Discuss about the Enterprise Resource Planning System for Disk4U and Sungate Foods.
According to Monk and Wagner (2012) ERP which stands for Enterprise Resource Planning is a fully automated computer-based system for management of resources. The resources of the system are physical assets, finances, human resource and the components. The purpose of this automation is to ensure better flow of information between the different aspects of the business functions and the stakeholders (Hall 2012).AI (Accounting Information System) is a subsidiary of ERP and emphasizes more on the finances of the system. ERP/AIS help organizations to have a clearer picture of the business and ensure better inventory, production, and financial control.
In this report it mainly analyzes about the two business processes and their requirements for implementation AIS/ERP software for the organization. The two organizations are Disk4U and Sungate Foods. For the purpose of the business proposal, the system requirements have been analyzed, with the help of the analyzed data comparative study between the available AIS/ERP software have been done for the selection of suitable software for the organization have been suggested.
The Disk4U which is based in Sydney specializes in CDs and Vinyl records. The company is family owned and has four business outlets spread around the city. Earlier the business used to be limited to the physical shops and orders over the phones, which have lesser demands which could be met with the help of manual computations and planning. With the advent of the internet, the company also started taking an order over email and recently started online channel through Ebay. The expansion led to the requirement of better planning and computation tools for the organization. The lack of advanced facilities in the organization is affecting the capability of the team to take the required decisions on time (order processing and delivery). The organization doesn’t possess the further capability to accommodate expansion.
Hence it is highly recommended that the organization either goes for more employees or the company goes for automation systems that need working knowledge about the computer and is much more versatile and cheap compared to the equivalent workforce (Dumas et al. 2013). The company takes an order over the phone, email and through Ebay, which makes the delivery process a tedious task due to the variable address of delivery. The present system due to lack of automation suffers various disadvantages like lack of co-ordination between the outlets, which results in late delivery and sometimes delivery through the wrong outlet, which is a result of mismanagement of resources (Slabbert Seymour and Schuler 2016). Hence the expansion has resulted in severe mismanagement of resources and the possible solution for proper management is process automation.
The companies of the market are facing difficulties in hiring in this booming economy which has resulted in the closure of the organizations around the world. The companies which are more resilient are facing problem in up gradation of the system (Weske 2012). The evolution of internet has changed the demographics of the present market, and the customers prefer the online mode for their order placement. The placed orders are delivered at the doorstep, hence making customers life easier. Hence the customer loyalty has been compromised hampering the previous market scenario. Hence the thriving businesses are making their presence in the online market (Meeker and Wu 2013). For management of the online business, it becomes necessary to have an automated system for taking the order and making the delivery for winning the trust of the consumers. For an efficient system, which co-operated between the physical and the digital world the need of AIS/ERP is paramount.
The need of online presence has been seen in the above section, but the presence of physical location along with the internet presence sets a higher standard for the organization. The physical location long has been associated with loyalty and trust and having a physical outlet always adds to the credibility of the organization (Jones 2013). Hence a hybrid system of an organization is better than singular approach and organizations around the world are following this system. But this hybrid model needs greater resources, and the problem can be resolved with AIS/ERP (Johansson and Carlsson 2013).In his article Morgane Palomares says that the customer today has become knowledgeable about the products and services and for making the services that are more price conscious the organization should be interconnected and automated.
Figure 1: Enterprise resource planning
(Image source: blog.thehcigroup.com)
Disk4U is a company which deals with CDs and Vinyl records. The organization which was manual till date is facing the brunt of globalization and the internet. The requirement of the organization is simple. It wants to maintain the present business as a hybrid model that has both the online and the physical presence. The physical system of the organization consists of four shops that are distributed throughout Sydney. The business due the physical outlet had been manageable due to a lesser amount of sale through the outlets and with the present workforce, but the expansion of the organization into internet has made the presence of the company global which has resulted into increased orders and for the management of the financials is becoming difficult day by day. Also, the delivery system is suffering due to inefficient management and is causing a delay in services (Masoud 2013).
Figure 2: The accounting process in Disk4U
Image Source: As created by author
Hence the AIS/ERP system has been suggested for Disk4U.The automation system is also capable of adapting to the future requirements and will help the organization have a better outlook about the processes being carried out by the system. Since Disk4U is distributed over four different places, a centralized automation will enable the managers to have a centralized view of the working system. The company also takes orders over the phone, email and through Ebay. Hence the delivery address is not constant and is different for each delivery. The delivery can be assigned to the specific outlet with the help of ERP software. Since the data is managed centrally, the faults in the system will be reduced, and the process is bound to be more efficient.
