Chapter 10: Order Entry/Sales Process (OE/S)
OE/S Electronic Data Capture Technology
(1) bar code readers (2) optical character recognition (OCR) (3) scanners (4) radio frequency identification (RFID)
OE/S Five Data Stores
(1) customer master data (2) inventory master data (3) marketing data (4) sales order master data (5) accounts receivable master data
OE/S Control Goals
(1) effectiveness of operations control goals (timely acknowledgment of orders, assurance of credit, and timely shipment to customers) (2) ensure efficient employment of resources (people, computers) (3) ensure security of resources (inventory, customer master data) (4) ensure input validity, completeness, and accuracy of sales order inputs
Two Perspectives of OE/S
(1) horizontal (2) vertical
Data Warehousing
(1) operational applications: focus on providing the information needed to monitor and control business processes (2) analytical applications: such as data mining, allow the use of sophisticated statistical and other analytical software to help understand customers, processes, and markets
Four Steps
(1) pre-sale activities (2) sales order processing (3) picking and packing goods (4) shipping
Three Major Processes OE/S Performs in Level 0 Diagram
(1) validates sales orders (2) completes picking tickets (3) executes shipping notice
OE/S Process Level 2 Diagram
(2) completes picking ticket is broken into... (2.1) match goods with picking ticket - personnel receive the picking ticket, locate and "pick" the goods and match them with the ticket (2.2) enter quantity picked - personnel complete the picking ticket and forward it, along with the goods, to the shipping department
OE/S Process Level 3 Diagram
(3) executes shipping notice is broken down into... (3.1) MATCH ORDERS - receives data flows from a completed picking ticket and sales order master data (3.2) PRODUCE SHIPPING NOTICE - a sales clerk ensures that the goods and data agree and forwards the order to 3.2 where notices of shipments are disseminated and sales order/inventory master data is updated
M-2: Review open sales orders (tickler file)
***assuming this control is missing - effectiveness goals B (assurance of customer creditworthiness) and C (timely shipment) - shipping notice IC - security of resources a tickler file of open sales orders maintained in the enterprise database allows the shipping department to investigate any orders that are open for an unreasonable period of time
M-1: Independent customer master data maintenance
***assuming this control is missing - sales order IV valid sales orders include those made to customers for whom management has provided prior authorization... accomplished here by having the records entered by the credit department
Dissemination of the Sales Order Data Flows
***dissemination means distribution (1) picking ticket: warehouse is authorized to "pick" the goods from the shelf and send them to shipping; identifies goods to be picked (2) customer acknowledgment: notifies customer of order's acceptance and expected shipment date (3) sales order notification: a document or computer message sent to the billing department to notify them of a pending shipment
Sell-Side (E-Business System)
- designed to allow a company to market, sell, deliver, and service goods to world-wide customers via the Internet - B2B (business to business) and B2C (business to consumer) transactions - includes customer relationship management (CRM), marketing management, catalog management, e-payment, and order management applications
OE/S Context Diagram
- does not include pre-sale activities - one input enters the process and six outputs emerge - the customer and carrier are outside the organization but the OE/S process interacts with them - one entity (the billing/accounts receivable/cash receipts process) is internal to the organization but external to the order entry/sales process
P-2: Customer credit check
- effectiveness goal B (assurance of customer creditworthiness) - security of resources - sales order IV
P-13: Automated data entry
- effectiveness goal C (timely shipment) - efficient employment of resources - shipping notice IA
P-12: Turnaround document (picking ticket)
- effectiveness goal C (timely shipment) - efficient employment of resources - shipping notice IV and IA
P-10: One-for-one checking of picking ticket with the goods
- effectiveness goal C (timely shipment) - efficient employment of resources - security of resources - shipping notice IV and IA
P-11: Enter shipment data in shipping
- effectiveness goal C (timely shipment) - efficient employment of resources - shipping notice IC and IA
P-3: Populate input screens with master data
- effectiveness goals A (timely acknowledgment) and C (timely shipment of goods) - efficient employment of resources - sales order IV and IA - shipping notice IV
P-1: Enter customer order close to where the order is received
- effectiveness goals A (timely acknowledgment) and C (timely shipment of goods) - efficient employment of resources - sales order IC and IA
P-6: Preformatted screens
- effectiveness goals A (timely acknowledgment) and C (timely shipment) - efficient employment of resources - sales order IA
P-5: Compare input data with master data
- effectiveness goals A (timely acknowledgment) and C (timely shipment) - efficient employment of resources - security of resources - sales order IV and IA
P-4: Programmed edit checks
- effectiveness goals A (timely acknowledgment) and C (timely shipment) - efficient employment of resources - sales order IA
P-7: Online prompting
- effectiveness goals A (timely acknowledgment) and C (timely shipment) - efficient employment of resources - sales order IA
P-8: Procedure for rejected inputs
- effectiveness goals A (timely acknowledgment) and C (timely shipment) - sales order IC and IA - shipping notice IC and IA
Control Goals of the Information Process
- input validity (IV) - input completeness (IC) - input accuracy (IA) - update completeness (UC) - update accuracy (UA)
OE/S Level 0 Diagram
- inputs and outputs are identical to those presented in the context diagram ***important convention when constructing data flow diagrams, MUST BALANCE - the single bubble for the OE/S process has been divided into three bubbles (one for each of the three major processes performed
P-9: Confirm input acceptance
- sales order IC - shipping notice IC
P-14: Independent shipping authorization
- security of resources - shipping notice IV
P-15: One-for-one checking of goods, picking ticket, and sales order
- security of resources - shipping notice IV and IA
Buy-Side (E-Business System)
- use the internet to automate and manage purchases and vendors from which the purchases are made - electronic data interchange (EDI) is the predominant technology in this area - also includes supply chain management (SCM), e-procurement, and e-sourcing
What kinds of questions should marketing managers ask?
