Contoso Entertainment Systems Company Overview

Overview documentation for Microsoft Dynamics AX 2009 demo data

Last updated: March 2010 Initial publication: September 2008 Initial Author: Mukkul Dasgupta, Program Manager, Microsoft Corporation The example companies, organizations, products, domain names, e-mail addresses, logos, people, places, and

events depicted herein are fictitious. No association with any real company, organization, product, domain name, email address, logo, person, places, or events is intended or should be inferred.

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Table of Contents

COMPANY BACKGROUND ............................................................................................................................... 3

COMPANY SETUP ............................................................................................................................................ 4

COMPANY GEOGRAPHICAL STRUCTURE ........................................................................................................................ 4 FINANCIAL SETUP .................................................................................................................................................... 5

Financial calendar .......................................................................................................................................... 5 ORGANIZATIONAL STRUCTURE ................................................................................................................................... 6 EXPENSE MANAGEMENT .......................................................................................................................................... 7

PRODUCT LINE ................................................................................................................................................ 8

PRODUCT GROUP TAXONOMY .................................................................................................................................... 9 COSTING/INVENTORY MODEL GROUP ........................................................................................................................ 10 KEY PRODUCT GROUP PROPERTIES ............................................................................................................................ 10 BILL OF MATERIAL (BOM) ...................................................................................................................................... 12

Speaker bill of material ................................................................................................................................ 12 Home theater system bill of material .......................................................................................................... 13

CES SUPPLY CHAIN MANAGEMENT ............................................................................................................... 14

INTERSITE AND INTERCOMPANY SUPPLY CHAIN ............................................................................................................ 14 CEU SITE 1 SUPPLY CHAIN OVERVIEW ....................................................................................................................... 15

Site 1 Production .......................................................................................................................................... 15 Site 1 Receiving ............................................................................................................................................ 18 Site 1 Shipping.............................................................................................................................................. 18 Site 1 Inventory management ...................................................................................................................... 18 Site 1 Detailed supply chain ......................................................................................................................... 19

CEU SITE 2 SUPPLY CHAIN OVERVIEW ....................................................................................................................... 20 Site 2 Production .......................................................................................................................................... 20 Site 2 Receiving ............................................................................................................................................ 21 Site 2 Shipping.............................................................................................................................................. 21 Site 2 Warehouse management .................................................................................................................. 23 Site 2 Detailed supply chain ......................................................................................................................... 27

CEU SITE 3 SUPPLY CHAIN OVERVIEW ....................................................................................................................... 28 Site 3 Production .......................................................................................................................................... 28 Site 3 Receiving ............................................................................................................................................ 29 Site 3 Shipping.............................................................................................................................................. 30 Site 3 Inventory management ...................................................................................................................... 30 Site 3 Detailed supply chain ......................................................................................................................... 30

CES DETAILED SUPPLY CHAIN .................................................................................................................................. 31

SALES ............................................................................................................................................................ 32

HISTORICAL SALES OVERVIEW .................................................................................................................................. 33 Procedure for generating transactional demo data .................................................................................... 33

PROCUREMENT ............................................................................................................................................. 35

PURCHASE REQUISITION ......................................................................................................................................... 35

PROJECT AND SERVICE .................................................................................................................................. 37

PROJECT .............................................................................................................................................................. 37 AFTER-SALES SERVICE ............................................................................................................................................. 37

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Company background

Contoso Entertainment Systems (CES) started out as a family business in the 1970s when home

stereo equipment was gaining popularity in the United States. Since then, CES has become a diverse

global business that has its headquarters in Seattle, Washington, USA, (Contoso Entertainment USA –

CEU) and has a European division (Contoso Entertainment Europe – CEE) in Germany. This document

contains information primarily about CEU.

Current annual revenue has just surpassed USD 10 million. CES has grown continuously in the past

and has growth expectations of 6–9 percent for the next three years, which is slightly above industry

average. CES is using Microsoft Business Intelligence (BI) technology, which allows CES to share relevant

information with all employees and to adapt quickly to changes in the business. CES is a privately owned

company, and it is considering going public in the next two years to get equity to expand its

manufacturing capability.

CES runs a successful retail and distribution business across North America. CES also sells to

wholesalers, major accounts, such as hotels and universities, and over the Internet.

CES retail stores differentiate themselves by focusing solely on high-end equipment and superior

customer service, which are important to their overall brand image. The majority of the CES product line

consists of items that are purchased and resold through one or more of its customer channels. These

items include audio-visual electronic equipment, such as TVs, Digital Video Recorders (DVRs), receivers,

and so on.

