Order processing and procurement report


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Order processing and procurement report

  1. 1. Group slide part• Mae slide 1 – 17• Mark G. Slide 18 – 26• Coleen slide 27 - 34• Irene 35 - 41• Gretchen 42 - 44 Irene and gretchen kau na po bahala if dadagdagan nyo po ung slides. Iksi lang ng naisama q sa slides nyo refer na lang po kau sa softcopy na pinasa q dn para maintindhan nyo at para maexplain nyo futher and if gusto nyo pa pong dagdagan ung slides. Tanxs.
  3. 3. ORDER PROCESSING• Refers to receiving, recording, filling, and assembling orders for shipment
  4. 4. Order Cycle Sales Order ProcessingPre-Sales Activities Inventory Sourcing Payment Billing Delivery
  5. 5. Pre-Sales Activities• It contains the following functionality: – Creating and tracking customer contacts and communications (sales activity) • Phone call records • On-site meeting • Letters • Campaign communication – Implementing and tracking direct mailing, internet, and trade fair campaigns based on customer attributes• Pre-sales documents need to be managed within the presales activities: Inquiries and Quotations. These documents help identify possible sales related activity and determine sales probability.
  6. 6. Inquiry• An inquiry is a customer’s request to a company for information or quotation in respect to their products or services without obligation to purchase. – How much will it cost – Material/Service availability – May contain specific quantities and dates• The inquiry is maintained in the system and a quotation is created to address questions for the potential customer.January 2007 (v1.0) The Rushmore Group, LLC 6
  7. 7. Quotation• The quotation presents the customer with a legally binding offer to deliver specific products or a selection of a certain amount of products in a specified timeframe at a pre- defined price. January 2007 (v1.0) The Rushmore Group, LLC 7
  8. 8. Sales Order Processing• Customers place orders with a customer service representative who create a document* with information on: – Customer – Material Ordered - material and quantity – Pricing conditions for each item – Schedule lines - delivery dates and quantities – Delivery Information – Billing information• Information is pulled from master data on customers and materials to minimize data entry errors.
  9. 9. Creating an Order Customer Master Sold-to party 2540-00 Item Material Quantity Material Master 1 1400-500-00 30 2 1400-100-00 20• When a sales order is created in R/3, data is copied from: – Customer Master – Material Master – Condition Records for Pricing – Tables in Configuration for shipping point and route.• Data can also be copied from an inquiry or quote.
  10. 10. Master Data Customer Pricing Master Master Material Master• Master Data is centrally stored (shared across application modules) and is processed to eliminate data redundancy.• Three kinds of master data are critical to sales order processing: – Customer - Shared with FI/CO – Material - Shared with MM and PP – Pricing
  11. 11. Customer Master Data • Customer Master – Contains all of the information necessary for processing orders, deliveries, invoices and customer payment – Every customer MUST have a master record • Customer Master Data is created by Sales Area – Sales Organization – Distribution Channel – DivisionJanuary 2007 (v1.0) The Rushmore Group, LLC 11
  12. 12. Customer Master Data • The customer master information is divided into 3 areas: – General Data – Company Code Data – Sales Area DataJanuary 2007 (v1.0) The Rushmore Group, LLC 12
  13. 13. Master Data • Material Master – Contains all the information a company needs to manage about a material – It is used by most components within the SAP system • Sales and Distribution • Materials Management • Production • Plant Maintenance • Accounting/Controlling • Quality Management – Material master data is stored in functional segments called ViewsJanuary 2007 (v1.0) The Rushmore Group, LLC 13
  14. 14. Material Master Views Sales Data Basic Data Purchasing Data Mat. Plan. Data Material Master Forecasting Data Storage Data Controlling Data Quality Data Accounting DataJanuary 2007 (v1.0) The Rushmore Group, LLC 14
  15. 15. Material Master General Information relevant for the entire organization: Name Weight U/M Client 410 Sales specific information: Delivery Plant Storage Location specific information: Loading Grp Stock Qty Plant 102 Storage Location 20 Plant 101 Storage Location 10 Plant 100January 2007 (v1.0) The Rushmore Group, LLC 15