ERP is management software that deals with the planning and management of the various component of the business process. ERP deals with segments like procurement, supply chain, human resources and finances (Johansson and Carlsson 2013). The software that inherently emphasizes the management of the finances is known as the AIS. A small organization that has limited management scopes opt for AIS and the organization which wants the planning associated with all its finances to opt for ERP. AIS is an integral part of ERP and hence for this project will be treated as one. For designing and selection of the system the various components of the system such as Planning, inventory management, production report and management updates, accounting information and bookkeeping, finances, and sales and purchases have to be updated in due time (Aslam Coombs and Doherty 2012)
The procurement functionality in ERP deals with product planning, inventory management and manufacturing associated with the organization. Supply chain deals with the marketing, sales, and purchases of the organization. Human resources deal with the man forces that are working for the organization and the finances deal with the monetary dealings of the organization which deals with purchases and income (Leon 2014).
For the selected organization Disk4U, there are two options that are available and can be implemented. The first option is offline software installation on the computers that are installed in the facility and the second one is the cloud services that doesn’t need software to be installed in the system, the rentals are paid on a monthly basis and can be accessed anytime anywhere, and the update is all real-time and synchronized. There are ample cloud service providers in Australia, some of them being Sage, SAP, MYOB, Xero, etc.
For the ease of automation, the AIS/ERP that has been selected for the organization is Xero. Xero is the premier in the field of cloud accounting and bookkeeping in Australia. Cloud services have been suggested for Disk4U because of the size of the organization and its distributed nature. As it is already known that the cloud services are accessible from anywhere, and the competitive pricing makes the option extremely viable. The starting price for the cloud services is only 20 USD, and the services can be accessed even from a Smartphone(Xero Accounting Software, 2016). Since the requirement of the organization is not very high the starter pack, whose price has been mentioned above, is suggested. The packs can be upgraded with the growing business, and it goes pretty easy on the pocket.
Sungate Foods is a rice and wild rice producing company based in Victoria and produces up to 80 tons per hour in peak season. It has a staff strength of around 200 employees and has three processing cum warehouses located in western Victoria. The largest milling facility of the company is situated in an area of 125,000 square feet and has a storage capacity of thirty thousand metric tons. The paddy in the raw for is processed in the facilities and the pure, clean rice is generated for consumption by the people. The organization is a medium scale company and has varied needs, for that purpose, there are various facilities maintained by the company. The organization has its rail spur, 250 thousand square feet of roads and air pollution controller which scrubs 240,000 cubic feet of air every minute. The company has the capability to work for 24 hours a day in peak season.
To feed its production rate, the company buys from 350 farms and subsequently packages, distributes and finally sells the products in both domestic and international markets. The process of getting the rice is tedious and involves cleaning, boiling, drying the obtained output, milling, finally sorting and packaging the clean rice. The cleaning section contains the paddy cleaner which sorts out the stones and the dust; this makes the paddy free of any dirt. In the next step, the paddy is half cooked which is known as par-boiling so that the grains are made hard enough to withstand the pressure applied during the milling. The boiled rice is then dried and moved to the milling section where the husk is removed from the rice, and clean rice is produced (Kondo and Kawamura 2013).
Figure 3: the information flow in ‘Sungate Foods’
Image source: As created by author
The organizations similar to ‘Sungate Foods’ are facing huge pressure due to a population boom and increased crop production. The pressure on the organization has resulted in the expansion of the facilities and development of the new facilities. More facilities under the same management need a proper management framework for maintaining quality and the speed. Quality and the speed of production is of paramount importance to an organization and decides the future course of the company (Jeston and Nelis 2014). For maintaining the desired goal of an organization, it is mandatory that the real-time data regarding the plants are available to the management for proper decisions. With the present infrastructure and facilities, the functions of the management were getting hampered in the organization, and the errors that were caused due to the mistakes had to be rectified which involved a great deal of works that costs the company a fortune (Bender et al. 2016).
