Term Paper MIS 320 – Digital Enterprise Management Section:1 Fall 2020 Submitted on: 14th, January, 2021 Submitted to: Kabid Md Surid (KMS2) Team 3 : Deviants Fayaz Bin Amin 1731887030 Md. Mohsin Islam Sajol 1812835030 Md. Toabur Rahman 1811887030 Sajjad-Al-Nahiyan 1812113030 What are the functional departments in the headquarter? Describe functions of each department. Functional areas are sections of a business that perform a certain category of tasks, the areas have constant communication with each other as most of their tasks are inter-related. These areas help each other to complete the company’s tasks and ultimately help the company to achieve their goal (Florida tech online, n.d.). For the headquarters, each functional area will have a department and even though all the functions will not be conducted there. There will still be top officials, who will oversee the whole process and receive data from places like production, warehouse and so on. So, for XYZ Phones there are five apparent departments, namely production department, warehouse department, procurement department, sales department, and accounting department. Production Department: The activity of the production department in the headquarter is to oversee the production process, try to design production process of new products if it is needed or modify processes by which the company saves money, oversee and generate reports on aspects like the efficiency of production process and if quality of products that are produced are up to the mark. Employees from this department might conduct factory visits or get digitized reports on a regular basis from the production plants. The production department’s core function is to carry out the production process activities, this might include producing products, requesting for raw materials, quality and cost control, production planning and so on. In the above-mentioned case, “XYZ Phones” have their production factories at Tejgaon Industrial Zone, Bangladesh and Hyderabad IT Park, India. For Bangladesh, they produce three smartphones branded as “Optimus Basic”, “Optimus Basic+” and “Optimus Prime” in their production plant located in Bangladesh, and they produce smartphones called “Bumblebee” and Optimus Pro” for India in their production plant located at Hyderabad IT Park, India. Warehouse Department: The activity of the warehouse department in headquarters is to oversee the overall condition of the warehouse, to generate reports on the condition of the warehouse and figure out new ways to increase efficiency, and reduce storage costs of the warehouse. They also try to find out if there is need for expansion and provide guidance to employees in warehouses to conduct any changes if required. The core function of the warehouse department is to store and transfer the products. These tasks may include requesting for new stock and raw materials; receiving raw materials and new stock; pick, pack and ship orders; inventory management; recording inventory and raw material level and so on (Vinculum, 2020). “XYZ Phones” have 6 warehouses of which 2 are in India where one is for raw materials and the other is for finished goods. The other four warehouses are located in Bangladesh where 2 warehouses are used to store raw materials and the other two is used to store finished goods. Procurement Department: The activities of the procurement department in the headquarters is to try and find new suppliers who produce better raw materials, negotiate with existing suppliers to get better rates on products and help the other departments of the company in obtaining what they need. Since the company is responsible for producing products and there is no indication of the company producing its own raw materials, this means that the company has a procurement department which is in charge of obtaining raw materials, and other assets needed for the function of a business, sending sales order, ensuring right quantity and quality of obtained goods and so on. Sales Department: The sales department in the headquarters deal with the data from all the sale locations and services centers. They generate reports on which products is doing well in which region and try to generate strategies which will help them increase sales of products. They also try to identify needs of various regions and convey the data to the other department which can be used to produce new products or change existing products. The core function of the sales department is to complete sales activities and promote the product in market as well as provide after sales services. “XYZ Phones” have 5 sales centers in Bangladesh which are in Gulshan-1, Kuril, Motijheel, Uttara of Dhaka and Lalkhan Bazar of Chittagong. There are 6 sales centers in India which are located in Bandra of Bombay, New Market of Kolkata, Panaji of Goa, Agra and Noida of Meerut and in New Delhi city. Besides that, there are also service centers, of which 2 are located in Bangladesh and 3 are located in India. Accounting Department: The main task of the accounting department is to track and record every financial transaction of the company. In doing so they can produce financial statements such as balance sheet, general journal, producing invoice, billing and adjusting accounts and so on. So, from the above discussion we can realize the functional departments of XYZ Phones headquarters and the functions of each department. Come up with a figure on the ERP org structure and describe each level. ERP or Enterprise Resource Planning is the software that ensures integrated business process. By integrated business processes we mean the ability of various functional departments of a company to work together and communicate with each other through the ERP software in order to complete a task. Now the organizational structure hierarchy of the firm is broken down into three levels. Which are described below: Client: Client represents the company; it has a server which hold all the data from the company codes and plants. The client will have a single financial statement which will be the combination of the company codes’ financial records. The data will be in the local currency of the