Lecture 6 The Order Entry/Sales (OE/S) Process PDF

LECTURE 6 THE ORDER ENTRY/SALES (OE/S) PROCESS ACS 2916 © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FO...

LECTURE 6 THE ORDER ENTRY/SALES (OE/S) PROCESS ACS 2916 © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 1  This Chapter examines systems and associated business processes that enable organizations to successfully achieve their organizational goals.  We will begin with the order entry/sales (OE/S) process. SYNPOSIS © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 2 The entire business process must be considered STUDYING BUSINESS PROCESSES 3 Including all the interrelated parts that work toward the common purpose of meeting business process requirements The study of every process consists of: Understanding the Horizontal Flow Understanding the Vertical Flow Understanding the Logical Data flow Understanding the data needs and Database set up Understanding the Technologies that support the process Understanding the Controls involved in the process © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE.  The order entry/sales (OE/S) process includes the first four steps in the order-tocash process (revenue cycle): ORDER ENTRY/SALES (OE/S) PROCESS 1. Presales activities 2. sales order processing 3. picking and packing the goods 4. shipping.  Billing and processing the customer payment are included in the billing/accounts receivable/cash receipts (B/AR/CR) process. 4 © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. Order entry/sales (OE/S) process: An interacting structure of people, equipment, activities, and controls that is designed to achieve revenue goals of an organization. PROCESS DEFINITION AND FUNCTIONS The primary function of the OE/S process is to create information flows that support: Repetitive work routines of the sales order, credit, and shipping departments. 5 Decision needs of managers of various sales and marketing functions. © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. ORGANIZATIONAL SETTING horizontal perspective  The OE/S process relates to the repetitive work routines of the sales order, credit, and shipping departments. vertical perspective  the OE/S process relates to managerial decision making within the marketing function © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 6 A HORIZONTAL PERSPECTIVE © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 7 HORIZONTAL PERSPECTIVE Flow Description # 1 Customer Places and Order 2 Sales Order Department Requests Credit approval from Credit Dept Activity Informs sales reps of customer requests for goods Represents the credit check. 3 Credit Dept. informs sales order Dep. of the credit approval or denial 4 Sales Order Dept. Acknowledges order to the customer(4a), and notified the warehouse (4b), shipping (4c), and the B/AR/CR process (4d) of sales order Confirms the order; warehouse picks the goods; informs the shipping department of the pending shipment; and informs the billing department. 5 Warehouse sends completed picking ticket to shipping (with the goods) Accompanies goods from warehouse to shipping. 6 Shipping Dept. informs carrier (6a), B/AR/CR process Prepares shipping notice, begins invoicing (6b), the GL process (6c) and the Sales order process, and updates inventory and cost of © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USEDepartment AS PERMITTED IN A LICENSE WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISEgoods ON A (6d)DISTRIBUTED of the shipment sold for shipment. PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 8 A VERTICAL PERSPECTIVE THINK OF EXAMPLES OF INFORMATION EACH MANAGER WOULD NEED 9 © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. MANAGING THE OE/S PROCESS: SATISFYING CUSTOMER NEEDS To respond to the increasing information supply and demand, many organizations have expanded the scope of their information systems to assist decision making in the marketing function. This expansion might include customer relationship management (CRM) systems and Web 2.0 tools, operated in-house or via cloud computing. © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 10  Web 2.0: A set of tools that allow people to build social and business connections, share information, and collaborate on projects online.  Includes blogs, wikis, social-networking and CONNECTING WITH CUSTOMERS WITH WEB 2.0 AND CLOUD COMPUTING other online communities, and virtual worlds.  Can be used by marketing managers to learn customers likes and dislikes and about new products that they want. This can build loyalty, increase sales, and help develop new, improved products.  Trust is important to customers in the Web 2.0 world.  Cloud computing: Often used to facilitate © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. connections to customers, improve customer service, reduce costs, and improve process timeliness 11 Where is sales volume (quantity and dollars) concentrated? What opportunities exist to sell aftersales services, to cross sell (related products), and to up-sell (higher priced products)? Who are the specific major customers (by sales and by profitability), both present and potential? DECISION MAKING What types of advertising and promotions have the greatest influence on customers? © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 12  Data warehousing applications are usually viewed as being focused on operational or analytical applications.  Operational applications focus on providing USING DATA MINING TO SUPPORT MARKETING the information needed to monitor and control business processes.  Analytical applications, which include data mining, allow the use of sophisticated statistical and other analytical software to help understand customers, processes, and markets.  When the marketing department is armed with analytical data, extensive customer studies can be undertaken. © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 13 MASTERING GLOBAL E-BUSINESS Buy-side systems: Sell-side systems:  Use the Internet to automate and  Designed to allow a company to market, sell, manage purchases and vendors from which the purchases are made.  Predominant technology in this area is electronic data interchange (EDI).  Other software applications are supply chain management (SCM), eprocurement, and e-sourcing. deliver, and service goods and services to worldwide customers via the Internet.  Can handle both B2B and B2C business transactions.  One facet is known as customer relationship management (CRM) applications.  Other examples include marketing management, catalog management, e-payment, and order management. © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 14  Designed to manage all customer-related data.  Goal is to cultivate customer relationships by prospecting, acquiring, servicing, and retaining customers.  Contact management features facilitate the recording and storing of information related to each client contact. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM)  Supports organizing and retrieving information on historical sales activities and promotion planning.  Segmentation is the grouping of customers into categories based on key characteristics.  Support for customer service includes sales-force automation which may route calls to a particular sales rep.  Customer self-service systems allow customers to complete tasks without the aid of an organization’s employee.  Many systems are now Internet-based  Payback for the organization is huge due to reduced customer service staff needs. © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 15 LOGICAL DESCRIPTION OF THE OE/S PROCESS Using data flow diagrams (DFDs), a logical view of a typical OE/S process is depicted. The narrative highlights certain key points that you should discern from the diagrams. 16 © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. CONTEXT DIAGRAM  One input enters the process, and six outputs emerge.  Some of the entities with which the OE/S process interacts reside outside the organization (Customer and Carrier).  One is internal to the organization but external to the OE/S process (the B/AR/C process).  Diagram shows the process after the presale activities. © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE. 17 LOGICAL DATA FLOW DIAGRAMS  Inputs and outputs are identical to those presented in the context diagram.  This balancing of inputs and outputs is an important convention to observe when constructing a set of DFDs.  The single bubble in the context diagram has been divided into three bubbles – one for each of the three major processes performed by the OE/S process. © 2018 CENGAGE LEARNING. ALL RIGHTS RESERVED. MAY NOT BE COPIED, SCANNED, OR DUPLICATED, IN WHOLE OR IN PART, EXCEPT FOR USE AS PERMITTED IN A LICENSE DISTRIBUTED WITH A CERTAIN PRODUCT OR SERVICE OR OTHERWISE ON A PASSWORD-PROTECTED WEBSITE FOR CLASSROOM USE.