Overview of the business process in an enterprise:

Customer inquiries a product and based on the inquiry a quotation Is sent to quotation and the customer agrees to the price and time a PO is created by customer which will be the sales order to the company.

This customer to quotation cycle is order inquiry and customer to sales order creation is order booking cycle.

For a company these 2 cycle plays an important role in forecasting and estimates.

Now this sales order will be demand for the company and the company will make use of any planning tool in order to plan the materials and in our case let's consider MRP- Material requirement planning.

Looking at the demand MRP checks?for raw materials?making up the finished goods ( Bill Of Material which is master data) and suggests to produce them to meet the demand and if there is a shortage of materials it suggests to procure them from the vendor.

In case of production, a planned order is released to produce the finished goods if raw materials are available and In case a raw material are short, a purchase requisition is created to procurement the material.

Now this purchase requisition which is created is the beginning of procure to pay cycle.

In case of new product development, it will be a case of new material or in case of a new vendor then it needs to be sourced, in that case RFQ (request for quotation) is sent to potential vendors, quotation is obtained from them, the received quotations are compared and the best one will be rewarded and others are rejected. The rewarded vendor is issued a purchase order which is sent by either email, fax, EDI. In case the raw materials are bought from the existing vendor a purchase order is sent to the vendor directly.

Once the PO is placed, it is acknowledged by vendor and when the goods are ready will be sent an ASN- advance ship notice is sent. Once material reaches the location it is received in the warehouse which is a goods receipt (GR).

The vendor sends an invoice for the goods sent which is booked and once verified with the PO, payment is processed to the vendor.

Here we have seen the integration of material management, finance (AP) and production ( MRP).

Upon goods receipt and if there is a quality module enabled, inspection orders are created as per the set up.

The characteristics and inspection is set and the target value is set up.

The stock is checked and the result is recorded. Based on the result, the usage decision is made and if it goes well the stock is accepted and it goes to unrestricted stock for usage.

This is the integration of material management with quality module.

?Earlier we have seen if enough raw materials are available if the material needs to be produced and a production order is created. A production order created contains the details of the machine in which the finished Goods are to be produced, how much to be produced and time needed to produce.

A reservation is created and reservation is a document which tells the store what production is required. As per the reservation, the raw materials are transferred to shop floor for production. Once the production is completed it is confirmed, there is a goods receipt which increases the stock of finished goods and there is a decrease In raw materials so there would be a goods issue and the finished goods are moved to storage location.

This is plan to produce process and it has integration of production ,finance and quality ( if enabled) modules.

?Now we have enough of finished goods and there is a sales order for a product to fulfill the order. Once the finished goods Is available, the availability check is done as per the sales order created initially and as per it the stock it is confirmed. There will be an outbound delivery document created upon which picking of goods is executed and the goods issue happens to reduce the stock to send it to customer. An invoice is created against the sales order to receive the payment from customer.

This process from order inquiry to payment from customer is the order to cash cycle.

We have seen the integration of sales and distribution along with finance here.

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Thank you.

Suhas