The Platinum Manufacturing Company (PMC) is a manufacturing company that order huge number of office equipment by the special ordering system of the company. The PMC purchased of about 13 million dollar office equipment along with individual orders that ranges from $3,000 to about $30,000. The company makes special order on lower volume items that are included in the manager’s budget. There are four functions that are included in PMC are purchasing, receiving, Accounts Payable, and Treasurer. The special ordering system consists of the four functions that involves all the activities of the manufacturing group.
The special ordering system of Platinum Manufacturing Company generally has four basic functions of ordering system. The functions involved with the case study are the purchasing system, receiving system, payment system and the treasury system. At the initial stage of purchasing, a purchasing form is generally generated and then the form is sent to purchasing agents for the purpose of verification. Then a possible supplier is chosen by the purchasing department. After the supplier being chosen, the order is placed (Wijaya et al., 2015). The order of purchase is forwarded to the department and the supplier as well. In receiving process, the form is acknowledged by the department of receiving, and information about receiving the orders is done verbally. For making the purchase, there is an open purchase form that is being filled up to make payment of the order. When the purchasing department receives vendor’s invoice, the payment is proceeded for the unpaid bills. There are two types of payment in the system. If the payment is under 10,000 dollar, then the cheques are signed with the help of machine. And if the payment amount is more than 10,000 dollar, then treasure manager and the cashier manager has to sign the cheques for making the payment.
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Factors Involved in the Company |
Discussion |
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a) Weakness of Platinum Manufacturing Company |
The weakness that are involved with the company related with purchasing process has very high risk. There are some drawbacks in each of the four process involved with the organization. The weakness of the processes that are involved in the system are: |
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With the purchasing system, the weakness that is involved is that the system consists of form that are done manually. The purchasing form is manual because of which the purchasing process slow. Manual process makes the system much more complicated and takes much time to complete the process (Khairi & Baridwan, 2015). For confirming the purchase order, the receiving department makes the confirmation verbally that is not at all desirable. There may be misunderstanding in a verbal communication in between the purchase department and the receiving department, which will lead to wrong supply of the equipment. The purchase order documentation of the system is also checked manually for purchasing of file. The manual process of opening the purchasing order leads to risk of placing the order. All the manual process may lead to mistake that can lead to wrong delivery of the products or the equipment. |
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In the receiving system, the receiving department gets the order after the order is placed and the order is approved by putting a stamp on the order form. The order form is stamped with all the orders made on it. This is a manual process that takes much more time for processing. There is also a chance of making mistakes as the process is human oriented and there can also be error with the checking process of the system. The communication that is done is also verbal and does not involve and automatic process. |
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The payment process of the Platinum Manufacturing Company is also done with the help of cheques. The bills that are generated are done manually by filling up a form for creating the invoice. This may lead to more making of mistakes for the system. Filling all the details of the invoice is done manually, which also takes much more time related to automation process. |
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In the treasure process, there are two types of cheques that are generated by the company. Payment in cheques are very old fashioned way of making payment (Diatmika, Irianto & Baridwan, 2016). The payment of amount more than 10,000 $ is only forwarded is the cashier and the treasurer signs the cheque. This may lead to slow down the process of payment. Situation may arise, where the cashier or the treasurer is not present. In these situations, the Payment process will be stopped. |
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b) Impact of Weakness Involved |
The company faces many difficulties or weakness because of the manual purchasing process of system. The purchasing system of the company confirms the deal only after confirming it from the sales department verbally (Hassan, Nasir & Khairudin, 2017). Verbal communication leads to much miscommunication in between the sales department and the supplier department. Miscommunication may lead to wrong delivery of equipment. |
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The data in the system are checked and process manually. The insertion of data, data checking, and data entry on the form are done manually (Laudon & Laudon, 2016). This is one of the main drawback of the system. The manual process may lead to mistakes of data entry and can also lead to mismatch the data. For entering the data manually, the time taken is also more than any other system. |
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The information that are stored in the system are all done manually without the involvement of online software (Simkin, Norman & Rose, 2014). The processes are done manually the employees of the system. Manually storing of data can lead in misplacing of data and wrong input of data. |
