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Information Studies Chapter 4
Terms in this set (27)
Briefly discuss the organizational levels relevant to the fulfillment process. Be sure to explain the relationships among the various levels
The organizational levels relevant to the fulfillment process are client, company code, sales area, plant, storage location, shipping point, and credit control area. Sales area, shipping point, and credit control area are unique to fulfillment, whereas the other levels are relevant to other processes as well. The client level is the highest level in the organizational hierarchy; it usually includes the corporate headquarters. The company code is the second level. In most cases company codes represent legally independent entities. A sales area is a combination of three other organizational elements — sales organization, distribution channel, and division
What is a distribution chain? How is it relevant to the fulfillment process
A distribution chain is a unique combination of a sales organization and division. Some master data, such as material master and pricing conditions, are maintained at the distribution chain level.
Explain the relationships among the following organizational levels: sales organization, distribution channel, division, and sales area
A sales area is a combination of sales organization, distribution channel, and division. A sales organization is responsible for the sale and distribution of goods and services for a particular geographical area. A distribution channel is the means by which a company delivers its goods and services to its customers; for example, wholesale or retail. A division is typically used by companies to consolidate materials with similar characteristics within a unit. These materials are usually associated with a product line
What is a credit control area? Explain the difference between a centralized and a decentralized model of credit control areas
A credit control area is an organizational level that is responsible for customer credit. It determines customers' creditworthiness, establishes credit limits, and monitors and manages the actual extension of credit to customers. A centralized system manages credit for customers across all company codes in the enterprise. In contrast, a decentralized system maintains multiple credit control areas, each of which manages credit for one or more companies within the enterprise.
Briefly discuss the master data relevant to the fulfillment process
Master data in the fulfillment process include material master, customer master, customer-material info record, pricing conditions, output conditions, and credit management master record. Material master includes data that are relevant to the material being sold to the customer, including sales organization data and sales plant data. Customer master data include data the company needs to conduct business with customers and to execute transactions that are specifically related to the fulfillment process. These data include general data, accounting data, and sales area data. Data in a customer-material info record relate to purchases of a specific product by a specific customer; for example, a customer's material number cross-referenced with company's material number. Pricing conditions are master data that companies utilize to determine the prices of their products. Output conditions are the methods companies use to generate the various outputs of the fulfillment process, like quotations and invoices. The credit management master record includes data relevant to managing credit for that customer.
Explain the relationship between the master data and organizational data in the fulfillment process
Master data in the fulfillment process are defined for specific organizational levels. One example, customer master data, are defined for specific company codes (financial data) and sales organizations (sales data). Another example is the material master, which is defined for a client (basic data), sales organization (sales strategies) , and sales plant data (how the material will be shipped).
Describe, with examples, the data in the three segments of a customer master
The three segments of a customer master are general data, accounting data, and sales area data. The general data include general information about the customer including name, address, and account number. Accounting data include payment terms and reconciliation accounts in the general ledger. Sales area data relate to sales, shipping, billing, and partner functions. An example is the currency in which the transaction is conducted.
At what organizational levels are the material master defined as it relates to the fulfillment process? Provide examples of data in the material master
The three views relevant to fulfillment are basic data, sales organization data, and sales plant data. Basic data are defined at the client level. An example is the name of the material. Sales organization data are defined for combinations of sales organizations and distribution channels. Examples are the delivering plant and the sales units. Sales plant data are defined at the plant level. Examples are transportation requirements and methods of loading.
Explain the role of each partner function in the fulfillment process
The four required partner functions are sold-to party, ship-to party, bill-to party, and payer. All four functions can be filled by one customer or by multiple customers The customer who submits the order is the sold-to party. If the order specified that the materials should be shipped to a different location or that the invoice should be sent to a party other than the sold-to party, then the ship-to party and bill-to party functions, respectively, are filled by different customers. Finally, another customer may be authorized to make payment on an order. This would be the payer function.
What is the purpose of a customer-material info record? Provide examples of the types of data it contains
A customer-material information record is comprised of master data specific to one customer and one material. Data in a customer-material info record relate to purchases of a specific product by a specific customer. One example is the customer material number, which cross-references the company's material number with the seller's material numbers. Thus, the customer material number is the link between the seller's master data and the buyer's master data.
How is pricing determined in the fulfillment process? Provide examples of data relevant to pricing.
Companies create conditions for various components of the final selling price, including gross prices, discounts, freight, surcharges, and taxes. Conditions can be fixed amounts, percentages, or calculated based on a sliding scale.
What is the credit management master record? How is it related to the customer master record?
The credit management master record is an extension of the customer master record, and it includes data relevant to managing credit for that customer
Describe the steps in the fulfillment process in terms of triggers, data, steps, and outcomes
The fulfillment process begins with pre-sales activities; proceeds to sales order processing, shipping, and billing; and concludes with the receipt of payment from the customer. Pre-sales activity is usually optional. The trigger is a customer action (inquiry or request for quotation) or salesperson action (proposal, contracts, and campaigns). Otherwise, the fulfillment process begins with sales order processing, which is triggered by the receipt of a customer's purchase order. It involves creating a sales order, which is used to manage and track the order as it flows through the process. After the sales order is created, the order itself is picked and packed. All of these activities are components of the sales order processing step. The order is then shipped to the customer, when the sales order becomes due for delivery. The next step is billing the customer for the materials shipped. Finally, the company receives a payment from the customer. Data is user input or obtained from referenced documents. Examples of data are material number, customer number, conditions, quantities, dates, etc. The final outcome is that the customer has received the their order, customer is billed, and customer payment is received.