  16. 16. Customer-Material Information Record • Data on a material defined for a specific customer is stored in a Customer material info record. • Info Records contain: – customer-specific material number – customer-specific material description – customer-specific data on deliveries and delivery tolerances • You can also maintain default text to appear on sales orders for that customerJanuary 2007 (v1.0) The Rushmore Group, LLC 16
  17. 17. Condition Master (Pricing) • Condition master data includes: – Prices – Surcharges – Discounts – Freights – Taxes • You can define the condition master to be dependent on various data: – Material specific – Customer specific • Conditions can be dependent on any document fieldJanuary 2007 (v1.0) The Rushmore Group, LLC 17
  18. 18. Inventory Sourcing• Inventory Sourcing determines: – If a product is available (availability check). – How the product will be supplied: • From stock on hand. • From production or purchase orders that should be available. • From make-to-order production. • Shipped from an external supplier. • Shipped from another plant or warehouse.
  19. 19. Inventory Sourcing• Inventory sourcing occurs when: – An order is created. – An order is changed. – When the delivery document is created.
  20. 20. Stock Available: Backward Scheduling Requested Material Transportation Loading Goods DeliveryOrder Date Availability Date Planning Date Date issue date Date Transit Time Loading Time Pick Pack and Stage The R/3 System uses the longer of these two times in calculating delivery scheduling. Transportation Lead Time
  21. 21. Stock Unavailable: Forward Scheduling Confirmed New Material Transportation Loading Goods DeliveryOrder Date Availability Date Planning Date Date issue date Date Transit Time Loading Time Pick Pack and Stage The confirmed delivery date is derived by the R/3 System using forward scheduling based Transportation on the new material availability date Lead Time
  22. 22. Delivery• Delivery activities include: – Creating delivery documents – Creating transfer orders for material picking – Provide packing information (if required) – Goods issue (updating accounting and inventory data)
  23. 23. Shipping Point and Route SP 1 SP 2 SP 3 Plant Shipping Point Route Customer• The Shipping Point is the logical or physical location where deliveries are created and managed (see Organizational Elements).• The Route is the path that the delivery follows from the plant to the customer site.• Delivery dates are determined based on lead times associated with the shipping point (picking and packing time) and route (transportation lead times and transit times)
  24. 24. Delivery Complete Sales Order Delivery Delivery Partial Delivery Delivery Sales Order Delivery Delivery Order Sales Order Combination Delivery Sales Order• A delivery can be created for each sales order.• Sales orders may split into multiple deliveries (availability).• A delivery may combine a number of sales orders for efficiency.• Combined sales orders must have something in common like shipping point, delivery processing date, ship-to party or route.
  25. 25. Billing• A Billing Document is created by copying information for the sales order and delivery document into the billing document which is used to create the invoice.• Creating a Billing Document will automatically debit the customer’s accounts receivable account and credits the revenue account. Postings may also be made to other accounts.
  26. 26. Billing Invoice Sales Order Delivery Invoice Split Invoice Separate Sales Order Invoice Delivery Invoice per delivery Delivery Invoice Collective Sales Order Delivery Invoice Delivery Invoice Sales Order Delivery• Invoice splits can be used to bill for different items like materials and services.• Collective invoices can be used to consolidate deliveries onto one invoice to minimize paperwork.
  27. 27. Payment• Payment is the final step in the customer order management cycle.• Final payment includes: – Posting payments against invoices. – Reconciling differences, if necessary.• The Cycle may not always go as planned (material not in stock, defective material returned for credit, etc.). SAP has procedures to deal with these possibilities.
