Order processing and procurement report

Group slide part

• Mae slide 1 – 17• Mark G. Slide 18 – 26• Coleen slide 27 - 34• Irene 35 - 41• Gretchen 42 - 44

Irene and gretchen kau na po bahala if dadagdagan nyo po ung slides. Iksi lang ng naisama q sa slides nyo refer na lang po kau sa softcopy na pinasa q dn para maintindhan nyo at para maexplain nyo futher and if gusto nyo pa pong dagdagan ung slides. Tanxs.

ORDER PROCESSING AND PROCUREMENT

ORDER PROCESSING

• Refers to receiving, recording, filling, and assembling orders for shipment

Order Cycle

Pre-Sales ActivitiesSales Order Processing

DeliveryBilling

Inventory Sourcing

Payment

Pre-Sales Activities• It contains the following functionality:

– Creating and tracking customer contacts and communications (sales activity)• Phone call records• On-site meeting• Letters• Campaign communication

– Implementing and tracking direct mailing, internet, and trade fair campaigns based on customer attributes

• Pre-sales documents need to be managed within the presales activities: Inquiries and Quotations. These documents help identify possible sales related activity and determine sales probability.

January 2007 (v1.0) The Rushmore Group, LLC 6

Inquiry

• An inquiry is a customer’s request to a company for information or quotation in respect to their products or services without obligation to purchase.– How much will it cost– Material/Service availability– May contain specific quantities and dates

• The inquiry is maintained in the system and a quotation is created to address questions for the potential customer.


Quotation

• The quotation presents the customer with a legally binding offer to deliver specific products or a selection of a certain amount of products in a specified timeframe at a pre-defined price.

Sales Order Processing

• Customers place orders with a customer service representative who create a document* with information on:– Customer– Material Ordered - material and

quantity– Pricing conditions for each item– Schedule lines - delivery dates and

quantities– Delivery Information– Billing information

• Information is pulled from master data on customers and materials to minimize data entry errors.

Creating an Order

• When a sales order is created in R/3, data is copied from:– Customer Master– Material Master– Condition Records for Pricing– Tables in Configuration for shipping point and

route.• Data can also be copied from an inquiry or quote.

Sold-to party 2540-00

Item Material Quantity 1 1400-500-00 30 2 1400-100-00 20

Customer Master

Material Master

Master Data

• Master Data is centrally stored (shared across application modules) and is processed to eliminate data redundancy.

• Three kinds of master data are critical to sales order processing:– Customer - Shared with FI/CO– Material - Shared with MM and PP– Pricing

CustomerMaster

CustomerMaster

MaterialMaster

MaterialMaster

PricingMasterPricingMaster


Customer Master Data

• Customer Master– Contains all of the

information necessary for processing orders, deliveries, invoices and customer payment

– Every customer MUST have a master record

• Customer Master Data is created by Sales Area– Sales Organization– Distribution Channel– Division


Customer Master Data• The customer master

information is divided into 3 areas:– General Data– Company Code Data– Sales Area Data


Master Data

• Material Master– Contains all the

information a company needs to manage about a material

– It is used by most components within the SAP system

• Sales and Distribution• Materials Management• Production• Plant Maintenance• Accounting/Controlling• Quality Management

– Material master data is stored in functional segments called Views


Material Master Views

Material Master

Basic Data

Sales Data

Controlling Data

Forecasting Data

Purchasing Data

Mat. Plan. Data

Accounting Data

Storage Data

Quality Data


Material Master

Plant 102Plant 101

Plant 100

Client 410

Storage Location 20Storage Location 10

General Information relevant for the entire organization: Name Weight U/M

Sales specific information: Delivery Plant Loading Grp

Storage Location specific information: Stock Qty


Customer-Material Information Record

• Data on a material defined for a specific customer is stored in a Customer material info record.

• Info Records contain:– customer-specific material

number– customer-specific material

description– customer-specific data on

deliveries and delivery tolerances

• You can also maintain default text to appear on sales orders for that customer


Condition Master (Pricing)

• Condition master data includes:– Prices– Surcharges– Discounts– Freights– Taxes

• You can define the condition master to be dependent on various data:– Material specific– Customer specific

• Conditions can be dependent on any document field

Inventory Sourcing

• Inventory Sourcing determines:– If a product is available (availability

check).– How the product will be supplied:

• From stock on hand.• From production or purchase orders

that should be available.• From make-to-order production. • Shipped from an external supplier.• Shipped from another plant or

warehouse.

Inventory Sourcing

• Inventory sourcing occurs when:– An order is created.– An order is changed.– When the delivery document is

created.

Stock Available: Backward Scheduling

RequestedDelivery

DateGoods

issue dateLoading

DateTransportationPlanning Date

MaterialAvailability DateOrder Date

Transit TimeLoading Time

Pick Pack and Stage

TransportationLead Time

The R/3 System uses thelonger of these two times in

calculating delivery scheduling.

Stock Unavailable: Forward Scheduling

ConfirmedDelivery

DateGoods

issue dateLoading

DateTransportationPlanning Date

New MaterialAvailability DateOrder Date

Transit TimeLoading Time

Pick Pack and Stage

TransportationLead Time

The confirmed delivery dateis derived by the R/3 System

using forward scheduling basedon the new material availability date

Delivery

• Delivery activities include:– Creating delivery documents– Creating transfer orders for

material picking– Provide packing information (if

required)– Goods issue (updating accounting

and inventory data)

Shipping Point and Route

• The Shipping Point is the logical or physical location where deliveries are created and managed (see Organizational Elements).

