Internet Integrated Accounting Information System example essay topic

BURBANK BOARD STABLE OF CONTENTS EXECUTIVE SUMMARY 3 PROBLEM DEFINITION 4 NEW SYSTEM OBJECTIVES 6 NEW SYSTEM CONSTRAINTS 7 NEW SYSTEM PERFORMANCE CRITERIA 8 TEXAS INSTRUMENT - COMPOSER 9 ENTITY-RELATIONSHIP DIAGRAMS 10 ACTIVITY HIERARCHY DIAGRAMS 11 EXECUTIVE SUMMARY Introduction Current System New System. objectives. recommendation. advantages of new system. how it will solve problems. implementation. tools used to document the new system ie... ERD PROBLEM DEFINITION The main problem at Burbank Boards: Management has not continued to use an out-dated computer based system without realizing the importance of using efficient information systems to gain a competitive edge. Symptoms of the problem at Burbank Boards: 1. Redundancy of effort. Telemarketing operators enter order data on sales order forms and then key much of the same data into their terminals... Buyers fill out Purchase Order Requisition forms and then data entry operators key in the same data...

Manufacturing orders are placed using paper forms and this data is then keyed into the computer. 2. Poor responsiveness of the system. Customer orders are not filled as they are received.

Instead they are held until the order batches are processed by the order entry, inventory, and billing systems... Buyers are notified of the need of raw material replenishment the day after the computer detects that the reorder point has been reached. 3. High credit risks. The current credit classes have resulted accepting several poor credit customers and in turn, several bad debts have been incurred. 4.

Lack of production standards and controls. Production workers often do not accurately record start and completion times for their jobs sheets... The production schedule prepared by production planning and control is only a close approximation to what can be expected. 5.

High buyer turnover. It is extremely difficult to train new buyers who need to be highly skilled at negotiating. Lack of sufficient information may lead to poor purchases... Low morale could be contributing to the high turnover. Loss of a buyer leads to loss of valuable experience and expertise that is hard to compensate for. 6.

Delayed deliveries by suppliers. Late delivery dates have caused the company to reschedule production run. The current system does not provide enough information to choose the best suppliers (i.e. those who have a clean record of delivering on time). 7.

Lack of sufficient management information. Communication has consisted of paperwork sent through the company mail system... Communication failures due to lost or late mail has adversely affected the production schedule time and the supplier payments... Though the system has sufficient data on the business activities, management information is not being generated. 8. Excessive paperwork.

Current system generates of a lot of paperwork that is often filed in the wrong files 9. Slow decision making. A direct outcome of redundancy of efforts and a poor information system... Rejected orders are communicated after not communicated instantaneously to the customer... Management reports are generated once a month and takes about two weeks to reach them. The current system was designed several years ago to process the firm's accounting and production tasks.

The only reports currently being produced are the income statement and balance sheet. No attention has been given by the company in developing improved management information systems. In our analysis of this system, we have found several corrective actions which need to be taken in order to upgrade to the proposed Advanced PRoduction and Order PrOcessing System (APROPOS). NEW SYSTEM OBJECTIVES Our objectives in this project deal with the existent problems of the current system and what should be accomplished to solve them. 1. Eliminate redundant effort throughout each department...

EDI will be used to receive orders from customers and to place orders with suppliers 2. Improve the responsiveness of the system... The new system will have an online transaction capturing capability thereby reducing delays in processing... All transactions will be edited for completeness and acknowledgements in the form of rejects or acceptances will be provided immediately... A variety of reports for almost any management decision will be available on demand.

3. Reduce poor credit risks in all classes... The new system will provide the means to accurately identify customers who have had a bad credit history... The new system will classify new customers at a credit risk level that is neither too soft nor harsh to them. 4. Impose production standards and controls...

The system will track all work in process using a bar code system... All time stamps will be automatically entered by the system ensuring consistent entries... The system will generate time taken at every station for a particular job and will act as a monitoring and control system. 5. Improve the decisions made by the buyer as well as reduce the high turnover... The system will provide expert knowledge that is irreplaceable and consistent...

