a customer should have access to all information on past interactions • Information about a customer should reside in the CRM system, not with the employee • CRM also provides a company with tools to analyze the vast quantities of sales data available from the ERP system
Core CRM Activities • What is “One-to-One Marketing”? • What is “Sales Force Automation (SFA)”? • What is “Sales Campaign Management”?
Core CRM Activities • What are “Marketing Encyclopedias”? • What is “Call Center Automation”?
SAP’s CRM Software • SAP R/3 contains some primative CRM functionality: • Contact management tool: • Database of customer contact information • Sales activity manager: • Supports a strategic and organized approach to sales activity planning • Helps ensure follow-up activities are accomplished
Contact Manager Figure 3-13 SAP R/3 contact manager