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September 26, 2012

Order to Cash Lifecycle: Multiple Fulfillment

Bishnu Prasad Choudhury / / 1

Order Management in Order to Cash Lifecycle


Important applications involved
1.       Order Import: May be imported from external systems, internal planning tools or created manually
2.       Inventory: Provides all item onhand and availability details
3.       Pricing: Provides unti price after implementing discounts or modifiers if any
4.       Shipping: Ships the goods to designated location
5.       Receivables: Invoices and receipts from customer

Order Management Process:

1.       Enter or Import Order
2.       Order Creation
·         Defaulting Rules
·         Pricing
·         Availability
       
3.       Booking Order
·         Scheduling
·         Reservations
4.       Managing Orders
·         Bulk Updates
·         Holds
·         Purges
5.       Packing Goods
6.       Shipping
7.       Accounts Receivables

Order Management – Multiple Fulfillments

There are multiple models to fulfill an order
1.       Ship from Stock
2.       Make to Order
3.       Internal Order
4.       Configure to Order
5.       Back to Back Order
6.       Drop Ship to Customer

Ship from Stock

1.       Customer places purchase order
2.       Order Management creates Sales Order
3.       Books and reserves the order getting data from Inventory
4.       Packing of the goods done
5.       Shipping of the goods
6.       Invoice generates
7.       Account Receivable done for Invoice

Make to Order

1.       Order management receives the order
2.       Master schedule/Plan Item manufacture
3.       Work in Process
4.       Inventory
5.       Packing and shipping
6.       Receivables and Cash Management

Internal Order

1.       Internal Requisition created in Purchasing
2.       Approval of internal requisition
3.       Order Import imports the order details and creates Sales Order in order management in the sourcing Org and a PO in the requesting org.
4.       Book and reserve the sales order
5.       Ship goods
6.       Receive goods in requesting org in the PO

Configure to Order, ATO, PTO

1.       Order Management gets the Order
2.       Master schedule/Plan configuration item
3.       Create configuration item
4.       Assembly/ Work In Process
5.       Final Assembly
6.       Inventory
7.       Packing and shipping
8.       Receivables and Cash Management

Back to Back Order

1.       Customer Purchase Order in becomes the Sales Order  in Order management
2.       Organization outs a procurement request through procurement
3.       Purchase order to supplier
4.       Supplier supplies goods
5.       After receiving the goods, the Sales Order for customer reserves the goods, so that it cannot be used in any other orders
6.       Packing, Shipping and Receivables

Drop Ship to Customer

1.       Sales order from Customer
2.       Seller puts a purchase order to the supplier
3.       Supplier ships the goods directly to the Customer
4.       Supplier sends the invoice to the Seller
5.       Seller sends the invoice to the customer
6.       Receivables and cash management
This is the model of fulfilling the sales order by selling the goods without handling, stocking and delivering them from the organization. The seller buys the goods for fulfilling the customer demand from its supplier and the supplier sends the goods directly to the seller’s customer.
Drop shipments are done mainly because of following reason
1.       The product ordered by customer might not be a stockable item in the organization
2.       Customer may need large quantity of the item which is not available with the seller
3.       When it is more economical if the supplier ships the parts to the customer directly

Drop shipments are created as Sales Order but it can be identified when the source type is External.
The Purchase Release concurrent program or workflow in Order Management creates records in the Requisition import tables in the purchasing module. This creates requisitions and once these are approved, it generates the purchase order to supplier where the source type is Supplier.
This Purchase Order sent to the supplier who will arrange the delivery of the item to the customer via an Invoice, EDI document or an ASN (Advanced Shipment Notice). Then Seller will generate the invoice to customer.
In addition to this, when the seller receives the confirmation of the drop shipment or receives the invoice from the supplier, it creates a receipt. It creates the inbound and outbound transactions for the accounting purpose.

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