Question

b. Due to an expansion of the business and to overcome problems of errors, back orders and late payment involving its suppliers, the owner of feast e- mart is considering the use of an advanced and integrated purchasing and cash disbursement system in a near future. as a business systems consultant, provide suggestion of a potential modern purchasing system to be adopted by feast e-mart sdn. bhd.

Your suggestion should contain the description of one (1) proposed modern purchasing system and one (1) benefit of the modern purchasing system. please list the relevant references to support the discussion for this questions.

Answer 1

1) Proposed Purchasing System

First let us identify the problems in the present structure and identify the best possible modern solution for each of it, the result of which is an efficient Mordern Purchasing System-

Problem/Errors	System to be adapted
a)Requisitions and Invoices	Use system generated documents with audit trial, so that we can make the people responsiblle for their work.
Sort the items doing ABC analysis based on the past experience of customer orders.
b)Communication	Assign a Mail Id for each department and avoid using the same mail more than one department.
Also create groups in social media to faster communication.
Take due care that the hierarchy of the management is maintained.
Back Orders and Late Payment	1) Use Bin Cards for the goods and employ good inventory management team.
2)Use an integrated software which supports the following-
-Set reorder levels and raise the requisition electronically once the level is reached.
-Once the requisition is made the purchasing department makes an order with the Supplier.
-Later when the goods are received the store keeper passes the purchase entry.
-Then the Accounts Department could approve the entry and GRN only after the payment is made to the supplier.
-Make sure that all the documents are attached with the entries in the software at each level.
-Later departments can only move forward after due verification of the records.

2) Benfits of the Modern Purchasing System-

• Audit Trail helps in keeping a watch on the quality of work of the employees.
• In case of frauds the audit trail helps as an evidence.
• The carrying cost and ordering cost of the inventories is reduced.
• Employees can be held responsible for the work they are assigned to.
• Rejection of customer orders due to shortfall in inventory is eliminated.
• Ageing analysis becomes easier as the suppliers are paid in time.