Managing Information Technology

Chapter 5 • Enterprise Systems 197

Computer

Sale

Terminal

Inquiry

Customer

Master

File

Sales

Master

File

Price

File

Inventory

Master

File

Back Order

File

Purchase

Order

File

Sales reports by item

Sales reports by customer

Customer statements

Inventory reports

Back order status reports

Accounts receivable reports

Periodic or on

demand: Out-of-stock notices

Credit limit exceeded

Exceptions:

Purchase orders

Past-due billing notices

Triggered:

Invoices

Credit rejections

Shipping documents

Directly related

to sale:

Inquiry

Reports

FIGURE 5.5 Online Order Entry System

data entry might be via a microcomputer on the sales
representative’s desk or possibly through a point-of-sale
transaction recording system (a sophisticated cash register
that doubles as a terminal). The computer then updates the
appropriate files and prints an invoice, either at the point-
of-sale terminal, the sales representative’s desk, or in the
computer center.
Once again, this basic explanation tells only a small
part of the story. Figure 5.5 provides a more complete
description and shows how each transaction (sale) interacts
with as many as six files on the computer system. In addi-
tion to the invoice, more than a dozen types of computer
output might be generated. For example, the computer can
check the credit status of the customer and reject the sale if
the customer’s credit limit will be exceeded. If the item
ordered is in stock, a multipart shipping document is
printed; if the item is not in stock, a message is sent (via
the PC) to the customer to ask if he or she wants to back
order the item. Periodically or on demand, the order entry
system will print out sales reports organized by item or by
customer, customer statements, inventory reports, back
order status reports, and accounts receivable reports. The
system will also generate reports when exception
conditions occur, such as when an item is out of stock or
when a customer attempts to exceed the established credit

limit. In these cases, management action might be

necessary. The order entry system can automatically print

out purchase orders when an item is out of stock; it can

also print out past-due billing notices for customers. A

primary advantage of such an online system is that

inquiries can be answered in a few seconds.

An important order entry system variant is an

interorganizational system in which the orders are placed

directly by the customer or the customer’s computer (more

on e-business applications in Chapter 7). An early, pre-

Internet example was the American Hospital Supply

Corporation’s ASAP system in which order entry termi-

nals, linked to AHSC’s computer, were placed on the

customers’ (hospitals’) premises, and hospital personnel

placed orders themselves by keying them in. This made

placing orders much more convenient for the customers

and at the same time greatly reduced the delays and costs

associated with printing and mailing order forms. More

recently, orders have been placed by the customer’s

computer to the seller’s computer using electronic data

interchange (EDI)—which will be discussed in Chapter 7.

By the late 1990s, the World Wide Web had taken the order

entry process one step further by making it easy for both

consumers and businesses to do their own order entry via a

Web browser and an Internet connection. For example,