1.

Assume you are Fitter Snacker’s new marketing manager, hired to clean up some of
the company’s problems, as outlined in the beginning of this chapter. You just started
this job, and you are getting to know your sales team and the company’s processes.
Describe all the problems you observe about the way Fitter’s sales force currently takes
and fills an order.
Now convince upper management of the need to improve the existing system and put
an ERP systemin place. Fitter Snacker Problems Sales quotes and orders Quotes and
orders are first recorded by hand, on paper. Data entry errors are possible, as well as
calculation errors (pricing, discounts, credit) especially since this is your new job and
you are nervous. Quotes and orders are sometimes conveyed by fax –again, paper-
based. Faxes can be misinterpreted or illegible. Data is communicated within Fitter by
fax, by phone, and by word of mouth. Usually this means that those in Sales,
Accounting, and the Warehouse do not have up–to-date and complete information. This
leads to (for example):
Inability to forecast delivery dates and promising infeasible delivery dates
Inability to handle customer inquiries properly, which leads to customer frustration
Errors in calculating proper discounts – too much or too little can be given
Errors in credit checks – credit can be denied to worthy customers ERP system
treatment
Quotes and orders are handled electronically
Data is stored in one central database
Calculations are programmed, to reduce errors
Use of ERP reduces delays and errors and therefore reduces customer frustration In
addition to just taking the order, there are other phases involved in the process :
Inventory sourcing There is no coordination between Production and Marketing.
Customers usually ask if a certain number of cases of a product will be available for
shipping on the desired date. In Fitter, the Marketing representative cannot say one way
or another for sure. To answer the question, the Warehouse personnel must be
consulted, and will render a best guess, based on current volume on hand and
assumed production levels. Ideally, the production forecast and the delivery schedule
would be available to answer the customer's question, but Fitter does not have software
that can do that. Thus, it is possible to run out of product at Fitter – or to have an excess
on hand
ERP system treatment The ERP system has the production schedule and the schedule
of deliveries in the database. Inventory sourcing is automatically done. If available, the
customer is informed. If not available the production scheduled can be adjusted.
Invoicing problems Data about sales is sent to Accounting three times a week.
Accounting keys in the data as quickly as they can get to it, and prints out the customer
bills (invoices) at that time as well. Thus, a billing can lag a shipment, and in fact is sent
separately by Fitter. If there are amendments to the order after it is first placed,
Accounting may or may not hear about them in time to prepare a correct invoice. Thus,
incorrect invoices maybe sent out. ERP system treatment The ERP system creates the
invoice, which is included with the shipment. Errors are reduced in this way. Accounting
uses the data entered by Marketing, for the sale, and so the accounting records are up
to date and accurate .Recording payments Customers are supposed to send a paper
copy of their invoice in with their payment. If they do that, Fitter accounting clerks know
which orders have been paid and which remain open. Often customers do not do that,
however. Recording the payment properly thus becomes a time consuming research
project for the Fitter accounting clerk
ERP system treatment Customers can be queried for the invoice number(s), if not
provided with the payment.
2.If Fitter installs an ERP system, how could they reorganize their sales division to be
more efficient? Be specific about how you would rearrange divisions, or consolidate
them.
Responses will vary. An ERP system can improve a company’s sales order process in
several ways. Because an ERP system uses a common database, it can minimize data
entry errors and provide accurate information in real time to all users. An ERP system
can also track all transaction data (such as invoices, packing lists, RMA numbers, and
payments) involved in the sales order process. Therefore, some students may consider
consolidating Fitter’s Wholesale and Direct Sales divisions.

4.Continuing the Yummy Foods example, now assume that Fitter has an SAP ERP system
installed. Each sales division records sales in the same way. Sales records exist in real time and
are kept in the company’s common database. What steps will be needed to pull this company-
wide analysis together? Do you expect that the divisions will meet the new system with
enthusiasm or reluctance?
Each sales division records their sales in the same way in the common ERP database.
The data needed for the report can be extracted using routine query techniques. If the analyst
does not know how to use queries (unlikely), sales orders can be accessed electronically – see the
examples of SAP sales orders in the chapter. Any questions can be resolved using the built-in
audit trail If the divisions are asked to pull together company-wide reports on a regular basis,
then they should embrace the new ERP system because their jobs have become much easier
.5.Assume you are a new summer intern at Fitter Snacker, working directly under the CIO. Your
first job is to write a memo describing the poor information flow between three functional areas
in the company: Marketing and Sales, Accounting and Finance, and Supply Chain Management.
Focus on the lack of information flow to and from Marketing and Sales, in particular.
Responses will vary. The following scenario is typical at Fitter Snacker and serves to
demonstrate the lack of information flow between the departments: Say a salesperson calls on a
good customer, Health Express. The salesperson offers Health Express deep discounts for buying
a certain number of NRG bars. At the same time, the Marketing Department is running a sale on
NRG bars. Marketing sends Health Express a flyer advertising the discounted price, which is less
than what the salesperson just offered in person. Meanwhile, the vice president of Fitter plays
golf with the CEO of Health Express and offers yet another discount. The connection or
relationship with the customer is confused because the customer is receiving inconsistent
information. The departments need to streamline their interactions with customers to ensure a
consistent message.

