Podcast
Questions and Answers
What happens when a customer sends in a payment in the SAP ERP system?
What happens when a customer sends in a payment in the SAP ERP system?
What is the main problem with Fitter Snacker's current sales order process?
What is the main problem with Fitter Snacker's current sales order process?
What is treated as a sequence of related functions in an ERP system such as SAP ERP?
What is treated as a sequence of related functions in an ERP system such as SAP ERP?
What is electronically linked in an ERP system such as SAP ERP?
What is electronically linked in an ERP system such as SAP ERP?
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What do configuration decisions in an ERP system reflect?
What do configuration decisions in an ERP system reflect?
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What type of data is stored in the central database of an ERP system?
What type of data is stored in the central database of an ERP system?
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What is the main difference between the old system and the ERP system in terms of generating a price quotation?
What is the main difference between the old system and the ERP system in terms of generating a price quotation?
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Why is timely recording of payment important in an ERP system?
Why is timely recording of payment important in an ERP system?
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What is the primary objective of the Fitter Snacker company?
What is the primary objective of the Fitter Snacker company?
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What is the result of Fitter Snacker's sales orders having problems?
What is the result of Fitter Snacker's sales orders having problems?
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What is the main issue with Fitter Snacker's sales process?
What is the main issue with Fitter Snacker's sales process?
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What is the purpose of the sales quotation and order process at Fitter Snacker?
What is the purpose of the sales quotation and order process at Fitter Snacker?
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How does Fitter Snacker manage inventory levels?
How does Fitter Snacker manage inventory levels?
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What is the result of the inefficiencies in Fitter Snacker's sales process?
What is the result of the inefficiencies in Fitter Snacker's sales process?
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What is the purpose of the SAP ERP system in Fitter Snacker's sales and distribution process?
What is the purpose of the SAP ERP system in Fitter Snacker's sales and distribution process?
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What is the series of activities in the SAP ERP system that must take place to record a sales order?
What is the series of activities in the SAP ERP system that must take place to record a sales order?
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What is the Available-to-Promise (ATP) check in the SAP ERP system?
What is the Available-to-Promise (ATP) check in the SAP ERP system?
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What is the result of the SAP ERP system's automatic accounting record update?
What is the result of the SAP ERP system's automatic accounting record update?
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Study Notes
ERP Fundamentals
- Fitter Snacker (FS) is a fictitious company that manufactures and sells healthy snack bars, but lacks an integrated information system.
- The company's Marketing and Sales (M/S) information systems are not well integrated with other information systems, leading to company-wide inefficiency.
Overview of Fitter Snacker
- FS manufactures two types of nutritious snack bars: NRG-A and NRG-B.
- The company has two sales divisions: Wholesale Division and Direct Sales Division, which differ in terms of quantities of orders and pricing terms.
- FS sells snack bars under its own brand name and packages them in store-brand wrappers for some chain stores.
Problems with Fitter Snacker's Sales Process
- Many sales orders have problems, such as incorrect pricing, excessive calls to the customer for information, delays in processing orders, and missed delivery dates.
- The reasons for these problems include:
- Separate information systems for three functional areas: Sales order system, Warehouse system, and Accounting system.
- High number of transactions handled manually.
- Information stored in the three systems is not available in real-time.
Sales Quotations and Orders
- The sales process involves giving a customer a price quotation and then taking the customer's order.
- The salesperson prepares a handwritten quotation on a form that generates two copies, which can lead to problems.
- Inefficiencies in the rest of the ordering process, such as determining the delivery date, checking customer's credit status, and entering the customer's order into the current order entry system.
Order Filling
- Packing lists and shipping labels are printed twice a day and hand-carried to the warehouse.
- The warehouse uses a PC database program to manage inventory levels, which are kept fairly low and change rapidly during the day.
- Order pickers may need to have conversations with warehouse supervisors, production supervisors, and sales clerks to resolve issues with inventory levels.
Accounting and Invoicing
- Invoicing the customer is problematic, with sales clerks sending sales order data to the Accounting department for customer invoices.
- The Accounting department loads the data into a PC-based accounting program, and clerks make manual adjustments for partial shipments and changes.
- Order corrections may be delayed, resulting in late or inaccurate invoices.
Payment and Returns
- Problems with the procedure for processing payments, including incorrect invoices and errors in customer payments.
- FS's returns processing is flawed, with customers not calling for the RMA number or failing to include it with their returned material, leading to difficulties in crediting the appropriate account.
Sales and Distribution in ERP
- ERP systems can minimize data entry errors and provide accurate information in real-time to all users.
- ERP systems can track all transactions involved in the sales order, including invoices, packing lists, RMA numbers, and payments.
- The SAP ERP Sales and Distribution module treats the sales order process as a cycle of events, including pre-sales activities, sales order processing, inventory sourcing, delivery, billing, and payment.
Pre-Sales Activities
- Customers can get pricing information about the company's products through an inquiry or a price quotation.
- Marketing activities, such as tracking customer contacts, including sales calls, visits, and mailings, can be maintained.
- The company can maintain data about customers and generate mailing lists based on specific customer characteristics.
Sales Order Processing
- Sales order processing involves a series of activities to record a sales order, including recording the items to be purchased, determining the selling price, and recording the order quantities.
- Users can define various pricing alternatives in the SAP ERP system.
- The system checks the Accounts Receivable tables in the SAP ERP database to confirm the customer's available credit.
Inventory Sourcing
- The Available-to-Promise (ATP) check checks the company's inventory records and production planning records to see whether the requested material is available and can be delivered on the desired date.
- The system can recommend an increase in planned production if a shortfall is expected.
Delivery
- Delivery in the SAP ERP system involves releasing the documents that the warehouse uses to pick, pack, and ship orders.
- The delivery process allows deliveries to be created so that the warehouse and shipping activities are carried out efficiently.
Billing
- The SAP ERP system creates an invoice by copying sales order data into the invoice document.
- Accounting can print this document and mail it, fax it, or transmit it electronically to the customer.
- Accounting records are updated at this point, with the system debiting accounts receivable and crediting sales.
Payment
- When the customer sends in a payment, it is automatically processed by the SAP ERP system.
- The system debits cash and credits the customer's account, updating the accounting records.
Summary
- Fitter Snacker's unintegrated information systems are at the root of an inefficient and costly sales order process.
- An ERP system, such as SAP ERP, treats a sale as a sequence of related functions, including taking orders, setting prices, checking product availability, checking the customer's credit line, arranging for delivery, billing the customer, and collecting payment.
- Installing an ERP system requires making various configuration decisions that reflect management's view of how transactions should be recorded and later used for decision-making.
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Description
Learn about the importance of integrated marketing and sales information systems in ERP, and how unintegrated systems can lead to inefficiency and lost profits. Understand the sales order process and its impact on company-wide operations.
