Chapter 1:

Which term refers to business processes that are not executed by a single group or
function?
Cross-Functional
Which term refers to a system in which workers complete their tasks in separate
departments without regard to the consequences for the other components of the
process?
Silo Effect
Which system supports business process end to end?
Enterprise System
Which of the following statements about business process is true?
A) They are executed across multiple functions
B) They are initiated by some type of trigger
C) They involve multiple steps
D) All of the above
D
Which term represents a set of tasks or activities that produce desired outcomes?
A) Business Process B) Trigger
C) Outcome D) None of the above
A
Which term refers to all of the activities involved in buying or acquiring the materials
used by the organization, such as raw materials needed to make products?
A) Material Planning B) Procurement Process
C) Production Process D) Fulfillment Process
B
Which process involves the actual creation of the products?
A) Production Process B) Material Planning
C) Procurement Process D) Fulfillment Process
A
Which process uses historical data and sales forecasts to plan which materials will be
procured and produced?
A) Material Planning B) Procurement Process
C) Production Process D) Fulfillment Process
A
Which process supports the design and development of products from the initial product
idea stage through the discontinuation of the product?
A) Material Planning B) Lifecycle Data Management
C) Production Process D) Fulfillment Process
B
Which process tracks the financial impact of process steps with the goal of meeting
legal reporting requirements?
A) Financial Accounting B) Human Capital Management
C) Project Management D) Management Accounting or Controlling
A
Which process is used to plan and execute large projects such as the construction of a
new factory or the production of complex products such as airplanes?
A) Human Capital Management B) Project Management
C) Financial Accounting D) Management Accounting or Controlling
B
Which process focuses on people within an organization and includes functions such as
recruiting, hiring, training, and benefits management?
A) Human Capital Management B) Project Management
C) Financial Accounting D) Management Accounting or Controlling
A
What steps are involved in the accounting portion of the procurement process?

A) Receiving the materials and the invoice

B) Creating and sending the purchase order
C) Creating the purchase requisition and receiving the materials
D) Receiving the invoice and sending payment
D
What is the first step of the production process?