- where is sales volume (quantity and dollars) concentrated? - who are the specific major customers (by sales and by profitability), both present and potential? - what opportunities exist to sell after-sales services, to cross sell (related products) and to up-sell (higher priced products)?
Effectiveness of Operations Process Control Goals
A. provide timely acknowledgement of customer orders B. provide assurance of customers creditworthiness C. provide timely shipment of goods to customers
Digital Image Processing
a computer-based system for capturing, storing, retrieving, and presenting images of objects such as pictures and documents scanners are used to capture and input the images
Web 2.0
a set of tools that allow people to build social and business connections, share information, and collaborate on projects online; helps companies connect with customers includes blogs, wikis, social-networking and other online communities, and virtual worlds
Radio Frequency Identification (RFID)
a system for sending and receiving data, using wireless technology, between an RFIS tag (chip with antenna) and an RFID transceiver
Marketing Data
repository of a variety of sales-oriented data from presales or sales activities
What is the Order Entry/Sales (OE/S) process?
an interacting structure of people, equipment, activities, and controls that are designed to achieve certain goals
Marketing Department Major User
analytical data allows marketing departments to conduct extensive customer studies
B/AR/CR process
billing, accounts receivable, and cash receipts process
Sales Order Master Data
created on completion of a sales order and updated when goods have been shipped
Bar Code Readers
devices that use light reflection to read differences in bar code patterns in order to identify a labeled item
Control Goals of Operations Process
ensure effectiveness of operations (A, B, C) ensure efficient employment of resources (people, computers) ensure security of resources (inventory, customer master data)
Control Goals of the Information Process (continued)
for sales order inputs (customer orders) ensure IV, IC, and IA for sales order and inventory master data ensure UC and UA for shipping notice inputs (shipment data) ensure IV, IC, and IA for sales order and inventory master data, ensure UC and UA
OE/S Level 1 Diagram
further divides the processes... (1.1) INVENTORY VERIFICATION - verifies inventory availability by checking inventory master data; sends buying characteristics to the marketing data store (1.2) CREDIT CHECK - establishes the customer's existence and then evaluates the credit by interacting with accounts receivable master data, customer master data, and sales order master data (1.3) COMPLETE SALES ORDER - updates inventory master data and sales order master data and notifies customer of completion
Vertical Perspective of the OE/S Process
improves understanding of managerial decision-making especially in the marketing functions (1) information flows through the sales order department to... - advertising managers - new product development managers - customer service and sales managers - marketing intelligence managers - sales promotion managers (2) information from these managers flows to the VP of marketing
E-R Diagram
information is received from inventory and customers to produce a sales order which is sales event divided into three events... (1) sales orders, (2) stock picks, and (3) sales invoices
Scanners
input devices that capture printed images or documents and convert them into electronic digital signals that can be stored on computer media
What is cloud computing?
it is often used to facilitate connections to customers, improve customer service, reduce costs, and improve process timelines
Customer Relationship Management (CRM) Systems
part of sell-side systems and is designed to manage all customer-related data cultivates customer relationships by (1) prospecting (2) acquiring (3) servicing and (4) retaining customers includes contact management features to facilitate the recording and storing of information related o each client contact
Inventory Master Data
record of each item that is stocked or regularly ordered from a vendor
Customer Master Data
records of every authorized, regular customer changes to the master data should be done by someone other than the person creating the sales order (as a direct, proper control technique)
What is a firm's most important asset?
satisfied customers
CRM Systems (continued)
supports organizing and retrieving information on historical sales activities and promotion planning segments (groups) customers into categories based on key characteristics supports customer service by using sales-force automation to particular sales reps - customer service systems allow customers to complete tasks without the aid of an organization's employee
Horizontal Perspective of OE/S
the ultimate goal of the activities in the OE/S process is to create value for the customer; the following nine processes support the repetitive work routines of the business departments (1) customer places order (2) sales order department requests credit approval from the credit department (3) credit department informs sales order department of disposition of credit request (4) sales order department acknowledges order to the customer (5) sales order department notifies shipping department of sales order (6) sales order department notifies warehouse and B/AR/CR process of shipment (7) warehouse sends completed picking ticket to shipping (8) shipping department informs sales order department of shipment (9) shipping department informs carrier, B/AR/CR process, and general ledger process of shipment
How do marketing managers use Web 2.0?
they can learn customer likes and dislikes and about new products consumers are in the market for with digital presence, especially through social networking, companies can build loyalty, increase sales, and improve products according t customer wants
Primary Function of the OE/S Process
to create information flows that support repetitive work routines of the sales order, credit, and shipping departments, as well as decision needs of managers of various sales and marketing functions
Optical Character Recognition (OCR)
used (similar to bar code readers) for pattern recognition of handwritten or printed characters
