Chapter 3

Chapter 3 Learning Objectives

• Describe the unintegrated sales processes of Fitter
Snacker
• Explain why unintegrated Sales and Marketing
information systems lead to company-wide
inefficiency, higher costs, lost profits, and
customer dissatisfaction
• Discuss sales and distribution in SAP’s R/3
system, and explain how integrated data sharing
increases company-wide efficiency
 Chapter 3 Learning Objectives
• Describe how SAP R/3 processes a standard sales
order
• Describe the benefits of Customer Relationship
Management software, a useful extension of ERP
software
 Marketing Personnel make
decision on:
• What products should we produce?
• How much of each product should we
produce?
• How are our products best promoted and
advertised?
• How should our products be distributed?
• What price should we charge?
 Problems with Fitter Snacker’s
Sales process:
• Sources:
– Three unintegrated systems
• Sales Order System
• Warehouse System
• Accounting System
– Manual handling of transactions
– Information not available in “real time”
Fitter Snacker’s Sales Process
Sales Warehouse
Order
Pick,
Quote Pack and
Sales Ship

Fitter Snacker’s
Sales Process
Receiving
Returns Accounting Invoice

Payment
 Sales Quotations and Orders
• Sales call
• Hand-written quote on 3 sheet form faxed to sales
office
• Customer calls 800 number to place order
 Sales Quotations and Orders
Problems
• Salesperson error in preparing quote manually
• Customer call reaches sales office before faxed
quote
• Faxed copy is illegible
• Delivery data requires call to warehouse
• Warehouse provides delivery date estimate
 Sales Quotations and Orders
Problems
• Initial credit check uses paper process
• Credit check for established customers using
accounting printout that may be a week old.
 Warehouse/Order Filling
• Packing lists/shipping labels manually
sorted
• Small order process and large order process
• Inventory managed by Access database
 Warehouse/Order Filling
Problems
• Picker may not report breaking case down
for small order
• Perishable product requires low inventories
• Out of stock decision:
– Partial shipment
– Change production schedule
– Wait until full order can be shipped
 Accounting and Invoicing
• Sales order data transferred by disk to
PeachTree program 3 times per week
• Clerks must make manual adjustments for
partial shipments and other errors.
• Invoices may not always match actual
product shipped
 Payment and Returns Problems
• Customers don’t always include copy of
invoice with payment
• Invoice may not match payment-
reconciliation required
• Returned Material –Paper process,
sometimes no RMA #
• Improper “dunning” letters
 Sales and Distribution with ERP
• SAP Sales and Distribution Process

Sales Order Processing

Pre-Sales Activities Inventory Sourcing

Payment
Billing Delivery
 Pre-Sales Activities
• Inquiry or Quote (binding)
• Marketing Activities
– Tracking Contacts
• Sales Calls
• Visits
• Mailings
 Sales Order Processing
• Activities required to record a sales order
• Incorporate data from inquiry or quote
• Automated Pricing and Discounting
• Automate Credit Check
 Inventory Sourcing
• Check of inventory, orders and production
to see if order can be delivered when
customer desires
• Includes shipping and considers
weekends/holidays
 Delivery
• Releasing documents to warehouse to
initiate pick, pack and ship
• Sequenced and grouped for warehouse
operation efficiency
• Materials Management module carries out
picking, packing and shipping
 Billing
• Sales order data copied to invoice
• Can be printed and mailed, faxed or
transmitted electronically
• Accounting records updated
 Payment
• Payment may be physical check or
electronic
• Cash debited and customer account credited
• Quick processing avoids credit check
problems
Sales Order Entry in SAP R/3

Sold-to party
P.O. Number
Required Delivery Date
Material
Order Quantity
 Master Data
• Master data is stored in a central database
that is accessed by all modules
• Customer Master Data and Material Master
Data are primary data sources for Sales
Order Processing
 Organizational Structures
• Organizational structures allow the R/3
system to control the sales order process –
pricing, minimum orders, etc.
• Distribution Channel defines the way that
materials move between the company and
customers
– Wholesale Distribution Channel
– Direct Sales Channel
Document Flow in SAP R/3

All documents related to

original sales order
 Document Flow
• Sales order process creates numerous
documents
- Sales Order - Invoice
- Delivery - Payment
- Goods Issue - RMA
• Document Flow links all documents related
to a sales order
Discounts in SAP R/3

Sold-to party
P.O. Number
Required Delivery Date
Material
Order Quantity
 Discount Pricing in SAP R/3
• R/3 system can be accommodate various
discounting schemes
• Calculates correct discount based on
customer and material
 Integration of Sales and
Accounting
• Sales order processing transactions make
appropriate accounting entries at time of
transaction-automatically
 Customer Relationship
Management (CRM)
• ERP provides means to manage all data relating to
a customer to improve the quality of the
interaction
• CRM Activities include:
– One-to-One Marketing
– Sales Force Automation
– Sales Campaign Management
– Marketing Encyclopedias
– Call Center Automation
 CRM Benefits
• Lower Costs due to better use of sales and
marketing resources
• Higher Revenue by improving the
effectiveness of marketing efforts
• Improved strategy and performance
measurement by changing management and
staff focus
 Chapter Summary
• Fitter Snacker’s unintegrated information
systems lead to inefficiencies and reduced
customer satisfaction
• An ERP system like SAP’s R/3 views sales
as a process, providing timely, accurate data
and automating error-prone tasks
 Chapter Summary
• Configuration decisions must be made
during installation to match the company’s
practices and policies
• The ERP system’s central database
maintains master data used by all areas of
the company
• CRM software builds on ERP data to
improve marketing effectiveness