company HQ or any other universally recognized currency. Company Code: Company Code is the division of business processes based on factors such as location or subsidiaries etc. It is a self-contained system consisting of its own financial records and own server for storing data. The currency values will be in the currency of where the company code is located in. For “XYZ Phones”, there are two company codes, one is in Bangladesh and the other is in India. Plant: Plants are the basic organizational processes or units of any firm. Each company code will have several plants and the plants within each company code will work together to complete various tasks. “XYZ Phones” have 12 plants each in Bangladesh and Indian consisting of various warehouse, assembling plants, sales and after sales service centers and so on. Figure 1: ERP Diagram of Organizational Structure of XYZ Phones How an ERP can help integrate the functions? Why do you need these integrations? ERP or Enterprise Resource Planning helps the company to run efficiently through automation and helps stop the phenomenon of silo effect. Silo effect occurs when any functional area of a company does not communicate with other functional departments and does any activity on its own. The system will ensure business activities by automating the information sharing system among the related department without any information gap or missing information. The ERP system also as mentioned above ensures integrated business process. Now to better describe how ERP can help integrate the functions we can look at the procurement process of XYZ Phones. The advantages and need for ERP and integration is mentioned below: • If integration is established with the help of ERP, the employees of different departments can access the data of their own and other departments easily and efficiently. This will help the company in generating better decisions, making decisions faster which will help the business to grow faster. • Integration will facilitate better communication and as a result people from different departments will be able to communicate instantaneously. This will save the company from failing to complete time sensitive deals and share information in a more cost-effective way which will save the company money and help it to grow even further. • Integration ensured by ERP will abolish the need for keeping copies of same data in different departments and the extra time required for sending and receiving data. As these will be instantaneous, time will be saved and efficiency will be increased greatly. • Since every department will be integrated one can access various types of information about the company from a single point and can get the most updated information at their fingertips. This sort of access makes things easier to manage. This aspect also allows the company to coordinate its efforts simultaneously to ensure each strategy generates profits to its fullest. • If any problem arises, the identification of such is faster than any traditional system. This also means that the managers and maintenance personnel can tackle such unfortunate events with ease and keep the company running as smoothly as possible So, from the above discussion we can understand how the ERP helps to integrate every functional department of the company and how much such integration is important. Discuss service-oriented architecture (SOA) for the whole organization. Consider all parts of the org. By Service Oriented Architecture or SOA, we mean any type of technology that allows communication between multiple 3 tier client server systems, be it within the company or outside it using internet protocol. This helps with integration, efficiency and adds value to the services are provided by the company. The most essential aspect of Service Oriented Architecture is Client Server Systems. Client Server Systems are built upon Client Server Architecture which consists of define set of rules which helps the system to store, organize and share data to and from its clients (Technopedia, 2020). Now for most organizations, 3-tier client server systems are used that follows the 3-tier client server architecture. Server (India) Figure 2: 3-Tier Client Server Architecture. Data Layer Database Server: It is the combination of multiple computers and also can be referred to as the master computer. Here for our diagram, this is the database of the India company code of the “XYZ Phones” company. Its main task is to store the data of operations from India region. It hosts the database, and has multiple software installed in order to help with communication and also hosts India’s regional website for clients. Application Layer Application Servers: Its purpose is to serve each plant with ERP components. Every data of each plant is served through or goes through each application server of its respective plant. Here the company executives of India region can access data from warehouses or service centers from the database server, but this information would be stored to that database server with the help of application servers. Inversely, various plants can communicate and obtain data from the database server, which would be served through the application servers as well. Presentation Layer Client Pc’s: Client Pcs’ are those which are used by employees to access information or by customers to access the website and make orders and perform various other tasks. These clients can make queries of various information and are provided with the requested data. Now, this is only an example of one Company Code of the system, realistically, each plant, company code, and even the client will have its own 3-tier client server systems. Integration is only possible when these systems communicate with each other through Intra company connection. True and absolute integration is established when company’s ERP systems can communicate with other outside ERP systems with the help of internet protocol and thus establish Inter Company Connections. Figure 3: Integration using SOA The SOA of XYZ Phones: XYZ Phones will have a central server for their Head Quarter, this will contain the financial as well as other