However, CES prides itself in the manufacture of its speaker line, especially its high-end speakers. It

manufactures the speaker enclosures by using either wood or plastic to ensure good overall product

design, which is a requirement for its high-end customers. CES also offers its customers the option to

custom-design their own speakers and home theater systems (HTSs) by using the Microsoft Dynamics

AX Product Builder module.

CES started its Project Services division in late 2004 to facilitate the custom design and installation

of HTSs for customers it considers to be major accounts (the taxonomy of customers is described in the

Sales section). In addition to selling its products, CES also offers installation, maintenance, and repair

services.

CES has an extensive supply chain throughout North America and Europe. CES is looking to expand

into Asia and Asia-Pacific regions in the future. The German division of CES (CEE) purchases its goods

directly through CES warehouses that are located in the United States, and then it distributes the goods

to its European customers. This process of transferring goods between CEU and CEE is automated

through the use of intercompany trading. CEE also offers some selected service plans for the finished

goods that are sold in Europe.

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Company setup

Company geographical structure

The Contoso Entertainment Systems (CES) company structure supports global sourcing, manufacturing, distribution, and sales operations with multicurrency, intercompany trading, and consolidation.

Note: CES is used, in general throughout this document, to refer to the data in all companies in the

Microsoft Dynamics AX 2009 demo data. The following diagram shows the legal structure for CEC, CEU, and CEE, and also shows the physical

structure for CEU and CEE and their various sites.

CEUContoso Entertainment

USA company(USA)

CECContoso Entertainment Consolidation Company

(USA)

Site 1ProductionAll speakers

CEEContoso Entertainment

Europe company(Germany)

Site 2Assembly and serviceHome theater systems

Site 3Production

Standard speakers

Site 4Distribution, assembly

and serviceAll products

Contoso Entertainment Consolidation (CEC)

CEC is a consolidation company that summarizes the financial information across CEU and CEE.

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Contoso Entertainment USA (CEU)

CEU is the primary company that contains two years of transactional demo data for Basic, Administration, General Ledger, Bank, Fixed Assets, Accounts Payable, Accounts and Receivable, Inventory Management, Intercompany, Production, Master Planning, Customer Relationship Management, Project, Expense Management, and Human Resources modules. (Note: Some modules may contain less than two years of transactional demo data.) CEU also contains base data without any transactions for the Product Builder module.

CEU procures raw materials, manufactures the subassemblies and finished goods, and then sells the finished goods to North American customers. CEU also sells the finished goods to Contoso Entertainment Europe (CEE) by using intercompany trading. The company uses a mixed make-to-stock (MTS) and make-to-order (MTO) manufacturing modes and sometimes uses subcontractors to manufacture finished goods. Some items also use configure-to-order (CTO) and assemble-to-order (ATO) manufacturing modes. CEU plans and monitors the supply chain operations across all of the divisions that include central forecasting and intercompany master planning. CEU consists of three physical sites. For more information about the intercompany supply chain, see the Intersite and intercompany supply chain section.

In addition to offering maintenance and repair services to North American clients, CEU also provides Project Services to major account customers.

CEU is also responsible for shared services, such as centralized payments and statements.

Contoso Entertainment Europe (CEE)

CEE is based in Germany and is primarily a distribution site with no manufacturing. It has almost no transactional data (but it may be added in future releases of the Microsoft Dynamics AX 2009 demo data), but it does have base data for a German company for some modules. The data, however, is in English.

CEE purchases some finished goods from CEU through intercompany trading and other finished goods from vendors and suppliers in Europe. CEE then distributes finished goods to European customers. The company uses a full package sourcing model with long lead times.

Contoso Virtual Company (CVC)

Contoso Virtual Company (CVC) is a virtual company that contains tables from CEU and CEE. Creation of a virtual company is necessary to demonstrate features, such as centralized payments and the global address book.

Financial setup

Financial calendar

CES runs all of its operations throughout the world on a July 1 through June 30 fiscal year (FY). The July through June fiscal year gives CES better parity with operations in other parts of the world that have July through June fiscal years. CES has operating bank accounts for North America, Europe, and China.

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Organizational structure

CEU and CEE have very similar organizational structures, and they are both based on the Microsoft Dynamics Customer Model (www.microsoft.com/customermodel).

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Expense Management

Expense Management is a new module in Microsoft Dynamics AX 2009. The demo data for this module has been prepopulated with all of the setup information, such as expense categories, payment methods, merchants, and so on. Some expense policies and workflow configurations have also been defined.

The employees in the following table, have been mapped to a corresponding vendor account:

Employee ID Employee Name

4101 Prakash Povvuru

4110 Tricia Burns

5120 April Stewart

7201 Kevin F. Browne

7210 Nancy Anderson

Nancy Anderson also has credit card transactions assigned to her out of the box. Expenses can be entered only by using Enterprise Portal. We recommend that you create your own

user ID, assign yourself to the Admin security group, and then map yourself to any one of the employees who appear in the preceding table. Then, you will be able to log on to Enterprise Portal for Microsoft Dynamics AX and submit and approve expense reports and have access to Expense Management setup and administration in the client.

