Sequential Walk Through
- Sales
- Pre-sales activity-- planning and availability support for the sales personnel
- Sales Order--The actual entry of the sales order into the system done by the salesperson at the point of sales perhaps using a PC and Internet connections.
- Determining where the most efficient source of the ordered product is in inventory and shipping it.
- Delivery
- Customer Billing
- Customer payment
- Production
- Sales and Operations Planning SOP where the sales forecasts are used in a production planning model to check feasibility.
- Master Production Scheduling MPS--The actual plan for the whole production process
- Material Requirements Planning MRP--Where the production plan is actually converted into raw materials input requirements.
- Planned Order--When materials are available and capacity exists this plan is created and then converted into a
- Production Order.
- Shop Floor Control where the actual production takes place and is registered into the system as finished goods.
- Purchasing
- Requisition--Once the Production manager plans to manufacture something a requisition for the raw materials required but not on hand must be prepared.
- Vendor Selection--made by the purchasing department
- Purchase order sent
- goods receipt increasing inventory
- Invoice verification as it is received from vendor
- Payment to vendor.
- Finance and Accounting
- Sales events must be captured at the proper time into the ledger system
- Inventory must be adjusted to match goods shipped
- Inventory must be adjusted to match raw materials received
- Inventory must be adjusted to move value from raw materials to work in process
- Inventory must be adjusted to increase finished goods when they are produced
- Accounts Payable must be set up for purchases
- Accounts Receivable must reflect goods billed but not yet paid for
Business Process Engineering must not only identify all these steps but must also find the most efficient way to minimize redundant actions. For example, when sales are made, inventory and manufacturing plans should be automatically updated. When manufacturing plans are updated raw materials should be automatically ordered from vendors. When finished goods are shipped customers should be automatically billed at the same instant. Real situations are far more complex than the simple explanation above.
