1

Chapter 1

Introduction to Accounting Information

Systems

Chapter 10

The Order Entry/Sales

(OE/S)

Process

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

4

Revenue Cycle (merchandising)

Order entry/sales process

Inventoryprocess

Generalledger

Billing/accounts

receivable/cash receipts

process

RevenueCycle

5

6

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…..

7

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

8

Manager,advertising

Manager,raw productdevelopment

Manager,customer sales

& service

Manager,marketing

intelligence

Manager,sales

promotion

Supervisor,sales orderdepartment

VPMarketing

Vertical perspective of the OE/S system

9

OE/S Context Diagram

Customer

Customer

Carrier

B/AR/CRSystem

OE/SSystem

CustomerInquiry

CustomerOrder

CustomerAcknowledgement

CustomerReply

Completedpacking

slip

Bill oflading

Salesorder

notificationShipping's

billingnotification

P/AP/CDsystem

(payroll)Commissions

10

Customer

B/AR/CRprocess

P/AP/CD(payroll)

Carrier

1.0Validate

SalesOrder

2.0Complete

Pickingticket

3.0Executeshipping

notice

Sales ordermaster data

Marketingdata

Inventorymaster data

Shipping noticedata

Sales ordermaster data

Customermaster data

Sales orderNotification

Shipping'sbilling notification

Bill of lading

Completedpacking slip

Completedpicking ticket

Picking ticket

Commissions

CustomerOrder

Customeracknowledgement

Completed pickingticket data

Packingslip

Accounts receivablemaster data

OE/SLevel 0DFD

11

1.1Verify

inventoryavailable

1.2Checkcredit

1.3Complete

salesorder

Sales ordermaster file Inventory

master file

Customermaster file

A/R masterfile

Inventorymaster file

Customerorder

Marketingfile

Inventoryavailable

order

Reject

Backorder

Reject

Acceptedorder

GL inventorysales update

CommissionsPickingticket

Packingslip

Customeracknowledgement

Sales ordernotification

OE/S Level 1DFD

12

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

processCont…

13

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

14

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.

15

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

16

17

18

19

20

21

Control Goals of the Business Process

Ensure effectivenessof operations by

achieving the followingprocess goals

Ensureefficientemploy-ment of

resources

Ensuresecurity

ofresources

Control Goal of the Operations Process

Control Goals of the Information Process

For salesorder inputs,

ensure:

For sales orderand inventorymaster data,

ensure:

For shippingnotice inputs,

ensure:

For salesorder masterdata, ensure:

A B C D IVICIA IVICIAUCUA UCUAP-1

P-2

P-3

P-4

P-5 P-5

P-6 P-6

P-7

RecommendedControl Plans

P-1: Independent customermaster file maintenance P-1 P-1

P-2: Enter data close to location where

customer order is preparedP-2 P-2 P-2 P-2 P-2

P-3: Customer credit checkP-3 P-3

P-4: Independent pricing daa

P-5: Independent shipping authorization

P-6: Packing slip tickler file

P-7: Completed picking ticket file

Key: possible system goals:

A - Provide timely responses to customer inquiriesB - Provide timely acknowledgement of customer ordersC - Provide assurance of customers’ creditworthinessD - Provide timely shipment of goods to customers

IV = input validity

IC = input completeness

IA = input accuracy

UC = update completeness

UA = update accuracy

22

Control Goals of the Business Process

Ensure effectivenessof operations by

achieving the followingprocess goals

Ensureefficientemploy-ment of

resources

Ensuresecurity

ofresources

Control Goal of the Operations Process

Control Goals of the Information Process

For salesorder inputs,

ensure:

For sales orderand inventorymaster data,

ensure:

For shippingnotice inputs,

ensure:

For salesorder masterdata, ensure:

A B C D IVICIA IVICIAUCUA UCUAP-8 P-8 P-8

P-9 P-9 P-9 P-9 P-9 P-9 P-9 P-9

P-10 P-10 P-10 P-10 P-10

P-11P-11 P-11 P-11 P-11

P-12 P-12

P-13P-13 P-13 P-13

P-14 P-14 P-14 P-14 P-14

RecommendedControl Plans

Key: possible system goals:

A - Provide timely responses to customer inquiriesB - Provide timely acknowledgement of customer ordersC - Provide assurance of customers’ creditworthinessD - Provide timely shipment of goods to customers

IV = input validity

IC = input completeness

IA = input accuracy

UC = update completeness

UA = update accuracy

P-9

P-14

P-8: 1 for 1 checking of goods, picking

ticket and packing slip

P-9: Populate inputs with master dataP-9

P-10: Online prompting P-10

P-11: Preformatted screensP-11

P-12: Interactive feedback checks

P-13: Programmed edit checks P-14: Compare input data with

master data

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