6.How does an ERP system like SAP simplify looking up customer numbers, setting a delivery
date, and charging a unique price to a given customer? Include discussion of master data.

SAP's ERP simplifies looking up a customer number by allowing users to search for customer
numbers on a variety of parameters such as distribution channel. The delivery date is calculated
within SAP ERP. Taking into accounting what is in stock, what is slated for production, what
raw materials are on hand or when new ones can be acquired, and existing orders are all factors
in SAP ERP deciding if the delivery date can be met. The system also will take into account
weekends and holidays if the factory is shut down. Prices are consistent with SAP ERP because
each customer is configured with specific pricing and discounts, if applicable. No errors are
allowed to be made by the sales clerk because the prices are set when the order is saved in SAP
ERP. Master data in SAP ERP is data that stays fairly stable, such as data about customers and
materials. It is important to keep this data so it can be called upon during the sales order process.
For example, when typing in a customer number and saving a sales order, the company name,
billing address, shipping address, payment information, and pricing details are all pulled from
master data. This allows the clerk . filling in the order to just type in the customer number, and
SAP does the rest. The result is a very consistent and accurate ordering system.7.What is
document flow? Why is it important for auditors of a company? Document flow is SAP ERP's
way of keeping track of all activities or transactions in the system. When an order is placed, as it
moves through the system, each step is assigned a unique number, called a document. All these
numbers or documents are related to that one sales order. If we call up the document flow on the
SAP ERP screen, we can click on any number and see what the details are of that phase. For
example, if we click on the Accounting document related to a particular sales order, we can
check to see if the bill has been paid. This is a very significant benefit of the SAP ERP system. It
is an auditor's dream come true.
8.A CIO of a major pharmaceutical company once stated that the reason the corporation used
ERP systems could be summed up in one word: control. How does an ERP system give
management control? ERP systems must be "configured" before their use. When that happens,
management's expectations about standard operating procedures are recorded as part of the ERP
program's operating code. Transactions are then processed by the ERP program, following
management's expectations. At first, the observer might think: "The program is controlling
operations, not the humans. This risks loss of control.” But "Control" is not necessarily enhanced
by virtue of a manager personally checking transactions or by looking over employees'
shoulders. Such approaches to supervision can actually backfire – employees do not necessarily
make fewer mistakes and the manager can become a bottleneck that reduces productivity and
stifles initiative. In fact, management control is improved to the extent supervision of repeating
events is systematized and made as automatic as possible; managers can then turn their attention
to non-repeating or novel events.
One very good example from Chapter 3 is the handling of price discounts. Fitter's current system
– on-paper "supervised" by humans – actually allows sales people to give such high discounts (or
multiple ones) that all the profit is taken out of the transaction. Their discount-granting process is
clearly out of control. If Fitter had SAPERP, the appropriate level of discounts (by customer, by
type of customer, by employee, or whatever) could be pre-coded, according to the way
management wants to control the situation. Transactions are then automatically recorded
properly – in effect, SAP ERP supervises the discount granting aspect of the transaction. Another
good example is the ability to manage inventory sourcing with ERP. In Fitter’s current situation,
stock outs are possible, as are overages. With ERP, Marketing and Production interactions would
be handled by software in as routine away as possible, and this would let management avoid
stock outs (or overages)
Un-integrated information systems, by their nature, require data to (eventually) be passed
between functional areas. This is often done in an inaccurate or tardy way. Even if done
accurately and on time, there is often a need to re-key data from one program into another, and
this usually leads to data-entry errors. When data is inaccurate or out of date, management
control is hampered. ERP systems, by their nature, prevent these problems and thus increase
control.9.How can a business better serve its customers using the APO tool in SAP ERP? The
APO tool stands for Advanced Planner and Optimizer. This helps the supply chain become more
efficient through excellent planning. In terms of customer service using APO allows a material
or product to be found amongst a number of plants. So if a customer is requesting an item that is
out of stock in their normal supplying plant, the APO tool will search all the other facilities to
find that item. Without APO, each plant and/or site must be searched individually for that desired
item.10. Assume you are the marketing manager for a large pet food company, such as Iams.
You need to launch a new marketing campaign. What social media channels would you use for
this campaign? How can CRM help your newstrategy? Social media channels worth considering
include blogs, Facebook, Google, Twitter and You Tube. Marketing campaigns can be extremely
expensive. If the marketing department can plan, execute, and evaluate the campaign well, then
the CRM component will add great value to the organization. Note that in order to launch a new
campaign, one needs to schedule the tasks of the campaign, allocate the resources, and make sure
the budget can cover all the expenses. SAP ERP can get involved in providing data on customers
so as to improve direct marketing .Using the Campaign Execution Activity Management in SAP
CRM, the entire execution of the marketing campaign can be managed and monitored.
Assessment of the campaign can also be recorded for future campaign success