information of the company as a whole and contain info like various strategies and plans regarding to how to move the company forward, they will also have their own client server system. This main server will be able to access the two Company Codes’ Servers. Each company code will have separate financial information as well as other information such as, records of orders and level of inventory for each country which are specific to their own region. These Company Code servers will be able to access each plant’s servers which will have information relative to each plant’s activities such as the warehouse plant’s servers will have information of the raw materials or finished goods, suppliers and customer contacts and so on. Here, the company codes and the plants themselves will also have their own client server systems. Client Company Code Company Code Plants Plants Figure 4: SOA of XYZ Phone Company What are the types of raw materials for each product? You need to mention raw materials for each product separately. Answer: XYZ Phones produces 5 types of product under 2 company code. The list of raw materials for each product are given in the followings, Optimus Basic Smart Phone Figure: List of Raw Materials for Optimus Basic Smart Phone Optimus Basic+ Smart Phone Figure: List of Raw Materials for Optimus Basic + Smart Phone Optimus Prime Smart Phone Figure: List of Raw Materials for Optimus Prime Smart Phone Bumblebee Smart Phone Figure: List of Raw Materials for Bumblebee Smart Phone Optimus Pro Smart Phone Figure: List of Raw Materials for Optimus Pro Smart Phone Make a chart of account (COA). Inclusion of general ledgers (GL) is upon you. Please do it carefully. Also describe purpose of a GL account that is not self-descriptive. Also show some sample transactions. Chart of Accounts Profit and Loss Accounts Account Number 6100000 6200000 6300000 6400000 6500000 6600000 6700000 6800000 7100000 7100000 7200010 7200020 7200030 7300000 7400000 7510000 7520000 7530000 7540000 7550000 7560000 7571000 7572000 7580000 7590000 7600000 7610000 Short Text Long Text Sales Revenue Sales Revenue Sales Revenue Sales Revenue Sales Revenue Sales Discount Revenue Deduction Customer Service Revenue COGS Labor Depreciation Expense Depreciation Expense Depreciation Expense Salaries Expense Discount Lost Interest Expense Rent Expense Repair Expense Sales Expense Telephone Expense Utilities Expense Tax Expense Tax Expense Payroll IT Expense R&D Expense Misc Expense Sales Revenue (Optimus Basic Smartphone) Sales Revenue (Optimus Basic+ Smartphone) Sales Revenue (Optimus Prime Smartphone) Sales Revenue (Bumblebee Smartphone) Sales Revenue (Optimus Pro Smartphone) Sales Discount Revenue Deduction Customer Service Revenue Cost of Goods Sold Labor Expenses Depreciation Expense-Building Depreciation Expense- Machinery Depreciation Expense- Office Equipment Salaries Expense Discount Lost Interest Expense Rent Expense Repair Expense Sales Expense Telephone Expense Utilities Expense Income Tax Expense Property Tax Expense Wage Expense Information Technology Expense Research and Development Expenses Miscellaneous Expense Balance Sheet Account Number 1100000 1110000 1120000 1400000 1500000 1600000 1700000 1800000 2100000 3100000 3200010 3200020 3200030 3300000 3400000 3400000 3510000 3520000 3530000 3540000 3550000 3560000 3571000 3572000 3580000 3590000 3610000 3620000 3630000 3640000 3650000 Short Text Long Text Bank Cash Cash Equivalent Accounts Receivable Int. Receivable Inv-RM Inv-WIP Inv-FG Inv-TG Inv-OP Prepaid Insurance Prepaid Rent Factory Land and Building Factory Land and Building Accumulated Depreciation Warehouse Warehouse Machineries Office Equipment Furniture Accounts payable Insurance payable Interest payable Legal fees payable Office salaries payable Salaries payable Accrued payroll payable Capital Withdrawal Retained Earnings GR/IR Bank Cash Cash Paid Accounts Receivable Interest Receivable Inventory of Raw Materials Inventory of Work in Progress Inventory of Finished Goods Inventory of Trading Goods Inventory of Operation Supplies Insurance paid in advance Rent paid in advance Factory Land and Building - Tejgaon Factory Land and Building - Hyderabad Accumulated Depreciation Warehouse - Bangladesh Warehouse - India Machines Office Equipment Furniture Accounts payable Insurance payable Interest payable Legal fees payable Office salaries payable Salaries payable Accrued payroll payable Owner’s Capital Owner’s Withdrawal Retained Earnings Goods Receipt or Invoice Receipt Account Transactions Dec 1- Purchased camera lenses from Canon on credit for 100,000 BDT for Bangladesh. XYZ Phones need to create subledgers and accounts payable accounts as they procured on credit which means there is future transactions involved. The vendor sub ledger account is created when the vendor master record is created to track money owed to vendor. Necessary general ledgers, subledgers and possible financial impacts are stated below: Accounts Payable Reconciliation 3550000 Debit Credit - 100,000 General Ledger Accounts Raw Materials (Camera Lenses) 1600000 Debit Credit 100,000 - Bank 1100000 Debit Credit - - Accounts Payable Subledgers Accounts Canon 8550000 Debit Credit - 100,000 Dec 2- Transaction cleared that happened on Dec 1 General Ledger Accounts Accounts Payable Reconciliation Bank 3550000 1100000 Debit Credit Debit Credit 100,000 100,000 - 100,000 Accounts Payable Subledgers Accounts Canon 8550000 Debit Credit 100,000 100,000 Dec 3- Uttara sales center performed sales worth of 70,000 BDT. All on cash XYZ Phones don't need to create subledgers and accounts receivable accounts as the sale is performed on cash. General Ledger Accounts Cash 1110000 Sales Revenue 6100000 Debit Credit Debit Credit 70,000 - - 70,000 Dec 5- Gulshan sales center delivered 200,000 BDT equivalent products to Smart technologies. It was done on credit. XYZ Phones need to create subledgers and accounts receivable accounts as they sold on credit which means there is future transactions involved. The customer sub ledger account is created when the customer master record is created to track money owed by customer. Necessary general ledgers, subledgers