Acct6001 Accounting Information Systems : Assessment Answers

GAAM is an international company that manufactures mainly hydraulic systems, building systems, and metal products. Specifically, it makes hydraulic equipment such as gear pumps and motors, telescopic cylinders, and control valves. Used in heavy-duty vehicles such as cranes, these products are sold to domestic (US) and foreign original equipment manufacturers. The company’s headquarters are located in the South Australia. Employing nearly 3,800 employees around the world, it operates 27 facilities in seven countries.

GAAM decided to conduct a process reengineering project with the objective of improving its global competitive position. Your team was formed to conduct a thorough investigation of the departments in the company. You are expected to come up with a Business Process Re-engineering recommendation for improvement. The following are the overviews of the major departments that needs major changes:

Overview of The Purchase Departments 

The purchasing department is mainly responsible for the procurement of hydraulic pump inventory. Maintenance, repair, and operating supplies (MRO) are also purchased through this department. This includes any equipment that needs tooling, supplemental materials such as foundry sand, various ingredients used for pouring castings, and any other non-production related products or services.

The department is comprised of a purchasing manager, two buyers and one secretary/clerk. It purchases an average of AU$15 million in inventory items, or approximately 3,000 parts each year. An additional AU$6 million in purchases in MRO per year is also made.

Work?ow – Inventory Purchasing

Inventory requirements are determined primarily by the Purchasing Department (PD), based upon existing order demands, service order forecasts, and safety stock requirements. The requisitions are recorded in the spreadsheet and printed out every morning by the PD. The PD uses a PC-based software that retains historical information regarding the last 11 purchases of an inventory item.

The purchasing department processes an average of 250 purchase orders (P/Os) each month for inventory items. Each of these documents is ?led for two years in the department, then moved to the corporate archives for seven years as required by law.

Historical information regarding inventory purchases is also kept within a separate card ?le in the purchasing department. Each inventory item has its own card(s), upon which is recorded any information regarding past purchases of the item. This information would include date of purchase, P/O number, price, quantity, number of rejections, etc.

Each time an inventory purchase is made, the inventory buyer will retrieve the card for that item and record the new information. This is usually done on the same day that the actual purchase is made, ensuring that the card remains current. Most of the information that the card system tracks are also maintained in the P/O program. However, the card system allows for the addition of notes, as well as a longer history.

After the receiving department receives the goods, the P/O is checked against a generated receiving report that is generated in the receiving department but printed in the purchasing department. This check is done to ensure that there is a match between what was ordered and what was received. The work is usually done by a secretary. Any discrepancies are forwarded to the buyer.

The company occasionally receives purchased items that are defective. In this case, a vendor reject form is forwarded to the purchasing department. This form details the vendor, the receiving location, the P/O, the item and quantity being rejected, and the reason(s) for rejection. Once a rejection form is received by the purchasing department, the necessary purchase adjustments can be made. The changed procurement information is re-entered into the spreadsheet. This process happens approximately 25-30 times each month.

Answer

Introduction

The report deals with the case study of the GAAM. The organization generally deals with the hydraulic system and the metal products. The organization provides the components for the heavy-duty vehicles. In addition to this, they also sell the products to the manufacturers which are both domestic and foreign as well. The headquarters of the company are located in South Australia and the organization is generally responsible for the employment of around 3,800 employees. The organization has operations in about 27locations in seven countries. In addition to this, the organization performs the processes by using the re-engineering methods. A team was formed for the re-engineering of the projects that are currently handled by the organization. The organization is now looking in to the further development of the re-engineering methods followed by them. Hence, they are proposing to provide them with recommendations for the further development of the re-engineering procedures.

The analysis of the business processes of the organization have been described in this report along with some recommendations and exceptions for the procedures.

The report consists of the purpose of the business procedures, participants of the system, input and output of the systems, exceptions and business process model is provided in this report.

Purpose

The main purpose of the project is to develop plans that would help the organization in maintaining the business development process. In addition to this, the main concern in this, situation is the overview of the purchase department. The main purpose of this analysis is identification of the anomalies of the processes in the current flow of business procedures. It would also help in the mitigation of the required process and adoption of efficient process that can be chosen efficiently and additional procedures can be added for the system. Moreover, the additional process would help the system in performing the job of the organization efficiently. Further, some additional process which are not required by the system would also be optimized so that the efficiencies of the business procedures of the organization can be improved to a great level.

Participants of the System

The main participants of the system are:

• purchasing manager
• two buyer
• secretary clerk.

The inventory items are handled by these participants. The purchasing manager determines the requirements of the inventory.

The requisition of the purchases is based primarily on the data recorded on the spreadsheets. The department of purchase uses a PC-based software that helps in the retention of the historical information regarding the latest purchases of the organization. On an average the 250 purchase orders are handled in a month, for the items of the inventory.

Inputs and Outputs of the System

• The main inputs to the system are the date of the purchase, P/O number, price, quantity and the number of rejections.
• Each time any type purchase is made the information of the card would be stored in the system and it is done on the same day when the actual purchase is made and in addition to this, the information on the card is also maintained by the program of the system.
• After the goods are received by the department the P/O is checked out and report is generated which is signed by the receiving department.
• The report is also printed by the Purchasing department. A checking procedure is followed by these procedures that helps in the marinating the information about the reception of the goods by the department. It helps in ensuring the product is delivered appropriately.
• All the work is generally done by the secretary. In case there are discrepancies are delivered to the customer. In case a defective item is received by the company a vendor reject form is forwarded to the purchasing department. After this, the purchasing department fills up the rejecting form including the details of the vendor, receiving location and P/O and the item and the quantity being rejected.
• On receiving the form, the necessary purchase adjustments are made.

Exceptions

In addition to the main process there can be alterations in the business processes of the organization. There have been assumptions made for the buyer and the process would be starting from the buyer and the buyer would be performing the processes such as placing order and making payments. The system processes are very efficient, however there is no mention of the payment procedure and for the discrepancies in the delivery of the products to the inventory. Hence, the payment process for the business of the organization has been assumed and it is included in the section of exceptions. The process involves the steps of the organization to provide the payment to the vendors from where they have purchased in their inventories. The process would then be handled by the finance department in the organization. They would at first procure the invoice for the products form the suppliers. After the invoice has been delivered the organization would select the payment method and make the payment for the products which they have purchased.

Business Process Model

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