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Managing Customer Contacts and Creating Outline Agreements
Process 145
CREDIT MANAGEMENT MASTER RECORD
The credit management master record is an extension of the customer master record that includes data relevant to managing credit for that customer. The data contained in this record are grouped into three segments: general data, credit control area data, and an overview. The general data segment includes data applicable at the client level, that is, across multiple credit control areas. Examples of general data are address, communication data, and total credit granted to the customer across the enterprise. The credit control area segment includes data applicable to a single credit control area. An example is the credit granted to the customer for companies in a particular credit control area and risk category. Risk category is a classifi cation used to determine how risky it is to extend credit to the customer. Companies use this classifi cation to assess the likelihood that the customer will pay its invoices. Finally, the overview seg- ment includes key data from the other segments from the credit master record. Companies use the overview segment to access the most important data they need to make decisions regarding extending credit to customers.
PROCESS Figure 5-19 illustrates the steps in the fulfillment process. The process begins with presales activities and concludes with the receipt of payment from the customer. Presales activities are optional and are designed to identify and develop customer relationships. Very often, the process begins with sales order processing, which is triggered by the receipt of a customer’s purchase order. As the name suggests, sales order processing involves creating a sales order, which is an internal document used to manage and track the order as it fl ows through the process. After a company creates the sales order, it prepares a shipment and sends it to the customer. The next step is billing the customer for the mate- rials shipped. Finally, the company receives a payment from the customer. As you can see in Figure 5-19, each step involves several tasks. Further, depend- ing on the circumstances, additional steps can be necessary, including activi- ties to be completed by other processes in the organization. Note that in this example, we have not explicitly included credit management. We will assume that the customer has suffi cient credit and that the order will be processed. We will, however, consider credit management activities and their impact in greater detail later in this chapter.
A variety of documents are created during the fulfi llment process. As previously discussed, documents are categorized as material documents, fi nan- cial accounting (FI) documents, management accounting (CO) documents, and transaction documents. Recall that documents can be printed or can exist in electronic form. The data contained in these documents are categorized as organizational data, master data, and transaction data. Some data are provided by the user, while other data are automatically retrieved from the relevant master data and the exsiting transaction documents.
This overview of the fulfi llment process is highly simplifi ed. The follow- ing discussion highlights each process step in detail in terms of its key ele- ments: triggers, data, tasks, and outcomes.
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146 CHAPTER 5 The Fulfi llment Process
Figure 5-19: Fulfi llment process steps
PRESALES ACTIVITY
Presales activity is often triggered by a communication from a customer such as an inquiry or a request for quotation (RFQ). The outcome is a quotation that is sent to the customer making the inquiry. The key elements of this inquiry–quo- tation activity are illustrated in Figure 5-20. An inquiry is a request for informa- tion regarding a potential order that the customer might place with the company. In our example, RMB inquires whether GBI can deliver 40 silver deluxe touring bikes and 100 t-shirts by the specifi ed dates. If so, then RMB requests infor- mation on pricing, shipping costs, and discounts. In response, GBI creates a quotation and forwards it to RMB. A quotation is a binding agreement to sell the customer specifi c products under clearly defi ned delivery and pricing terms. Because these terms can change, a quotation will typically include a validity date, that is, a date up to which the quotation remains in effect.
Figure 5-20: Elements of the presales activity
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Process 147
Besides sending quotations in response to inquiries, presales activities can include managing customer contacts and creating outline agreements (explained in the next paragraph). SAP ERP provides some capabilities to track data pertaining to established customers, such as their preferences and purchasing history. Companies can analyze these data to create marketing and sales strategies designed to encourage customers to place additional orders. In addition, the system can track potential customers. ERP systems typically manage basic presales activities. Companies utilize customer rela- tionship management (CRM) systems, discussed in Chapter 2, to manage very detailed presales, sales-pipeline, sales prospects, and marketing activities that generate a quotation in the ERP system. The handoff between the presales processes in a CRM system and the quotation-to-cash process in the ERP sys- tem is a critical integration point for most companies because failures, such as missed sales opportunities, can signifi cantly reduce sales revenues.
Just as quotations are binding agreements made by sellers, outline agree- ments are binding agreements made by customers to purchase specifi c quanti- ties or values of materials. An example is a GBI customer who enters into an outline agreement to purchase 1,000 standard touring bicycles over a six-month period for a specifi ed price. Alternatively, the agreement may specify value instead of quantity. In this case, the customer agrees to purchase bicycles val- ued at $30,000 over the next six months. These types of outline agreements are called contracts. Another form of outline agreement includes specifi c delivery schedules. For example, a GBI customer could agree to purchase 1,200 bicycles over the next six months and to accept delivery of these bicycles on a specifi c schedule. In this case, the agreement is called a scheduling agreement.
Data
Several types of organizational and master data are necessary to process an inquiry and create a quotation. These data are presented in Figure 5-21. Particularly important are data concerning the customer, the materials, and pricing. User input consists of the customer number, material numbers, quanti- ties, and dates. The SAP ERP system uses these inputs to obtain the necessary organizational data, such as sales area, from the various master data in the sys- tem. Recall that the material master and customer master are associated with specifi c organizational elements. SAP ERP also uses the customer number to obtain necessary customer data, such as contact information, from the customer master. Finally, the system uses material numbers to obtain availability and pric- ing data from available pricing conditions or customer-material info records.
The preceding paragraph deals with existing customers. If the inquiry is from a new customer, then the system will not contain either master data or a customer-material info record for that customer. In such cases, the company must fi rst create the customer master data in the system. The info record is not essential because pricing data are available via pricing conditions.
The quotation can be created with or without reference to existing docu- ments. If the quotation is created without reference, then all of the necessary data must be provided when the quotation is created. However, if a reference document—such as a previously created inquiry, quotation, sales order, or an outline agreement—is used, then data from these documents are automatically included in the quotation. These data are then updated as needed before the quotation is completed. Figure 5-22 diagrams the process of incorporating existing data into the quotation.
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148 CHAPTER 5 The Fulfillment Process
Figure 5-21: Data in a quotation
Figure 5-22: Reference documents for a quotation
Tasks
The key tasks in the presales step are to receive inquiries and to create quotations. Additional tasks include tracking customers and their buying patterns and creating long-term agreements with them.
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