and possible financial impacts are stated below: General Ledger Accounts Accounts Receivable Reconciliation 1400000 Debit Credit 200,000 Sales Revenue Bank 6100000 1100000 Debit Credit Debit Credit - 200,000 - - - Accounts Receivable Subledgers Accounts Smart Technologies 9100000 Debit Credit 200,000 - Dec 7- Transactions cleared that happened on Dec 5 General Ledger Accounts Accounts Receivable Reconciliation Bank 1400000 1100000 Debit Credit Debit Credit 200,000 200,000 200,000 - Accounts Receivable Subledgers Accounts Smart Technologies 9100000 Debit Credit 200,000 200,000 Prepare Vendor master data and Material master data for each of them. List of vendors is upon you (do it for camera, rom, motherboard and display). (follow the chapter on purchasing process). Material Master data Master data usually represents any type of entities that are related with a certain process. Material master data is the most common and used form of master data, it has 3 views, namely financial views, purchasing views, and storage views. Financial views Financial views of the material master data consist of three things. Initially it is the valuation currency which denotes which currency the materials are priced in. In our case the vendors we are dealing with wish to do transaction with U.S. Dollar (USD). Secondly, there is the valuation class which denotes various general ledger accounts of the process which is related to the materials involved in producing the products. A detailed list of valuation class elements of XYZ phones are stated below. Financial View Account Number 8176001 8176002 8176003 8176004 8176005 8176006 8176007 Short Text SUPEX INRAW INFIN INTRD INSMFC INPRSUP INOPSUP Long Text SUPPLIES EXPENSE INVENTORY RAW MATERIAL INVENTORY FINISHED GOOD INVENTORY TRADING GOOD INVENTORY SEMI FINISHED GOOD INVENTORY PRODUCTION SUPPLIES INVENTORY OPERATION SUPPLIES Thirdly there is price control, it denotes the method that is used to value the materials. For XYZ phones, we will use standard price, or fixed price method of price control. Components like camera, rom, motherboard, and display there isn’t much factors which could cause its price to fluctuate within a short amount of time, therefore XYZ phones will opt to choose this method. Purchasing views Purchasing view also contains various aspects which are explained below: Purchasing groups: As XYZ phones have production plants in two countries, they will have separate purchasing groups which will try to identify vendors and help in procuring goods from such vendors at the best price possible. Some data regarding to how many people are assigned and or employed in the purchasing group and what is their office location may be included in the master data. Goods receipt processing time: It generally denotes how much time is required for the goods received to be processed into the proper storage location after it is delivered. Time to get delivery from suppliers, Unboxing time, Inspection time of products are used in master data. Now, these are very important as these can be used to identify the next order purchase timings. Otherwise, production may stop as the products are out of stop, again there may be delay in delivery of sales orders. Delivery tolerance: For XYZ phones we will tolerate ± 2% of over or under delivery. Storage views XYZ Phones deals with the storage of small sized electrical equipment and materials. As a result, there are many aspects that need to be paid close attention to while they are stored. Such aspects are detailed in the storage views of material master data. The details are mentioned below: • The humidity level should always be kept around 60%RH, as too low fosters static discharge and too high is also not friendly for the shelf life of exposed electrical components prone to corrosion. • The storage complex should be kept at 24 degrees Celsius constantly. • Components should be placed in special containers and bags which protect them from ESD (Electro Static Discharge). • Shelf life of the components will be determined by the production run of each model of cellphones. • Components, namely, Camera, ROM, Motherboard and Display are all classified as fragile components which are susceptible to get damaged or become faulty if handled without care. Vendor Master data Vendor master data is simply the data related to the businesses which are considered as a vendor to the business. These data are kept to facilitate the execution of transaction and make the purchasing process more efficient. The Vendor master data are grouped into 3 segments. General Data: General data in vendor master data contains identifying aspects of the company. XYZ phones are not purchasing Camera, Motherboard, ROM, or Display from any local vendors. Hence as all these raw materials are purchased from overseas, they will have the same vendors. Details such as Name, Address, contact information such as email and phone numbers as well as code and rank of vendors are mentioned in the general data. Component Vendor Rank 1 2 3 1 2 1 1 2 Camera ROM Motherboard Display Vendor Name Sony Sharp Omnivision Samsung SK Hynix samsung Samsung BOE General Data Address Tokyo, Japan Osaka, Japan California, USA Seol, South Korea Icheon-si, South Korea Seol, South Korea Seol, South Korea Beijing, China Contact number 080-6478-7403 06-9639-5936 +1-213-6858503 +82-48-3947-3842 +82-73-8294-2234 +82-96-3754-9364 +82-74-3433-7399 +86 139 1099 8889 Email sales@sonyimx.com sales@sharpimg.com sales@omnivision.com sales@samram.com sales@skhynix.com sales@sammobo.com sales@samdisp.com sales@boedisp.com vendor code 1298 1256 1238 1709 1787 1890 1434 1456 Accounting Data: Transaction information as well as permanent data like subledger account, and accounts payable reconciliation information is contained in the accounting data. Vendor code Subledger no. 1298 1256 1238 1709 1787 1890 1434 1456 7336635 7336637 7736632 5998478 5998454 8340657 9488939 9488970 Accounting Data Accounts reconciliation no. Bank account no. 363443 293873038482028583 363457 293873456643598587 363476 293884982947583939 245498 201025377060734980 245472 201025377060734980 780095 344033459657930100 205584 