Given a set of suppliers and data about them, the system will have the necessary capability to select the best one. 6. Provide increased management information through out the company... The new system will generate useful management information at all levels of order processing and, also, at all functional levels of the company... The system will improve the quality and speed of decisions in vital areas of the business such as credit checks and discount claims. NEW SYSTEM CONSTRAINTS System Design Constraints.

Keyboard entry of customer sales order data should not exceed 50 percent of the sales orders received... Customer sales orders will be processed as they are received, rather that in batches... All master files will be stored on magnetic disk, permitting online access... Material flow through receiving, the raw materials stockroom, the shop floor, the finished goods stockroom, and shipping should be recorded by data collection terminals as the activities occur... Initial system design (to be implemented by August 1, 1998) should include no more than one interactive mathematical model or expert system... System configuration should include no more than ten additional terminals for use by management and professional staff.

System Implementation Constraints. Restrict consultant fees to a maximum of $50,000 (5 days @ $10,000 each day). Use a project control mechanism consisting of a tabular listing of tasks, personnel assignments, and dates supported by a network diagram... Use the Texas Instruments Composer CASE tool to prepare the data and process models of the new system... Use pre-written application software whenever possible...

Cut over to the new system on August 1, 1998. NEW SYSTEM PERFORMANCE CRITERIA The performance criteria are established to specify in exact terms what the system should accomplish. The new system will minimise the discrepancies in the earlier system and plans to achieve the following: 1. About 80% of all customer orders will be received through EDI. The rest will be received over the telephone or via the internet.

Less than 2% will be received on paper sales order forms. 2. All orders received by telephone will be entered directly into the accounting system computer. 3.

The company will aim for 90% of all orders to be filled on the same day that they are received. 4. Inventory levels will be maintained real-time to facilitate same day shipping. 5.

Reduce the initial credit limit for new customers by 50%. 6. Use the accounts receivable aging schedule to identify high credit risk customers. 7. All new customers will transfer orders over the telephone or internet until their credit standing has been approved and EDI account has been established. 8.

Require a bar code scan of the product at each step of the production process. 9. Provide production managers with accurate information on each job in progress in order to track location and provide 100% accountability. 10.

Consistently use an expert buying system to make supplier selection. 11. Implement MRP software to project demand to supplies reducing late deliveries. 12. Utilize a company intranet to distribute information to all levels of management. 13.

All management reports will be available to managers on demand instantaneously. 14. Buyers should be notified as soon as reorder point is reached. 15. No error in recording of time at job work stations. 16.

All communication among managers and departments will be via email. ALTERNATIVE SYSTEM SOLUTION COMPONENTS In this section, we look at various system components that may be used to design the system that will meet our objectives. The major functional areas that need change are order processing, manufacturing, accounts receivable, purchasing, receiving, accounts payable and intra-office communication. ORDER PROCESSING The alternatives for this functional area are: 1. EDI over the internet 2. Extranets linking the customer to Burbank Boards 3.

Ordering via the internet Electronic Data Interchange over the internet EDI consists of a set of standard ways to codify business documents such as purchase orders and invoices for electronic transmission. Traditionally, EDI has offered a set of specifications for ordering, billing, and paying for parts and services over private electronic networks. Currently, new technology is allowing EDI to work more simply over the Internet. The Internet gives a usually arcane technology a much simpler interface and greatly reduces costs. Internet based EDI sites can be obtained from a provider for a monthly fee.

Customers will use a package like Harbinger Express to translate documents like invoices and purchase orders into a form that can be read through standard Web Browsers. All customers must be encouraged to transmit orders via EDI. This could be done by charging a higher price for non-EDI based orders. Also, since current customers include sporting goods and toy wholesalers, it should not be difficult to persuade them to invest in EDI. Burbank Boards and its customers can use EDI over the Internet to reduce communication costs and streamline various processes. For instance, customers can log into the on-line ordering system to see the product selection, inventory availability and place orders.

