Chapter 4: The Fulfillment Process
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Outline
 A Basic Fulfillment Process
 Role of Enterprise Systems in the Fulfillment Process
 Exercise Using Simulated SAP
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
A basic fulfillment process
 Definition
 Order to cash
 Quote to cash
 Inquiry to cash
 All the steps needed to fill a customer order
 Key concepts and assumptions
 Conceptual Framework
 Physical flow
 Data and Document Flow
 Information Flow
 Financial Impact
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Key Concepts and Assumptions
 Sell-from-stock
 High volume, low cost products
 Little choice for buyer
 Example: iPod
 Configure-to-order
 Low volume, high cost products
 Base model + options
 Example: computer (Dell, Mac)
 SSB uses sell from stock
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Physical Flow
 What is the trigger?
 What are the steps?
 What is the purpose of each step?
 Who is involved in each step?
 How is communication and coordination accomplished
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A Basic Fulfillment Process
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Document Flow
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Customer Inquiry
Quotation
Customer Purchase Order
Sales Order
Picking Document
Packing Document
Customer Invoice
Customer Payment
Key questions regarding documents
 What is the purpose?
 What are the key data?
 General: Who, when, what, where
 Process / step specific: varies
 How does data change across the process?
 Who is responsible for the data?
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Customer Inquiry
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Quotation
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Customer Purchase Order
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Sales Order
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Picking Document
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Packing List
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Customer Invoice
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Information Flow
 Instance-Level Information
 Status of a customer inquiry / order
 Has the order been acted on? Which step of the process is it in?
 Have goods been shipped? When? Where are the goods?
 If not, when can we expect shipment?
 If shipped, has an invoice been sent?
 Has payment been received?
 Process-Level Information
 How well is the process doing?
 How much time does it take on average? Per material? Per customer?
 Which customers are prompt in payment? Who habitually pay late?
 What do we sell most? Which customer(s)?
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Financial Impact of the Fulfillment
Process
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Financial Impact
 Impact on balance sheet and income statement accounts
 Example: Customer orders $500 in materials.
Process step
B/S
I/S
Customer inquiry
Quotation
Customer PO
Picking
Packing
Shipment
Customer Invoice
Customer Payment
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Role of Enterprise Systems in the
Fulfillment Process
 Execute the Process
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Create Quotation
Create Sales Order
Prepare Shipment
Send Shipment
Create and send Invoice
Receive and process payment
 Capture and Store Process Data
 Monitor the Process
 Instance-Level Information Flow
 Process-Level Information Flow
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Enterprise System in Fulfillment
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Customer Order (not in the book)
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Delivery Due List
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Picking document (Not in book)
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Billing Due List
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Process monitoring (Information flow)
 Instance level – status information
 Status of a customer order (order history)
 Process level – aggregate information
 How is the process doing?
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Order history – Completed Order
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Order history– Payment Pending
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Process Level Information
Delay Causes
January 08
Q1 Order Summary
January
February
Packing Delay
14%
March
Total Orders
7
11
15
Total Late Orders
4
3
6
On Time Order %
43%
73%
60%
Average Order Time (Days)
2.86
2.12
2.94
Out of Stock
29%
On Time
43%
Shipping Delay
14%
Order Details: January
Order
Number
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Customer Name
Order
Date
Orderto-Ship
(days)
Ship Date
Order Value
123456
World Wide Skateboard Distributors
01/04/08
01/06/08
$
300.18
1
On Time
123457
Extreme Skateboard Sports, Inc.
01/06/08
01/08/08
$
245.65
2
On Time
123458
"Waldo" Autry
01/08/08
01/11/08
$
123.43
4
Out of Stock
123459
West Michigan Sporting Goods, Inc.
01/10/08
01/12/08
$
342.53
2
On Time
123460
Flying Acrobats, Inc
01/12/08
01/20/08
$
556.43
5
Packing Delay
123461
MI Sporting Company
01/14/08
01/16/08
$
234.22
3
Out of Stock
123462
Saginaw Dawgs
01/16/08
01/18/08
$
653.45
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Shipping Delay
Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Reason for Delay
Exercise Using Simulated SAP
 The exercises will take you through the following steps that
have been discussed in this chapter:
 receive customer inquiry
 create quotation
 receive a customer purchase order
 create a sales order
 prepare the shipment (pick and pack)
 send the shipment (post goods issue)
 create a customer invoice
 receive a customer payment
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009