  28. 28. Posting Payments Invoice 1 Acme Corp. 4325 Invoice 2 Pay to $ Invoice 3 Dollars First National Bank Invoice 4 2132 123123 54545 345 34• Customers may send one check to cover multiple invoices. They may also send checks for less than the full amount due. SAP allows for partial payments to be applied to invoices.• Payment posting is performed by the accounts receivable department.
  29. 29. Order Management Process Pre-Sales Contact Inquiry Scheduling Contract Quotation agreement Materials Management Materials ManagementSales Information SystemSales Information System Production Planning Production Planning Sales Order Order Processing Inventory Sourcing Delivery/ Delivery Goods issue Transportation Transfer Order Shipment Billing Invoice Payment/ Material Stock Accounts Receivable Accounting Account
  30. 30. Fitter Snacker Exercise West HillsAthletic Club Sales Inquiry OrderSales andDistribution 1 2 Pricing Availability
  31. 31. Fitter Snacker Exercise Pick Goods Issue 4 5MaterialsManagement Sales Order Delivery Delivery Delivery 3
  32. 32. Fitter Snacker Exercise Invoice West HillsAthletic ClubSales and DeliveryDistribution 6Accounts 7Receivable Post Receivable Receivable
  33. 33. PROCUREMENT• Procurement/Purchasing Procurement is the process of buying goods and services for the user department based on order specifications given by that department. Procurement begins with sending the purchase order to the supplier. Procurement function involves-
  34. 34. three company purchasing orientations• Buying orientation. The purchaser’s focus is short – term and tactical.• Procurement Orientation: buyers simultaneously seek quality improvements and cost reductions.• Supply Chain Management Orientation: The purchasing role is further broadened to become a more strategic, value – adding operation.
  35. 35. Types of Purchasing Processes• Routine products - These products have low value and cost to the customer and involve little risk.• Leverage products: These products have high value and cost to the customer but involve little risk of supply because many companies make them.
  36. 36. Types of Purchasing Processes• Strategic products: These products have high value and cost to the customer and also involve high risk• Bottleneck products: These products have low value and cost to the customer but they involve some risk
  37. 37. Stages in the Purchasing Process• Palagay na lng nong table na nasa hard copy.. Tanxs.
  38. 38. Problem Recognition• The purchase process begins when someone in the company recognize a problem or need that can be met by acquiring a good or service. The recognition can be triggered by internal or external stimuli.
  39. 39. General Need Description and Product Specification• the buyer determines the needed item’s general characteristics and required quantity.• The buying organization now develops the item’s technical specifications. Often, the company will assign a product – value – analysis (PVA) engineering team to the project.
  40. 40. Supplier Search• The buyer now tries to identify the most appropriate suppliers. The buyer can examine trade directories, contact other companies for recommendation, watch trade advertisements, and attend trade shows
  41. 41. e – procurement in three other ways:• Direct extranet links to major suppliers.• Buying alliances.• Company buying sites.
  42. 42. Proposal Solicitation• The buyer invites qualified suppliers to submit proposals, If the item is complex or expensive, the buyer will require a detail written proposal from each qualified supplier, after evaluating the proposals, the buyer will invite a few suppliers to make formal presentations.
  43. 43. Supplier Selection• Before selecting a supplier , the buying center will specify desired supplier attributes and indicate their relative importance, it will then rate suppliers on these attributes and identify the most attractive suppliers.
  44. 44. Order routine specification• After selecting suppliers, the buyer negotiates the final order, listing the technical specification, the quantity needed, the expected time of delivery, return policies, warranties, and so on.
  45. 45. Performance review• The buyer periodically review the performance of the chosen supplier(s). There methods are commonly used. The buyer may contact the end users and ask for their evaluations: or rate the supplier on several criteria using a weighted score method; or aggregate the cost of poor supplier performance to come up with adjusted costs of purchase, including price, the performance review may lead the buyer to continue, modify, or end the relationship with the supplier.