The system will send an acknowledgement to the customer on receipt of a sales order. The acknowledgement will indicate invalid requests, credit rejects or confirmation of receipt of order. All processing will be done by the existing mini-computer. Customers will appreciate the real time capabilities. Advantages -1.

EDI can be layered over existing applications. 2. Improved communications. 3. Changes in product pricing are automatically updated.

4. Customers can have access to promotional offers, new products. 5. Public domain software is widely available. 6.

Use of EDI is expected to quadruple by 2001, due to the Internet. Disadvantages -1. Initial contact with customer may be difficult. 2.

Ongoing security concerns. 3. Technology is changing very quickly. Extranets Linking the Customer to Burbank Boards When Intranets are connected between companies within a supply chain, they become Extranets. A customer would be able to communicate with Burbank Boards (the supplier) via this Extranet. This customer could order merchandise, request product information, and / or ask questions as needed.

There are two ways that basic Extranets can be configured that are both inexpensive and easily accomplished. The first method is to maintain a leased line whereby the Burbank Boards has complete control over the line connecting the Intranets. This is the most secure method. The second method is for Burbank Boards to use a secure line over the Internet, using the Internet as a universal private number. Regardless of which method is used, a global directory will contain all users names and access control information.

This is for security reasons. These outside users will come into Burbank Board's network and log into the directory as if they were internal users. These outside users will have access to a only subset of Burbank Board's resources. The security function is the responsibility of the software.

Advantages: 1. Inexpensive and easy to install this Extranet mode of communication. 2. Extranets allow for real-time communication between customer and supplier. Disadvantages: 1.

All customers must have access to the Internet. 2. Burbank Boards will have to sort through the communications for queries and orders. Orders will need to be imported (if in a standard format) to the order log. Ordering via the Internet This alternative allows customers to order via the internet using online forms. Though this technology provides advantages such as elimination of paper and reduction of effort, it is highly susceptible to security violations.

The communication expenses are minimal as compared to the EDI. The approach requires that the customers are connected to the internet and that Burbank Boards purchase the ordering software. Also, Burbank Boards may experience increased demand for its products because of being high visible on the internet and having a simple online ordering form. Advent ages: 1. Ease of use. 2.

Inexpensive compared to other alternatives. 3. High visibility to internet users. Disadvantages: 1.

Minimal security. 2. Difficult to communicate information such as item availability. PURCHASING Extranets Linking Burbank Boards to Suppliers Burbank Boards can achieve the same Extranet utility with their suppliers, as described above. Advantages: 1. Greater accuracy in placing supply orders due to the electronic transmission of information.

2. Cost savings associated with more efficient order placement. Disadvantages: 1. Suppliers may not have Internet access, nor Intranet capability. 2. Purchasing Managers may resist changing to a new type of ordering system.

Integrated Accounting Information System An integrated accounting information system will include order entry, inventory, accounts payable, accounts receivable, payroll and general ledger modules. Each module will interact with other modules depending on accounting rules (GAAP) and processes. For instance, as sales orders are entered, data will also be entered into order entry, accounts receivable, inventory, and general ledger. This integration of modules will provide management with reports containing pertinent information, unlike what is presently available. MANUFACTURING Bar Coding in the Manufacturing Process Data gathered by bar code scanners can be used to control and track products as they move through the manufacturing process'.

Manufacturing employees will scan items as they arrive at their particular station and the scanning will automatically time stamp the employees job records. Bar code scanners can be either hand-held devices (wands) or free-standing devices mounted above a convey er belt system. Free-standing devices allow the worker to move about freely during the production process. All scanners contain a laser light source and a photo detector which detects the light and dark stripes on a bar code label. As bar code labels are scanned, critical information is sent instantly to various departments. This information is useful for customer order inquiries, materials resource planning, distribution and shipping.

Burbank Board's equipment requirements for a bar code scanning system include bar code readers (scanners), decoders, sortition controllers, multi plexors, labels and label printers. Communication software connects these various parts to a PC or other host computer. Sort ation controllers are useful for routing products to specific storage space or to the loading dock for direct shipment. Advantages: 1. Accurate start and completion times will result from the use of bar code scanning. 2.