The employees in the preceding table have prepopulated expense reports assigned to them in different statuses (for example, Not submitted and Posted). To demonstrate how to submit a report, you should open an expense report that has a Not submitted status and itemize any hotel transactions. You will not be able to submit the report until the hotel transactions have been itemized in the demo data.

The workflow configurations are set to allow anybody in the Admin security group to approve expense reports. If you want to set up a more realistic scenario whereby you cannot approve your own expense reports, you can change the workflow configurations.

The Expense Management module contains setup data, which allows you to submit cash advance requests. To allow you to demonstrate how this feature works to customers, no cash advance request data entries exist in the current version of the demo data.

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Product line

This section presents the taxonomy of finished goods, the product group taxonomy, a table of some of the key properties of the items and item groups, and the bills of material (BOMs) for speakers and home theater systems.

CES sells a wide variety of products across its retail segments, store sales, wholesale sales, major accounts, and Internet sales. CES manufactures speakers and home theater systems. All other products are purchased as finished goods from vendors and resold directly to customers.

The taxonomy of finished goods sold by CES is presented below:

1. Audio a. Speakers

i. High-end speakers 1. 12-inch 2. 14-inch 3. 16-inch 4. Custom

ii. Standard speakers 1. Satellite 2. Center channel 3. Subwoofer

b. Home theater systems i. 2.1 Channel

ii. 5.1 Channel iii. Custom/assembled

c. Receivers i. 2.1 Channel

ii. 5.1 Channel d. Car audio

2. Video

a. Televisions i. Liquid Crystal Display (LCD)

ii. Plasma iii. Projection

b. LCD video projectors c. Digital Video Recorders (DVR)

i. Standard ii. High-definition

d. Digital Video Disc Players (DVD Players) i. Standard

ii. High-definition

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Product group taxonomy

In the following diagram, the four-digit numbers in the text boxes indicate the item IDs for the corresponding items/groups.

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Costing/Inventory model group

In CEU, most of the items use standard costing as their inventory valuation method, while some other items, such as the ones that are used in the demo data in the Project module (for example, items with IDs in the xx09 format), use normal costing with first in, first out (FIFO) flow principles.

Key product group properties

The tables that follow highlight some key properties and setup of items and item groups in the demo data. This information is for general, high-level guidance only. The actual data may deviate slightly in some cases.

Manufacturing mode and dimensions

Product Group Manufacturing Mode Color Size Configuration

High-end speakers Make-to-order (MTO) Configure-to-order (CTO)

Yes

Standard speakers Make-to-stock (MTS) Yes

Home theater systems Assemble-to-order (ATO) Yes

Receivers Purchased Yes

Car Audio Purchased Yes

Televisions Purchased Yes Yes Yes

Projectors Purchased

DVRs Purchased

DVD Players Purchased

Inventory dimension information

Product Group Warehouse Location Pallet ID

High-end speakers Yes

Standard speakers Yes

Home theater systems Yes

Receivers Yes

Car Audio Yes

Televisions Yes

Projectors Yes Yes

DVRs Yes Yes Yes

DVD Players Yes Yes Yes

Discounts and commission structure

Product Group Sales Purchasing

Home theater systems AR Line Discounts AR Commissions

Receivers AP Line Discounts AP Miscellaneous Charges

Televisions AR Miscellaneous Charges

Projectors AR Supplemental Items AR Commissions

DVRs AR Multiline Discounts AR Commissions

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Miscellaneous information

Functionality Type Description (used in/for) Items (numbers refer to IDs)

Production: MTO 3-level BOM High-end speakers (1100 to 1119) Production: MTS 1-level BOM Standard speakers (1150 to 1199) Production: ATO Assembled items Home theater systems (12xx) Product Builder: CTO Configurable items 1119 and 1299 Sold items Sells directly to customers 1000 to 1999 Non-sellable items Not directly sold to customers

(Some of these can be sold in parts replacement scenarios.)

2000 to 8999

Service Items Items used in Service orders or agreements

Projectors (15xx)

Project Items Items used in the Project module xx09 (1109, 1209, 2009, 5009, 7009, 8009)

Batch Number Batch number tracked item Item 1706 (DVD player) Serial Number Serial number tracked item Item 1707 (DVD player) Purchase Requisitions

Considered as indirect expense items, which are not accounted for in inventory

Indirect Expense Items (90xx)

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Bill of material (BOM)

Speaker bill of material

The high-end speaker consists of a three-level bill of material (BOM), which uses wood as the raw material at the lowest level of the BOM. Wooden enclosures are used in the high-end speakers for better sound quality.

