Systems Overview Notes - simple example of order processing:
Order placed by customer:
validate - valid customer & items
amount of each item ordered added to committed for that item (inventory)
after order entered, 2 copies printed and sent to warehouse (no prices) - used to pick items - note on both items not shipped if unavailable and therefore shipping other than what was ordered - 2 copies become packing slip and order confirmation document which is entered against the order and is the basis for the invoice
back order/out of stock report can be generated from inventory
actual shipped (to customer) information from this process used to update
committed and on hand reduced
can have back order bucket that can be updated - customer may not want to back order
invoice summary information (from order including goods, taxes, prices, freight, deposit etc.) sent to A/R - update A/R and customer - send invoice
customer makes payment - A/R credits customer file and A/R file using (balance, balance forward, and open item approach) - 0 balance invoice items are removed to history file at month end
month end closing ages unpaid
Order has effected inventory:
Inventory checks to see which items need to be reordered, how much, from whom etc. (management can intervene)
generate purchase order (alternative report to management and then generate orders and update inventory)
entered in on order
purchase order sent to vendor
receiving document (purchase order without prices) sent to receiving
order comes in - check receiving document, vendor shipping document and actual count from warehouse - send information to purchasing and/or A/R
when order comes in, inventory is also updated - on order reduced and on hand increased
invoice comes in - if invoice okay (price matches price on purchase order and count verified) it is confirmed and put on open A/P file
management makes decisions on what A/P to pay
checks send to vendor
remove 0 balance items to history at end of month and age unpaid
Backorder considerations:
Back order and out of stock options:
ship what you have and backorder
ship what you have period - no back order
ship nothing
back order whole order until you can fill
code customer option
Backorder
when goods come in fill back order first (still committed in inventory)
warehouse has no record - open order information on computer or in order processing - send revised order when goods are in
before you run orders for day you run backorders (note, update inventory first) - from this point on, handled like regular order