A) Authorize Production B) Request Production

C) Create Product D) Issue Raw Materials
B
What is the final step of the procurement process?
A) Invoice B) Purchase Requisition
C) Purchase Order D) Payment
D
What function does the warehouse perform in the fulfillment process?
A) Prepares and sends the shipment to the customer
B) Communicates data related to the order to other parts of the organization
C) Tracks the order
D) Notifies the customer
A
_______ is concerned with matching the demand for materials in the organization with
the supply.
A) Business Planning B) The Silo Effect
C) Project Management D) Material Planning
D
Which of the following is concerned with the storage and movement of materials
A) Business Planning B) Silo Effect
C) Material Planning D) Inventory and warehouse management
D
_____ enables an organization to optimize its product development process, from
design to
A) Business Planning B) Lifecycle Data Management
C) Project Management D) Material Planning
B
Which of the following are steps within a generic business process of an organization
A) Payment B) Trigger
C) Shipment D) Outcome
BD
The most common organizational structure within modern organizations is the functional
structure.
True
Losing sight of the big picture is commonly referred to as the silo effect.
True
Systems that support end-to-end processes are called business processes.
False
An enterprise system is a set of tasks or activities that produce desired outcomes.
False
Without the various steps of the business process, a company can't successfully bill
customers and ship products.
True
The lifecycle data management (design) process supports the design and development
of products from the initial product idea stage through the discontinuation of the product.
True
The material planning process is used to maintain internal assets such as machinery
and to delivery after-sales customer services such as repairs.
False
The fulfillment process (sell) consists of all the steps involved in selling and delivering
the products to the organization's customers.
True
The financial accounting process focuses on internal reporting to manage costs and
revenues
False
The procurement process includes all of the tasks involved in acquiring needed
materials.
True
Within the production process, the issuing of raw materials takes place in the
warehouse.
True
The purpose of material planning is to match supply with demand.
True
Insufficient supply results in a situation called "stock out".
True
Common reports of financial accounting include income statement, profit and loss, and
balance sheet.
True
Management accounting helps an organization track costs and revenues to assess its
profitability.
True
Chapter 2:
1. One of the primary goals of implementing an ERP system is to standardize processes
and systems.
T
2. Communicating via separate databases is easier than communicating with an
enterprise system.
F
3. Enterprise systems result in more accurate forecasts resulting in reduced inventory
and costs to redistribute inventory.
T
4. The primary goal of installing an enterprise system is reducing system installation
costs.
F
5. Enterprise systems potentially integrate the business process functionality and
information from all of an organization's functional areas.
T
6. An enterprise system should cause the organization to conduct business in a more
costly manner.
F
7. An add-on software module in an enterprise system might be a customer relationship
management system (CRM).
T
8. The dominant player in the enterprise systems market is Microsoft.
F
9. SAP has a primary focus on large Fortune 500 type companies.
T
10. Microsoft Dynamics GP (Great Plains) and Lawson Software focus on mid market
sized companies.
T
11. Customer relationship management (CRM) software builds and maintains an
organization's customer-related data.
T
12. Customer relationship management (CRM) software aggregates, manages, and
retains data across the entire organization for the identification, acquisition, and
retention of vendors to maximize the benefits of those relationships.
F
13. If you have made a Web purchase such as with Amazon.com you have experienced
some of the functionality of a CRM system where the vendor keeps track of your name,
address, and purchases.
T
14. Customer relationship management (CRM) functionality includes procurement and
contract management.
F
15. Customer self service (CSS) software is often an extension of CRM software.
T
16. Supply chain management (SCM) software helps plan and execute the steps such
as demand planning, acquiring inventory, manufacturing, distributing, and selling the
product.
T
17. Supplier relationship management (SRM) software manages the interactions with
the organization's that supply the goods and services to an enterprise.
T
18. Middleware is a software product that connects two or more separate applications or
software modules.
T
19. Enterpriseware might be used to stitch together a number of legacy systems, an
enterprise system, best-of-breed applications, and Web-based applications.
F
20. An Application Programming Interface (API) is a means for connecting to a system
or application provided by the developer of that application.
T
21. Microsoft Dynamics Snap line of tools is an example of an Application Programming
Interface.
T
22. Enterprise application integration (EAI) is an approach to connect together multiple
pieces of an enterprise system and to connecting across different organizations.
T
23. Examples of enterprise application integration include enterprise systems and
customer relationship management systems.
T
24. Enterprise Services Bus (ESB) is a type of communications-broker software that
uses standardized protocols to let event-driven applications communicate in a less-
expensive manner than can the tightly-coupled, synchronous enterprise application
integration (EAI) platforms.
T
25. DreamWeaver is a Web services platform from SAP that can be used to build
applications that integrate business processes and databases from a number of sources
within and between organizations.
F
26. Business process management (BPM) provides a comprehensive method for
integrating manual and automated internal processes, applications, and systems, as
well as integration to external partners and services.
T
27. Manual accounting systems include integration of business processes, applications,
databases, and data standards such as EDI, and XML.
F
28. Event driven architecture (EDA) is an approach to building and designing enterprise
systems in which business events "trigger" messages to be sent by middleware
between independent software modules that are completely unaware of each other.
T
29. In an event driven architecture (EDA) the business unit "pushes" the event to the
recipient rather than waiting for the recipient to request or "pull", the event to them
T
30. The value chain is a chain of activities performed by the organization to transform
outputs into inputs valued by the customer.
F
31. An organization creates a competitive advantage by creating less value for its
customers than does its competition.
F
32. Secondary activities of the value chain include activities directly involved with
marketing, producing, selling, and delivering the product or service to the customer.
F
33. Primary activities of the value chain provide support infrastructure such as
procurement, information technology, human resources, and accounting.
F
34. The value chain emphasizes the separate activities or silos of the organization.
F
35. Dell's value chain takes raw materials, manufactures computers and other products,
and delivers them to customers in a timely manner at an attractive price.
T

