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Week 8: Marketing Information Systems in an Integrated System

Week 8: Marketing Information Systems in an Integrated System. MIS 2101: Management Information Systems Douglas M. Schutz. Based on material from Concepts in Enterprise Resource Planning, Second Edition , Ellen F. Monk and Bret J. Wagner, Thomson Course Technology, 2006

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Week 8: Marketing Information Systems in an Integrated System

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  1. Week 8: Marketing Information Systems in an Integrated System MIS 2101: Management Information Systems Douglas M. Schutz Based on material from Concepts in Enterprise Resource Planning, Second Edition, Ellen F. Monk and Bret J. Wagner, Thomson Course Technology, 2006 Also includes material by David Schuff, Paul Weinberg, Cindy Joy Marselis, Munir Mandviwalla, and Mart Doyle.

  2. Concepts in Enterprise Resource Planning 2nd Edition Monk and Wagner (M&W) Chapter 3 Marketing Information Systems and the Sales Order Process

  3. Fitter Snacker’s • Fictitious case study • Many companies have had similar experiences • Many companies have made similar transitions after enough pain, suffering, and costs • 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 more challenging!

  4. Learning Objectives • Describe the chaos associated with an un-integrated sales process • Discuss how integrated data sharing increases company-wide efficiency • Describe the benefits of CRM, a useful extension of ERP

  5. Transactional Data • Key transactional data: • Recording sales • Creating customer bills (invoices)/AR processing • Allocating credit to customers • What would an integrated information system allow us to do? • An un-integrated information system leads to chaos

  6. Overview of Fitter Snacker • Fictitious company produces two snack bars: 1) NRG-A: “Advanced Energy” 2) NRG-B: “Body-building proteins” • Two sales divisions: 1) Direct (large chains e.g. grocery and sporting goods stores) 2) Wholesale (middlemen e.g. small shops and vending machines)

  7. Overview of Fitter Snacker • Both divisions offer terms of 2-10, net 30 • What the does this mean? • Fitter Snacker also sells snack bars in store-brand wrappers for some chains

  8. Problems with Fitter Snacker’s Sales Process • Fitter Snacker has separate information systems for: • Sales order processing • Warehouse management • Accounting • Sales transaction data is shared from Sales to Accounting via periodic file transfers • CreditStatus data is shared from Accounting to Sales via paper printout - high number of manual transactions • What are the types of problems that are likely to occur?

  9. Sales Process

  10. Price Quote • Quotation process is a paper-based process • Price quotes are written up on a 3-part form • What kinds of problems are likely to be encountered with such a process?

  11. Sales Order • Customers want delivery time when placing an order. -Currently estimated by Sales by adding shipping method time to shipping date, which is estimated by Warehouse Supervisor using inventory and outstanding order information. • How do sales clerks currently get credit information and how timely is this information? • How does integrated information systems solve these problems?

  12. Sales Order Four Tasks Performed by Current Order Entry System: 1) Stores customer order data 2) Prints out packing list and shipping labels for warehouse 3) Produces data file for Accounting to create invoices and for financial, tax and managerial accounting purposes 4) Data file is copied to disk and entered into PC based accounting application

  13. Warehouse: Order Filling

  14. Oh No! 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? • Difficult to decide on the best option often requiring the coordination of many people from different departments. • How do integrated information systems solve this problem?

  15. 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?

  16. Invoicing

  17. Invoicing • Accounting prepares invoices three times per week • Start with hand-written faxed paper quotes to Sales Office • Difficult to read - potential errors • Accounting Department loads data from disk provided by Sales Department – not real time • Manual adjustments are made for changes to sales order (e.g. partial shipments) • When corrections aren’t made on time, incorrect invoices are sent and corrected invoices are sent after the shipment

  18. Payment • Numerous problems in receiving customer payments • Customers may not return a copy of invoice with payment - harder to match payment to customer order • Customer may pay correct amount, even if invoice was not correct - requiring investigation by Accounting • Making sure customer merits 2% discount for timely payment (2/10 net 30) - requires manual effort

  19. Sales Process

  20. Returns • Customers may return out-of-date or spoiled snack bars or damaged or defective cases • Customer is supposed to get a Returned Material Authorization (RMA) number from Fitter Snacker -to put on the defective snack bars before shipping them back • Without the RMA number, problems for the Receiving and Accounting Departments.

  21. Returns • What kind of problems are encountered if return credits are not properly credited in a timely basis?

  22. The Integrated Sales Process

  23. 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 1) Pre-sales activity 2) Sales order processing 3) Inventory Sourcing 4) Delivery 5) Billing 6) Payment One Integrated Database

  24. 1) Pre-Sales Activity • What kind of pricing information is provided to customers? • What checks the validity of discounts? • How to the order entry clerks know the terms and conditions of a particular quote?

  25. 2) Sales Order Processing • With an integrated system, where does the data come from when creating an order? • What steps make up this process?

  26. 3) 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?

  27. 4) Delivery • What does “Delivery” mean in an SAP system?

  28. 5) Billing • The system creates an invoice by copying data from the sales order • The invoice can be printed and mailed to the customer, faxed, or transmitted electronically by • EDI (electronic data interchange) or • the Internet • The accounts receivable account is debited (increased) and sales account is credited automatically

  29. 6) Payment • The customer can make a payment by mailing a check or electronically transmitting funds • Timely recording of payments is important for properly managing a customer’s credit limit

  30. 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

  31. 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

  32. 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

  33. Customer Search Results Figure 3-6 Results of customer search

  34. 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?

  35. Complete Order Screen Figure 3-7 Order screen with complete data

  36. 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?

  37. Order Proposals Three options proposed by SAP R/3 Figure 3-8 Order proposals

  38. 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?

  39. 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”?

  40. Document Flow Accounting Document 90000002 is linked to sales order 5 Figure 3-9 The Document Flow tool, which links sales order documents

  41. Pricing • Do I offer identical pricing regardless of items ordered, size of order, or customer placing the order? • What is “condition technique”?

  42. 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

  43. 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

  44. 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?

  45. 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

  46. Sales Process

  47. 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 ERP 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

  48. Core CRM Activities • What is “One-to-One Marketing”? • What is “Sales Force Automation (SFA)”? • What is “Sales Campaign Management”?

  49. Core CRM Activities • What are “Marketing Encyclopedias”? • What is “Call Center Automation”?

  50. 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

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