The standard speaker uses a simplified one-level version of this BOM, and uses a plastic enclosure to manage costs.

High-end speaker bill of material

The four-digit numbers indicate item IDs for the components.

Speakers

Woofer

Tweeter

Mid-range

Grill

Damping

Binding posts

Wiring harness

Enclosure

Screws

Components

Wave guide

Jack

Printed circuit board (PCB)

Wood

11xx

30xx

20xx

40xx

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Packaging material

60xx

S

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Home theater system bill of material

The following diagram shows the simple BOM for a home theater system (HTS), which is assembled by using manufactured (speakers) and purchased (receivers) items.

Home theater systems

Speakers

Receivers

Subwoofer

Satellitespeakers

Assemble-to-order

Make-to-stock

Center channel

Produce

Purchase

Assemble

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CES Supply chain management

Intersite and intercompany supply chain

The following diagram illustrates the supply chain for CEU and CEE and also between the three sites in CEU. The diagram presents the key product groups that are purchased, manufactured, and sold from each site; it also highlights intersite transfer orders and intercompany trading.

Over the following few sections, we present more information about each site’s production, receiving, and shipping activities.

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CEU Site 1 Supply chain overview

Site 1 is the main production facility of CEU where high-end speakers are made. The facility is vertically integrated. During peak demand season, the facility is also used as a secondary production facility for the standard speakers that are used in home theater systems (HTSs), which are assembled at Site 2. This is visually communicated in the following diagram.

SalesPurchasing

Transfer

IC

Transfer Source site or Destination site

InventoryProduction

Site 2

CEE

CEU – Site 1

High-end speaker

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Wood

Other parts

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Intercompany

Site 1 Production

Production is divided in two areas: high-end speaker production and standard speaker production. High-end speaker production is mainly MTS with some CTO capabilities.

Standard speaker production is MTS based on forecasted stand-alone sales and dependent demand coming from HTS sales.

High-end speaker production

The wood is cut, drilled, sanded, and finished to make the different wood components (enclosure sides), which are then assembled with other parts to make the wooden speaker enclosure. The enclosure and other speaker parts go through a speaker assembly stage, an inspection stage, and a packing stage to make the high-end speaker.

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High-end speakers have three production stages (routes). The two following diagrams show these stages and an example. The upper diagram shows a mini-supply chain for these three stages with work centers. The lower diagram, which is separated by a line, shows an example.

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High-end speaker production line

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Standard speaker production

Site 3 is the primary production facility for standard speakers, while Site 1 is used only to meet additional production demand for standard speakers, especially during peak season, such aswinter holidays. For more information about standard speaker production, see the Site 3 Production section.

Site 1 Receiving

The receiving area holds the components that are used in high-end speaker production and standard speaker production. The receiving area has storage areas for wood, parts that go into the enclosure assembly, the high-end speaker, and the standard speaker. Wood is ordered in bulk, and it is stored strategically to cover one month of production demand. The low-cost high-volume parts, such as screws, are managed based on minimum and maximum inventory levels. Expensive components, such as printed circuit boards (PCBs), are ordered based on actual demand. The goods are received against the purchase orders. Some critical parts, such as tweeters, are inspected by using the quarantine warehouse. Raw materials are not serial number tracked or batch number tracked.

Site 1 Shipping

The finished goods are stored in two storage areas that are dedicated for high-end and standard speakers. They are location controlled.

The MTO high-end speakers are usually shipped directly to the customer. The MTS standard speakers are shipped to Site 2 for HTS assembly per transfer order requirements. Because of the MTS nature of production, most of the finished goods space is reserved for standard speakers.

The warehouse personnel are given pick tickets to pull both MTO high-end speaker sales orders and MTS standard speaker transfer orders from the bulk storage areas. The goods are delivered against the sales or transfer orders with the appropriate documentation. A nightly batch run generates the invoices for the sales orders.

Site 1 Inventory management

The low-cost components, such as screws, are backflushed at the start of the operation. The expensive components, such as PCBs, are manually picked and reported against the production order. The batch and serial numbers are recorded for tracked goods, such as damping material and PCBs.

The subassembly inventory (wood components and wooden enclosures) are kept at minimum. The production reporting for wood components (cut, drill, sand, finish) is done through manual route cards. The enclosure and speaker assembly labor times are backflushed at the end of the operation.

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Site 1 Detailed supply chain

The following diagram shows a more detailed supply chain diagram for Site 1 based on information in the preceding sections.

