At macro level, business processes in an enterprise can be categorized under 3 main business process flows. These are
Source/Purchase to Pay (S2C/P2P) ,
Quote/Order to Cash (Q2C/O2C) and
Record to Report (R2R).
For each of them, Master Data Management (MDM) is kept as the central repository which helps in abiding discipline for capturing business transactions.
Let’s understand each of them with the help of a real time business scenario in a business enterprise.
BI-C-RIDE Ltd. is engaged in the trading and manufacturing of Bi-cycles & its spares parts. Jagat from ‘BPM team’ is responsible for management of key business processes. He is a Senior Process Engineer in the team and also heading the Master Data Management (MDM) in BI-C-RIDE Ltd.
What is MDM – Master Data Management
| MDM implies master data management. For any successful business process, MDM is placed at the core and it ensures utilization of well coordinated and uniform set of master data among business processes with the use of technology and systems. |
| As per Jagat, Master data covers/take care of every key and critical data such as Product/Item data, Assets data, Customers data, Suppliers Data, Locations data etc. and such key data is maintained in such a way that all business processes utilize ‘centralized master data’. A good MDM ensures uniformity, accuracy, stewardship and accountability concerning key data in an enterprise. |
| Such data master is maintained and managed by following strict disciplines and coordinated with other entities across business. |
| All the key business processes rely on well managed master data and the processes that create, update and retire that master data. |
| Jagat has listed down following business process activities under key business process flows at BI-C-RIDE Ltd.- |
Key Business Process Activities in BI-C-RIDE Ltd:
| Key Business Process | Sub-Business Process | Business Severity | Required * (Mandatory / Optional) |
Business Activity Code | Business Activity Description |
| MDM | AP Masters | Critical | Mandatory | Supplier Master | Management of Supplier Master with all key information (Tax Identification, Bank details, KYC, Default Payment Method, Payment Terms, Bank Guarantee Details and Status like Active/Inactive etc.) |
| MDM | AR Masters | Critical | Mandatory | Customer Master | Management of Customer Master with all key information (Tax Identification, Bank details, KYC, Default Payment Method, Payment Terms, Credit Limit, Credit Category, BG Details, Status like Active/Inactive etc.) |
| MDM | INV Masters | Critical | Mandatory | Item Master | Management of Item Master with all key information (Item Category, Business Line Attributes, Valuation Method, Cost, Inventory/Non-Inventory, HSN/SAC, Default Inventory Warehouse, Activation/Inactivation etc.) |
| MDM | AP/AR Masters | Critical | Mandatory | Payment Terms | Definition of Payment Terms with Discounts and Discount Terms for Suppliers and Customers |
| MDM | Bank Masters | Critical | Mandatory | Bank Master | Management of Bank Master with all key details |
| MDM | Person/User | Critical | Mandatory | Users Master | Management of Users Master with all key details, Access to the Business Activity Forms Read/Write/Both/Approvers |
| MDM | Employee | Critical | Mandatory | Employee Master | Management of Employees Master with all key details, Team Information |
| MDM | User Access (ERP) | Critical | Mandatory | User Access Matrix | Report showing User and their Accesses in system to manage Segregation of Duties and identify Conflicts |
| MDM | Tax Masters | Critical | Mandatory | Tax Masters | Management of local taxes, Tax Codes, Tax Rates, Tax Categories, Input Taxes with Activation/Inactivation |
| MDM | Tax Masters | Critical | Mandatory | Tax on Sales | Tax Category on Sales transactions, Activation/Inactivation |
| MDM | Tax Masters | Critical | Mandatory | Tax on Purchases | Tax Category on Purchase transactions with Flags of Input Tax, Activation/Inactivation |
