order entry and fulfillment at fabrikam: an erp...

College of Business ERP Walkthrough

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Last modified: January 6, 2015

Order entry and fulfillment at

Fabrikam: an ERP walkthrough In this exercise you will experience the look and

feel of a modern ERP system: Microsoft Dynamics

GP. You will play the role of several ‘Fabrikam’

personnel who assist a customer in purchasing

some computers. The steps you will go through

highlight the integrated nature of ERP software.

Towards the end of this assignment, the system

will generate a report with your name and ONID

id on it. If you have completed the steps, it will

also list the transactional details from your walk

through. Please turn in the report to your

instructor.

Accessing this Assignment You must run this assignment on one of the

computers in the Austin Hall labs as these are the

only computers that have the required software

installed.

Your Mission: Using GP, conduct a hypothetical sales business process with the following activities:

Sales generates orders, manages customers and if stock levels are too low, ‘back orders’

inventory.

The Warehouse receives shipments and updates stock levels, and then enters vendor invoices

that arrive with shipments.

Once Sales has the inventory to complete an order, it will transfer stock out of inventory to be

shipped to a customer, creating an invoice to the customer.

Finally, Accounting receives customer payment and deposits it into the records, and issues

payment to the vendor for their shipment.

Figure 1 - The workflow explored in this exercise


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Launching Microsoft Dynamics GP

To begin, launch the Microsoft Dynamics ERP system: Start - All

Programs Microsoft Dynamics folder , GP icon.

This should bring up the login window. Login to the system with the following credentials (case

sensitive)

User ID: student

Password: student

Press the OK button

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You will then be asked to login to the company. If it is not already selected, from the Company drop

down menu, select Fabrikam, Inc.

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Next, you will receive a notification that the date is being set for the year 2017. Because Fabrikam is a

hypothetical company, the data in the system has been developed around a set of dates in the distant

future. Just be aware of this when you are working in Dynamics as you will not see date stamps for the

current date.

Press the OK button.


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Initial Sales and Back-Order In this section you will start out representing a sales rep such as Sally entering an order from a customer.

Her sales functions include taking orders, maintaining customer information, and purchasing new stock

from vendors. Normally, an ERP system enforces user controls by only allowing users to perform the

activities that they have been authorized to perform. However, in this exercise, you will perform all

functions using the student login, for simplicity.

Tasks that Sally (and you) will perform in this section are as follows:

Start a new sales transaction order entry,

Create a new customer record (you!), and add this customer to the order,

Attempt to add 10 computers to the order, but discover there is insufficient inventory in the

warehouse… so we must place them on back-order,

Create a purchase order for the 10 computers and select a vendor from whom to purchase

them,

Submit your purchase order into the ERP system.

On the home page, click Sales Transaction Entry under the Quick Links

sn002


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This will bring up the following screen; choose Order (we are going to place an order for a customer)

sn003

Note: since Dynamics enforces entering certain types of information in a specific order, using the Tab

key can be useful as it jumps over the various required data fields in the required order. You may, of

course, use your mouse to activate input fields, but when you do that and enter fields in the wrong

order, Dynamics will complain.

Using your Tab key, tab to Document No. field, Dynamics will automatically fill in the document number.

Next, Tab to the Customer ID field, and type in your ONID ID. (If your ONID email is

[email protected], then your ONID ID is the part before the @ sign). Once you have added

your ONID ID, click on the new icon which looks like a little ‘document’ sitting to the right of the

magnifying glass (see illustration below).

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You are prompted to add this customer record. Click Add.

sn005

(Note: did the following window pop-up instead? If so, click on the New icon.)

Sn18_part2

This will bring up an empty Customer Maintenance window, in which you will create a new record for

the new customer (yourself). Normally you would add the new customer record for the customer

placing the order. However, in this exercise, you should create a customer record for yourself. At the

end of this exercise, you will generate an invoice for this order which you will turn in to receive course

credit. Having your ONID ID on the invoice ensures that you will receive credit for this assignment.


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In the Customer Maintenance window, for the Customer ID, insert your ONID Login ID, and add your

Name. For Address ID, enter your ONID ID (just as you did for Customer ID). Then, if you like, you may

use the College of Business Address, City, etc. (200 Austin Hall, Corvallis, Oregon 97331) or make up your

own.

sn0076

Click the Options button to bring up the following Customer Maintenance Options screen.