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CEU Site 2 Supply chain overview

Site 2 is the main assembly and distribution facility where home theater systems (HTSs) are assembled. The facility handles all of the operations around purchased (nonmanufactured) finished goods as well as the service operations. Some of the purchased goods are shipped directly to customers from vendors, while other goods are stored in inventory, depending on the products. This is visually communicated in the following diagram.

SalesPurchasing

Transfer

IC

Assembly

Transfer Source site or Destination site

Inventory

CEE

Site 1

Site 3

HTS

CEU - Site 2

HTS

HTS

Other FGs (Direct shipping)Other finished goods (FGs)

Standard speaker (Primary)

ReceiverStan

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(Seco

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Intercompany

Site 2 Production

Production in Site 2 is the MTS assembly of home theater systems (HTSs). The site also has ATO capabilities.

Home theater system production

Site 2 has a one production stage (route). The standard speakers (satellite speakers, central channel, and woofers) and receivers are assembled, inspected, and packed. All home theater system components are manually picked and reported against the production order. The production reporting (kit-inspect-pack) is done through manual route cards.

The two following diagrams show a mini-supply chain and an example. The upper diagram shows a mini-supply chain for the standard speaker production route with work centers. The lower diagram, which is separated by a line, shows an example.

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Home theater system production line

Site 2 Receiving

The receiving area holds the standard speakers and receivers that are used in the home theater system production and all of the other purchased finished goods, including car audio, televisions, projectors, DVRs, and DVD players.

The standard speakers are transferred from Site 3 (primary) and Site 1 (alternate) production sites. Standard speakers, receivers, and the purchased finished goods are ordered based on forecasted demand. The goods are received against the purchase and transfer orders. All finished goods are inspected by using the quarantine warehouse.

Site 2 Shipping

The finished goods are stored in several storage areas assigned for each item group. The finished goods storage areas are location controlled. The assembled home theater systems and purchased finished goods are shipped to the customer.

The warehouse personnel are given pick tickets to pull sales orders from the bulk storage areas. The goods are delivered against the sales orders with the appropriate documentation. A nightly batch run

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generates the invoices for the sales orders.

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Site 2 Warehouse management

Site 2 has two different warehouse configurations. 1. Warehouse 22 has a first-level pick and upper levels bulk layout. 2. Warehouse 23 has a separate pick and bulk layout.

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StoreZone C

StoreZone B

StoreZone A

Pick

Bulk

Inbounddock

Outbounddock

Rack

Shelf Bin

Warehouse 22: First-level pick and upper levels bulk layout

Bulk storage area

StoreZone D

(empty Pallets)

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Rack 1, 2, 3

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f 1, 2

, 3

01-02-03-2Aisle 1, 2, 3, 4, 5

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StoreZone D

(empty pallets)

Inbounddock

Outbounddock

Pick

Bulk

Rack

Shelf Bin

Warehouse 23: Separate pick and bulk layout

StoreZone C

StoreZone B

StoreZone A

Bulk storage area

Rack 1, 2, 3,4,5

Shel

f 1, 2

, 3

Aisle 1, 2, 3, 4

01-02-03-2

Pick storage area

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Finished goods, such as DVRs, are tracked by using serial numbers, while HD DVD players, are tracked by using batch numbers.

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Site 2 Detailed supply chain

The following diagram shows a more detailed supply chain diagram for Site 2 and presents the information about Site 2 from the preceding sections.

SalesPurchasing

Transfer

IC

Assembly

Transfer Source site or Destination site

Inventory

MTS: Make-to-stock, MTO: Make-to-order, ATO: Assemble-to-order, CTO : Configure-to-orderMode

CEE

Site 1

Site 3

HTS HTS

CEU - Site 2

HTS

Receivers ReceiverReceiver

Other FGs Other FGsOther FGs

MTS

HTS

IC

ServicesServices

Standardspeaker

ATO

Other FGs(Direct shipping)

Other FGs

Standard speaker (Primary)

Stand

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con

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Intercompany

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CEU Site 3 Supply chain overview

Site 3 is the main production facility for the standard speakers. These speakers are sold directly to customers and are used in home theater systems (HTSs) that are assembled in Site 2. This is visually communicated in the following diagram.

SalesPurchasing

Transfer

IC

Transfer Source site or Destination site

InventoryProduction

Site 2

CEE

Standard speaker

CEU– Site 3

Standard speaker (Primary)

Standardspeaker

Other parts

Plastic enclosure Primary route

Standard speaker

PCB

Intercompany

Site 3 Production

Standard speaker production is mainly MTS. The demand is forecasted based on stand-alone sales and dependent demand coming from HTS sales.

Standard speaker production

Standard speaker production has one production stage (route). The purchased plastic speaker enclosure and other parts are assembled and inspected to make the standard speaker.