| P2P/S2P | Purchasing | Critical | Mandatory | Purchase Requisition(PR) | User registers the purchase requirements stating Item (Inventory/Non-Inventory), Quantity and Expected Price, Due Date, Cost Center Details and Place of Delivery |
| P2P/S2P | Purchasing | Important | Optional | PR Approval | Approval process of PR based on Cost Center in Organization as per DOA |
| P2P/S2P | Purchasing | Critical | Mandatory | Purchase Order(PO) | Purchasing Team creates a Purchase Order against approved Purchase Requisition |
| P2P/S2P | Purchasing | Important | Optional | PO Approval | Approval process of PO based on Cost Center in Organization as per Delegation of Authority (DOA) |
| P2P/S2P | Purchasing | Important | Optional | Blanket Purchase Agreement | Purchasing Team creates a Blanket Purchase Agreement (BPA) for Supplier against approved Purchase Requisition with specifications of Quantity, Period, Discount Terms etc. |
| P2P/S2P | Purchasing | Important | Optional | Milestones | Milestone definitions for invoice booking against Purchase Order in order to actualize the relevant cost as per the T&C (Accrual concept) |
| P2P/S2P | Goods/Service Receipt | Critical | Mandatory | Purchasing Receipt (GRN/SRN) | User creates a Receipt in system upon receipt of Goods/Services against approved Purchase Order and confirm the receipt as per T&C |
| P2P/S2P | Goods/Service Receipt | Critical | Mandatory | Purchasing Returns (Supplier Debit Note) | Users returns the goods/services after the same is received against GRN/SRN and validate creation of Debit Note, if already AP Invoice was booked |
| P2P/S2P | Goods/Service Receipt | Critical | Mandatory | Purchase Overheads | Freight, Taxes and Duties associated with Purchasing flow, Application of Purchasing Overheads on Purchase Receipt for correct valuation of purchases |
| P2P/S2P | AP Invoice | Critical | Mandatory | Invoice Approval | Managing Physical/Scan copies of Supplier Invoice and its approval mechanism (Domestic / Foreign Invoices) |
| P2P/S2P | AP Invoice | Critical | Mandatory | Payable Invoices (AP Invoice) | Creation of AP Invoices based on Matching with PO/ PO receipts (Domestic / Foreign Invoices) |
| P2P/S2P | AP Invoice | Critical | Mandatory | Supplier’s Debit Memo | Creation of Supplier Debit Memo for miscellaneous Adjustments (Domestic / Foreign Invoices) |
| P2P/S2P | AP Invoice | Critical | Mandatory | Supplier’s Credit Memo | Creation of Supplier Credit Memo for miscellaneous Adjustments (Domestic / Foreign Invoices) |
| P2P/S2P | AP Payments | Critical | Mandatory | Invoices Payment | Payment of validated AP Invoices as per Due Date through system flow attached for Bank Payments (Domestic / Foreign Currency Payments) |
| P2P/S2P | Bank Transactions | Critical | Mandatory | Bank Payment File | Bank Payment file generation for instruction to bank for releasing payments |
| P2P/S2P | Bank Transactions | Critical | Mandatory | Bank Statement | Capturing of Bank Statement in system application to use the same for references and for preparing the Bank Reconciliation |
| P2P/S2P | Bank Transactions | Critical | Mandatory | Bank Reconciliation | Matching the Cash Book Transactions with the Bank Statement based on ‘Matching criteria’ and generation of Final Report of Bank Reconciliation |
| P2P/S2P | Accrual | Critical | Mandatory | AP Accrual Report | Report showing amounts for accrual booking at the end of the accounting period based on GIT and Receipts done but not invoiced |
| P2P/S2P | Accrual | Critical | Mandatory | GIT Report | Report showing goods in transit against Inter-Company Purchase Orders and Delivery Messages |
| P2P/S2P | AP Invoice | Critical | Mandatory | Non-PO AP Invoices | Creation of Direct AP Invoices (not based on any Purchase Order) and validation process (Domestic / Foreign Invoices) |
