Processing a standard sales order

Sterling Selling and Fulfillment Foundation processes a standard Sales Order.

A standard sales order is process as follows:

Order creation

On a sales order line creation and draft sales order confirmation, Sterling Selling and Fulfillment Foundation uses the following logic to retrieve the unit cost of each item:

  1. If the unit cost was overridden on the order line, Sterling Selling and Fulfillment Foundation uses the override cost as the unit cost.
  2. When Replacement Cost is used as the basis for unit cost computation:
    • If the unit cost was manually entered at the item level in the product master tables, the order line uses the manually entered unit cost
    • Ιf no manual entry was made, the order line uses the computed unit cost stored at the item level. If no such cost was stored, the cost is reflected as $0.00 on the sales order line and the ORDER_CREATE.ON_ZERO_UNIT_COST event is triggered.
    • Logical kit unit cost is stored at the component level and is maintained at this level.
  3. When Average Cost is used as the basis for unit cost computation: this cost basis is not supported in this release.
    • If the unit cost was overridden on the order line, the order line uses the specified cost as the unit cost.
    • A ship node must be identified on the order line for computing the unit cost. If no ship node is specified, unit cost is not stored and shows as $0.00.
    • Whenever a ship node is specified on the order line, Sterling Selling and Fulfillment Foundation stores the unit cost from the item-node level. If a change is made to the ship-node of an order line, the unit cost of the order line is picked up from the new node.

Shipment confirmation

  1. When product is shipped, Sterling Selling and Fulfillment Foundation recalculates the Inventory Value for the fulfillment location. See the calculation for Inventory Value in Inventory costing.
  2. When a shipment is confirmed in Sterling Selling and Fulfillment Foundation, Sterling Selling and Fulfillment Foundation publishes the information to be used in a Financial application.
  3. The Shipment Confirmation event is used to update general ledger entries for cost of goods sold, inventory and various variance accounts. This event is published for each order line separately and Sales and A/R postings should typically be made through the invoice publishing event.

Invoice creation

Sterling Selling and Fulfillment Foundation invoice publication interface posts the sales and account receivable general ledger entries.

Standard sales order scenarios

Note: Though not illustrated in these scenarios, cost factor retrieval is a standard part of cost calculation.

Standard sales order - scenario 1 - see Figure 1

A customer places an order for a quantity of 2 pieces of item ABC. The order is priced according to pricing rules for the customer. The expected Unit Cost of ABC is also stamped on the order line as ship node determination has been done during order creation. The fulfillment location reports shipment of ABC, at which time the inventory value change event is published detailing the various cost buckets. When the invoicing transaction runs, the appropriate Financial application interface entries are generated with shipped quantity and sales price.

  1. Order Creation
    1. Order is priced according to the price list defined by the seller
    2. Unit Cost is stamped on the order line based on the primary supplier of ABC.
  2. Shipment Confirmation

    The average cost of item ABC and the fulfillment location is recorded for the shipment or order line.

  3. Sterling Selling and Fulfillment Foundation recalculates the Inventory Value
    1. Current Inventory Value = $250
    2. Current Average Cost = $2.05725
    3. Value of shipment = 2*2.05725 = $4.1145
    4. New Inventory Value = $245.8855
    5. Sterling Selling and Fulfillment Foundation publishes the Inventory Change information (used for integration to financial applications).
  4. Invoice Creation
    1. The sales order invoice does not publish any cost related data
    2. All cost-related data recorded during shipment confirmation (step 2) is passed
    3. An invoice can trace to the contained shipments through shipment number to obtain the cost data if needed. The invoice carries all price related information about the transaction that is used to form the corresponding Accounts Receivable entries.
      Figure 1. Sales order scenario 1
      SO_scenario1_a

Standard sales order - scenario 2 - see Figure 2

A customer places an order for a quantity of 10 pieces of item ABC. The order is priced according to pricing rules for the customer. The expected Unit Cost of ABC is also stamped on the order line. The order is scheduled, and it is determined that fulfillment is from Node1 (quantity=7) and Node2 (quantity=3). The order is released. The fulfillment locations report shipment of ABC, at which time the inventory value change event is published detailing the various cost buckets. When the invoicing transaction runs (using SHIPMENT based invoicing), the appropriate Financial application interface entries are generated with shipped quantity and sales price.

  1. Order Creation
    1. The Order is priced according to the price list defined by the seller
    2. Unit Cost is stamped on the order line based on the primary supplier of ABC
  2. Schedule

    The Order Line is split into two schedule entries to represent 2 fulfillment sources – Node1 and Node2

  3. Release

    Sterling Selling and Fulfillment Foundation creates an order release for each node to carry out against the order line

  4. Shipment Confirmation – Node1

    Sterling Selling and Fulfillment Foundation records the average cost of item ABC/fulfillment location for the shipment or order line.

  5. Sterling Selling and Fulfillment Foundation recalculates the Inventory Value for Node1
  6. Sterling Selling and Fulfillment Foundation publishes the Inventory Change information (used for integration to financial applications).
  7. Sterling Selling and Fulfillment Foundation repeats steps 4-6 for Node2
  8. Invoice Creation
    1. The sales order invoice does not publish any cost related data
    2. All cost-related data recorded during shipment confirmation (step 4) is passed.
    3. An invoice can trace to the contained shipments through shipment number to obtain the cost data if needed. The invoice carries all price related information about the transaction that is used to form the corresponding Accounts Receivable entries.
      Figure 2. Sales order scenario 2
      SO_scenario2_a