252426989625477540 205576 252438576479234480 Payment term 30-day window 10-day window 30-day window 30-day window 15-day window 30-day window On delivery 30-day window Payment Method Escrow Escrow Escrow Escrow Escrow Escrow Escrow Wire-Transfer Purchasing Data: Purchasing data will include various information relating to searching and fixing vendors, contract information and their terms and conditions of the XYZ Phones. Since there are two production plants in India and Bangladesh, there will be two separate records for these plants. Look at the purchasing processes below. You need to discuss each process. While discussing each process, you can create 3 scenarios like creating multiple purchase requests on different date, for year 2020 for Bangladesh and India. This section has to be much elaborate. The above mention diagram depicts a detailed purchasing process. We will explain this process in details by using various scenarios. We will assume that central purchase organization handles the buying of assets. Scenario 1: XYZ Phones would like to make a new type of smartphone which will be produced in the Bangladesh and India factories at equal quantities. For this reason, they would like to procure 50,000 batteries, rated at 5000 mAh, with unit price of $7 from a new supplier. Half of the amount will be for Bangladesh production facility while the other half will be for India production facility. The order will be placed on 13 April 2020, and will be required on 14 May 2020. XYZ Phone’s ERP system will go through the processes according to the diagram to complete the above-mentioned purchase. Step 1: Requirement Determination The requirements for any materials may arise from an automatic process or be generated by another process or simply by manual entry. Figure 1: Elements of the requirements determination step Trigger Trigger is any event that will initiate a process. According to our scenario, an increased need for 25,000 batteries in Indian production plant and 25,000 batteries in Bangladeshi production plant is the trigger. Data For this process various types of data are required. Organizational Data: These types of data are prepared and stored in the company data base. Client: XYZ phones Company Code: India, Bangladesh Receiving plant: Storage plant for raw materials in Bangladesh, Storage plant for raw materials in India. Material Master Data: Material description: Batteries with 3000 mAh capacity. Material group: Raw material Unit of measure: Piece Valuation price: $7 (standard price) Vendor Master Data: Vendor is not yet identified in this case, as a result this portion is left empty and would be filled with data when vendor is identified. Purchase Information Record: Purchase information record consists of vendor master data and material master data elements, but since our vendor is not selected yet, it cannot be formed. User Input: Users will input transaction data within the document manually. The person who is preparing purchasing requisition document is going to input the data related to the required fields manually. Material Number: BT10204 Required date: 14 May, 2020. Quantity: 25,000 for storage plant for raw materials in Bangladesh, 25,000 for storage plant for raw materials in India. Receiving plant: Storage plant for raw materials in Bangladesh, Storage plant for raw materials in India. Task: Only task in this process is to create the purchasing requisition using the above-mentioned data. Outcome: The final outcome of the requirement determination process is purchase requisition, which will have a unique requisition number assigned by the system. This can be used so that concerned parties can use this to track its progress through the various steps in the process. This purchase requisition process will trigger the process of “the source of supply determination”. Step 2: Source of Supply Determination Since the vendor is not fixed for the new type of material, the purchasing organization will send a request for quotation to possible vendors from the source list. Those vendors will send their offer with price per unit for the material which is known as “quotation”. Using these quotations, the purchasing organization of XYZ Phones is going to select the vendor who are going to provide the batteries at the best possible price with best quality set as per the production department. Suppose, XYZ Phone’s purchasing organization after considering various quotations will select BYD for purchasing the required number of batteries, because they fulfill the pricing criteria of $7 per unit. In this way, source of supply determination will be completed by selecting a specific vendor. Step 3: Purchase Order Processing Purchase order is a type of communication between vendor and receiver. This consists of commitment of purchasing specific material under the stated terms. Figure 2: Elements of the purchase order step Trigger The triggers will include the purchase requisition document created from requirement determination process and the selected quotation from source of supply determination process. Data User Input/ Transaction Data: In this case the person will verify the data related to quantity of material, which is in our case 50,000 batteries, and the data on receiving plant which are respectively storage plant for raw materials in Bangladesh, and storage plant for raw materials in India. Transaction Documents: In this case the following documents will be required: • Purchase Requisition Document • Quotation Master Data: Material: Description: Battery Type: Lithium Ion Capacity: 5000 mAh Weight: 150 grams Voltage: 3.8 volts Vendor: Communication method: Email Contact person: Sales representative at BYD Address: Shenzhen, Guangdong, China. Conditions: Price/ unit: $7 Discount: N.A. Task Creating and sending the purchase order to the vendor is the basic and mandatory task while completing the process. Since our order involves a new product, we have to confirm delivery and logistic details such a shipping method and other aspects. Outcome The document which is known as the purchase order will be the outcome of this process. Additionally, “purchase order numbers” will be