Question

Case study: Crown clothing store chain (you need to right 700 words)

Ahmed and Ali are two of the most prominent businessmen in the Middle East. Mark and Thomas created a chain of clothing stores five years ago and your group was recently appointed to assess their cost cycle.
During a short discussion with the Procurement Manager, they were informed of the following:
"Our business is growing faster than we expected. As a result, many tasks and roles must be taken to keep our operations running. All of the suppliers we have approved since we started the store chain are still dealing with them and we have built a relationship based on mutual trust. Usually the necessary supplies are purchased from Every supplier using the phone After delivering the goods, suppliers send the invoice to us by email. Our policy of paying the invoices is to pay the invoice immediately upon receipt. The payment process is also easy as the checkbook of the facility is in my possession. For each bill on the check, then sign the check and send it by email. All the operations are simple and work smoothly to the best of my knowledge. "
Required:

The case should be read,
Determine the weaknesses in the Crown Garment Facility expenditures cycle based on the information provided by the Procurement Manager?
Please provide the necessary recommendations for each weakness?

Answer 1

Determine the weaknesses in the Crown Garment Facility expenditures cycle based on the information provided by the Procurement Manager?
Please provide the necessary recommendations for each weakness?

Answer 1:

The biggest weakness of the Crown Garment Facility is the absence of a proper Trade Structure.

The weaknesses in the Crown Garment Facility Expenditures Cycle are as follows:

a. No market study with respect to the price of the goods ordered. To check if the supplier is giving the right price and the price asked by the supplier is not higher than the prices asked by its competitors.

b. Orders are on phone and not documented purchase order. Not having document purchase order can affect the company later on at the time of tax requirements and records. Which can lead to higher tax implications by the tax authorities.

c. No contract and no clarity of terms and conditions: Not having written terms and conditions and not fixing delivery charges, transport charges, packaging charges. The supplier can be ask extra delivery or packaging charges than its competitors.

d. Missing Invoice payment structure: Invoices should be compared to the purchase orders and the quality of the deliveries then the payment should be made. Immediately paying invoices without even cross checking the details can lead to extra expenditure for the company.

Answer 2: The necessary recommendations for each weakness is as follows:

Recommendations:

1. Performing Market Analysis on the goods prices by other suppliers.

2. Signing a contract expressing detailed terms and conditions including delivery charges, transportation charges and packaging charges etc.

3. Raising purchase orders for making order to the supplier.

4. Proper Invoice payment structure should be made for evaluating the details of the invoice and then making payments.

5. Hiring employees for it and making a team to handle the above mentioned trade structure.