Chapter 3

Marketing Information Systems and the Sales Order Process

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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 SAPs R/3 system, and explain how integrated data sharing increases company-wide efficiency
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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?
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Problems with Fitter Snackers Sales process:

Sources:
Three unintegrated systems
Sales Order System Warehouse System Accounting System

Manual handling of transactions Information not available in real time

Fitter Snackers Sales Process

Sales Order Quote

Warehouse
Pick, Pack and Ship

Sales Fitter Snackers Sales Process Accounting

Payment

Receiving
Returns

Invoice

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

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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

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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

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Payment and Returns Problems

Customers dont always include copy of invoice with payment Invoice may not match paymentreconciliation required Returned Material Paper process, sometimes no RMA # Improper dunning letters
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Sales and Distribution with ERP

SAP Sales and Distribution Process

Pre-Sales Activities

Sales Order Processing

Inventory Sourcing

Payment Billing Delivery

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Pre-Sales Activities
Inquiry or Quote (binding) Marketing Activities
Tracking Contacts
Sales Calls Visits Mailings

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Sales Order Processing

Activities required to record a sales order Incorporate data from inquiry or quote Automated Pricing and Discounting Automate Credit Check

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Inventory Sourcing
Check of inventory, orders and production to see if order can be delivered when customer desires Includes shipping and considers weekends/holidays

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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

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Billing
Sales order data copied to invoice Can be printed and mailed, faxed or transmitted electronically Accounting records updated

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Payment
Payment may be physical check or electronic Cash debited and customer account credited Quick processing avoids credit check problems

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Sales Order Entry in SAP R/3

Sold-to party P.O. Number Required Delivery Date Material Order Quantity

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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

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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
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Document Flow in SAP R/3

All documents related to original sales order

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Document Flow
Sales order process creates numerous documents
- Sales Order - Delivery - Goods Issue - Invoice - Payment - RMA

Document Flow links all documents related to a sales order

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Discounts in SAP R/3

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Discount Pricing in SAP R/3

R/3 system can be accommodate various discounting schemes Calculates correct discount based on customer and material

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Integration of Sales and Accounting

Sales order processing transactions make appropriate accounting entries at time of transaction-automatically

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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 29

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
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Chapter Summary
Fitter Snackers unintegrated information systems lead to inefficiencies and reduced customer satisfaction An ERP system like SAPs R/3 views sales as a process, providing timely, accurate data and automating error-prone tasks

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Chapter Summary
Configuration decisions must be made during installation to match the companys practices and policies The ERP systems central database maintains master data used by all areas of the company CRM software builds on ERP data to improve marketing effectiveness
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