Enhancing Order Entry Sales Process Efficiency with ERP Systems and E-commerce Add-ons

1. Chapter 1 Chapter 10 The Order Entry/Sales (OE/S) Process Introduction to Accounting Information Systems

2. Learning Objectives • Understand relationship of OE/S process and its environment • Appreciate potential of OE/S process to assist management decision making. • To demonstrate how integration by ERP systems and e-commerce add-ons can improve effectiveness and efficiency of OE/S process.

3. Learning Objectives (2) • Achieve understanding of OE/S logical and physical characteristics • Be familiar with technologies re OE/S • Know operations & information process control goals and control plans for OE/S

4. Revenue Cycle (merchandising)

6. OE/S Horizontal Information Flows • Customer places order • S.O. dept. requires CR approval from CR dept. • CR dept. informs S.O. dept. of decision • S.O. dept. acknowledges customer order • S.O. dept. notifies shipping dept. of S.O. • S.O. dept. notifies warehouse, B/AR/CR process, payroll process, & General ledger Cont…..

7. OE/S Horizontal Information Flows (2) • Warehouse sends completed picking ticket to shipping department • Shipping dept. informs S.O. dept of shipment • Shipping dept. informs carrier & B/AR/CR process of shipment

8. Vertical perspective of the OE/S system

9. OE/S Context Diagram

10. OE/SLevel 0DFD

11. OE/S Level 1DFD

12. Level 1 DFD narrative • 1.1 - Verify inventory available • inquiry of inventory master file to check • reject or make “backorder” if not available; send to next process if available • record demographic and other info in marketing file • 1.2 - Check credit • check to see if valid customer • check A/R master file to see if credit limit is ok • if invalid or over limit, reject; if not, send to next process Cont…

13. Level 1 DFD narrative (2) • 1.3 Complete sales order • add pricing info from inventory file • update inventory file - reduce quantity on hand • notify GL inventory has been reduced and cost of goods sold increased • update Sales Order master file to show completed order • Notify P/AP/CD that commissions are due • disseminate sales order

14. Dissemination documents • Picking ticket - authorizes warehouse to “pick” goods, send to shipping. Has warehouse location. • Packing slip - attached to outside of carton; identifies customer and goods. • Customer acknowledgement - notifies customer of acceptance of order; shipping date. • Sales order notification - internal form sent to billing department re pending shipment • Bill of lading - contract between shipper & carrier; carrier gets copy, shipper keeps copy.

15. OE/S Files • Marketing file - sales-oriented data, some from OE/S, other from Marketing information system • Customer master file - data about customer characteristics: name, address, credit limit, etc. • Sales order master file - file of “open” sales orders; can be checked periodically/follow up. • Completed picking ticket file - used for follow up and audit purposes. • Shipping notice file - used for follow up and audit purposes

21. Control Goals of the Business Process Control Goal of the Operations Process Control Goals of the Information Process Ensure effectivenessof operations by achieving the following process goals Ensure efficient employ- ment of resources Ensure security of resources For sales order inputs, ensure: For sales order and inventory master data, ensure: For shipping notice inputs, ensure: For sales order master data, ensure: Recommended Control Plans A B C D IV IC IA UC UA IV IC IA UC UA P-1: Independent customermaster file maintenance P-1 P-1 P-1 P-2: Enter data close to location wherecustomer order is prepared P-2 P-2 P-2 P-2 P-2 P-2 P-3: Customer credit check P-3 P-3 P-3 P-4: Independent pricing daa P-4 P-5: Independent shipping authorization P-5 P-5 P-6: Packing slip tickler file P-6 P-6 P-7: Completed picking ticket file P-7 Key: possible system goals:A - Provide timely responses to customer inquiries B - Provide timely acknowledgement of customer orders C - Provide assurance of customers’ creditworthiness D - Provide timely shipment of goods to customers IV = input validity IC = input completeness IA = input accuracy UC = update completeness UA = update accuracy

22. Control Goals of the Business Process Control Goal of the Operations Process Control Goals of the Information Process Ensure effectivenessof operations by achieving the following process goals Ensure efficient employ- ment of resources Ensure security of resources For sales order inputs, ensure: For sales order and inventory master data, ensure: For shipping notice inputs, ensure: For sales order master data, ensure: Recommended Control Plans A B C D IV IC IA UC UA IV IC IA UC UA P-8: 1 for 1 checking of goods, picking ticket and packing slip P-8 P-8 P-8 P-9: Populate inputs with master data P-9 P-9 P-9 P-9 P-9 P-9 P-9 P-9 P-9 P-9 P-10: Online prompting P-10 P-10 P-10 P-10 P-10 P-10 P-11: Preformatted screens P-11 P-11 P-11 P-11 P-11 P-11 P-12: Interactive feedback checks P-12 P-12 P-13: Programmed edit checks P-13 P-13 P-13 P-13 P-14: Compare input data with master data P-14 P-14 P-14 P-14 P-14 P-14 Key: possible system goals:A - Provide timely responses to customer inquiries B - Provide timely acknowledgement of customer orders C - Provide assurance of customers’ creditworthiness D - Provide timely shipment of goods to customers IV = input validity IC = input completeness IA = input accuracy UC = update completeness UA = update accuracy

23. Learning Objectives • Understand relationship of OE/S process and its environment • Appreciate potential of OE/S process to assist management decision making. • To demonstrate how integration by ERP systems and e-commerce add-ons can improve effectiveness and efficiency of OE/S process.

24. Learning Objectives (2) • Achieve understanding of OE/S logical and physical characteristics • Be familiar with technologies re OE/S • Know operations & information process control goals and control plans for OE/S