Sales Logistics


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5 Sales Logistics n the past, manufacturers controlled the marketplace by determining the price, quality, specifications, and delivery parameters of their products. Companies were organized as isolated departments, each dedicated to specific fulfillment functions along the value chain. Under a top-down, command-and-control philosophy, isolated departments optimized their own individual functions along the chain. This system rarely incorporated customer demands into the rigidly defined departmental
   71  5  Sales Logistics  I   n the past, manufacturers controlled the marketplace by determining theprice, quality, specifications, and delivery parameters of their products. Compa-nies were organized as isolated departments, each dedicated to specific fulfill-ment functions along the value chain. Under a top-down, command-and-controlphilosophy, isolated departments optimized their own individual functions alongthe chain. This system rarely incorporated customer demands into the rigidlydefined departmental structures. Rather, the system functioned by aligning cus-tomer expectations with the manufacturer’s or distributor’s structures and proce-dures. Today’s customers demand that products be designed and built to theirspecifications and be delivered according to their terms. The isolated depart-mental approach simply will not work in the current environment of increaseddemands for product quality, massive product proliferation, and ever-shrinkinglead times.To meet these demands, companies are adopting the “customer-centricmodel,” which unites the activities of the company around its customers’ needs.They are engineering-efficient business processes to coordinate all activities thatgenerate and satisfy customer demand. Optimal order management systems arealso uniting customers with the company’s internal operations (such as logistics,manufacturing, and accounting). The sales logistics business-process scenario inR/3   ™   allows users to so manage sales and distribution activities in an effectivemanner. The business processes include scenarios for sales, shipping, billing,sales support, and sales information. With real-time, online access to sales infor-mation, such tasks as order entry, delivery, and billing are all streamlined. Inaddition, sales and distribution can be integrated with procurement and produc-tion planning, improving turnaround time up and down the value chain.   72  Chapter5 ã Sales Logistics   The business-process scenarios in sales and distribution that we consider hereare represented in the following activities: handling of standard orders, contractsand scheduling agreements, third-party orders, customer consignment stock,and others. This chapter offers a detailed overview of the standard order han-dling scenario, followed by a look at other main processes found in sales anddistribution. Figure 5-1 illustrates the main sales logistics scenarios discussed inthis chapter. Also included are the core processes, business objects, and organi-zational units that are part of the sales and distribution business process.   5.1S   TANDARD  O    RDER   H     ANDLING  S   CENARIO   In R/3   ™   parlance, a standard order is a document representing a one-time cus-tomer demand for products within standard delivery and accounting parameters.This scenario manages the following activities: 1) helping a customer decidewhat to buy; 2) processing customer orders; 3) coordinating delivery and relatedlogistics; and 4) producing customer invoices. These are represented in Figure5-2, which shows a general outline of how the standard order handling process ◗ Figure 5–1 Overview of scenario, process, organization, and business objects   Standard Order Handling Scenario  73   flows. First, the sales support helps acquire a prospective customer throughsome marketing channel. Next, the sales process creates various inquiries andultimately processes the sales order. Credit management conducts credit limitchecks, guarantees for open receivables, and generally oversees risk manage-ment. Shipping controls deliveries and issues goods. Warehouse managementoversees stock placement and removal. Quality management provides the nec-essary controls for quality assurance, including inspections and checks of deliv-eries and returns. Transportation involves planning, shipping deadlines, meansof transport, and assigning routes. If the shipment involves an international cus-tomer, then Foreign Trade tacks export control and declarations to authorities.And finally, billing may take the form of an invoice, credit/debit memo, andrebate processing.An EPC model of this scenario is illustrated by Figures 5-3 through 5-5. Fig-ure 5-3 shows this business-process scenario beginning by recording sales activ-ities with customers, such as phone calls, meetings, and product presentations.Direct mail campaigns can be planned and monitored. As these activities resultin customer inquiries, they are recorded in the system. A quotation, valid for aspecified time period, is created on the basis of this inquiry.After customer acceptance of the quotation, a standard sales order is pro-cessed. A standard sales order can also be processed directly from a customerwithout a quotation. The sales order documents the customer’s demand, pricesthe order, and checks both customer credit and material availability. The salesorder function in R/3   ™   utilizes a configurator to select configured products aswell as a “conditions” program to manage complex pricing scenarios. The salesorder process sends requirements to manufacturing (Figure 5-4).This business-process scenario integrates order handling activities with theworkflow of downstream delivery and logistics operations. Logistics operationsinclude transportation planning as well as picking, packing, and shipping of products. The credit and material availability checks made during order entryare similarly available in this workflow. As goods leave the plant or warehouse,stock and value adjustments are made in the materials management system. Tocomplete this scenario (Figure 5-5), invoices are processed and sent to custom- ◗ Figure 5–2 Value chain: Direct sale to an industrial customer   74  Chapter5 ã Sales Logistics xorxorxorxorxorxorxor ◗ Figure 5–3 Analyzing customer demand and creating an order
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