Productivity will increase due to the time-stamping mechanism. 3. Better order tracking will result in improved customer service and better materials resource planning. 4. New technology allows for the economical printing of unique bar code labels.

Disadvantage: 1. Employees may be resentful of new time-stamping system. Radio Frequency Scanning in the Manufacturing Process Cordless, hand-held scanners are used to read bar codes off labeled products and then transmit data to Burbank Board's network via radio waves. Scanners can be used up to 50 feet from the network and require very little power. "Over the belt" scanners are also available which can automatically read bar code labels keeping the production line workers hands free.

Advantages: 1. Development cycles of this type of technology have shortened. 2. Radio frequency transmission of data reduces the wiring needs in the manufacturing area. Disadvantages: 1. Lack of standards require the use of the same manufacturer for all radio frequency technology.

Could be expensive. 2. New technology likely to come along soon requiring a full upgrade. Manufacturing Resource Planning Manufacturing resource planning is a business strategy that when used, can ensure that schedules are met by suppliers and internal departments. MRP combines material planning, master scheduling, and supplier scheduling functions that expedite the manufacturing process. The purchasing department would use the MRP system to accurately determine what and when materials are required.

The shop foremen would use MRP to schedule machine set-ups and employee work schedules with greater accuracy. Advantages: 1. Reduced raw materials inventory. 2.

Improved raw materials requirements planning. 3. Improved employee work scheduling. 4. Improved communication between Burbank Boards and suppliers. Disadvantages: 1.

Manufacturing Resource Planning Software is costly to obtain and implement. 2. Extensive employee training will be required. PURCHASING The alternatives for this functional area are: 1.

Negotiation support systems 2. Expert system for purchasing Negotiation Support Systems (form of GDSS) and Purchasing Purchasing managers can arrange better contracts. The importance of negotiation, combined with increasingly complex issues requiring resolution, makes the possibility of a computer application for negotiation purposes appealing. Purchasing managers will save time processing transactions using an NSS and will achieve more positive contract results.

Advantages: 1. Saves time 2. Saves money 3. The use of an NSS focuses the bargaining session on content and analysis. Disadvantages: 1. All parties (buyers and sellers) must have an NSS.

2. Extensive employee training is involved during implementation phase. Expert System for Purchasing Department Expert systems are artificially intelligent computer software programs that enable the making of effective and efficient decisions in the purchasing area. The expert system makes decisions by selecting supplier candidates based on supplier prices, lead times, service history, and forecast ed demand. Expert systems allow for more accurate, consistent and faster decisions at a lower cost. By improving the quality of purchasing decisions, Burbank Boards can increase their profitability by reducing order fill times and lowering inventory costs.

Improving decision quality is difficult for the following reasons. First, purchasing decisions are dynamic, in that the data involved changes frequently or is uncertain. Second, decision situations are often time-dependent, meaning that decision making time is critically important (i. e., rush orders). Finally, decision variables are often difficult or impossible to quantify and require the judgment of an experienced manager.

Expert systems solve these purchasing decision-making problems by emulating the behavior of human purchaser (expert). Expert systems are developed by "knowledge engineers" who interview experts in order to capture the expert's purchasing knowledge and problem-solving logic. A computer model is then developed using expert system software. The expert system consists of a knowledge base that contains the facts and logic of the expert, and an inference engine that represents the expert's problem-solving approach.

The inference engine uses the contents of the knowledge base to each conclusions. The user interacts with the expert system through a user interface, called a consultation (question / answer session). Expert systems combine the knowledge base with the consultation to make purchasing decisions. Advantages: 1. Reduces error rate of sourcing decisions. 2.

Increases the decision-making rate. 3. More reliable supplier decisions are made. 4.

Purchasers can be trained more quickly. 5. Decision-making costs will be reduced. Disadvantages: 1. The process of building the knowledge base can be difficult because experts might disagree or may have a difficult time describing their decision-making logic. 2.