application layer
Applications consist of three main components: presentation layer, application layer,
and data layer. Determines what the application allows you to do.
application suite
The collection of systems including customer relationship management (CRM) and
product life cycle management (PLM). Suite vendors, such as SAP and Oracle provide
fairly comprehensive collections of applications that offer an enormous amount of
functionality and cover most of the standard business processes in a company.
best-of-breed
Best-of-breed applications are typically isolated to one process or part of a process and
have evolved from departmental applications.
composite applications
Composite applications and mashups rely on Web Services to send and receive data
between and among ES.
custom applications
Provides capabilities needed to complete specific tasks.
customer relationship management (CRM)
Connects a company's ERP system to those of its customers. CRM provide companies
with capabilities to manage marketing, sales, and service for its customers.
data layer
Applications consist of three main components: presentation layer, application layer,
and data layer. Determines where the application stores your work.
database
One of 3 components of ES: (hardware, software, and database).
enterprise resource planning (ERP)
They focus primarily on the internal operations of an organization, and they integrate
functional and cross-functional business processes.
hardware
One of 3 components of ES: (Hardware, software, and database). In early days,
typically consisted of large, expensive mainframe computers.
independent software vendors (ISVs)
Offer highly specialized niche applications for various industries and functions.
mashups
Part of Service-Oriented Architecture
master data
Define key entities with whom an organization interacts, such as customers and
suppliers.
niche applications
Specialized niche applications for various industries and functions.
operating system
Software needed to execute operations from the applications on the hardware.
organizational data
Used to define the organizational structure of the business, and they rarely change over
time.
packaged applications
Generic software that can be used by many companies. This can reduce the purchase
price of ES for each company.
presentation layer
Applications consist of three main components: presentation layer, application layer,
and data layer. Determines how you will interact with the application.
product lifecycle management (PLM)
Help companies administer the processes of research, design, and product
management. PLM systems help companies take new product ideas from the virtual
drawing board all the way to the manufacturing facility.
SAP
Sold packaged applications. Pioneered by SAP in 1972, generated significant cost
savings for companies. ES became much more widespread.
scalability
Concept related to the number of users or the volume of operations that a given
hardware/software combination can manage. Determined by different aspects of the
configuration of a hardware and software combination.
service-oriented architecture (SOA)
New technologies that could help link, or integrate, many different client-server systems
together in new and valuable ways.
software
One of 3 components of ES: (hardware, software, and database). Includes specialized
operating system software needed to execute operations from the applications on the
hardware and custom applications.
supplier relationship management (SRM)
Ex. of connected ES. Typically manage the overall relationships with the materials
suppliers .
supply chain management (SCM)
Ex. of connected ES. Helps companies plan for their production demand requirements
and optimize complex transportation and logistics for materials.
three-tier client-server
Emergence of three-tier client-server architecture led to the explosive growth in the use
of ES. (Database --> Application Servers --> Clients)
transaction data
Reflects the day-to-day activities of the organization.
Web services
Companies could now integrate several client-server applications and create an
enterprise mashup, or composite applications.

