Stakeholder analysis
It is vital when it come to a resolution of the conflict, as well as administration. The individuals or groups can be easily spotted by the action and sorted as per the influence they have on the action (Connelley, 2012). In the case study, Electronics Outlet is going through a patchy phase amidst tiff with the suppliers and the CEO decided not to write off the stock so that the net profit remains undisturbed and the loan can be procured. This will affect the internal, as well as external stakeholder.
Framework
(Douma & Hein, 2013)
Going by the overall analysis of the case matter it can be commented that the stakeholders will be adversely impacted by the action plan of the CFO. If the numbering system is followed where
1 = strong resistance
2 = Resistance
3 = Neutral
4 = Willing to change
5 = strong will and welcoming change
Then under the current scenario, the stakeholders will come under the ambit of 1 and 2 that is they will show strong resistance.
As there is a problem with the supplier, the production of hi-fi was of lower specifications and hence sold at a lower price. As per the estimation, the sale value per hifi comes to $60 as compared to the cost of production and closing stock needs to be written down. The ethical issue concerning is that the CFO does not want the adjustment to be done as the business is in a huge dearth for a bank loan at the end of the year. If the stock adjustment is done it will affect the business and therefore affect the profit of the company.
However, it needs to be noted that the CFO is undertaking unethical means to satisfy the loan process. There are two ethical issues involved in it. Firstly, the stakeholders will get a net profit that does not reflect the true and fair view of the company owing to the fact that the stock is not done. Hence, the figure does not reveal the actual position. If a stakeholder takes any decision considering the figures it will not justify the attempt. Secondly, it will impact the other figures and position in the financial statements (Goodstein, 2011). Therefore, it would tantamount to misstatements.
Going by the scenario, it appears that due to a certain problem with the supplier the products were manufactured of a lower technical feature and hence, the estimated sale value appear to be lower. Therefore, a write down is specifically needed as it will give effect to the low value of the stock. This will be more effective in nature because the business can move through ups and down. However, concealing this fact in the wake of fetching bank loan will destroy the sentiments of the stakeholder and if the business is unable to recoup the losses in the next year, it will destroy the goodwill of the business (Harrison & Colle, 2010). Therefore, in all probability, the business should follow a conservative mechanism and go with the written down value of the closing stock as it will be more meaningful in nature. Further, the business must try to tune its relation with the supplier, a major stakeholder. This will settle the process and can make up for the losses in the next season which will be a feasible course of action.
The ten control procedures that must be included in the system are as follows:
Enterprise resource planning (ERP) can be best described as the inventory control system that will enable to meet the need for this shoe manufacturing company. ERP is best suited for a company that is into production for large batches of standard items done in forecasting of the demand of the customers (Fowler, 2010). It is software that helps in business processing and provides an organization a chance to use the system of applications that is integrated and back office functions are automated that is related to technology, human resource and services. Hence, when it comes to product planning it is highly needed (ERP, 2016). For a manufacturing company it is highly essential because it helps to customize, as well as evaluate the data. Hence, it paves the way for a strong financial report like the business plan, commitment report of purchase, and most importantly the projection for inventory. The ERP system consists of various software of enterprises that are purchased on an individual basis and that meet the particular requirement of the organization. It is mainly concerned with a single area of business processes like inventory control, development of product, marketing, etc. The level of inventory can be known with ease and hence, decision making will be fluent in nature (ERP, 2016). As it is automated it will ensure stability and planning. Hence, anticipation of demand can be done through this system as it contains the data of the overall organization and leads to better projection.
Advantages
There are several advantages to implementing an (ERP) Enterprise Resource Planning System. Firstly, with the assistance of an ERP system, repetitive processes can be easily eliminated and the requirement of manually entering details is greatly minimized. Furthermore, this system can also play a role in streamlining business procedures, thereby making it simpler and more effective for them to procure relevant information (ERP, 2016). Secondly, instead of having data allocated throughout several numbers of separate databases, each detail can now be stored in a single location through an ERP system. Moreover, data is also kept up-to-date and consistent. Thirdly, this system can assist in making reporting more customizable and simpler. In other words, with enhanced reporting abilities, businesses can respond to complicated data requests in an easier way. These users can also operate their own reports without even depending on any assistance from the IT department. Fourthly, with the help of an ERP system, offering of high-quality customer service becomes simpler in nature (ERP, 2016). This is because sales and customer service persons can interact with the customers in a better way, thereby enhancing relationships with them, and making it more accurate and faster. Lastly, this system can also improve the accuracy and security of data because it allows restrictions to data feature that can make it secure from unwanted parties.
