Unfortunately, this was only the beginning. As competition is getting fiercer, management requires now the addition of security features to the different modules. No cost price should appear in the warehouses, and the goods receipts procedure should be split in two steps:
13– The storekeeper checks that the items and quantities are those that have been ordered, with no cost prices appearing on their terminal screen.
14– The purchasing department then checks that the prices are in accordance with the purchase confirmation they have received from the supplier.
As the purchase confirmation is still a manual procedure:
15– A new programme has to be written for this purpose.
Procedure flow is now completely under control. Or is it? We have not followed up on the payment terms and customers are getting more difficult to corner to obtain payment. We are now facing a cash flow problem and are incapable of preparing ourselves for the accounts payable schedule. We need a financial agenda that will remind us of the different payments to be chased, and to prepare the supplier payments to be made.
16– Management decides to commission the development of accounts payable and accounts receivable applications (A/R A/P).
17– The accounting interface has to change yet again.
18– We need now an A/P A/R interface with inventory and accounting.
Some wholesalers, with cash flow problems, request that goods be left as a consignment, and that payment be made if and when these goods are sold to the end user:
19– The analysts devise a new type of transaction: the consignment note.
20– It requires also an inventory card for each wholesaler, to allow management to replenish the stock of the wholesaler when sales to the end user are made
Management will purchase data collectors to help salesmen with their physical inventory at the wholesalers. The MIS department writes:
21– The interface to connect the data collectors to the application
22– The programme that will generate the sales order from the physical inventory.
Real life Scenario
The business is now well established, and management has decided to diversify. They will provide a wide choice of goods ranging from pharmaceuticals to spare parts, office furniture and foodstuffs. Management calls for a meeting with the MIS department to inform them that the company needs to upgrade their system to cover the line of business, and that they need the upgrade ‘yesterday’.
Management feels that the computer hardware should be upgraded to the latest in server technology, and that the business outlets dispersed over the country should logon to the system using the state of the art remote access technology. Management also feels that the current software, having emerged from the hard earned experience of being upgraded regularly, will need only small modifications to become operational.
But Management has forgotten that pharmaceuticals have to be traced with lot numbers and expiry dates, that items under guarantee should be traced with a serial number and a guarantee period, and that a sitting room is a set of armchairs, sofas tables and other accessories, and that the customer will never take the set as a set: he will disassemble the room, and the application will have to be able to do the same.
Management will also realize later that the company will purchase items in lots and sell them by piece, weight, length or any kind of unit of measure. Employees will need to identify the different items sizes using a different barcode and price for each size.
Management will purchase the items in containers and will consolidate orders from suppliers in one shipment. They will need to split the costs on the different orders and have the average costs of the different items reflect these charges. They purchase in US Dollars, Euros, and British Pounds etc. They sell in any of these currencies but not necessarily in the purchasing currency and will like to evaluate their stock in two reference currencies. Obviously, Management will need Management Reports in all these currencies.
To be continued.…