The two following diagrams show a mini-supply chain and an example. The upper diagram shows a mini-supply chain for this route with work centers. The lower diagram, which is separated by a line, contains an example.

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Standard speaker production line

Site 3 Receiving

The receiving area holds the components that are used in standard speaker production. The goods are received against the purchase orders. Some critical parts, such as tweeters, are inspected by using the quarantine warehouse.

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Site 3 Shipping

The finished goods are stored in storage areas that are dedicated for standard speakers and are location controlled. The MTS standard speakers are shipped to Site 2 for HTS assembly per transfer order requirements.

The warehouse personnel are given pick tickets to pull MTS standard speaker transfer orders from the bulk storage areas. The goods are delivered against the transfer orders with the appropriate documentation.

Site 3 Inventory management

The low-cost high-volume parts, such as screws, are managed based on minimum and maximum inventory levels and backflushed at the start of the operation. Expensive components, such as printed circuit boards (PCBs), are ordered based on time driven coverage plans and are manually picked and reported against the production order.

The batch and serial numbers are recorded for tracked goods, such as PCBs. The standard speaker assembly labor times are backflushed at the end of the operation.

Site 3 Detailed supply chain

The following diagram shows a more detailed supply chain diagram for Site 3 and presents the information about Site 3 from the preceding sections.

CEE

Site 2

Standardspeaker

CEU– Site 3

Standard speaker (Primary)

Plasticenclosure

Standardspeaker

Standardspeaker

MTS

PCB

Parts IParts I

Plasticenclosure

Primary route

Standard speaker

IC

PCB

MTS: Make-to-stock, MTO: Make-to-order, ATO: Assemble-to-order, CTO : Configure-to-orderMode

SalesPurchasing

TransferProduction

IC

Transfer Source site or Destination site

Inventory

Intercompany

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CES Detailed supply chain

The following diagram shows the physical supply chain among the three sites in CEU and CEE.

CES

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Page | 32

Sales

CES operates across multiple customer channels to sell its products. The following list contains a taxonomy of the key customer channels. The four-digit numbers in parentheses represent the customer ID ranges of customers in each category.

Wholesale (1xxx) o Large (11xx) o Medium (12xx) o Small (13xx)

Major accounts (2xxx) o Hospitality (20xx)

Hotels (200x) Conference centers (201x) Training centers (202x) Universities (203x)

o Entertainment (21xx) Concert halls (210x) Shopping malls (211x) Stadiums (212x)

o Other (22xx) Airports (220x) Emerging (221x)

Retail (3xxx) o U.S. Retail (30xx) o Europe Retail (31xx)

Internet (4xxx)

Other (8xxx)

Intercompany (9xxx) A chain of retail outlets across North America and Europe sells CES branded products in traditional

retail stores. Each store has a high volume of unique customers. Therefore, each store is set up as a customer. The customer name of the retail stores in the demo data is indicative of its geographical location (for example, customer ID 3002 is Contoso Retail Seattle). CES also distributes its own branded products to retailers other than CES-owned retail stores. CEU distributes goods to retail outlets in North America, while CEE is the distribution center for European retail stores.

CES’s traditional retail store operations are complemented by its online presence. Because of an extremely large number of registered online customers, CES does not keep the unique customer records in Microsoft Dynamics AX. Instead, CES has one customer registered in Microsoft Dynamics AX that represents all Internet sales.

CES distributes products for other manufacturers through its wholesale channel. Each wholesaler is listed as an individual customer.

In FY04, CES started distributing audio visual products to major account customers. CES expanded its offering to this customer group in FY05 by providing consulting services to design custom solutions for each major account, as needed. CES considers major accounts as its biggest chance to grow bottom line profitability. CES can expand this channel without having to invest in capital assets because the warehouse and distribution channels are already in place.

As a complement to its tangible product line, CES offers service and maintenance agreements for all of its products. Products that are sold with a protection plan from retail stores are serviced in the service division of that retail store. Each major account customer sets up a service agreement for regular

Page | 33

servicing and maintenance of equipment that is performed at each customer’s location. CES also provides repair services for other manufacturers to support their warranties.

CES constantly tracks customer input and market trends in order to develop and provide the most technologically advanced products on the market. Analysis of its sales history, along with the tracking of customer input and market trends, enables CES to determine which products should be discontinued or replaced.

CES has customers in many countries/regions, and CES handles multiple currencies. The following table contains a list of some customers that do not use U.S. dollars for their transactions.

Customer ID Customer Name Currency

1204 Kingbird Wholesales CNY

2004 Valley Hotel MXN

2014 Berry Conference Center CAD

2034 School of Fine Art EUR

2104 Cheetah Concert Hall CNY

2114 Orchid Shopping Mall MXN

2124 Football Stadium EUR

2204 Ontario Airport CAD

Historical sales overview

Two years of transactional data is provided to facilitate year-over-year analysis by using the Business Intelligence (BI) tools that are provided by Microsoft.