Disadvantages
With number of advantages, this system also has several disadvantages, Firstly, migration of the current information into the ERP system can be very problematic to achieve. Furthermore, integration of such ERP systems with the rest stand-alone software systems is also equally complicated. Hence, this can consume a lot of time and money, if attempted (Taylor, 2016). Secondly, the expenses of an ERP system, its planning, configuration, customization, examination, and implementation are very high in comparison to other systems. Further, there can be additional indirect expenses because of implementation of an ERP system, like upgradation of WAN links, new infrastructure of IT, etc (Sheilds, 2005). Thirdly, the engagement of users is very significant for an appropriate implementation of ERP projects. Therefore, exhaustive training of users and simple interface of users may become too complicated. Moreover, these systems are generally difficult to learn and to use. Fourthly, assessment before the implementation of ERP system is often unfavourable. This is because if such step is not conducted appropriately and highly experienced business or technical resources are not prevalent during the assessment, the implementation of ERP may become a failure (Gill, 2011). Lastly, very less customization cannot integrate the ERP system with the business procedure and very high customization can result in slowing down the project, thereby making it difficult to upgrade.
Vendor-managed inventory system plays a relevant function for the continuous supply of goods betwixt a vendor (supplier) and the retailer. This system has both its advantages and disadvantages that must be given due consideration (Lunka, 2015).
Its advantages are first, that it assists in enhancing profitability as there is the stability of the stock flow that can not only increase the retailer’s revenues but also of the vendor. Secondly, if there is regular stock supply, retailers can fulfill their commitment of providing products to their valuable customers, thereby enhancing their trust towards the business. Similarly, this goes on with the vendor’s case because if the retailer is satisfied with the constant supply of goods, it will, in turn, result in establishing a strong relation betwixt both parties (Lunka, 2015). This system also assists in alleviating data errors because since the vendor pursues all the details supplied by the retailer, there will be a lesser chance of the occurrence of data errors, and the processing of such requests can become faster.
Its disadvantages are first, that customer preferences alter in a heartbeat, and with new items become more demanding if the vendors do not supply a wide range of products and their contract restricts them from going to competition, they will be stuck with the items not desired by customers. Therefore, a system that binds a supplier so tightly with his vendor can create several complications. Secondly, a vendor-managed inventory system can be very bad when it restricts a business from seeking lower-cost or better-suited options (Zoberis, 2014). Furthermore, since VMI interconnects the supply chain so closely together, it facilitates in a discouragement to make an alteration that necessitates changing the inventory management system of the company. Lastly, when a business depends on this system, it exerts a huge bet on its capability to deliver (Olsen, 2012).
References
Connelley, T 2012, Aspects of leadership, Ethics, law and Spirituality, Marines Corps University Press
David, F.R 2009, Strategic Management: Concept & Cases, NJ: Pearson Prentice Hall
Douma, S & Hein, S 2013, Economic Approaches to Organizations, Oxford university Press.
ERP 2016, ERP advantages and disadvantages, viewed 23 March 2017 https://selecthub.com/enterprise-resource-planning/erp-advantages-and-disadvantages/
Fowler, M 2010, Patterns of Enterprise Application Architecture, Addison Wesley.
Gill, R 2011, ‘The rise of two-tier ERP’, Strategic Finance, vol. 93, no. 5, pp.35-40
Goodstein, E 2011, Ethics and Economics, Economics and the Environment, Wiley
Harrison, W & Colle, D 2010, Stakeholder Theory, State of the Art, Cambridge University Press
Lunka, R 2015, Vendor-Managed Inventory Benefits & Advantages, viewed 23 March 2017 https://www.nchannel.com/blog/vendor-managed-inventory-benefits-advantages/
Olsen, E 2012, Strategic Planning Kit for Dummies, John Wiley & Sons.
Porter, M 2008, Competitive Strategy: Techniques for analyzing industries and competitors,
Sheilds, M.G. (2005). E-Business and ERP: Rapid Implementation and Project Planning. John Wiley and Sons.
Zoberis, C 2014, 5 Benefits of Vendor Managed Inventory Systems For OEMs, viewed 23 March 2017 https://blog.fusionoem.com/blog/5-benefits-of-vendor-managed-inventory-systems-for-oems
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