| P2P/S2P | Purchasing | Critical | Mandatory | Purchase Order Print | Print Report of Purchase Order with all relevant details including Taxes & Other Charges applied |
| P2P/S2P | Reporting | Critical | Mandatory | Supplier’s Ledger | Statement of all transactions recorded against Supplier account based on period selected |
| P2P/S2P | Reporting | Critical | Mandatory | Supplier’s Statement | Report showing all Debits and Credits transactions against Supplier account based on a period selected |
| P2P/S2P | Reporting | Critical | Mandatory | Supplier’s Aging Statement | Aging Report showing total supplier’s outstanding/advances with Not Due, Past Due Dates in custom period buckets |
| S2C/O2C | Customer Orders | Critical | Mandatory | Sales Quotation | Recording of Sales Quotation received from Customer |
| S2C/O2C | Customer Orders | Critical | Mandatory | Customer Order | Creation of Customer Order with key details like Item, Price, Quantity, Delivery Dates, Place of Delivery, Payment Terms |
| S2C/O2C | INV Management | Critical | Mandatory | Inventory Management | Management of Inventory- Sub-inventory, Inventory Ledger, Inventory Valuation, Inventory Movements, Inventory Transfers among Warehouses |
| S2C/O2C | Customer Orders | Critical | Mandatory | Price List | Management of Price List for various group of Items, Customer groups and Discount offers |
| S2C/O2C | Customer Orders | Needed | Optional | Delivery Methods | Discount Codes to be applied on Customer Orders |
| S2C/O2C | Dispatches | Critical | Mandatory | Delivery Challan/Documents | Delivery Document to be issued along-with customer Invoice for movement of goods to Customer/other Inventory movements |
| S2C/O2C | AR Invoice | Critical | Mandatory | Customer Invoices | Creation of Customer invoices based on Customer Order and also Direct Customer Invoice with no Order linked (Domestic / Foreign Invoices) |
| S2C/O2C | AR Invoice | Critical | Mandatory | Customer Credit Note/Debit Note | Creation of Customer Credit Note/Debit Note based on Customer Order and also Direct Customer DN/CN with no Order linked (Domestic / Foreign Invoices) |
| S2C/O2C | AR Invoice | Critical | Mandatory | Freight Charges | Capture of Freight and other associated charges to be received from Customers |
| S2C/O2C | AR Payments | Critical | Mandatory | Customer Receipts | Creation of Customer Receipts against Order based Invoice or Direct Invoice (Domestic / Foreign Currency Receipts) |
| S2C/O2C | Bank Transactions | Critical | Mandatory | Bank Reconciliation | Bank Reconciliation Statement based on matching of Customer Receipts against Bank Statement Lines |
| S2C/O2C | Customer Orders | Critical | Mandatory | Customer Order Print | Print Report of Customer Order with all relevant details including Taxes & Other Charges applied |
| S2C/O2C | AR Invoice | Critical | Mandatory | Customer Invoice Print | Print Report of Customer Invoice with all relevant details including Taxes & Other Charges applied |
| S2C/O2C | Reporting | Critical | Mandatory | Customer Ledger | Statement of all transactions recorded against Customer account based on period selected |
| S2C/O2C | Reporting | Critical | Mandatory | Customer Statement | Report showing all Debits and Credits transactions against Customer account based on a period selected |
| O2C | Reporting | Critical | Mandatory | Customer’s Aging Statement | Aging Report showing total customer’s outstanding/advances with Not Due, Past Due Dates in custom period buckets |
| R2R-PAFA | FA purchase | Critical | Mandatory | CWIP Booking | Creation of Interim Fixed Asset (CWIP) against Capital Item Purchases |
| R2R-PAFA | FA purchase | Critical | Mandatory | FA Mass Allocation | Mass Allocation of group of CWIP Account transactions for FA generation |
| R2R-PAFA | FA purchase | Critical | Mandatory | FA Creation | Creation of Fixed Asset by CWIP or by Direct Purchase Transaction |
| R2R-PAFA | FA Maintenance | Critical | Mandatory | FA Depreciation | Depreciation application against Fixed Assets applicable based on the key values on Assets |
