Question

What software features and functions are required to support Ace’s business practices described below?

Please identify at least 24, or more, functions.  List these features and functions with sufficient explanationto demonstrate your understanding of the function.

Pick one of the similar systems that you worked with.  Compare that system with Ace.  Which functions does it provide?  Which functions are not available?  How well would that system work for Ace?

Background:

Ace Aerospace Fasteners manufactures and sells fasteners, latches and related hardware to the aerospace industry.  The fasteners are a combination of standard items and made-to-order items. The stan­dard items are stocked in inventory according to pre-determined inventory levels.  Made-to-Order (MTO) items are manufactured to the customers’ specifications.  If the customer is a regular customer and the items are ordered on a regular basis, Ace may manufacture the items in quantities that optimize manufacturing and stock the excess.

Ace has three separate facilities.  The largest facility is Ace’s South­ern California main warehouse and manufacturing facility.  The other two facilities are distribution centers in Kansas and Georgia near major Aerospace complexes.  The Southern California facility stocks raw materials, work in process, finished goods and supplies.  The Kansas and Georgia warehouses stock only finished parts purchased by customers in those geographic areas.  So the Kansas distribution center, for example, stocks fasteners used by Boeing’s Wichita Assembly plant while fasteners used by Boeing’s Everett assembly plant are stocked in Southern California.

Ace has some of its fasteners manufactured and stocked in Asia by contract manufac­turers.  Asian fasteners are shipped to Southern California as finished goods or as raw materials that are components in more complex assemblies.  Orders from foreign customers may be supplied directly from the Asian manufacturers.

Ace’s Basic Business Processes

I.     Find Prospective Customers, Maintain Contact with Existing Customers

As with other industries, Ace is constantly looking for new business prospects.  The good news – the aerospace industry is easily identifiable; the bad news – it is a very competi­tive industry especially among the subcontractors who supply the major aerospace com­panies.

To find potential new customers, Ace employees a group of salespeople who are responsible for finding prospective customers as well as selling to existing customers.  The salespeople have both a new prospect quota and a sales quota.  Their income is a combination of base and sales commission.

To identify prospects, the salespeople attend aerospace conferences and shows, including exhibiting. They subscribe to aerospace magazines. They are constantly talking to their customers regarding their subcontractors and competitors.  They track their contacts from company to company as they move around the industry.  With the emergence of Social Media and Social Networking, their efforts have expanded to include coverage of various social media sites such as LinkedIn, Facebook and Twitter.

The business problem is tracking all of this information.  In the same way that contacts move among aerospace companies, the salespeople move among these same companies.  Ace’s objective is to maintain an up-to-date record of prospects and contacts at existing customers.

II.   Sell Product

Ace receives sales orders through four channels:

·      Salespeople take orders and enter them in Ace’s ERP system.

·      Customers call orders directly into Ace Customer Service, which in turn enters their orders in the ERP system.

·      Customers send Purchase Orders to Ace via email, mail or fax.  These orders are processed by Ace’s Customer Service.

·      Customers enter sales orders directly into Ace’s systems through Ace’s Website by-passing Customer Service, which means less in-house data entry.

Sales Orders for stocked fasteners are checked for customer credit and item availability.  If credit and availability exist, the orders are fulfilled according to requested delivery dates and shipping instructions.

Sales Orders for made-to-order fasteners are a bit more complicated.  If the items are in stock, the process is similar to above.  If the items are not in stock, credit is checked and production orders are created and sent to manufacturing.

The Purchasing Department is informed of any shortages of finished goods or raw materials.

The following business rules apply:

·      Domestic orders are filled from domestic warehouses; Foreign orders are filled from foreign stock to minimize customs duty reclaim.

·      Orders for certain customers are given priority.

·      Orders are fulfilled from the warehouse closest to the Customer.

·      Orders for out-of-stock items at one location can be fulfilled from another location.

·      Orders for large quantities with sufficient manufacturing lead-time are converted into Production Orders, sent to the appropriate factory and ultimately shipped from the factory directly to the Customer.