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The payment method of the company also is an old method of payment (Sudaryanti et al., 2015). The payments made by the purchasing department are done by Platinum Manufacturing Company to supplier and the work is done manually that leads to certain risks for offline transactions. |
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c) Specific Controls to Mitigate Risks |
There are many ways to mitigate the manual process that goes on in the purchasing process of Platinum Manufacturing Company. Two processes can be identified while dealing with the issues of the organization. The manual process of entering the data and establishing a verbal communication in the system makes the system slow. All the processes that are involved in the system should be made manual so that there does not exists any place of mistake. The checking of all the data, and entering new data in the system can be done automatically by software systems (Libby, 2017). The automation system will reduce the risks of handling the data in the company and also takes much less time than manual process. The company can use bar code for making the system more fast and accurate. To mitigate the misunderstanding created by verbal communication, electronic forums can be achieved. Electronic forums can be used to arrange all the communication involved in the system in formal way (Uyar, Gungormus & Kuzey, 2017). The company can also implement a user interface so make the communication smooth. Al the system involved in the company should be connected via LANs. |
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d) Recommendation |
For making the purchasing process smooth, the company is recommended to use all Internet Technology methods. There are many system in IT that helps to make the system automated and decrease the timing of processing the data (Collier, 2015). The IT technologies involves barcode scanning, electronic forums, and can also use fund transfer that is done online. The organization can get maximum profit out of these technologies. The infrastructure of the network that is established in the company should also be changed so make the system an automated one. There is a need of user interface in the system. The verbal communication in the system is not at all desirable (Guragai et al., 2015). The Platinum Manufacturing Company can implement cloud architecture for storing all the data that are provided by some cloud vendor. The data that are stored in the cloud are to be secured so that there is no data breach in the system. The security is a major concern that the company needs to deal with. The system and the networks should be secured with passwords so that others cannot get access to the data. The data should be only accessible with the authorized user only. The payment system of the company should be made online to avoid the cheques signing from the cashier and the treasurer (Susanto, 2017). Payment system should be made in a secure way so that there is not failed transaction in the system. Backup of data is also to be kept in case of any data breach taken in a company. There should also be a firewall to control the access of unnecessary data. At last, for implementing a smooth system in the Platinum Manufacturing Company, the company must held training regarding all the automated equipment that are to be involved in the system. |
Conclusion
This case study consists of ordering system of the Platinum Manufacturing Company. This company uses special ordering system for purchasing the office equipment in the system. The system that is followed in the company fully done manually and there also exists a verbal communication in between the purchasing department and the supplier. This report states the drawbacks of all such methodologies that are used by the company with all the procedures for mitigation. The risks that are associated with the methods of communication, and the mitigation process are described in this report. A recommendation is also provided for the system for improve the methods of the company.
References
Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.
Diatmika, I. W. B., Irianto, G., & Baridwan, Z. (2016). Determinants of Behavior Intention Of Accounting Information Systems Based Information Technology Acceptance. Imperial Journal of Interdisciplinary Research, 2(8).
Guragai, B., Hunt, N. C., Neri, M. P., & Taylor, E. Z. (2015). Accounting information systems and ethics research: Review, synthesis, and the future. Journal of Information Systems, 31(2), 65-81.
Hassan, H., Nasir, M. H. M., & Khairudin, N. (2017). Accounting Information Systems. In SHS Web of Conferences(Vol. 34). EDP Sciences.
Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information systems in small and medium sized Malaysian manufacturing firms. Journal of Information Systems and Small Business, 1(1-2), 1-20.
Khairi, M. S., & Baridwan, Z. (2015). An empirical study on organizational acceptance accounting information systems in Sharia banking. The International Journal of Accounting and Business Society, 23(1), 97-122.
Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education India.
Libby, R. (2017). Accounting and human information processing. In The Routledge Companion to Behavioural Accounting Research (pp. 42-54). Routledge.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information systems. John Wiley & Sons.
Sudaryanti, D., Sukoharsono, E. G., Baridwan, Z., & Mulawarman, A. D. (2015). Critical Analysis on Accounting Information Based On Pancasila Value. Procedia-Social and Behavioral Sciences, 172, 533-539.
Susanto, A. (2017). The Empirical Testing How the Quality of Accounting Information Systems Affected by Organizational Structure Research Atuuiversities in Bandung. Asian J. Infarm. Technal, 16(1), 1098-1105.
Uyar, A., Gungormus, A. H., & Kuzey, C. (2017). Impact of the Accounting Information System on Corporate Governance: Evidence from Turkish Non-Listed Companies. Australasian Accounting Business & Finance Journal, 11(1), 9.
Wijaya, R. E., Ludigdo, U., Baridwan, Z., & Prihatiningtias, Y. W. (2015). Paradigm Blurred: Opera Cake in Management Accounting Information Research. Procedia-Social and Behavioral Sciences, 211, 859-865.
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