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sn007

Change the Credit Limit from No Credit to Unlimited. This will allow you to place an order for this

customer without pre-payment.

Thought question: is having the credit limit set to unlimited a good business practice? Why would a

customer like to have a credit limit (other than ‘unlimited’) set and enforced by the system?

Click OK and then save and close the Customer Maintenance window.


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sn008

Back in the Sales Transaction Entry window, if the Customer ID is not filled in, press the magnifying glass

and locate your new customer record (Your ONID-ID) and select this.

sn010


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Using the Tab key, tab over to the Batch ID, click the magnifying glass and select SOP Orders. Orders are

often processed in batches (instead of one at a time) and Fabrikam usually saves its sales orders under

the batch id SOP Orders which is assigned to sales that have not yet gone through the batch process.

Later, when they are processed they will get a number like: STDINV2266 for the 2266th batch of sales

orders processed.

Tab to Default Site ID, and tab again. If Warehouse does not autofill, then click the magnifying glass and

select Warehouse. Tab to Currency ID and tab again so that Z-US$ is filled in. Tab again

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Now you are ready to add some actual sales items to this order. Click the look up icon (the magnifying

glass) next to the Item Number text, which will bring up the Items window.

sn012

Type computer into the text box (see below), then press the tab key. Click the COMPUTER item then

press the Select button.

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You will now see that COMPUTER has been added to your new order (Line Items by Order Entered).

Change the quantities ordered to 10, and then press the tab key.

sn014

At this point you should see the Sales Quantity Shortage Options window open. Notice that the Quantity

Available is 0! This means that we do not currently have any of these in stock, so they must be (back)

ordered.

Notice how ERP systems help make this process more efficient by notifying that stock levels are running

low. The ERP system will now allow you to back order these items so that you can fill this order.

Select Back Order All, and then press the OK button.

NOTE: Did the Sales Quantity Shortage window NOT appear? If so, then it is possible another student

has partially completed the assignment. Did you reboot the computer before starting? If not, close GP

and restart the computer. This will reset everything and you can re-start the exercise again (you will

have to recreate the customer record and the order).

Once you have returned to the Sales Transaction Entry, we should review the order in more detail.

The default view of this order is the summary view. To view this order details, expand the item details

by pressing the Expand button (two down arrows on the far right side of the screen) to see the detail.


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sn015


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sn016

In the expanded view, under Quantity to Back Order for a standard white computer, you will see that the

system now reflects the number of computers which need to be back-ordered to satisfy this order.

Thought question: Does it seem likely that the same person in a large organization will both see that the

company is out and also order more computers? (Hint: the exercise is simplified to demonstrate the

interconnectivity of processes)


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Once an item is placed on back-order, it must next be purchased from a vendor who provides Fabrikam

with the item. To actually order this from the vendor, a so-called ‘Purchase Order’ must be created

which will be sent to the vendor requesting to send the item and promising to pay in return for shipping

the item.

We will now generate the purchase order to request the vendor to ship the items in order to fulfill the

your customer’s transaction.

In the upper left hand corner of the Sales Transaction Entry window, select Actions Purchase.

sn017


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You should see a new Purchase Orders Preview window. Click on the PO tab at the top. Next, click the

Vendor ID look-up, then in the look-up window, find and select Cowley Engineering, which is one of the

vendors who provides computers for Fabrikam.

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Finally, select the order number (ORDST2235 in the display below, but your order number will be

different) by checking the box on the left hand side of the Purchase Orders Review window. Once you

check that box, the other boxes will automatically be checked.

Next press the Generate button and the system will generate the purchase order.

At this point, the ERP system will offer to generate a print out of the Purchase order. For some

processes, a copy of the document is required. However, for our circumstances, we do not need this

document, so you should click the Cancel button and the window will close.

sn020


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You can now close the Sales Transaction Entry window.

