Chapter
1
Chapter 10
The
Order Entry/Sales
Introduction
to
Accounting Information
(OE/S)
Systems
Process
1
Learning Objectives
• Understand relationship of OE/S process
and its environment
• Appreciate potential of OE/S process to
assist management decision making.
• To demonstrate how integration by ERP
systems and e-commerce add-ons can
improve effectiveness and efficiency of
OE/S process.
Learning Objectives (2)
• Achieve understanding of OE/S logical
and physical characteristics
• Be familiar with technologies re OE/S
• Know operations & information process
control goals and control plans for OE/S
Revenue Cycle (merchandising)
Order entry/
sales process
Billing/
accounts
receivable/
cash receipts
process
Revenue
Cycle
Inventory
process
General
ledger
4
5
OE/S Horizontal Information Flows
•
•
•
•
•
•
Customer places order
S.O. dept. requires CR approval from CR dept.
CR dept. informs S.O. dept. of decision
S.O. dept. acknowledges customer order
S.O. dept. notifies shipping dept. of S.O.
S.O. dept. notifies warehouse, B/AR/CR
process, payroll process, & General ledger
Cont…..
6
OE/S Horizontal Information Flows (2)
• Warehouse sends completed picking ticket to
shipping department
• Shipping dept. informs S.O. dept of shipment
• Shipping dept. informs carrier & B/AR/CR
process of shipment
7
Vertical perspective of the OE/S
system
VP
Marketing
Manager,
advertising
Manager,
raw product
development
Manager,
customer sales
& service
Manager,
marketing
intelligence
Manager,
sales
promotion
Supervisor,
sales order
department
8
OE/S Context Diagram
Customer
Acknowledgement
Customer
Customer
Reply
Customer
Inquiry
OE/S
System
Customer
Customer
Order
Commissions
P/AP/CD
system
(payroll)
Completed
packing
slip
Bill of
lading
Sales
order
notification
Shipping's
billing
notification
Carrier
B/AR/CR
System
9
Customer
Marketing
data
OE/S
Level 0
DFD
Inventory
master data
Accounts receivable
master data
Customer
Order
Sales order
master data
Customer
acknowledgement
Customer
master data
1.0
Validate
Sales
Order
B/AR/CR
process
Commissions
Picking ticket
Sales order
Notification
Completed picking
ticket data
P/AP/CD
(payroll)
Packing
slip
2.0
Complete
Picking
ticket
Shipping's
billing notification
Sales order
master data
3.0
Execute
shipping
notice
Completed
picking ticket
Completed
packing slip
Carrier
Shipping notice
data
Bill of lading
10
Marketing
file
Customer
order
1.1
Verify
inventory
available
OE/S Level 1
DFD
Backorder
Reject
Inventory
master file
Customer
master file
Inventory
available
order
A/R master
file
1.2
Check
credit
Reject
Accepted
order
Sales order
master file
Sales order
notification
1.3
Complete
sales
order
Inventory
master file
GL inventory
sales update
Customer
acknowledgement Packing
Picking Commissions
slip
ticket
11
Level 1 DFD narrative
• 1.1 - Verify inventory available
– inquiry of inventory master file to check
– reject or make “backorder” if not available; send to
next process if available
– record demographic and other info in marketing file
• 1.2 - Check credit
– check to see if valid customer
– check A/R master file to see if credit limit is ok
– if invalid or over limit, reject; if not, send to next
process
Cont…
12
Level 1 DFD narrative (2)
• 1.3 Complete sales order
– add pricing info from inventory file
– update inventory file - reduce quantity on
hand
– notify GL inventory has been reduced and
cost of goods sold increased
– update Sales Order master file to show
completed order
– Notify P/AP/CD that commissions are due
– disseminate sales order
13
Dissemination documents
• Picking ticket - authorizes warehouse to “pick”
goods, send to shipping. Has warehouse location.
• Packing slip - attached to outside of carton;
identifies customer and goods.
• Customer acknowledgement - notifies
customer of acceptance of order; shipping date.
• Sales order notification - internal form sent to
billing department re pending shipment
• Bill of lading - contract between shipper &
carrier; carrier gets copy, shipper keeps copy.
14
OE/S Files
• Marketing file - sales-oriented data, some from
OE/S, other from Marketing information system
• Customer master file - data about customer
characteristics: name, address, credit limit, etc.
• Sales order master file - file of “open” sales
orders; can be checked periodically/follow up.
• Completed picking ticket file - used for follow
up and audit purposes.
• Shipping notice file - used for follow up and
audit purposes
15
16
17
18
19
20
Control Goals of the Business Process
Control Goal of the
Operations Process
Recommended
Control Plans
Ensure effectiveness
of operations by
achieving the following
process goals
ABC D
P-1: Independent customer
master file maintenance
P-2: Enter data close to location where
customer order is prepared
P-3: Customer credit check
Ensure Ensure
efficient
security
employof
ment of
resources
resources
P-1
P-2 P-2
Control Goals of the Information Process
P-1
P-3
For sales order
and inventory
master data,
ensure:
For shipping
notice inputs,
ensure:
For sales
order master
data, ensure:
IVICIAUCUA IVICIAUCUA
P-1
P-2 P-2
P-2 P-2
P-3 P-3
P-4
P-4: Independent pricing daa
P-5
P-5: Independent shipping authorization
P-6: Packing slip tickler file
For sales
order inputs,
ensure:
P-5
P-6
P-7: Completed picking ticket file
Key: possible system goals:
A - Provide timely responses to customer inquiries
B - Provide timely acknowledgement of customer orders
C - Provide assurance of customers’ creditworthiness
D - Provide timely shipment of goods to customers
P-6
P-7
IV = input validity
IC = input completeness
IA = input accuracy
UC = update completeness
UA = update accuracy
21
Control Goals of the Business Process
Control Goal of the
Operations Process
Recommended
Control Plans
Ensure effectiveness
of operations by
achieving the following
process goals
ABC D
Ensure Ensure
efficient
security
employof
ment of
resources
resources
P-8: 1 for 1 checking of goods, picking
Control Goals of the Information Process
For sales
order inputs,
ensure:
For sales order
and inventory
master data,
ensure:
P-9
P-8
P-8
P-9
P-9 P-9
P-9
P-9
P-14
P-14
P-9: Populate inputs with master data
P-9 P-9
P-9 P-9
P-10: Online prompting
P-10P-10
P-10 P-10
P-10
P-10
P-11P-11
P-11 P-11
P-11
P-11
P-11: Preformatted screens
P-13: Programmed edit checks
P-14: Compare input data with
master data
P-12
P-12
P-12: Interactive feedback checks
P-13
P-13P-13
P-14 P-14
Key: possible system goals:
A - Provide timely responses to customer inquiries
B - Provide timely acknowledgement of customer orders
C - Provide assurance of customers’ creditworthiness
D - Provide timely shipment of goods to customers
For sales
order master
data, ensure:
IVICIAUCUA IVICIAUCUA
P-8
ticket and packing slip
For shipping
notice inputs,
ensure:
P-13
P-14
P-14
IV = input validity
IC = input completeness
IA = input accuracy
UC = update completeness
UA = update accuracy
22
Learning Objectives
• Understand relationship of OE/S process
and its environment
• Appreciate potential of OE/S process to
assist management decision making.
• To demonstrate how integration by ERP
systems and e-commerce add-ons can
improve effectiveness and efficiency of
OE/S process.
Learning Objectives (2)
• Achieve understanding of OE/S logical
and physical characteristics
• Be familiar with technologies re OE/S
• Know operations & information process
control goals and control plans for OE/S