BBAC302 Lecture Slides CHP 10

Chapter 10:
The Order Entry/Sales

(OE/S) Process
Accounting Information Systems, 9e
Gelinas Dull Wheeler
2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning Objectives
Describe the relationship between the OE/S process and its
business environment.
Illustrate the potential of the OE/S process to assist
management decision making.
Summarize how ERP add-ons, e-business, and other
technologies can improve the effectiveness and efficiency of
the OE/S process.
Depict the typical logical and physical characteristics of the
OE/S process.
Prepare a control matrix for some typical OE/S processes,
including explanations of how business process control plans
can accomplish OE/S operations and information process
control goals.
2
Introduction
The order entry/sales (OE/S) process includes
the first four steps in the order-to-cash
process.
1. pre-sales activities
2. sales order processing
3. picking and packing the goods
4. shipping
Billing and processing the customer payment,

are included in the billing/accounts
receivable/cash receipts (B/AR/CR) process.
Process Definition and

Functions
Order entry/sales (OE/S) process: an interacting structure of
people, equipment, activities, and controls that is designed
to achieve certain goals. The primary function of the OE/S
process is to create information flows that support the
following:
Repetitive work routines of the sales order department,
credit department, and shipping department
Decision needs of those who manage various sales and
marketing functions.
Following, we look at both a horizontal and a vertical view
of how the OE/S process fits into the organisational setting
of a company: https://youtu.be/uhS0fviftHY
Organisational setting & the

Horizontal View of the OE/S
The figure below shows the various information flows, depicted as
Process
documents, generated or captured by the OE/S process.
Description of Horizontal
Information Flows
Organisational setting & the

Vertical Perspective of the
The figure below illustrates that after data is captured in the sales order
dept. it then flows vertically to managers at the next level of the orgn.
OE/S Process
Managing the OE/S

process;
Satisfying
A most critical success factor for a business, especially
one facing increased needs
competition, is the ability to know
customer
their customers better and, armed with such

knowledge, to serve their customers better than their
competition.
What does this mean for the OE/S process?
This has expanded the type and amount of data collected

by the OE/S process regarding the customer.
The expansion might include customer relationship
management (CRM) systems and Web 2.0 tools,
operated in-house or via cloud computing.
Web 2.0
Web 2.0: set of tools that allow people to build
social and business connections, share
information, and collaborate on projects
online.
Include blogs, wikis, social-networking and other
online communities, and virtual worlds.
Can be used by marketing managers to connect with
customers, to learn what they like and dont like, and
about new products that they want. Such connections
can build loyalty, increase sales, and help develop
new and improved products.
Cloud Computing
Cloud computing: often used to facilitate
connections to customers, to improve
customer service, to reduce costs, and to
improve process timeliness.
Relevant uses include:
Sales personnel connecting to central sales
database.
Field sales representatives obtaining appropriate
expertise during sales calls.
Management Questions
for Decision making
Many questions can be asked. Some examples

of the decisions that managers must confront.
Where is sales volume (quantity and dollars) concentrated?
Who are the specific major customers (by sales and by
profitability), both present and potential?
What opportunities exist to sell after-sales services; to
cross sell and to up-sell?
What types of advertising and promotions have the greatest
influence on customers?
Where might you find answers to some of

these questions?
Using Data Mining to

Support
Marketing
Data mining intended to allow the use of

sophisticated statistical and other analytical
software to help an organizations members
develop insights about customers, processes,
and markets.
When the marketing department is armed
with this massive array of data from which
customer buying habits, characteristics, and
addresses can be analyzed and linked,
extensive study can be undertaken.
Global e-business
Two categories of E-business systems:
Buy Side
Systems use the Internet to automate and manage
purchases and vendors.
The predominant technology in this area EDI.
Sell Side
Systems allow a company to market, sell, deliver,
and service goods and services to customers
throughout the world via the Internet.
Can handle both B2B and B2C business transactions.
One facet is known as CRM applications.
CRM Systems
Recall that CRM software is designed to manage all
customer-related data (Enterprise systems).
It cultivates customer relationships by prospecting,
acquiring, servicing, and retaining customers.
Its features include:
Contact management.
Organizing and retrieving information on historical sales
activities and promotions. Uses Segmentation, the grouping of
customers into categories based on key characteristics.
Sales-force automation to, for example, support call centres.
Customer self-service systems (e-business).
The OE/S Process Context

Using dataflow diagrams (DFDs) provides a logical view of a typical OE/S
Diagram
process.
Below, the OE/S process is portrayed in the form of a context
diagram and delineates (pictorially) the domain of our study.
Note, one input is entering the process and six outputs emerging and, the interacting entities.
OE/S ProcessLevel 0
The inputs and
Diagram
outputs are
identical to
previous slide,
however, the
single bubble
has been
divided into
three bubbles,
one for each of
the three
major
processes
performed by
the OE/S
process.
The OE/S ProcessDiagram