| R2R-PAFA | FA Maintenance | Critical | Mandatory | FA Register | Generation of Fixed Assets Register showing Opening, Addition, Reductions and Balance |
| R2R-PAFA | Projects | Needed | Optional | Projects | Creation of Projects with Project Activities and due dates with Budgeted Costs. |
| R2R-PAFA | Projects | Needed | Optional | Project Accounting | Booking of Costs against Project Activities and linkage through PO/PO Receipt |
| R2R | GL Master | Critical | Mandatory | Accounts Master | Definition of GL Accounts, Other Segments of Accounting like Site, Cost Center, Business Line etc. |
| R2R | GL Master | Critical | Mandatory | Other Accounts Segments Master | Management of GL Accounts, Other Accounting Segments, Activation/Inactivation |
| R2R | GL Master | Critical | Mandatory | GL Calendar | Management of GL Calendar for maintenance of books in multiple ledger for Local and Global Compliances |
| R2R | GL Master | Critical | Mandatory | Ledgers | Ledgers definition based on Local and Global Requirements (More than 1 Ledger) with Auto posting features ((Domestic / Foreign Currency) |
| R2R | GL Adjustments | Critical | Mandatory | GL Journals | GL Journal creation and posting feature based on scheduled jobs (Domestic / Foreign Currency Transactions) in multiple Ledgers |
| R2R | GL Details | Critical | Mandatory | GL Details and Summary Report | Statement showing GL transactions at summary and detail level |
| R2R | FIN Reports | Important | Optional | Purchase Register | Statement showing Purchasing transactions with Taxes Information at summary and detail level |
| R2R | FIN Reports | Important | Optional | Sales Register | Statement showing Sales transactions with Taxes Information at summary and detail level |
| R2R | FIN Reports | Important | Optional | Inventory on Hand Report | Statement showing INV on Hand at summary and detail level based on INV Org |
| R2R | FIN Reports | Important | Optional | Inventory Transactions Register | Statement showing INV transactions at summary and detail level based on INV Org |
| R2R | FIN Reports | Important | Optional | Inventory Aging Report | Aging Report showing Inventory based in Last Transactions Date in custom period buckets for analysis of Slow, Non-Moving and High Moving Inventory |
| R2R | FIN Reports | Important | Optional | Tax Register | Statement showing Tax transactions at summary and detail level based on P2P and O2C Flows |
| R2R | FIN Reports | Critical | Mandatory | Trial Balance | Statement showing balances in GL Accounts at summary and detail level against any period end |
| R2R | FIN Reports | Critical | Mandatory | Account Schedules | Statement showing GL transactions at summary and detail level grouped at Account Group Level |
| R2R | FIN Reports | Important | Optional | Goods/Services Delivered not Invoiced Report | Accrual Accounting Report showing not Invoiced transactions for the relevant accounting period |
| R2R | FIN Reports | Critical | Mandatory | Foreign Exchange Rates | Maintenance of Foreign Exchange rates for the booking of Foreign AP/AR/Bank transactions and for GL Adjustments |
| R2R | Period Close | Critical | Mandatory | Period Closing | Closure of AP, AR, FA, FA, INV periods with Exceptions Reports for Analysis by Accountant |
| R2R | Period Close | Critical | Mandatory | GL Period Closing | Period Closing of GL and generation of Trial Balance of different Ledgers |
Generally, enterprises uses ERP systems that helps focusing on maintenance of efficient business processes across all functions in the organizations. In India, SAP, Oracle, Ramco Systems are few popular ERP suites that are vastly used by commercial enterprises. BI-C-RIDE Ltd , however, uses its own developed system which is completely integrated into different functions thereby giving some key features and benefits as like mini ERP system.
Follow related article – Business Process Flow