The development of the expert system may be expensive due to the large number of supplier variables. 3. Expert systems must be maintained continuously to reflect supplier data changes, such as price updates or new products. 4. Extensive employee training is required. Expert System Development: Step One: Burbank Boards identifies the Purchasing Department as the problem area requiring the expert system solution.

Step Two: To design the expert system, the knowledge engineers should have a good understanding of the current purchasing system and problem areas. The should identify system goals and performance criteria. The knowledge engineer will develop a rule-based scheme consisting of "if... then" rules which will be used to reach conclusions. Step Three: Computer software and hardware are chosen for use in developing the expert system.

An expert system shell is recommended which can be learned easily and will allow for prototyping. The knowledge engineer develops a prototype using specific problem sequences that have already been solved. The prototype is sued to refine the system's knowledge base. The prototype is tested and evaluated. Step Four: Changes are made to the knowledge base during development. Procedures are written which closely mimic the problem-solvers behavior.

The user interface is also developed. It is important that the users be involved at this point in the development process which will help them to overcome any possible future resistance. Step Five: The final stage is implementation. Copies of the software and hardware are moved into the Purchasing Department at Burbank Boards. Users are trained and familiarized with the system capabilities. As supplier data variables change, the system will need to be updated.

A program should be developed to facilitate making these changes on an on-going basis. ALTERNATIVE NEW SYSTEM SOLUTIONS Recommended system includes: EDI ordering via the Internet Integrated Accounting Information System to include MRP capabilities Expert System used for Purchasing Alternative system 1: Receive Sales Orders via the Internet Integrated Accounting Information System - No MRP Negotiation Support Systems (form of GDSS) and Purchasing Alternative System 2: Receive Sales Orders via Extranet Integrated Accounting information System Expert System used for Purchasing Alternative System 3: EDI ordering via the Internet Integrated Accounting Information System - No MRP Expert System used for Purchasing Raj - I know I did not write enough for the recommended and alternative system solutions (Page 6). I concentrated on detailing the technologies involved and I can work on the rest after we meet again. I have forgotten what we had talked about in terms of the finer details of our system recommendations. This is a good start though. My home number in Houston is (713) 864-6936.

I will be there off and on Sunday. PLEASE, call me if you need to discuss anything. I will try to check my messages here in College Station if something comes up Friday afternoon or Saturday. Texas Instrument - Composer During this project we used a data and process modeling tool developed by Texas Instruments. This CASE (computer-aided software engineering) tool is named Composer. Composer assists in modeling how a business can best use information as a corporate resource.

It facilitates the collection and organization of information about every phase of your business. Composer enables business professionals to capture information needs at the highest possible level of abstraction and transform them into executing application systems. Generally, this process begins with strategic evaluation of the business's objectives and information needs. Planners identify the information that the business needs to carry out its mission.

This information is mapped to the activities the business performs. The result is an overall business model. Entity-Relationship Diagrams The entity-relationship diagrams (ERD) is supplied to document various information about the entities which make up the system. A brief description of each entity is supplied, as well as the subject area to which the entity belongs to. Defined properties are given, such as minimum occurrence, average occurrence, maximum occurrence, and growth rate of the entries in each entity. Every relationship that the entities are involved in are described, including the minimum, maximum and cardinality.

If attributes are defined for an entity, they will be listed in this report. This type of report is important when the structure of the entities are being developed, and later when they are being coded. Heavy documentation of those areas is necessary to ensure cohesion and consistency throughout the use of the entities. Activity Hierarchy Diagrams Activity Hierarchy Diagramming (AHD) identifies the lowest-level processes of interest to the business through decomposition.

AHD shows levels of increasing detail for each function and process until activities decompose to the lowest level (elementary processes). A process is a defined business activity whose executions may be identified in terms of the input and output of entities of specific types. Analyzing business activities independently of data helps you understand: . The activities of the business.

The nature of information required and produced by these activities, independent of the organizational structure and the existing information systems An accurate and complete activity model lays the foundation for subsequent system design and implementation efforts. More specifically, the upcoming phases require this information in one form or another.