·      Ace set a minimum gross margin of 25% on sales of current product and break-even on discontinued product.  

·      Obsolete product is usually sold for scrap at a loss.

III.  Stock Product

Ace sells two types of products:  

·      Standard Products

·      Made-to-Order Products

Standard products are made-to-stock (MTS) items.  They are carried in inventory in suffi­cient quantities to fill typical demand.  They are manufactured as needed based on a comparison of actual and forecast demand to current inventory levels.

Made-to-Order (MTO) products are manufactured in response to specific orders.  If the cus­tomer is a regular customer and regularly orders the items, they are typically manufac­tured in economic order quantities with the excess carried in stock.  Made-to-Order products that are ordered once or irregularly are manufactured upon receipt of a purchase order according to the customer’s specifica­tions including delivery schedules.  This may involve holding some of the product in inventory for the customer.

Ace has three types of inventories:  

·      Raw Materials

·      Finished Goods

·      Supplies

Finished Goods are stocked in all three company warehouses and in some cases by the contract manufacturers.  Raw Materials and Supplies are only stocked in the Southern California Warehouse and at contract manufacturers.

The inventory in Ace’s warehouses is cycle counted quarterly.  The perpetual inventory is adjusted to the physical inventory based on the quarterly cycle counts.  Each item is counted once annually in one of the four cycles.

The purchasing of raw materials, including subassemblies, and finished goods is handled by Purchasing based on demand and stock-on-hand.

Factories schedule their manufacturing based on orders, promise dates, stock-on-hand and inventory min/max and safety stock parameters.  Factory schedules are provided to Purchasing to ensure that raw materials are available in sufficient quantities to sustain manufacturing.

IV. Distribute Product

Orders for Standard Products are sent to an Ace warehouse, where the items are Picked, Packed and Shipped. Invoices are automatically prepared based on the items and quantities shipped.

Made-to-Order Products, if they are in stock, are handled the same as standard items.  

If Made-to-Order Product is not in stock, the typical situation, it is manufac­tured when ordered by the customer.  At the completion of manufacturing, the items are transferred to inventory and subsequently picked, packed, shipped and invoiced.  If the entire order is to be shipped immediately, the items may be moved directly from manufacturing to Ship­ping for expedited packing and shipping.

V.   Procure Raw Materials, Finished Goods and Supplies

Ace issues Purchase Orders for

·      Raw materials and supplies for the California factory

·      Purchased finished goods, which are typically Asian manufactured fasteners

Purchase Orders for raw materials and factory supplies are handled routinely through domestic suppliers.  

The Contract Manufacturers are responsible for their own procurement with one exception.  Ace supplies several items used in offshore manufacturing.  Ace monitors the stock on hand of these items and their replenishment.

Items manufactured offshore are typically shipped from the Orient in containers via ocean freighters.  Occasionally orders are rushed by airfreight.

After a container is received, Accounts Payable receives a group of invoices to pay:  

·      The invoice for the items, which are covered by a Purchase Order

·      Invoices for ocean freight, customs duty, broker’s fees and inland freight from the dock to Ace’s warehouse.  These are not part of the original Purchase Order.

Accounts Payable processes the various invoices setting them up for payment according to applicable terms.

All items are ordered in response to manufacturing demand based on quantities on hand, min/max and safety stock amounts.

VI. Manufacturing and Distribution Exceptions

In the case of offshore manufacturing, the ERP system does not schedule, track, control or monitor offshore manufacturing.  That is entirely the responsibility of the offshore manufacturer.

However, for some special items, it tracks raw materials that Ace provides to the contract manufacturers to avoid manufacturing delays resulting from insufficient raw materials.

The major Manufacturing and Distribution exceptions are the following:

·      Items are purchased or manufactured when quantities on hand drop below established thresholds.

·      Partial shipments can occur when available stock is insufficient to fill an order.

·      Priority orders can be expedited disrupting the manufacturing schedule.