Chapter 5:

Sales organization
a company is divided into several of these, each of which is responsible for the sale and
distribution of goods and services for a particular geographical area, such as a regional
or national market
Distribution Channel (DC)
the means by which a company delivers its goods and services to its customers
Distribution chain
a unique combination of a sales organization and distribution channel
Division
where materials and services with similar characteristics within a unit are consolidated
sales area
a unique combination of sales organization, distribution channel and division. Defines
which DC a sales organization uses to sell the products associated with a particular
division.
Shipping point
a location in a plant from which outbound deliveries are shipped.
Credit control area
an organizational level that is responsible for customer credit, especially determining
customers; creditworthiness, establishing credit limits and monitoring and managing the
actual extension of credit to customers.
Material Master
client, sales organization, distribution channel and plant
Sales organization data
defined for combinations of sales organizations and distribution channels. Ex: delivering
plant, sales units and minimum quantities.
Sales plant data
provide details on how the material will be shipped from the plant. Ex: specific
transportation requirements (refrigeration) and the methods of loading the material
(hand cart, forklift, or crane).
Customer master data
include data needed to conduct business with customers and to execute transactions
that are specifically related to the fulfillment process.
General data
defined at the client level. Valid for all of a client's sales areas and company codes.
Accounting data
specific to a company code and include data such as payment terms and the
reconciliation account in the general ledger.
Sales area data
specific to a particular sales area, which is made up of one sales organization, one
distribution channel and one division.
Partner functions
sold-to party, ship-to party, bill-to party, payer.
Customer-material information record
comprised of master data specific to one customer and one material (purchases of a
specific material by a specific customer)
pricing conditions
master data that companies use to determine the selling prices of their products
credit management master record
an extension of the customer master record that includes data relevant to managing
credit for that customer
Inquiry
request for information regarding a potential order that the customer might place with
the company
quotation
a binding agreement to sell the customer specific products under clearly defined
delivery and pricing terms
Outline agreements
binding agreements made by customers to purchase specific quantities or values of
materials
scheduling agreement
a form of outline agreement that includes specific delivery schedules.
Sales order
internal document that contains information necessary to fill the customer order in a
standardized form
Item category
standard item, text item, free-of-charge item
Schedule lines
specify delivery quantities and dates
availability check
a procedure to determine whether the required materials are available or will be
available in time for the desired delivery date
Backward scheduling
the company begins with the required delivery date and then works in reverse order to
determine when each process step must be performed.
Transfer of requirements
generated by creating a sales order
Delivery document
identifies which materials are to be shipped to which partner and from which plant
Post goods issue
final task in shipping. indicates that the shipment has left the facility

How does the fulfillment process start? How does it end?

Receiving a customer's purchase order and receiving payment.

What 3 organizational elements are unique to fulfillment?

Sales area, shipping point, credit control area
A company code must have at least one sales organization.
True
The _ _ is responsible for distributing goods and services, negotiating sales conditions,
product liability and rights and recourse
Sales Organization
Used to divide the market based on geographic regions and highest level of aggregation
in sales-related reporting
Sales Organization

Responsible for getting materials to customers

Distribution Channel
What are 3 typical distribution channels?
Wholesale, Retail, Online
Statistics and reporting are at the division level.
False, at distribution channel
_ _ used to differentiate distribution strategies or approaches, different pricing and
responsibilities.
Distribution Channels

Used to consolidated materials with similar characteristics, based on product line

(different sales strategies, pricing agreements)
Division
A sales organization must have at least one division.
True
A division can be assigned to only one sales organization.
False, can be assigned to multiple

What 3 organizational elements makeup the Sales Area?

sales organization, distribution channel, division
Example of a Sales Area

A unique combination of sales organization and division

Distribution Chain
What types of master data are maintained at the distribution chain level?
Material master, pricing conditions
Manufacturing facility, warehouse, office. A company code must have at least one of
these.
Plant
Can a plant be assigned to deliver products or services for multiple distribution chains?
Yes
Can a plant be assigned to multiple company codes?
No
A location from which outbound deliveries are sent, could be the loading dock,
mailroom, rail depot, or even group or employees
Shipping Point
A shipping point can be associated with many plants.
True
What organizational level is responsible for customer credit?
Credit Control Area
What is the purpose of a credit control area?
determine (customer) credit worthiness, establish credit limits, monitor & manage actual
extension of credit (to customers)
An enterprise can choose to manage credit in either a centralized or decentralized
manner. What's the differences?
Its centralized when all customers in all company codes are managed by one credit
control area. Its decentralized when one area manages more than one company code
Why would you want to build a customer master?
To see trends and forecast (to create marketing and sales strategies)
The key organizational elements in fulfillment for which material master data are define
are?
client, sales organization, distribution channel, plant
Material master data are grouped into views and each view is relevant to one or more
processes and define for specific organization levels.

