Question

You are recently employed as a graduate consultant in a management consultancy firm. One of your firm’s clients is currently evaluating its information systems, and the Managing Director of your client thinks that they needed to invest in an Enterprise Resources Planning (ERP) system to support the growth of the business. Required You are required to prepare a report to evaluate and recommend an ERP software for a listed company of your choice (your firm’s client).1 The report should include the following components: 1. Background of the Selected Business • Describe your client’s business and its business activities. • Discuss the key business processes for your client. • Based on our discussion in Interactive Tutorial 4 to 6, evaluate the business process of your clients to identify potential weak internal controls and the risk associated with these potential weak controls. • Recommend the control techniques that will reduce or eliminate these potential risks.

Answer 1

Background of business of the firm-

We are considering that our client is a paper manufacturing Firm. It converts the raw material into finished goods . It's most important raw material is baggase, it converts baggase into papers, crafted papers, pulp etc. by using so many resources of the firm( man, machine, power etc).

Some are the business activities of the firm are as follows-

I)- Inbound Logistics- Inbound logistics include the receiving, warehousing and inventory control of a company's raw materials.

II)- Operations-Operations include procedures for converting raw materials into a finished product or service.

III)-Outbound Logistics- All activities to distribute a final product to a consumer are considered outbound logistics. This includes delivery of the product but also includes storage and distribution systems and can be external or internal.

IV)-Marketing and Sales-Strategies to enhance visibility and target appropriate customers—such as advertising, promotion, and pricing—are included in marketing and sales

V)-Services-This includes activities to maintain products and enhance consumer experience—customer service, maintenance, repair, refund, and exchange.

Evaluation of Business Process to identify Potential Internal Control Weakness and risk associated with weak internal control-

1- our firm first acquires baggase from suppliers. It's seasonal purchase. So how much order to be places at a time must be ensured by analysing our sales from past years.

2-Special care should be given at the time when baggaee enters in , while weight is measured on weighing machine.

3- It must be carefully stored to protect it from rain and environmental factors  

4-machines should also be placed in logical order so that proper coordination must be there at production floor.

5- human resource policy must be designed to motivate workers.

So the above process have been evaluated in order to identify where control may be missing and by identification of control we can evaluate risk associated with the weak controls.

Some are the control techniques to reduce or eliminate risks-

1. Avoidance

Avoidance is the best means of loss control. This is because, as the name implies, you’re avoiding the risk completely. If your efforts at avoiding the loss have been successful, then there is a 0% probability that you’ll suffer a loss (from that particular risk factor, anyway). This is why avoidance is generally the first of the risk control techniques that’s considered. It’s a means of completely eliminating a threat.

2. Loss Prevention

Loss prevention is a technique that limits, rather than eliminates, loss. Instead of avoiding a risk completely, this technique accepts a risk but attempts to minimize the loss as a result of it. For example, storing inventory in a warehouse means that it is susceptible to theft. However, since there really is no way to avoid it, a loss prevention program is put in place to minimize the loss. This program can include patrolling security guards, video cameras, and secured storage facilities.

3. Loss Reduction

Loss reduction is a technique that not only accepts risk, but accepts the fact that loss might occur as a result of the risk. This technique will seek to minimize the loss in the event of some type of threat. For example, a company might need to store flammable material in a warehouse. Company management realizes that this is a necessary risk and decides to install state-of-the-art water sprinklers in the warehouse. If a fire occurs, the amount of loss will be minimized.

4. Separation

Separation is a risk control technique that involves dispersing key assets. This ensures that if something catastrophic occurs at one location, the impact to the business is limited to the assets only at that location. On the other hand, if all assets were at that location, then the business would face a much more serious challenge. An example of this is when a company utilizes a geographically diversified workforce.

5. Duplication

Duplication is a risk control technique that essentially involves the creation of a backup plan. This is often necessary with technology. A failure with an information systems server shouldn’t bring the whole business to a halt. Instead, a backup or fail-over server should be readily available for access in the event that the primary server fails.

6. Diversification

Diversification is a risk control technique that allocates business resources to create multiple lines of business that offer a variety of products and/or services in different industries. With diversification, a significant revenue loss from one line of business will not cause irreparable harm to the company’s bottom line.

Evaluation of ERP Software-

We can ensure max benefits by using erp software system in our company. Following are some benefits of Erp system.

• Enhanced Business Reporting Management
• Better customer services
• Improved Inventory costs
• Boosted Cash Flow
• Cost Savings
• Better Data & Cloud security
• Modernized Business Process Standardization
• Superior Supply Chain Management

So management must move towards adopting this new information system software.