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The sales order and purchasing processes

The sales order and purchasing processes. Weeks 8-10 MIS2101: Management Information Systems. Based on material developed by C.J. Marselis. Sales order process: The sales organization. A sales organization is responsible for negotiating sales conditions and distributing goods and services

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The sales order and purchasing processes

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  1. The sales order and purchasing processes Weeks 8-10 MIS2101: Management Information Systems Based on material developed by C.J. Marselis

  2. Sales order process: The sales organization • A sales organization is responsible for negotiating sales conditions and distributing goods and services • It represents the top organizational level to which you sum sales figures

  3. Shipping Point • A fixed location that carries out shipping activities. • One plant can have multiple shipping points. • A shipping point can serve multiple plants. • Lead times for determining delivery dates are associated with shipping points.

  4. Customer Order Cycle Sales Order Processing Pre-Sales Activities Inventory Sourcing Payment Billing Delivery

  5. Pre-Sales ActivitiesSales Order Processing • Pre-sales • Customer databases • Contracts • Sales order processing • Creation of a document regarding a sale • Customer, materials ordered, delivery information, billing information, etc. • Information is retrieved from Master (static) Data whenever possible

  6. Inventory Sourcing • Getting the “stuff” for delivery • Check availability (inventory) • Where to get the product • From the warehouse • From the production floor • From an external supplier

  7. Delivery • It isn’t physical delivery – remember systems deal in data • Provide delivery and packing information • Goods issue • Updating internal accounting and inventory data

  8. Billing and Payment • Billing • The invoice • Created from sales order and delivery document • Debits the customer’s accounts receivable and credits revenue • Payment • Posting payments against invoices • Reconcile differences

  9. Pre-Sales Pre-Sales Contact Sales Order Processing Billing Inventory Sourcing Delivery/ Transportation Delivery/ Transportation Inventory Sourcing Sales Order Processing Billing Inquiry Scheduling agreement Contract Quotation Production Planning Production Planning Order Materials Management Materials Management Sales Information System Sales Information System Delivery Goods issue Transfer Order Shipment Invoice Payment/ Accounting Payment/ Accounting Material Stock Account Accounts Receivable The Whole Process

  10. Delivery Invoice Order Accounting Document flow • The sales order process consists of a chain of steps • Each step in the process causes the creation of a document used to track the progress of the order • All changes to documents (sales orders, delivery, etc.) create a document to keep track of the changes • Document Flow in a Sales Order: • Order • Delivery terms • Transfer of goods • Invoice • Accounting

  11. Creating a customer order The Order Customer Master DB Sold-to party 2540-00 Item Material Quantity 1 1400-500-00 30 2 1400-100-00 20 Material Master DB Remember, Master Databases are used by everyone in the company to ensure uniformity of data! An order is created from the Master Data AND the transaction data

  12. Shipping and Delivery Backward scheduling from a delivery date • The delivery date is a function of • Time for inventory sourcing • Time to “load the truck” (or train, etc.) • Time in transit • There are multiple ways to ship • Air, train, truck Forward scheduling to a delivery date

  13. Billing and Payment • More complex than you might think • You can have • Multiple invoices per delivery • Multiple deliveries per invoice • Multiple payments per invoice • Multiple invoices covered by a single payment

  14. The purchasing process • In the sales process, the organization is the supplier • In the purchasing process, the organization is the buyer • The movement of goods from supplier to the end customer is the “supply chain” Supplier  Organization  Customer How do you think the supply chain relates to the value chain?

  15. Purchasing Process • Create Purchase Requisition • Where analysis/vendor selection occurs • Create Purchase Order from Requisition • Requisition items can be used to generate multiple purchase orders • Create Goods Receipt • Create Invoice Receipt • Post Outgoing Payment • There is no purchasing “document flow”

  16. Purchasing Process Internal Demand Purchase Requisition Purchase Order Customer Goods Receipt Vendor Invoice Receipt Pay Invoice

  17. Vendor Master Data • Created for every vendor • General data • Name, address, phone number • Company code data • Accounting data: currency, payment terms • Purchasing data • Contacts, delivery terms Vendor data is like a company’s CRM data in reverse!

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