Hence the similar businesses need a system that can be easily edited and updated in case of any discrepancies. For ease of operation Ricegrower Association have implemented automated systems for speeding up of the various aspects of the farming which also ensures better work compared to previous methods(Rga.org.au, 2016). Ake Rice Mills have made the whole process mechanized which has helped in reduction of costs and processing time. This automation is the whole process has made the system more versatile and rugged. Involvement of lesser human workforce has resulted in lesser revenue that is being spent on the workforce as the machines are more capable compared to human beings(Akericemill.com, 2016). Hence it is recommended that the present system should be automated for ease of operation and saving time which will in time save a lot of human resources and ease the pressure on the accounting department and the management.
Sungate Foods is a large organization and deals with a large amount of data every day. The data quantity can be guessed from the amount of work that the organization does every day. Manual data handling of such massive amount of data is bound to errors that will either result in a faulty calculation that can compromise with the name and fame of the organization. To ensure faultless transaction records, the time wasted is very large and involves a huge amount of human resources. A survey that has been done by the organization reports ten times the wasting time for editing the error that has been done while creating the multiple entries that is a fact of life for organizations of such order (Krahel and Vasarhelyi 2014). The time that is being wasted for error management and correction could be efficiently used for other productive works.
The compilation of the financial records takes around weeks for completion from the patchworks. The staffs of the organization are always working for data insertion and the faults to the system make the work more tedious. The need for updated inventory is paramount for any organization and ‘Sungate Foods’ spends a lot amount of work to maintain it. The inventory data is also important for making the proper decision for a system. The absence of data or a faulty inventory feed will result in bad decisions that will in due course affect the organization which should be avoided on a priority basis. Hence the organization has expressed interest to implement the AIS/ERP system for minimization of calculation faults, that will reduce the time wasted on doing the calculations again and will help the management to have a better view regarding the system for taking valuable decision which will take the organization to the pinnacle of its glory (Aslam Coombs and Doherty 2012).
Figure 4: The characteristics of information system
(Image Source: Hill et al. 2013, pp: 210)
The Enterprise Resource Planning deals with the various aspects of the organization management. The various resources that are being used by the organizations are effectively managed to meet the ultimate goal of production. The aim of ERP is to ensure a smooth information flow between the departments so that the decisions that are taken by the concerned authorities are data driven and is not some whimsical decision (Chai Liu and Ngai 2013). Hence the ERP suites that are being sold on the market are designed to collect and organize all the data from the various levels of the organization and provide it to the management, so that have a better insight into the performance indicators in the real-time. There are five major components of the ERP; they are financial management, customer relationship management, human resource management, manufacturing resource management and supply chain management (Monk and Wagner 2012).
Figure 5: Represents the accounting cycle of ‘Sungate Foods’
Image Source: As created by author
The ERP software module helps the administrator of the organization to administer the process parameters of the company in real-time. The process parameters are the supply, procurement, inventory, finance, project, product lifecycle, human resources and the different critical factors of the process through the interconnected modules. For successful execution of the ERP, the whole system should be interconnected for a real time feed of the necessary parameters. There is various ERP software available in the market space some of them are: MYOB, SAP, Sage, etc. This software makes management of the system more efficient and time saving.
The need of ‘Sungate Foods’ is very specific. The organizations need Accounting Information System, for easing the workload of its finance department and make the data available for better management decisions. The AIS services can be sorted out with the help of the available AIS software like Xero or MYOB, but the better management can’t be facilitated with the help of AIS only (Usman Coombs and Neil 2014). For this purpose cloud ERP software has been selected for the organization. The selected service provider is Sage X3. The Cloud services can be accessed on any device and anywhere in the world and provided all the needed services like capturing all the information in a single platform, intelligent business integration and implementation of the application within eight weeks. With the pricing of 112 USD per month per user Sage is offering a price that is unbelievable for many (Go.sagex3.com, 2016). The implementation of the software on the cloud in going to cost around 8300 USD and the users can be increased or reduced on a monthly basis. The flexibility and the price that is being provided the Sage are incomparable and with the cloud services that are being offered by the company it is bound to become a market leader.
Conclusion
The report contains two cases that propose two business proposals for two organizations. The prepared business proposal presents the implement ability of the AIS/ERP software for the organizations. The two organizations that have been scrutinized here are ‘Disk4U’ and ‘Sungate Foods’. The former company deals with the CDs and Vinyl records and has outlets in the city of Sydney. The later company is a rice mill conglomerate that has processors and warehouses at three different locations in Western Victoria. The proposal has successfully suggested AIS/ERP software for data management according to the requirements of the organization. Further, the software services have been scrutinized based on the services and price of services so that the companies get the maximum out of the money they spend.
References
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