What are the 3 material master views relevant to fulfillment?

Basic data, sales organization data, sales plant data
What master data includes general data (specific to a client and valid across company
code and sales area), financial/accounting data, and sales area data?
Customer Master
Can a sales organization belong to more than one company code?
No, it can only belong to one
Data defined for combinations of sales organizations and distribution channels.

Examples are delivering plant, sales unit, and minimum quantities.

Sales Organization Data
Data that provides details on how the material will be shipping from the plant.

Examples are specific transportation requirements and the methods of loading material.
Sales Plant Data
Customer master data is divided into what 3 segments?
Genera, accounting, sales area

Master data that includes data needed to conduct business w customers and to execute
transactions that are specifically related to the fulfillment process are?
Customer Master Data
A customer can be served by _ sales area.
multiple
Customer Master Data defined at client level. Valid for all of a client's sales area and
company codes. Examples?
General Data, like customer's name, address, acct number
Customer Master Data specific to a company code and include data such as pmt terms
& reconciliation acct
Accounting data
Customer Accounts are _ accounts.
subledger
Customer Master data that relates to sales, shipping, billing, and partner functions.
Sales Area Data
The customer-material information record is an intersection of?
data for one customer and one material
How does the customer-material info record differ from the material master or customer
master?
The material master applies to all customers and customer master applies to all
purchases made by a customers, but the customer-material info record relates to
purchases of a specific material by a specific customer, with data like preferences
related to shipping (delivering plant tolerances and partial deliveries)
What master data is used by companies to determine the selling price of their products?
pricing conditions
What types of pricing conditions do companies create?
gross prices (material or customer specific), discounts, freight, surcharges, taxes
A variety of outputs are generated during the fulfillment process, such as quotations,
confirmations, and invoices, that must be communicated to customers. The data
needed to perform these tasks are included in these conditions.
Output Conditions
Data in the condition master include:
Output medium (print, fax), partner function (sold-to party, ship-to pary), transmission
time (immediately, periodically)
An extension of the customer master record, includes data relevant to managing credit
for customer.
Credit Management Master Record
Credit Management Master record data are grouped into what 3 segments?
General (data at client level), credit control area (data on single cc area), overview (key
data from other segments)
Activities in this fulfillment process step include creating and tracking customer contacts,
mailing campaigns, responding to customer inquiries and request for quotation, outline
agreements (contracts & scheduling agreements).
Presales Activity
The fulfillment process begins with _ and concludes with _.
Presales activities, receipt of payment from customer

The fulfillment process, which usually begins with a sales order, is triggered by a?
Purchase Order

A binding agreement to sell the customer specific products under clearly defined
delivery and pricing terms
quotation
A presales activity is triggered by?
Customer inquiry or RFQ
Data in quotation

What happens in a quotation and reference documents?

When a new quotation is being created for a customer, these existing documents can
be used for reference.

Presales activity frequently results in the creation of two transaction documents:

inquiry and quotation
an internal document that contains information necessary to fill the customer order in a
standardized form
sales order
What triggers a sales order?
Customer PO

Data in a sales order

(Same as quotation, but with contracts)

The time needed to complete shipping steps is calculated using _ _, 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.
backward scheduling
Data used by the material planning process to plan materials procurement and
production
Transfer of requirements
A company can procure stock:
internally (through in house production), externally (procurement process)
What triggers the shipping step?
Orders due for delivery

A central document in shipping, identifies which materials are to be shipped to which

partner and from which plant (also shows storage locations for materials)
Delivery document
Data in a delivery document

Why do we need sales areas?