Procedure for generating transactional demo data

The transactional demo data for CEU was generated in the following way. 1. Sales orders from July 2006 to September 2008 were imported into Microsoft Dynamics AX. 2. Master planning was executed on the first day of each month from July 2006 to July 2008.

This generated the purchase, production, transfer orders, and so on, that were needed to meet the delivery dates on the sales orders.

a. Some delays and variations (such as raw material over-consumption and under-consumption) were introduced to simulate more realistic data.

b. Master planning was not run between July 2008 and September 2008 to leave several sales orders unfulfilled to enable demonstration of other forms and functionality to customers

3. Vendor payments were made as per payment terms assigned to each vendor from July 2006 to May 2008. Several payments are due after May 2008, and those can be used to demonstrate vendor payment functionality.

4. Customer payments were also received per payment terms that were assigned to each customer from July 2006 to April 2008. This was done to ensure that some data existed in forms and reports that was related to overdue payments from customers and to enable you to easily demonstrate that functionality.

The following sections provide some general information about the seasonal nature of the sales

orders for various items in the Contoso demo data.

Televisions and projectors

1. Item 1000 (LCD Television HD Black 42 inches) has no transactions against it. 2. Televisions are the largest revenue generator for CES.

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3. Sales of LCD TVs are growing faster than Plasma TVs, while those of Projection TVs are declining to the point that CES is considering discontinuing those models in one to two years.

a. Sales of high-definition TVs (HD) are growing faster than non-HD TVs. 4. TV sales are seasonal. Peak demand occurs throughout the winter holidays (for example,

during November and December). There is a minor peak for a few weeks in TV sales at the end of January, generally in the U.S. just before the Super Bowl sporting event. There is a similar peak for a few weeks during the spring holidays during late March and early April.

5. TVs are sold by CEU only to some large and medium wholesale customers. 6. LCD video projectors and their lamps are sold primarily to major account customers, and

they are often used in projects and services. Sales of projectors can be seasonal at times; however, sales of projector lamps remain very even throughout the year.

Speakers

1. High-end speakers are the next best selling item group after TVs. However, because they are manufactured by CES, as compared to TVs, which are purchased through vendors, high-end speakers are more profitable.

2. Most of the high-end speaker sales go to major account customers in the entertainment industry, such as concert halls, stadiums, and so on.

3. Standard speakers are mainly sold through CEU’s retail outlets in North America. 4. High-end and standard speakers sales are generally also seasonal, similar to TV sales. 5. Car audio speakers are a new product line for CEU that began in FY06. Car audio speaker

revenue contributions are currently miniscule, but it is the fastest growing product segment, almost doubling in sales annually. The peak of sales for car audio speakers occurs in August and September. The clientele consists of young (secondary school and university students) who want good sound systems in their vehicles.

Home theater systems and receivers

1. Sales of HTS and Receivers are seasonal, similar to TVs. They are sold to wholesale and major account customers.

2. The 2.1 channel HTS and receivers sales are declining year-over-year and will most likely be discontinued by CES within a few years.

DVD players and recorders

1. Sales of standard DVD players have been declining over the years, to the point that CES no longer sells them through its own retail stores. CES only carries them because a few of its large wholesale customers still demand these, primarily for sales in the Asia-Pacific and Africa regions.

2. HD DVD player sales are increasing and are sold primarily through the retail stores, with some sales to major account customers. DVD recorder sales are increasing modestly as well.

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Procurement

Vendors of CES finished goods typically supply only one type of finished good to CES, such as televisions. Other vendors may supply an assortment of raw materials or packaging items. CES orders components directly from its vendors. Purchase related parameters determine if, how, and when the purchasing is going to be done.

The following list contains a taxonomy of vendors. The four-digit numbers in parentheses represent the vendor ID ranges of customers in each category.

Video (1xxx) o Televisions (10xx) o Projectors (11xx) o Electronics (12xx)

Audio (2xxx) o Receivers (20xx) o Audio (21xx)

Services (3xxx)

Parts (4xxx) o Speaker internal parts (41xx) o Speaker external parts (42xx) o Miscellaneous parts (43xx)

Packaging (5xxx)

Tax authorities (7xxx)

Other (8xxx)

Intercompany (9xxx)

CES vendors are located in the United States and in other countries throughout the world. The following table contains a list of some vendors that do not use U.S. dollars for their transactions.