·      Manufacturing errors result in re-work or scrap (in addition to the scrap that is the normal byproduct of the manufacturing process).

·      Discontinued and superseded items are sold through alternate channels or scrapped.

VII. Accounting

Ace’s Accounting Department keeps track of Ace’s Assets, Liabilities, Equity, Revenue and Expenses.

Revenue is categorized by Military, Commercial and Distributor sales.

Expenses are segregated between cost of sales and non-cost-of-sales expense accounts.  The non-cost-of-sales expenses are further classified as marketing and sales, research and development and administrative expenses. All of the company’s expenses fit into natural accounts within these categories.

Assets, Liabilities and Equity are accounted for using typical categories and accounts, such as Accounts Receivable, Accounts Payable, Prepaid Expenses, Long Term Assets, Common Stock, etc.

VIII.  Basic Business Processes Common to Businesses

Sell Product

Stock Products

Ship Orders

Bill Customers

Order Materials

Pay Suppliers

Manufacture Product

Pay Employees

Track of Assets

Keep the Books

Answer 1

ANSWER:

Based on the information provided in the question above, Ace’s business software should include follwing features/functions:
ACE’s business Software Requirement and it’s features
1.Customer Relationship Management Module: This module should have functions starting from identification of customers, leads, meetings with prospective customers, feedback, quotations, and orders placement.
2.Sales Module: Once orders are fed into the system by Marketing team sales module should take care of customers’ credit, payment terms, and billing.
3.Lead Management. There should be specific module for leads management including social, print, tv media campaigns, (such as LinkedIn, Facebook and Twitter). Further, details for attending various seminars, exhibitions etc should also be kept and tracked for its usefulness for final conversion to orders.
4.Accounts Receivables: This function takes care of customers credit, payment receipts
5.Purchasing / Vendor Management: This module should include vendor management, credit terms, quality requirement etc.
6.Accounts Payable: All accounts payable should be managed through this module for their timely payment etc.
7.Inventory: This function should include items requirements for manufacture of finished products, each item minimum inventory levels, minimum order quantity etc.
8.Materials Planning. This function should include management of manufacturing processes, production planning, product requirements, scheduling and inventory control.
9.Plant Maintenance Module: Should take care of periodical/preventive maintenance of all equipment and machinery.
10.Supply Chain Management: It should be linked with the orders, lead time and vehicle details with capacitates expected time to deliver desired orders to customers warehouses.
11.Manufacturing: This function should be linked with Warehouse stock quantities as well as orders / future orders. There must be a planning function which can take care of sudden stock requirements and manufacturing limitations.
12.Financial Management and Accounting: This function should include regulatory requirements, if any with respect to accounting / reporting requirements.
13.Banking and Fund Management System: This should include linking with banking system for smooth online payments to vendors, employees etc.
14.Warehousing Management: As there is requirement of stocks to be warehoused as per requirement of customers at various locations, this feature should include minimum requirements for each warehouse taking care of current/future orders.
15.Quality Control Management: Quality Management should include quality checks and ensuring that all products meet customer requirement.
16.Tax Management Module: There should be a tax module which should take care timely tax payments, return filing etc.
17.Human Resource Management: This module should include company’s human resource requirements, recruitment, planning etc.
18.Employee Development &Training Module: This module should identify skill requirements of each job and should plan for training requirement for development of employees.
19.Payroll Management: This feature enables companies to make timely salary and other allowance payment.
20.Audit Management: This module should cover schedules of audit requirements, planning and engaging of concerned employees without hampering normal activities.
21.Costing Module: This module should cover costing of each and every product with proper cost allocation to each product.
22.MIS: This module should be able to provide timely information to management for decision making in all areas.
23.Fleet Management Module: This should include details of vehicles of the company, its maintenance schedules, tax payment etc.
24.Data Security & Software Management: This module should include safety of data and proper authorisation of each user.
25.Asset Management Module : should take care of all assets, their location, cost, replacement etc.

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