updated to the purchase requisition document. We will verify whether the purchase requisition is associated with the specific purchase order number. Step 4: Goods Receipt The process starts when the materials are received at the plant. The user will have to complete some tasks and insert some data in order to fulfill the goods receipt process and create the goods receipt document. Data There will be 3 types of data: • Purchase order This comes from the organization and includes data like, purchase order number, materials ordered and the quantity of materials ordered. • Delivery document This comes from the vendor and includes data like, purchase order number, materials ordered and the quantity of materials ordered. • User input/ Transaction Data User will crosscheck purchase order and delivery document and examine whether the information is same or not. He will put purchase order location, meaning where the materials will be stored in the good receipt document. He will also insert details about movement type, which means what sort of transport will be used to unload the material to warehouse. Task The main task in the goods receipt step is to verify and record the materials which are in the shipment to the goods receipt document. The user will log in and create the goods receipt document by providing purchase order number, this will add all the relevant data to the document. Then the user will verify if these data are correct. Outcome Good receipt document is an outcome of this process. Additionally, it is the first step in the procurement process that has an impact on financials specifically, on general ledger accounts. Chart 1: Financial Impact of goods received The goods inventory account is debited by the value of the goods received that is $350000. A corresponding credit is posted to the goods receipt/invoice receipt (GR/IR) account. Step 5: Invoice Verification The vendor will send XYZ phones an invoice against that invoice there will be some accounting impacts on the organization. We are assuming that we are purchasing the product on credit. Chart 2: Financial Impact of Invoice verification A debit of $350,000 is posted to the GR/IR account, and the vendor account is credited by the same amount. Because the vendor account is a sub-ledger account, an automatic credit posting is also made to the corresponding reconciliation account in the general ledger, the accounts payable reconciliation account. Step 6: Vendor Payment Now XYZ company phones is ready to complete the payment to vendor. This will have the following financial impact. Chart 3 Financial Impact of vendor payment Bank will credit $350,000 against the vendor as a result debit side of the vendor will increase by $350,000. Subsequently Accounts Payable Reconciliation will be debited by $350,000. So, the final outcome is the decrease of money from the bank. So, with the payment XYZ phones are done with the procurement process from a vendor. Scenario 2: XYZ Phones would like to buy display from Sharp which is originated from Japan. For this reason, they would like to procure 30,000 6-inch display, with 1080p resolution, with unit price of $10. Half of the amount will be for Bangladesh production facility while the other half will be for India production facility. The order will be placed on 6 March 2020, and will be required on 7 April 2020. XYZ Phone’s ERP system will go through the processes according to the diagram to complete the above-mentioned purchase. Step 1: Requirement Determination The requirements for any materials may arise from an automatic process or be generated by another process or simply by manual entry. Figure 3: Elements of the requirements determination step Trigger Trigger is any event that will initiate a process. According to our scenario, an increased need for 15,000 displays in Indian production plant and 15,000 displays in Bangladeshi production plant is the trigger. Data For this process various types of data are required. Organizational Data: These types of data are prepared and stored in the company data base. Client: XYZ phones Company Code: India, Bangladesh Receiving plant: Storage plant for raw materials in Bangladesh, Storage plant for raw materials in India. Material Master Data: Material description: 6 inch display with 1080p resolution. Material group: Raw material Unit of measure: Piece Valuation price: $10 (standard price) Vendor Master Data: Vendor name: Sharp Vendor address: Sakai, Osaka, Japan. Contact person: Sales representative at Sharp display technologies. Purchase Information Record: Purchase information record consists of vendor master data and material master data elements, in this purchase information record will also include last purchase order information. Since we buy displays from Sharp on a regular basis. User Input: Users will input transaction data within the document manually. The person who is preparing purchasing requisition document is going to input the data related to the required fields manually. Material Number: DC102044 Required date: 7 April, 2020. Quantity: 15,000 for storage plant for raw materials in Bangladesh, 15,000 for storage plant for raw materials in India. Receiving plant: Storage plant for raw materials in Bangladesh, Storage plant for raw materials in India. Task: Only task in this process is to create the purchasing requisition using the above-mentioned data. Outcome: The final outcome of the requirement determination process is purchase requisition, which will have a unique requisition number assigned by the system. This can be used so that concerned parties can use this to track its progress through the various steps in the process. This purchase requisition process will trigger the process of vendor selection and evaluation. Step 2: Vendor Selection and Evaluation As XYZ Phones already know the vendor, they are going to include the name of the vendor just by selecting the name of the vendor from their list and start the purchase ordering process. Step 3: Purchase Order Processing Purchase order is a type of communication between vendor and receiver. This consists of commitment of purchasing specific material under the stated terms. Figure 