Let’s re-cap what you just did: you

logged into Microsoft Dynamics,

started a new sales transaction order entry,

created a customer record, and added this customer to the order,

attempted to add 10 computers to the order, but discovered there was insufficient inventory in

the warehouse, so you placed them on back-order,

created a purchase order for the 10 computers and selected a vendor from whom to purchase

them,

Submitted your purchase order into the ERP system.

Since a purchase order is a promissory note to pay for the items which are on the order and since

Cowley is a vendor that Fabrikam has done business with in the past, the purchase order will be sent to

them immediately. Once Cowley receives the PO, it will fulfill it and send an invoice with the shipment.

Sally contacts the warehouse and asks them to contact the customer (you) once the shipment arrives so

that you can participate in the receiving process.

Receiving Shipment in the Warehouse In this section you will work with Hank who is the warehouse receiving manager. He tells you that his job

is to receive shipments and log them into inventory. When orders arrive with an invoice from the

vendor, he will submit the invoice into the system along with the order so that accounting has both the

invoice and a list of materials that arrived.

When a shipment comes in, Hank attempts to match it with a purchase order in the system. You will

help Hank with this process. Click SmartList under Quick Links on the home page.

sn021


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In the SmartList window, expand the Inventory folder, and then expand the Item Quantities subfolder.

Click on the Back Ordered Items list. This will display a list of all items on order at all sites and also break

the items down by site.

Scroll through the list on the right-hand side and find the SECOND order for computers that sales placed

on backorder (the one which is to be delivered to the Warehouse) at the bottom of the list.

sn022

Double click on this item to bring up the details window.


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sn023

The warehouse would then verify that the shipment that it received corresponds to the PO from the

same vendor. Make a note of the vendor ID, so that you can compare with the shipment later.

Close the Item Quantities Maintenance window then close the SmartList. Now that you know to what

purchase order this shipment corresponds, we can receive the items into inventory.

Under Quick Links on the home page, click Receivings Transaction Entry.

sn024

This will bring up the Receiving Transactions Entry window.


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sn025

Change the shipment type to Shipment/Invoice (since this shipment also came with an invoice). Press

the tab key and the receipt number will be auto filled. However, you must enter a vendor document

number (this would be the invoice number on the vendor’s invoice).

Enter the following as the Vendor Doc Number: COWLEY1234

sn026

Note how this receiving event brings together the Fabrikam order number (to track progress and set up

for payment of the bill), the vendor number (to reference the vendor’s contact information) and the

vendor’s number for this order (to facilitate communication if anything goes wrong). ERP systems need

to organize a lot of data to support effective processes.


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Once you enter the vendor document number, press the tab key until the Vendor ID is selected. Press

the look up icon to locate Cowley Engineering.

sn027

Once you have selected the vendor, press the Auto-Receive button. We could manually type in the items

Cowley has shipped to the warehouse, but using the auto-receive will allow us to select from items we

already have on order with this vendor.


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sn028

Once you press the Auto-Receive button, a new window will open with all open Purchase Orders for this

particular vendor for you to select from.

sn029

(NOTE: Did this window come up but NO purchase order number? Most likely, you skipped the step on

page 18. Go back and generate a new order with yourself as a customer and follow the instructions

carefully. )


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Once again, take a moment to recognize how an ERP system manages this process. Instead of having to

search through the company records to find the copy of the purchase order that Sales placed (which

could take some time with a manual process), the ERP system automatically has saved that information

and displays it for the warehouse employees to pick from. In this case there is only one open purchase

order with this vendor. However in other cases, there might be several orders to choose from.

Check the invoice which corresponds to the computers we just received in the current shipment and the

existing purchase order. Finally, press the Receive button. The current window will close and you will be

looking again at the Receiving Transaction Entry window.

Thought question: Are there any downsides to automatically pulling the amounts from the order? Do

you think the people involved might assume the right amount of material arrives without checking

carefully? Note how the information system can both contribute to improved efficiency but also might

contribute to mistakes – it’s a balance.


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In the Receiving Transaction Entry window, you will notice that the items and quantity were pulled from

the purchase order and were automatically added to the list of items being received. This is yet another

example of the ERP system speeding up the process by saving the Warehouse from having to enter the

items received.

Next, the warehouse would review the screen and be sure that it is filled in properly. For example, they

would compare the quantity received with the quantity ordered to be sure that this was accurate (for

example, one or more items may have been damaged or missing). They would also compare the invoice

total with the total from the purchase order (in some cases the prices may have changed).