1
We can now
decompose
(explode)
bubble 1.0
(from
previous
diagram)
into a lower
level
diagram.
Process 1.1: Verify

Inventory
Availability
Inquiry of inventory master file to check

inventory availability.
Available to promise (ATP) can be complicated.
Facilitated by an enterprise system that can look
worldwide and up and down the supply chain to
determine when goods can be delivered.
If inventory is on hand, order is forwarded for

further processing. If not, a back order routine.
Demographic and other info is recorded in the
marketing data store.
Process 1.2: Check credit

Establishes the customers existence and then
evaluates credit.
Need to know amount of credit available to a
customer worldwide.
Comprehensive credit check looks at:
Amount of order.
Amount of open orders (sales order master data).
Amount of open accounts receivable (AR master
data.
Available credit (customer master data).
Process 1.3: Complete

sales order
Process 1.3 performs the following activities

simultaneously:
Updates the inventory master data to allocate the
quantity ordered to the sales order (or reduce
inventory balance).
Updates the sales order master data to indicate
that a completed sales order has been created.
Disseminates the sales order.
Process 1.3: External

Data Flows
Picking ticket: authorizes the warehouse to

pick the goods from the shelf and send them
to shipping. Identifies the goods to be picked and
usually indicates the warehouse location.
Customer acknowledgement: notifies the
customer of the orders acceptance and the
expected shipment date.
Sales order notification: document or computer
message sent to the billing department to notify
them of a pending shipment.
Logical Data
Descriptions:
Customer master data: record of every
OE/S
Data
Stores
authorized, regular customer.
Inventory master data: record of each item that
is stocked in the warehouse or regularly ordered
from a vendor.
Marketing data: repository of a variety of salesoriented data from presales or sales activities.
Sales order master data: created on completion
of a sales order and updated when goods have
been shipped.
Key technologies to enable

modern day sales order processes:
Electronic
Data
Capture
Bar code readers:
devices that use light
reflection to read differences in bar code
patterns in order to identify a labeled item.
Optical character recognition (OCR): similar to
bar code readers, but recognize a pattern of
handwritten or printed characters.
Scanners: input devices that capture printed
images or documents and convert them into
electronic digital signals that can be stored on
computer media.
Digital Image Processing

Digital image processing systems: computerbased systems for capture, storage, retrieval,
and presentation of images of objects, such as
pictures and documents.
Major steps:
Scanners capture documents. Key additional data as
needed.
Documents are organized and filed.
Documents may be made available worldwide.
Digital Image Processing

(contd)
After input, additional processing may take
place.
Additional data might be added, or someone might

act on data contained in the document.
Documents might be routed using workflow.
Retrieval and processing capabilities may be
incorporated into existing applications.
Linking images in an enterprise system makes
accessibility easier. Information can readily be
distributed throughout the organization to where it
is needed.
Key OE/S Controls

Customer credit check: performed to ensure that an
organization does not extend more credit to a
customer than is prudent.
Compare picking ticket to picked goods: an example
of one-for-one checking that ensures that the correct
goods are picked from the shelf and that any errors
are detected and corrected in a timely manner.
Independent shipping authorization: establishes, for
the shipping personnel, that someone other than the
warehouse personnel authorized the shipment.
Key OE/S Controls (contd)

Compare shipment to sales order and picking
ticket: example of one-for-one checking that
ensures that the shipment will be authorized
and accurate. Any discrepancy among these
items might indicate an unauthorized or
duplicate shipment (no open sales order) or an
inaccurate shipment (quantities to be shipped
do not agree with the picking ticket or open
sales order).
Key OE/S Controls (contd)

Independent customer master data
maintenance: assumes that there is a
segregation of duties between the personnel
who create the customer record (to authorize
sales to the customer) and the personnel who
create the sales order (execute the sale).
Review file of open sales orders (tickler file):
to detect any shipments that should have taken
place. This will ensure that all shipments are
made in a timely manner.

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Chapter 10:

The Order Entry/Sales

Billing and processing the customer payment,

Process Definition and

Organisational setting & the

Organisational setting & the

Managing the OE/S

their customers better and, armed with such

This has expanded the type and amount of data collected

Many questions can be asked. Some examples

Where might you find answers to some of

Using Data Mining to

Data mining intended to allow the use of

The OE/S Process Context

The OE/S ProcessDiagram

Process 1.1: Verify

Inquiry of inventory master file to check

If inventory is on hand, order is forwarded for

Process 1.2: Check credit

Process 1.3: Complete

Process 1.3 performs the following activities

Process 1.3: External

Picking ticket: authorizes the warehouse to

Key technologies to enable

Digital Image Processing

Digital Image Processing

Additional data might be added, or someone might

Key OE/S Controls

Key OE/S Controls (contd)

Key OE/S Controls (contd)

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