• The Route is the path that the delivery follows from the plant to the customer site.

• Delivery dates are determined based on lead times associated with the shipping point (picking and packing time) and route (transportation lead times and transit times)

Plant Shipping Point Route Customer

SP 1

SP 2

SP 3

Delivery

• A delivery can be created for each sales order. • Sales orders may split into multiple deliveries

(availability). • A delivery may combine a number of sales orders

for efficiency.• Combined sales orders must have something in

common like shipping point, delivery processing date, ship-to party or route.

Sales Order Delivery

DeliverySales Order

Sales Order

Delivery

Delivery

Delivery

CompleteDelivery

PartialDelivery

OrderCombination

Sales Order

Billing

• A Billing Document is created by copying information for the sales order and delivery document into the billing document which is used to create the invoice.

• Creating a Billing Document will automatically debit the customer’s accounts receivable account and credits the revenue account. Postings may also be made to other accounts.

Billing

• Invoice splits can be used to bill for different items like materials and services.

• Collective invoices can be used to consolidate deliveries onto one invoice to minimize paperwork.

Sales Order Delivery Invoice

Invoice

Sales Order Delivery

Delivery

Invoice

Invoice

Delivery

Sales Order

Sales Order

Delivery

Delivery

Invoice

InvoiceSplit

SeparateInvoiceper delivery

CollectiveInvoice

Payment

• Payment is the final step in the customer order management cycle.

• Final payment includes:– Posting payments against invoices.– Reconciling differences, if necessary.

• The Cycle may not always go as planned (material not in stock, defective material returned for credit, etc.). SAP has procedures to deal with these possibilities.

Posting Payments

• Customers may send one check to cover multiple invoices. They may also send checks for less than the full amount due. SAP allows for partial payments to be applied to invoices.

• Payment posting is performed by the accounts receivable department.

Invoice 1

Invoice 2

Invoice 3

Invoice 4

Acme Corp. 4325

Pay to $ Dollars

First National Bank 2132 123123 54545 345 34

Order Management Process

Quotation

Contact

Schedulingagreement

Order

Delivery Goods issue

Shipment

Invoice

Accounts ReceivableMaterial Stock

Account

Inquiry

Contract

Pre-SalesPre-Sales

Sales OrderProcessingSales OrderProcessing

Delivery/TransportationDelivery/Transportation

Transfer Order

BillingBilling

Payment/AccountingPayment/Accounting

Mate

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anagem

ent

Mate

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anagem

ent

Pro

ductio

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lannin

gPro

ductio

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Inventory SourcingInventory Sourcing

Sale

s Info

rmatio

n S

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mSale

s Info

rmatio

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Fitter Snacker Exercise

Inquiry

West HillsAthletic Club

SalesOrder

1 2

AvailabilityPricing

Sales andDistribution


DeliverySalesOrder

3

5Pick

MaterialsManagement

Goods Issue

Delivery

4

Delivery


InvoiceWest Hills

Athletic Club

6

7

Sales andDistribution

AccountsReceivable

Delivery

Receivable

Post

Receivable

PROCUREMENT

• Procurement/Purchasing Procurement is the process of buying goods and services for the user department based on order specifications given by that department. Procurement begins with sending the purchase order to the supplier. Procurement function involves-

three company purchasing orientations

• Buying orientation. The purchaser’s focus is short – term and tactical.

• Procurement Orientation: buyers simultaneously seek quality improvements and cost reductions.

• Supply Chain Management Orientation: The purchasing role is further broadened to become a more strategic, value – adding operation.

Types of Purchasing Processes

• Routine products - These products have low value and cost to the customer and involve little risk.

• Leverage products: These products have high value and cost to the customer but involve little risk of supply because many companies make them.

Types of Purchasing Processes

• Strategic products: These products have high value and cost to the customer and also involve high risk

• Bottleneck products: These products have low value and cost to the customer but they involve some risk

Stages in the Purchasing Process

• Palagay na lng nong table na nasa hard copy.. Tanxs.

Problem Recognition

• The purchase process begins when someone in the company recognize a problem or need that can be met by acquiring a good or service. The recognition can be triggered by internal or external stimuli.

General Need Description and Product Specification

• the buyer determines the needed item’s general characteristics and required quantity.

• The buying organization now develops the item’s technical specifications. Often, the company will assign a product – value – analysis (PVA) engineering team to the project.

Supplier Search

• The buyer now tries to identify the most appropriate suppliers. The buyer can examine trade directories, contact other companies for recommendation, watch trade advertisements, and attend trade shows

e – procurement in three other ways:

• Direct extranet links to major suppliers.

• Buying alliances.• Company buying sites.

Proposal Solicitation

• The buyer invites qualified suppliers to submit proposals, If the item is complex or expensive, the buyer will require a detail written proposal from each qualified supplier, after evaluating the proposals, the buyer will invite a few suppliers to make formal presentations.

Supplier Selection

• Before selecting a supplier , the buying center will specify desired supplier attributes and indicate their relative importance, it will then rate suppliers on these attributes and identify the most attractive suppliers.

Order routine specification

• After selecting suppliers, the buyer negotiates the final order, listing the technical specification, the quantity needed, the expected time of delivery, return policies, warranties, and so on.

Performance review

• The buyer periodically review the performance of the chosen supplier(s). There methods are commonly used. The buyer may contact the end users and ask for their evaluations: or rate the supplier on several criteria using a weighted score method; or aggregate the cost of poor supplier performance to come up with adjusted costs of purchase, including price, the performance review may lead the buyer to continue, modify, or end the relationship with the supplier.

Order processing and procurement report

Technology

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