Press the Post button and this will commit the receipt of items and Cowley’s invoice to the ERP system.

Now, the sales staff will be able to complete the order they took previously because sufficient inventory

is now available in the warehouse. The accounting staff will also see the new invoice and pay for the

shipment.

sn030

Close the Receiving transaction Entry window.


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Let’s recap what you just did in the warehouse:

Used the SmartList to look up items on back order

Created a shipment receipt and added the vendor invoice number

Located the vendor ID

Auto-received the order, selecting the open Purchase Order

Posted the received items and the invoice to the system

Finalizing the Sales Transaction In this section, you will go back to Sally’s office in the Sales department and finalize the order. Now that

the items we needed have been received, you can add them to the invoice.

Normally, Sally would look for any open orders that she has not completed and check to see if they are

ready to be completed. You will help Sally with this process by reviewing the open orders.

Click on the Dynamics Home, and then select SmartList from the quick links.

sn031


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In the SmartList, expand the Sales folder, then Sales Transactions, the click on Open Orders. In the right

hand window, locate the order where your ONID ID is the Customer Number.

sn032

Double click the order, and this should bring up the Sales Transaction Entry you were working on with

Sally. Expand the order details by clicking on the two down arrows on the right hand side of the Line

Items by Order Entered.

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By expanding the order details, we can see now that our quantity on back order has dropped to zero,

and the quantity fulfilled (and quantity to invoice) are the same as the quantity ordered. Notice how the

system took care of that automatically once Hank posted the shipment to inventory.

sn034

Review the order, and verify that the quantity ordered is the same as the quantity fulfilled. Now that the

order is ready to be completed, we would invoice the customer and ship the items.

To finalize the order, select Actions, then Transfer. This will bring up the Sales Transfer Document

window. Check the Transfer to Invoice box which will generate an invoice for the customer.

sn035

Then click the Transfer button.


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At this point the ERP system will bring up the following window to allow a print out report of the order.

In some processes, these reports are necessary, but at this stage we do not need a report.

Press the cancel button and the window will close.

sn036

Back in the Sales Transaction Entry window, we will now post the order, which finalizes the sale in the

ERP system, sends the invoice, initiates the shipment of items and removes the sold items out of the

warehouse inventory. Once again, take a moment to reflect on how efficient this process is thanks to

the ERP system. In a manual process, completing this order might have required several phone calls,

emails or visiting other parts of the company where completing our process integrated with other

processes in the company such as shipping and invoicing. However, with the ERP system, we only need

to post this order and the integration with other processes is be taken care of automatically.

First Tab over to Batch ID and press Back space to delete it. Since we are going to manually process this

order (instead of batch processing it) we have to remove this value.

sn 035.5


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Then to complete this order, select Actions, then Post.

sn037

Close the Sales Transaction Entry window.

Let’s recap what you just did in Sales:

Used the SmartList to look up an open order

Verified that items which had been on back order were now in inventory

Transferred the order to an invoice

Posted the order and the invoice to the system


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Accounting: Receiving Customer Payment and Paying Vendor Now that you have seen how an order is created and items are received into inventory, Sally directs you

to visit Fredrick in the accounting department. Fredrick explains that it is his job to receive payment

from the customer for the order and to post that back to the company bank account. He also has to pay

invoices, such as the one from Cowley for the recently purchased computers.

Normally in a very large company, Fredrick’s job might be divided among several different people. Here,

they have been combined into one role to make this exercise easy to follow. However, you should be

able to recognize the need to have controls in an organization so that more than one person has the

responsibility to receive and issue payments.

Note: in this section, you will generate output reports from the ERP software which you must turn in to

receive credit for this assignment. Follow the instructions below.

To begin, help Fredrick post the payment for the computers which you purchased. Open the SmartList,

by clicking on the SmartList link on the home screen.

sn031


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Expand the Sales folder, then Sales Transactions, then double click Posted Invoices. In the list of invoices

on the right hand side, locate the invoice that was made under your ONID ID. Write down the Invoice

Document Number and the amount due. You may have to scroll to the right to view the amount due on

this invoice.

sn038

At this point, we will assume the customer (your ONID) has sent Fabrikam a check to pay this invoice in

full. Once you give that check to Fredrick, you will help him record the payment and post it to Fabrikam’s

bank account.