So you can see why some areas are doing better than others (gives a lot of actionable
information)
Division is based on?

GBI's is bikes and accessories

types of products
the specific tasks completed during the shipping step are:
creating a delivery doc, picking, packing, post goods issue
What is the first step in the fulfillment process that has an impact on financials?
Shipping
the final task in shipping is to ____ in ERP system. Indicates that the shipment has left
the facility
post good issue
The outcomes of the shipping step fall into 3 broad categories:
accounting impacts, creation of docs to record transaction data (FI, CO, & Material
Docs), updates master data & previously created docs
What triggers the billing step?
deliveries due for billing or orders due for billing

What are the 3 documents that result from the billing step?
FI, CO, Invoice

What are the outcomes of the payment step?

GL Account entries, customer credit (increases), FI document
Data in a payment document

First Delivery:
Cost: Bikes - $1400/ea, Shirts - $15/ea
Total: 30 bikes ($42,000), 100 Shirts (1,500)

Record the outcomes after the goods issue for the first delivery has been posted.
(Shipping Step)

First Delivery:
Cost: Bikes - $1400/ea, Shirts - $15/ea
Total: 30 bikes ($42,000), 100 Shirts (1,500)

Record the outcomes after the goods issue for the first delivery has been posted.
(Shipping Step)
Invoice Includes:
Selling Price: Bikes - $2800/ea, Tshirts - $27 ($30 - 10% discount)
Total: 30 bikes ($84,000), 100 Tshirts ($2700)

Record the financial impact of the invoice Rocky Mountain Bikes sent. (Billing Step)

First Delivery:
Cost: Bikes - $1400/ea, Shirts - $15/ea
Total: 30 bikes ($42,000), 100 Shirts (1,500)

Record the outcomes after the goods issue for the first delivery has been posted.
(Shipping Step)

Invoice Includes:
Selling Price: Bikes - $2800/ea, Tshirts - $27 ($30 - 10% discount)
Total: 30 bikes ($84,000), 100 Tshirts ($2700)

Record the financial impact of the invoice Rocky Mountain Bikes sent. (Billing Step)

The Customer Has Made the Payment:

Record the financial impact of the customer making a payment of $86,700.

First Delivery:
Cost: Bikes - $1400/ea, Shirts - $15/ea
Total: 30 bikes ($42,000), 100 Shirts (1,500)

Record the outcomes after the goods issue for the first delivery has been posted.
(Shipping Step)

Invoice Includes:
Selling Price: Bikes - $2800/ea, Tshirts - $27 ($30 - 10% discount)
Total: 30 bikes ($84,000), 100 Tshirts ($2700)

Record the financial impact of the invoice Rocky Mountain Bikes sent. (Billing Step)
The Customer Has Made the Payment:

Record the financial impact of the customer making a payment of $86,700 who has met
the discount terms, 1%10/Net 30.

Why does RMB and Accounts Receivable Accounts both needed to be debited/credited
when an invoice is sent/payment is received?
Because the customer account is a subledger account corresponding to the
reconciliation account, a/r

(and the subledger is NOT part of the general ledger)

What does 1%10/Net 30 mean?
Payment is due no later than 30 days of receiving invoice and there is a 1% discount if
payment is made within 10 days

(discount, payment within _ days/Due no later than _ days)

Credit is checked when:
Sales order is created or changed, delivery is created or changed, post goods issue
Credit approval is based on:
Credit exposed (sum of open orders, deliveries, open invoices, current order value)
The fulfillment process is integrated with what other processes?
FI, CO, Material Planning, IWM, Project Systems, Procurement, Production
The fulfillment process consists of five key steps: (1) receipt of a customer inquiry or
RFQ, (2) preparation of a quotation in response to the inquiry, (3) sales order
processing, (4) shipping, and (5) billing and payment processing.
True