Multiple Divisions in a Major Publishing Company
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Multiple Divisions in a Major Publishing Company
Business Processes in Practice 5.3: Multiple Divisions in a Major Publishing Company
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Organizational Data 133
Figure 5-5: GBI DE divisions
As we discussed in a previous example, Apple sells its products through a combination of online stores, Apple retail stores, and reseller stores. Apple contains several hardware divisions, including Mac computers, iPods, iPhones, servers, and accessories. Apple also operates several sales areas for different types of customers, such as education, government, enterprise, and consumer. Each of these customer segments has unique needs and requires a distinctive sales approach, even though they are buying the same products. Therefore, Apple must
plan its sales strategies by product globally while pay- ing close attention to the unique characteristics of both the channels (retail, online, reseller) and the customer (education, government, enterprise, and consumer). This strategy is typically refl ected in a matrix, which allows Apple to pinpoint opportunities and manage their global sales efforts effectively.
Source: Apple company reports.
Business Processes in Practice 5.4: The Sales Structure at Apple
SALES AREA
A sales area is a unique combination of sales organization, distribution chan- nel, and division. In other words, it defi nes which DC a sales organization uses to sell the products associated with a particular division. A sales area can be assigned to only one company code. All of the documents associated with the fulfi llment process, such as quotations and packing lists, belong to one sales area.
Figure 5-6 illustrates the six sales areas for GBI US. For example, one sales area (UE00�WH�BI) is responsible for the sale of products in the bicycles division for the Eastern US sales organization via the wholesale channel. This sales area is highlighted in the fi gure. A second sales area (UW00�WH�AS) manages the sale of products in the accessories division for the Western US sales organization via the wholesale channel. As a third example, sales area UW00�IN�BI manages the sale of products in the bicycles division for the
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134 CHAPTER 5 The Fulfi llment Process
Figure 5-6: GBI sales areas
Western US sales organization via the Internet channel. The German com- pany also has six sales areas. They are not depicted in the fi gure, however.
PLANT
We have discussed plants in previous chapters in the context of other pro- cesses. In the fulfi llment process a delivering plant is a facility from which the company delivers products and services to its customers. In the case of prod- ucts, a plant is typically a manufacturing and/or storage facility. In the case of services, it can simply be an offi ce. A plant can be assigned to more than one distribution chain. Recall that a distribution chain is a unique combination of sales organization and distribution channel. Conversely, a distribution chain can be associated with more than one plant.
In Figure 5-7, plant 1 delivers only for distribution chain 1 and plant 3 only for distribution chain 3. In contrast, plant 2 delivers for all three distribution
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Organizational Data 135
chains. Viewed from a different perspective, distribution chains 1 and 3 use two plants to deliver materials to their customers, whereas distribution chain 2 uses only one plant.
Recall from Chapter 2 that GBI has three plants in the United States and two in Germany. In the United States, the Dallas plant is the sole manufacturing
Figure 5-7: Plants
site, while the plants in San Diego and Miami serve as distribution centers. Finished goods are shipped from the Dallas facility to the other two facilities as needed. In contrast, trading goods are shipped directly to the two regional dis- tribution centers by the vendors. The Dallas plant does not hold an inventory of trading goods. Normally, the Miami plant delivers products to customers in the Eastern United States and the San Diego to the Western United States. However, the Dallas plant serves as an overfl ow facility to the two other plants and can ship fi nished goods anywhere in the country, as needed. In Germany, the Heidelberg plant ships to locations in the South and the Hamburg plant to locations in the North.
SHIPPING POINT
A shipping point is a location in a plant from which outbound deliveries are shipped. It can be a physical location, such as a loading dock, a rail depot, or a mail room. It can also be a designated group of employees who, for example, handle express or special deliveries. A shipping point is associated with one or more plants, and a plant can have more than one shipping point. A plant must have at least one shipping point from which to process deliveries, although the shipping point does not have to be physically located within the plant.
Figure 5-8 diagrams a scenario in which multiple plants access one ship- ping point. The fi gure represents a campus for a company that includes a factory and two storage facilities, all of which are plants. Note that the only plant that has a shipping point is the storage facility located by the front offi ce. Therefore, all materials from the factory and the main storage facility must fi rst be moved to this facility and then shipped to their destinations.
In contrast, Figure 5-9 illustrates a scenario in which several plants share three shipping points. Storage facility #1 has one shipping point, and facility #3 has two. Storage facility #2 has none, so it uses the shipping points located in the
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136 CHAPTER 5 The Fulfillment Process
Figure 5-8: Shared shipping point
Figure 5-9: Multiple shipping points
other plants. In storage facility #3, one of the shipping points handles normal deliveries, while the other one is reserved for express deliveries or for deliver- ies that require special handling.