4: Elements of the purchase order step Trigger The triggers will include the purchase requisition document created from requirement determination process and the selected quotation from vendor. Data User Input/ Transaction Data: In this case the person will verify the data related to quantity of material, which is in our case 30,000 displays, and the data on receiving plant which are respectively storage plant for raw materials in Bangladesh, and storage plant for raw materials in India. Transaction Documents: In this case the following documents will be required: • Purchase Requisition Document • Quotation Master Data: Material: Description: Display Type: LCD Resolution: 1920 x 1080 Size: 6 inch Vendor: Vendor name: Sharp Vendor address: Sakai, Osaka, Japan. Contact person: Sales representative at Sharp display technologies. Communication method: Email Conditions: Price/ unit: $10 Discount: N.A. Task Creating and sending the purchase order to the vendor is the basic and mandatory task while completing the process. Since our order involves a new product, we have to confirm delivery and logistic details such a shipping method and other aspects. Outcome The document which is known as the purchase order will be the outcome of this process. Additionally, “purchase order numbers” will be updated to the purchase requisition document. We will verify whether the purchase requisition is associated with the specific purchase order number. Step 4: Goods Receipt The process starts when the materials are received at the plant. The user will have to complete some tasks and insert some data in order to fulfill the goods receipt process and create the goods receipt document. Data There will be 3 types of data: • Purchase order This comes from the organization and includes data like, purchase order number, materials ordered and the quantity of materials ordered. • Delivery document This comes from the vendor and includes data like, purchase order number, materials ordered and the quantity of materials ordered. • User input/ Transaction Data User will crosscheck purchase order and delivery document and examine whether the information is same or not. He will put purchase order location, meaning where the materials will be stored in the good receipt document. He will also insert details about movement type, which means what sort of transport will be used to unload the material to warehouse. Task The main task in the goods receipt step is to verify and record the materials which are in the shipment to the goods receipt document. The user will log in and create the goods receipt document by providing purchase order number, this will add all the relevant data to the document. Then the user will verify if these data are correct. Outcome Good receipt document is an outcome of this process. Additionally, it is the first step in the procurement process that has an impact on financials specifically, on general ledger accounts. Chart 4: Financial Impact of goods received The goods inventory account is debited by the value of the goods received that is $300,000. A corresponding credit is posted to the goods receipt/invoice receipt (GR/IR) account. Step 5: Invoice Verification The vendor will send XYZ phones an invoice against that invoice there will be some accounting impacts on the organization. We are assuming that we are purchasing the product on credit. Chart 5: Financial Impact of Invoice verification A debit of $300,000 is posted to the GR/IR account, and the vendor account is credited by the same amount. Because the vendor account is a sub-ledger account, an automatic credit posting is also made to the corresponding reconciliation account in the general ledger, the accounts payable reconciliation account. Step 6: Vendor Payment Now XYZ company phones is ready to complete the payment to vendor. This will have the following financial impact. Chart 6: Financial Impact of vendor payment Bank will credit $300,000 against the vendor as a result debit side of the vendor will increase by $300,000. Subsequently Accounts Payable Reconciliation will be debited by $300,000. So, the final outcome is the decrease of money from the bank. So, with the payment XYZ phones are done with the procurement process from a vendor. Scenario 3: XYZ Phones would like to buy camera from Sony which is originated from Japan. For this reason, they would like to procure 30,000 8 megapixels, with unit price of $10. Half of the amount will be for Bangladesh production facility while the other half will be for India production facility. The order will be placed on 20 March 2020, and will be required on 21 April 2020. XYZ Phone’s ERP system will go through the processes according to the diagram to complete the above-mentioned purchase. Step 1: Requirement Determination The requirements for any materials may arise from an automatic process or be generated by another process or simply by manual entry. Figure 5: Elements of the requirements determination step Trigger Trigger is any event that will initiate a process. According to our scenario, an increased need for 15,000 cameras in Indian production plant and 15,000 cameras in Bangladeshi production plant is the trigger. Data For this process various types of data are required. Organizational Data: These types of data are prepared and stored in the company data base. Client: XYZ phones Company Code: India, Bangladesh Receiving plant: Storage plant for raw materials in Bangladesh, Storage plant for raw materials in India. Material Master Data: Material description: 8-megapixel camera. Material group: Raw material Unit of measure: Piece Valuation price: $10 (standard price) Vendor Master Data: Vendor name: Sony Vendor address: Minato city, Tokyo, Japan. Contact person: Sales representative at Sony camera technologies. Purchase Information Record: Purchase information record consists of vendor master data and material master data elements, in this purchase information record will also include last purchase order information. Since we buy cameras from Sony on a regular basis. User Input: Users will input transaction data within the document manually. The person who is preparing purchasing