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Relationship Between Quotations and Sales Orders
Tasks
The key task in this step is to create a sales order. Like a quotation, a sales order can be created using one of several reference documents. The illustra- tion in Figure 5-22 is applicable for a sales order as well. Thus, a sales order can be created with reference to a customer inquiry, a quotation, an agreement, or a previously created sales order. Data from multiple reference documents can be combined to create one sales order. Conversely, a single reference docu- ment can generate several sales orders. Figure 5-25 illustrates this relationship for the case of quotations. In our example, the quotation received from RMB is used as the source document to create the sales order. Further, one sales order is created from one quotation.
Figure 5-25: Relationship between quotations and sales orders
If the credit management capabilities of the ERP system are in use, then a check of the customer’s credit is conducted. If the credit is approved, then the fulfi llment process continues. If not, then additional steps are necessary. The steps related to credit management are discussed later in this chapter. If the sales order is associated with a customer contract then an additional task is to link the customer’s purchases against the terms of the contract. This action allows both the company and the customer to monitor and track sales to ensure that the terms of the contract are met.
Figure 5-26 represents a standard sales order. The left side illustrates the structure of a sales order, and the right side indicates some of the data con- tained in the sales order that GBI created for RMB.
The document header in a sales order includes data that are valid for the entire sales order. Examples are customer data such as partner functions and customer PO number, dates, and order total. Each sales document can
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152 CHAPTER 5 The Fulfi llment Process
Figure 5-26: Structure of a sales order
include one or more sales document items, which contain data about each item included in the sales order. Examples of item data are material number, description, and quantity. Each item can be associated with a different item category, such as standard item, text item, and free-of-charge item, which determines how the item is handled with regard to pricing, billing, and ship- ping. For example, there is no charge for free-of-charge items. Finally, each document item can include one or more schedule lines, which specify deliv- ery quantities and dates.
Some of the data in our example are illustrated on the right side of Figure 5-26. For example, the fi gure shows the PO date and PO number for RMB’s order. It also indicates two partner functions, sold-to party and ship-to party. RMB is the sold-to party, and the racing location where the materials are to be shipped is the ship-to party. The order consists of two items, one for the 40 bikes and one for the 100 t-shirts. The bikes have two schedule lines, one for 30 bikes to be delivered by May 10 and the other for 10 bikes to be deliv- ered by June 10. In contrast, the shirts have one schedule line because RMB requested that GBI deliver all 100 shirts by May 10.
Outcomes
A sales order is the only transaction document generated by this step. No material or accounting documents are created. If a contract is associated with the sales order, then it is updated to include the quantity or amount of the sale. There are four additional consequences—availability check, delivery scheduling, and transfer of requirements—which we consider next.
Availability check is a procedure to determine whether the required mate- rials are available or will be available in time for the desired delivery date (per the schedule lines). Further, if the materials are not available, the availability
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Process 153
check will determine the earliest possible delivery date. The decision to con- duct an availability check, as well as the type and scope of the check, is based on settings in the material master. For example, the system can be confi g- ured to calculate availability based on current stock levels as well as planned receipts of material from either procurement or production. In addition, the system can create a material reservation, which reserves the needed materials so they cannot be used to fulfi ll any other requirements.
The availability check must also take into account the amount of time needed to perform relevant activities such as material staging, transportation planning, loading, and goods issue. Material staging refers to preparing the material for shipment. It involves picking the materials from their storage locations and packing them in suitable containers. Transportation planning is the process whereby fi rms determine how best to transport the materials to the customer based on weight, volume, transportation mode (e.g., truck, rail), and other variables. Loading involves moving the materials from the plant onto the truck. Goods issue is largely concerned with recording the financial impact of shipping goods. We will discuss goods issue later in the shipping step. The time needed to complete these steps is calculated using backward scheduling, in which the company begins with the required delivery date and then works in reverse order to determine when each process step must be performed. Figure 5-27 diagrams the backward scheduling process. Note that loading is preceded by picking/packing and transportation planning, which in turn are preceded by material staging. Significantly, these steps can overlap, as the figure illustrates. Consequently, the greater of these two times (transportation lead time and pick/pack time) is included in the calculation.
Finally, creating a sales order can generate a transfer of requirements to the material planning process. These data are used by the material planning process to plan materials procurement and production.
Figure 5-27: Backward scheduling
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In our example, after GBI creates the sales order for RMB, the system automatically performs an availability check to determine whether the materi- als can be shipped as requested. In addition, it transfers the sales data to the material planning process to ensure that the materials are available as needed so that they will be shipped to RMB in a timely manner.
Demo 5.6: Create a sales order
SHIPPING
The shipping step is triggered when orders become due for delivery. Shipping consists of several tasks that are necessary to prepare and send shipments. Specifi cally, a delivery document is created which authorizes the delivery of orders that are ready to be shipped. Then, the necessary materi- als are picked from storage and placed in a staging area where they can be packed appropriately. If these tasks are completed through the warehouse management process, then additional steps in that process are triggered. After the order is shipped, a goods issue is recorded in the system, which triggers processes in accounting. These elements of the shipping step are diagrammed in Figure 5-28.
Figure 5-28: Elements of the shipping step
Data
The central document in shipping is the delivery document, which identifi es which materials are to be shipped to which partner (ship-to party) and from which plant. The delivery document further identifi es the storage locations for these materials. The data in the delivery document are compiled from multiple sources (see Figure 5-29). Because shipping is triggered when a sales order becomes due for delivery, sales orders—particularly the schedule lines—are one source of data. Other sources are similar to the ones we have seen for pre- vious steps. As we would expect, shipping-related data are the most relevant. In contrast, pricing data typically are not relevant during the shipping step.
Figure 5-30 illustrates the structure of a delivery document (left side) and some of the data in the delivery document in our GBI example (right side). The header includes data applicable to the entire document, such as the
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Figure 5-29: Data in a delivery document
Figure 5-30: Structure of a delivery document
ship-to party, shipping address, dates, and totals (weight, number of items). Data about each item in the shipment, such as material number, delivery quan- tity, and weight, appear as separate line items. Each schedule line in a sales order is a line item in the delivery document. Figure 5-31 illustrates the rela- tionship between schedule lines and delivery document items.
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