the sales order and purchasing processes

The sales order and purchasing processes

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

Pre-Sales ActivitiesSales Order Processing

DeliveryBilling

Inventory Sourcing

Payment

5

Pre-Sales ActivitiesSales Order Processing

Pre-salesCustomer databasesContracts

Sales order processingCreation 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 warehouseFrom the production floorFrom an external supplier

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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

The Whole Process

Quotation

Contact

Schedulingagreement

Order

Delivery Goods issue

Shipment

Invoice

Accounts ReceivableMaterial Stock

Account

Inquiry

Contract

Pre-SalesPre-Sales

Sales OrderProcessingSales OrderProcessing

Delivery/TransportationDelivery/Transportation Transfer Order

BillingBilling

Payment/AccountingPayment/Accounting

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Inventory SourcingInventory Sourcing

Sale

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Document flow

Order Delivery Invoice Accounting

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

Sold-to party 2540-00

Item Material Quantity 1 1400-500-00 30 2 1400-100-00 20

Material Master DB

Customer Master DB

The Order

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

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

RequestedDelivery

DateGoods

issue dateLoading

DateTransportationPlanning Date

MaterialAvailability DateOrder Date

Transit TimeLoading Time

Pick Pack and Stage

TransportationLead Time

The R/3 System uses thelonger of these two times in

calculating delivery scheduling.

RequestedDelivery

DateGoods

issue dateLoading

DateTransportationPlanning Date

MaterialAvailability DateOrder Date

Transit TimeLoading Time

Pick Pack and Stage

TransportationLead Time

The R/3 System uses thelonger of these two times in

calculating delivery scheduling.

ConfirmedDelivery

DateGoods

issue dateLoading

DateTransportationPlanning Date

New MaterialAvailability DateOrder Date

Transit TimeLoading Time

Pick Pack and Stage

TransportationLead Time

The confirmed delivery dateis derived by the R/3 System

using forward scheduling basedon the new material availability date

ConfirmedDelivery

DateGoods

issue dateLoading

DateTransportationPlanning Date

New MaterialAvailability DateOrder Date

Transit TimeLoading Time

Pick Pack and Stage

TransportationLead Time

The confirmed delivery dateis derived by the R/3 System

using forward scheduling basedon the new material availability date

Backward scheduling from a delivery date

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

Sales Order Delivery Invoice

Invoice

Sales Order Delivery

Delivery

Invoice

Invoice

Delivery

Sales Order

Sales Order

Delivery

Delivery

Invoice

InvoiceSplit

SeparateInvoiceper delivery

CollectiveInvoice

Sales Order Delivery Invoice

Invoice

Sales Order Delivery

Delivery

Invoice

Invoice

Delivery

Sales Order

Sales Order

Delivery

Delivery

Invoice

InvoiceSplit

SeparateInvoiceper delivery

CollectiveInvoice

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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”

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Purchasing Process

GoodsReceipt

PayInvoice

PurchaseRequisition

PurchaseOrder

InvoiceReceipt

InternalDemand

Cus

tom

er

Vendor

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Vendor Master Data

Created for every vendor General data

Name, address, phone number Company code data

Accounting data: currency, payment terms

Purchasing dataContacts, delivery terms

Vendor data is like a

company’s CRM data in

reverse!