In GBI, each of the fi ve plants has a single shipping point. All customer deliveries are shipped from one of these locations. Each shipping point is a loading dock, which is a facility that trucks can back into so they can be loaded. Figure 5-10 illustrates a loading dock. Other facilities that can operate as ship- ping points include rail depots (Figure 5-11) and shipyards or ports (Figure 5-12). In the case of a rail depot, the rail cars are pulled up to the facility and loaded. When the storage facility is located by a waterway, a shipyard serves the same purpose.
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Figure 5-10: Loading dock as a shipping point. ©iStockphoto
Figure 5-11: Rail depot as a shipping point. ©iStockphoto
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138 CHAPTER 5 The Fulfi llment Process
Figure 5-12: Port as a shipping point. ©iStockphoto
CREDIT CONTROL AREA
A credit control area is an organizational level that is responsible for cus- tomer credit. Specifi cally, it determines customers’ creditworthiness, estab- lishes credit limits, and monitors and manages the actual extension of credit to customers. An enterprise can choose to manage credit in either a centralized or a decentralized manner. In a centralized system, a single credit control area manages credit for customers across all company codes in the enterprise. This arrangement is particularly useful if customers conduct business with multiple company codes within the enterprise. As an example, Figure 5-13 illustrates a centralized model that GBI employs for customers who purchase bicycles and accessories from both GBI US and GBI DE. In such cases, GBI manages the
Figure 5-13: Centralized credit control area
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Master Data 139
credit limit at the enterprise level, meaning that it assigns all company codes to one credit control area.
In contrast, an enterprise that utilizes a decentralized model maintains multiple credit control areas, each of which manages credit for one or more companies within the enterprise. For example, in the hypothetical scenario illustrated in Figure 5-14, GBI has two credit control areas, one for all com- panies in North America (GBI US, GBI Canada, and GBI Mexico) and one for all companies in Europe (GBI DE and GBI Great Britain). If GBI were to expand operations into the Asia-Pacifi c region, it likely would create a third credit control area to supervise credit for customers of those companies. Even when using a decentralized approach, however, it is possible—and prudent— to establish credit limits for customers at the enterprise level and for each credit control area. This policy ensures that customers purchasing from com- panies belonging to different credit control areas (e.g., GBI US and GBI DE in Figure 5-14) do not exceed credit limits across the enterprise.
Figure 5-14: Decentralized credit control areas
MASTER DATA In Chapter 4 we discussed the material master, pricing conditions, and output conditions from the perspective of procurement. In this section we will explore these master data as they pertain to fulfi llment. In addition, we will discuss master data that are relevant only to fulfi llment, namely, customer master, customer-material information record, and credit management master record.
MATERIAL MASTER
The key organizational elements in fulfi llment for which material master data are defi ned are client, sales organization, distribution channel, and plant. Recall that material master data are grouped into views and that each view is relevant to one or more processes and defi ned for specifi c organizational levels. The three views relevant to fulfi llment are basic data, sales organization data, and sales plant data.
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Basic data, which are relevant to all processes, are defined at the client level. Sales organization data are defined for combinations of sales organizations and distribution channels. Examples of sales organization data are the delivering plant, sales units, and minimum quantities. The delivering plant is the preferred plant from which deliveries are made for the particular sales organization and distribution channel. Sales units are the units of measure, such as cartons, barrels, containers, cases, pallets, and crates, in which the materials are sold. Quantities include minimum order quantities and delivery quantities. In addition, a link to pricing conditions (discussed later) is avail- able. Because the data are defi ned for each combination of sales organization and DC, each DC can have different values for these data to support different sales strategies. Sales plant data provide details on how the material will be shipped from that plant. Examples are specifi c transportation requirements (e.g., refrigeration) and the methods of loading the material (e.g., a hand cart, forklift, or crane). Note that it is necessary to defi ne materials for every com- bination of sales organization and distribution channel, as well as for every plant if the data are different. Very often, the material data will be unchanged between plants or distribution channels.
Demo 5.1: Review material master
CUSTOMER MASTER
Customer master data include data needed to conduct business with cus- tomers and to execute transactions that are specifi cally related to the fulfi llment process. The data in the customer master are divided into three segments— general data, accounting data, and sales area data. The relationships among these three segments and the two departments in an organization responsible for these data (accounting and sales) are depicted in Figure 5-15.
General data are defi ned at the client level. They are valid for all of a client’s sales areas and company codes. Examples of general data are a cus- tomer’s name, address, and account number. Accounting data are specifi c to
Multiple Divisions in a Major Publishing Company
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