The header in a sales order includes data that are valid for the entire sales order, such as partner functions, dates, and order total. Each sales document can include one or more line items, which contain data about each item included in the sales order. A third level is the schedule lines which specify the delivery quantities and dates for each line item in the sales order. A line item includes at least one schedule line, but can include more than one
The header in the delivery document includes data applicable to the entire document, such as the ship-to party, shipping address, dates, and totals (weight, number of items). Data about each item in the shipment, such as material number, delivery quantity, and weight, appear as separate line items. Each schedule line in a sales order is a line item in the delivery document
The billing document header consists of the partner identification such as the sold-to party and payer, in addition to the billing date, document currency, payment terms, and the total. Each billing document item includes data such as material number, quantity, and price.
Quotations and sales orders
A quotation is a binding agreement to sell specific products to the customer under clearly defined delivery and pricing terms. A sales order is an internal document that contains information necessary to fill the customer order in a standardized form. Much of the data contained in the sales order is also found in the quotation. A sales order can be created with reference to one or more quotations. A single quotation can generate either one or multiple sales orders
Sales orders and deliveries
Creating a delivery document serves as an authorization for delivery. Schedule lines from multiple sales orders with similar characteristics can be combined into one shipment or delivery. This arrangement is possible only when the sales orders have the same ship-to address, shipping point, and due date. Conversely, items in one order can be split into multiple deliveries.
Deliveries and transfer requirements
Items from multiple delivery documents can be included in a single transfer requirement. This approach can optimize the work of the pickers in the warehouse by grouping requests for materials that are located in the same area. Alternatively, a delivery document can generate multiple transfer requirements. Data from the delivery documents are copied to the transfer requirement
Deliveries and billing documents
Multiple deliveries can be combined to create one billing document. This process can be employed only when the deliveries share the same characteristics with respect to payer, billing date, and country of destination. Conversely, one delivery can generate multiple invoices. This is the case when the terms of payment for the items in the delivery are different.
Explain how the steps in the fulfillment process impact the general ledger accounts.
The shipment, billing, and payment steps have an impact on the general ledger. When the order is shipped, the inventory value in the general ledger is reduced. When the billing step is completed, accounts receivable reconciliation and sales revenue accounts in the general ledger are updated. When a customer payment is also recorded, the relevant general ledger accounts are updated, and a corresponding FI document is created
How do companies manage payments that are less than the amount of the invoice
In a case where the payment is not equal to the amount of the invoice, two scenarios are possible. In one scenario, the amount of the difference is so small that it is insignificant. In such cases, the company either charges off or writes off the difference using an appropriate general ledger account, and the invoice is considered paid. This is usually done if the difference is within the tolerance limits specified in the system. When the difference falls outside the tolerance limits and therefore is considered significant, the payment is handled either through partial payment or residual item. Under the partial payment technique, the payment is posted to the customer account, and the original invoice item remains open. Under the residual item technique, the original item is closed, and a new item for the balance is posted to the customer account.
Briefly describe the credit management process. Which steps of the fulfillment process are relevant to credit management?
Companies use the credit management process to determine whether a customer should be granted credit to purchase and receive goods prior to payment. Three steps in the fulfillment process are relevant to credit management:
When the sales order is created or changed. When the delivery is authorized (created) or changed. When the post goods issue is performed during shipping.
The company performs a credit check to determine whether the customer has exceeded its credit limit. The three possible outcomes are (1) warn the user and allow the process to continue, (2) display an error message and do not allow the process to continue, and (3) block delivery of the order. All three outcomes are possible when the sales order or delivery is being created or changed. During the post goods issue, the only option available is to block the goods issue from being posted.
Briefly explain how the fulfillment process is integrated with other processes
The fulfillment process and financial accounting are integrated because fulfillment involves both revenues and customer payments. Some of the master data utilized in fulfillment, such as customer master and material master, are jointly maintained by sales and accounting. The shipment, billing, and payment steps have an impact on the general ledger.
When a company conducts availability checks during sales order processing, it uses data from inventory management, production, and purchasing, which are the sources of the materials for shipment. Sales data are also used by materials planning to schedule the procurement and production of materials. Another fulfillment step, goods movement, is related to inventory management. Finally, warehouse management processes can be initiated during shipment.
Fulfillment is also related to project systems. Project systems influence deliveries and billing
What is a document flow
A document flow displays all of the documents associated with the steps that have been completed for a single customer inquiry or order. The document flow is updated after each process step is completed. The document flow essentially displays the history and status of the sales order.
Provide examples of works lists and online lists associated with the fulfillment process
Work lists identify tasks that are ready for completion. These lists can be generated for each task involved in fulfillment, such as preparing deliveries, picking, post goods issue, and billing. An example of work list is delivery due (shipping work) list, which is essentially a list of orders that are scheduled to be shipped by a specific date. Another example is a list of orders that have been shipped but not billed.
Companies use online lists to generate lists of documents associated with specific master data. Examples are a list of delivery documents for a specific customer and a list of sales orders for a specific combination of customers and materials.
Provide an example of reporting using standard analysis in fulfillment. Make certain to include the concept of drill down
An example of standard analysis is sales reporting, which includes sales organizations, order value, and invoiced amount. In addition, sales reporting provides a drill down to display customers for a selected sales organization. Drilling down for one customer reveals data for each time period.
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