Daily Sales Outstanding (DSO)
How to compensate sales staff
Economic Order Quantity (EOQ)
Sales Order Definition
A sales order definition is an internal document which lists buyer and sales quantity for a given purchase. It is also a valuable document for operations. A sales order form generally indicates that no additional production effort will be applied to the product. Exceptions to this occur, as with the making of custom products.
Sales Order Explanation
A sales order, explained as the internal document which explains the sale, conveys important information to staff. Sales orders fully document the needs of a customer. When a sale first occurs, sales staff take valuable information about what the customer wants. After taking this information, it is added to either a document or database so that the customer’s needs can be fully addressed. This is the sales order.
2 Reasons Why A Sales Order Is Valuable
A sales order is valuable for 2 main reasons. First, it fully documents what the customer wants to buy. This is a valuable record to the sales staff because it can be reviewed later to gain information about the customer and their needs. At times additional information will be added to a sales order, such as amount of product delivered as compared to amount of product desired. All of the internal information regarding a sale is kept in the sales order, so it is extremely useful upon review. This is the value of a sales order vs invoice. An invoice merely includes the details, cost, and unpaid balance of the sale.
A sales order is also valuable for operational staff. Due to the fact that this document fully explains the demand of the customer, it contains valuable information for those preparing the delivery. This staff needs a sales order; processing products requires a full understanding of the order which is being processed. In this way a sales order vs purchase order is very different; the sales order includes internal information which is not important to the customer and thus not included in their purchase order.
Sales orders, traditionally, were a paper document. In modern times, the whole sales order book is kept in a single database. This way, staff can access the information quickly. In times where one piece of information is needed, staff can simply look into the database and answer their question. In times where the full information is needed, a printout or electronic copy can make this information accessible as well.
Sales Order Example
For example, Doug is the manager of a distribution plant of a major company. His job is vital to the company because it ensures that product leaves the warehouse in perfect condition to be delivered to the computer. Timeliness and attention to detail are Doug’s strengths. He will need to use them today.
Doug needs to prepare a large order. Since the company has recently signed this customer, a high paying account, Doug must make sure there are no problems with the order.
Doug receives the initial sales order from sales staff. They have fully laid out the needs of the customer. So, Doug will share this with the rest of his department.
Doug then passes this sales order processing off to his warehouse team. They carefully pull the items they plan to sell from the warehouse. They place them together on a palate and sent the items to the packaging department.
The packaging department assures that the items will not be destroyed in transit. They carefully place the product in sealed and shock-resistant boxes to prevent any issues. As an additional part of their efforts, they include any marketing materials in the package. This shows the value in this division: it is as much a function of marketing as it is a function of delivery.
Then, they place the product back on to palates. They place these palates next to the loading dock. Tomorrow, they will ship them.
At the last minute, sales staff receive an amendment to the purchase. Luckily, Doug’s branch uses electronic documents. He sends the document through the channels listed above. Then the rest of the order is processed and placed on the palate.
Finally, they load the product on the delivery truck. It will be sent to the offices of the customer. The delivery staff is well trained to assure professional distribution of the product and act as a good face for the company.
Doug is proud of how he processed the order. His department has done a good job. For their efforts, Doug will highlight and reward the delivery team at the next company meeting. Doug values this because is is an important morale builder. He does not need a morale builder, successful delivery of the product is motivational enough to Doug.