Vendor ID Vendor Name Currency

1003 Fire Televisions CNY

1202 Ruby Electronics MXN

2003 Wingtip Receivers EUR

2103 Woodpecker Audio CAD

4003 Smoke Supplier CAD

4103 Lake Electronics EUR

4203 Beetle Electronics MXN

5003 Wide World Importers CNY

Purchase requisition

Purchase requisitions can be created, completed, and approved in CEU. Expense items, users, and employees have been set up in CEU demo data to support purchase requisitioning workflow.

Item group and inventory model

The Item Group Ind Exp (ID: 9xxx) has been created to consist of items set up to select from for purchase requisitioning. All items within this item group are considered as indirect expense items, which are not accounted for in inventory. All items within this group are associated to vendor 8001, and all items are defined as service items in order to avoid exposing any positive or negative inventory on-hand values. The items are associated with the Inventory Model Group PURCHREQ. This inventory model

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group has been set up without any inventory ledger integration and allows for both negative and financial inventory.

Catalogs

Two purchase requisition catalogs have been defined: 1. Purchase Requisition Catalog: Contains catalog items, which are discretely identifiable. 2. The Purchase Requisition Non-Catalog: Contains items from the item group Ind Exp, which

are multipurpose and are not by themselves discretely identifiable to a vendor. The distinction between catalog items and non-catalog items, is not a property of the item itself, but

is made within the definition of the catalogs for purchase requisition. A catalog item behaves on the purchase requisition as a regular item on a purchase order lines.

When a non-catalog item is selected, it does not automatically retrieve trade agreements or vendors, and it forces the user to add required information to the purchase requisition line.

Employees/Users and workflow

The following list of employees/users can be used in the Purchase Requisitioning workflow. To view the reporting relationships, see the Organizational Structure section.

Employee ID User User Profile User Group

3710 Alicia Thornber PurchasingAgent Admin

7000 Julia Thunderburk SalesandMarketingEXE Admin, PRComplete

7200 Kevin Cook SalesManager Admin

7240 Susan Burk OrderProcessor Admin

The purchase requisition workflow that is defined in CEU enables the following scenario. You must

log in as one the users to use the workflow.

1. Susan creates a purchase requisition and submits it. a. If the line net amount on any of the lines is 0 (zero) or a vendor is missing on any of

the lines, a task is raised and assigned to the PRComplete Role, which is associated with Alicia. Then Alicia adds the missing line price and vendor, and then completes the purchase requisition.

2. Susan is defined with a spending limit on her employee profile of USD 200. a. When Susan’s spending limit is exceeded, the purchase requisition is assigned to her

manager Kevin. Then Kevin has to approve or reject the purchase requisition based on his approval limit of USD 5,000.

b. If Kevin’s approval limit is exceeded, then Julia, who has an approval limit of USD 50,000, has to approve the purchase requisition.

3. Julia is set up as the escalation path if Kevin fails to approve the purchase requisition within one week from the approval being assigned to him.

Note: If you log on as any user or create a purchase requisition for any employee other than the

four employees who are listed in the preceding table, the purchase requisition workflow will fail because no reporting hierarchy has been defined for other users or employee. You will need to first set up the employee spending limit and approval limit and then define the reporting hierarchy for the employees in CEU who you want to use.

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Project and Service

Project

CES has been very successful in its retail and distribution businesses and have expanded a few years ago by offering project services to its major account customers. CES believes that this is a big potential area combined with its after sales support service to up-sell into its customer base.

CES also uses the Microsoft Dynamics AX Project module to manage internal processes and projects, such as home theater demo room building and renovations, marketing campaigns, customer research, and so on.

After-sales service

The after-sales service division generates revenue from a number of streams.

Service agreements

Some major account customers set up a service agreement to service and manage the equipment that they purchased from CES. Tasks covered by these service agreements can range from changing a light bulb in a projector to delivering and setting up new equipment, moving existing or pre-installed equipment, and so on.

The service agreements are managed by CES at three different levels: Gold, Silver, and Bronze, which offer different levels of services, response times, costs, and so on.

Service orders

Service orders are usually entered when customers call to request repairs to products that are not covered by service agreements. The costs of the services vary depending on the nature of the problem.

Service subscriptions

Some periodic services, such as subscriptions to the Contoso Entertainment Systems Magazine, which provides information on the latest line of products and other offers, bring in minimal revenue for CES. Acknowledgements In addition to several internal Microsoft employees who helped create most of the demo data,

we want to acknowledge two Microsoft Dynamics consultancy firms that made the largest contributions to the creation of the Microsoft Dynamics AX 2009 demo data. Sunrise technologies Inc (http://www.sunriseconsult.com) created a lot of the base data in CEU, as well as the original diagrams in this document, and STZ IT-BusinessConsulting Lörrach (http://www.stz-loerrach.de/en/) created almost all of the data in CEE.

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