Close the SmartList.


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Click Cash Receipts under Quick Links on the home screen.

sn039

This will bring up the Cash Receipts Entry window. Use the customer look up and locate your record

(hint: type your ONID into the search window, then press the TAB key). Select your record and the press

the select button, this will add your name to the cash receipt.

sn040


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Once you have selected yourself as the customer, enter the full invoice payment amount as the

payment received. Next, click on the Apply button (lower right hand corner), which will open a list of all

open invoices for this customer. Check the open invoice and finally Post the payment.

sn041


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sn042

After you post the payment, this will automatically bring up a new blank Cash Receipt Entry (in case you

wanted to post another payment).


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Close the Cash Receipt Entry window.

Once you close the Cash Receipts Entry window, you will see the Report Destination window (see

below). Be sure to save this report in a location you will be able to find it once you have finished. This

report will be required in order to receive credit for this assignment.

sn043


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After saving the report you will then see a copy of the report displayed on the screen; you can review

the report to see the information which has been displayed such as payment amount, customer

information and audit trail codes.

sn044

Once you have finished, reviewing the report, close this window.


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Now that you have received the customer payment, it is time to pay the vendor for their shipment.

Open the SmartList again.

sn031

In the SmartList, expand Purchasing, Payables Transactions, and then Payables Due Today. On the right

hand side, locate the outstanding invoice due to the vendor Cowley Electronics which needs to be paid.

Write down the vendors name and the amount due.

sn045


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To generate payment, click Transactions, Purchasing, and then Manual Payments.

sn046

This will bring up the Payables Manual Payment Entry window

In the Payables Manual Payment Entry window, click the vendor look up icon, then locate the vendor

(hint: type COWLEY and in the search box and press the tab key) and select the vendor by clicking on the

vendor’s name and pressing the Select button.

sn047


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In the Payables Manual Payment Entry window enter the amount to be paid, and then press the Apply

button (lower right hand).

This will automatically bring up a list of all outstanding documents for this vendor.


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Check the invoice to apply payment to and then press the OK button, which will close the window.

sn048

Now finalize the payment by pressing the Post button.

sn049


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Let’s recap what you just did in Accounting:

Used the SmartList to look up open invoices and your invoice.

Created a cash receipt for payment of your invoice.

Applied the payment to your invoice and posted it to the general ledger.

Reviewed a Cash Receipts Report the ERP system generated and saved it.

Used the SmartList to find a vendor payment due.

Generated a manual payment to the vendor for the invoice and posted it.

Reviewed a Payment Entry Report generated by the ERP system.

At this point, you are finished with the assignment and you can exit Dynamics.

Assignment Deliverables Assignment Deliverable: Submit ONLY the Cash Receipts Report (which you saved a few minutes ago)

and which that includes your ONID ID and your name (similar to picture labeled sn044).

For your own benefit Although this exercise consisted essentially of following instructions, you may want to reflect on a few

things in order to test your appreciation for ERP systems; see if you can answer the following questions

(Do not submit your answers to these questions).

1. When you began this assignment, you tried to order 10 computers, but were unable to complete the process. What prevented you from completing this order? Describe how an ERP system managed this problem.

2. You create a purchase order for the back-ordered items. Briefly explain what a purchase order is and why a vendor would accept a purchase order and ship items without having received payment for the shipment?

3. You received a shipment into inventory. Briefly explain how the process of receiving the shipment was simplified for the warehouse by having a copy of the original purchase order in the ERP system.

4. Once the shipment was received into inventory, you helped finishing the customer order. Briefly explain how you used the SmartList to check whether the order was ready to be completed without the Warehouse telling you; i.e., how could you determine that the items had arrived?.

5. After you posted the customer payment for the order, the ERP system generated a report with the details of this transaction. You will notice that this report has a field called Audit Trail Code. Briefly explain how having a trail of transactional details which can be reviewed (or audited) is helpful for monitoring and improving this business process.

order entry and fulfillment at fabrikam: an erp...

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