requisition document is going to input the data related to the required fields manually. Material Number: SC15634 Required date: 21 April, 2020. Quantity: 15,000 for storage plant for raw materials in Bangladesh, 15,000 for storage plant for raw materials in India. Receiving plant: Storage plant for raw materials in Bangladesh, Storage plant for raw materials in India. Task: Only task in this process is to create the purchasing requisition using the above-mentioned data. Outcome: The final outcome of the requirement determination process is purchase requisition, which will have a unique requisition number assigned by the system. This can be used so that concerned parties can use this to track its progress through the various steps in the process. This purchase requisition process will trigger the process of vendor selection and evaluation. Step 2: Vendor Selection and Evaluation As XYZ Phones already know the vendor, they are going to include the name of the vendor just by selecting the name of the vendor from their list and start the purchase ordering process. Step 3: Purchase Order Processing Purchase order is a type of communication between vendor and receiver. This consists of commitment of purchasing specific material under the stated terms. Figure 6: Elements of the purchase order step Trigger The triggers will include the purchase requisition document created from requirement determination process and the selected quotation from vendor. Data User Input/ Transaction Data: In this case the person will verify the data related to quantity of material, which is in our case 30,000 cameras, and the data on receiving plant which are respectively storage plant for raw materials in Bangladesh, and storage plant for raw materials in India. Transaction Documents: In this case the following documents will be required: • Purchase Requisition Document • Quotation Master Data: Material: Description: Camera Type: Standard Resolution: 8 MP Vendor: Vendor name: Sony Vendor address: Minato city, Tokyo, Japan. Contact person: Sales representative at Sony camera technologies. Communication method: Email Conditions: Price/ unit: $10 Discount: N.A. Task Creating and sending the purchase order to the vendor is the basic and mandatory task while completing the process. Since our order involves a new product, we have to confirm delivery and logistic details such a shipping method and other aspects. Outcome The document which is known as the purchase order will be the outcome of this process. Additionally, “purchase order numbers” will be updated to the purchase requisition document. We will verify whether the purchase requisition is associated with the specific purchase order number. Step 4: Goods Receipt The process starts when the materials are received at the plant. The user will have to complete some tasks and insert some data in order to fulfill the goods receipt process and create the goods receipt document. Data There will be 3 types of data: • Purchase order This comes from the organization and includes data like, purchase order number, materials ordered and the quantity of materials ordered. • Delivery document This comes from the vendor and includes data like, purchase order number, materials ordered and the quantity of materials ordered. • User input/ Transaction Data User will crosscheck purchase order and delivery document and examine whether the information is same or not. He will put purchase order location, meaning where the materials will be stored in the good receipt document. He will also insert details about movement type, which means what sort of transport will be used to unload the material to warehouse. Task The main task in the goods receipt step is to verify and record the materials which are in the shipment to the goods receipt document. The user will log in and create the goods receipt document by providing purchase order number, this will add all the relevant data to the document. Then the user will verify if these data are correct. Outcome Good receipt document is an outcome of this process. Additionally, it is the first step in the procurement process that has an impact on financials specifically, on general ledger accounts. Chart 7: Financial Impact of goods received The goods inventory account is debited by the value of the goods received that is $300,000. A corresponding credit is posted to the goods receipt/invoice receipt (GR/IR) account. Step 5: Invoice Verification The vendor will send XYZ phones an invoice against that invoice there will be some accounting impacts on the organization. We are assuming that we are purchasing the product on credit. Chart 8: Financial Impact of Invoice verification A debit of $300,000 is posted to the GR/IR account, and the vendor account is credited by the same amount. Because the vendor account is a sub-ledger account, an automatic credit posting is also made to the corresponding reconciliation account in the general ledger, the accounts payable reconciliation account. Step 6: Vendor Payment Now XYZ company phones is ready to complete the payment to vendor. This will have the following financial impact. Chart 9: Financial Impact of vendor payment Bank will credit $300,000 against the vendor as a result debit side of the vendor will increase by $300,000. Subsequently Accounts Payable Reconciliation will be debited by $300,000. So, the final outcome is the decrease of money from the bank. So, with the payment XYZ phones are done with the procurement process from a vendor. References Florida tech online. (n.d.). ERP Functional Areas . Retrieved from floridatechonline: https://www.floridatechonline.com/blog/information-technology/erp-functionalareas/#:~:text=This%20may%20include%20departments%20such,lead%20prioritization%20and %20customer%20retention. Technopedia. (2020, August 25). What is Client/Server Architecture? - Definition from Techopedia. Retrieved from Technopedia: https://www.techopedia.com/definition/438/clientserverarchitecture Vinculum. (2020, February 14). Functions of a Warehouse Management System – All You Need to Know. Retrieved from Vinculum Group: https://www.vinculumgroup.com/functions-of-warehousemanagement-system/