Accounting Information System - Pressure Hydraulics - Case Study Example

Name: Tutor: Course: Date: Accounting Information System Executive Summary Pressure Hydraulics is a company owned by Allan Taylor and he has a vision of expanding the business to five from the current three to Gosford and Coffs Harbour. This report describes the problems and challenging affecting the business operations and its efficiency and offers suggestion for potential solutions. The introduction gives a glimpse into the situation prompting the essence of the report and what is anticipated in the report. Description of the problems gives a detailed account of the challenges that Allan is facing in his current system of operation and the desire for change. The part gives the inconsistencies, incoordination, and absence of synchronization that exists within the service centers and highlights the need for coordination between the different service centers. Solution objectives section states defines what is set to be accomplished by the new system bit by bit. It describes how effectiveness and efficiency can be achieved in the service centers. The constraints section is very important since it sets the limits within which a new system can be implemented in the service centers. It mentions number of employees, time, training and skills, budget allocation and resources available as some of the constraints to be considered while designing the new system. The development plans section states the grand plan for implementing a new system in Pressure Hydraulic Company. Potential solutions section describes what Mr. Allan in the implementation of the new system. The recommendations provides further advice to the management of the service centers while the conclusions echoes the important points to note about the case study. The reference list contains the consulted sources during the preparation of the report. Introduction Pressure Hydraulics owned by Allan Taylor has potential for improvement but bottlenecks and inconsistencies hinder expansion. Growth new service centers in Gosford and Coffs Harbour cannot be supported by the current system that involves Allan visiting all the service centers and preparing payment cheques for each employee. Allan has to assume the position of president of Pressure Hydraulics and allow other heads to run the service centers. The positions of finance or accounting officer, operation manager and stock keeper have to be created to enhance efficiency through delegation of duties. Problems in the company are due to incoordination and duplication of duties that overburdens Allan and his workers. Office automation has to be a big consideration for the company is it embraces the entire form of management information system to achieve efficiency. A clear plan for implementing a new system of operation is required to increase effectiveness and efficiency that will lead to more productivity in Pressure Hydraulic Company. Understanding the current needs of customers will make the business know what kind of components to stock to avoid delays or eliminate time spend searching to the suitable part (O’Brien, 1999). The new system has to be developed within the defined constraints to avoid overstretching the resources of the company. This essay outlines the steps that have to be taken in development of a new system considering the needs of the customers and resources available to the company. Flow of information has to be enhanced as well as accomplishment of tasks. Description of the problem Allan business is based in Newcastle, Maitland, and Toronto. Each service center operates independently from each other. There is no accounting information system that joins the three service centers. Allan has to travel to all the service centers to inspect the work and make him tied down and with no time to dedicate on expansion. He has plans to start service centers in Gosford and Coffs Harbour but there is no time left that can be dedicated for the new centers. The business is fragmented hence making it challenging to supervise and coordinate activities between them. Operations are majorly done manually and it is cumbersome for people involved. The office assistant has to take phone calls from all people placing their requests. The office assistant has to verify the price from the Price Book and verbally quote the answer to the customer. It is tiring because the Price Book has also to be updated manually. A lot of time is spent updating the Price Book and this is costly for the business. Inconsistencies due to inability to update prices on time either leads to lost sales if the price is quoted lower and lost income it is quoted higher. Orders for work are recorded in the Work Book manually and crossed out if the customer changes the date. This makes the work untidy and jumbled out. Anytime a customer comes to the service center prices have to be confirmed from the Price Book. Discrepancies come up between what was verbally to the customer and what is in the Book Price hence causing confusion. A job card has to be written specifying the requirements of the order and presented to the workshop foreman. The foreman returns the work is completed for the assistant to write out an invoice. The office assistant has to prepare stock replacement using the job cards in order to tell what is needed. For technicians who go out to service trucks on the company’s site, they have to carry an assortment of equipment since the parts needed to perform the service is not predetermined. The technicians report to the workshop foreman when the task is completed who informs the office assistant to prepare an invoice. Misrepresentation can occur during the passing on of the information from one person to another. There is need to secure the system from tampering and communication breakdown from one person to another. Allan has to confirm hours worked by staff from the foremen before preparing the payroll and writing cheques for every individual employee. The current system is cumbersome and time consuming hence allowing little or no time for expansion of the business. Solution objectives Solution objectives defines what the new system intends to achieve in the restructuring in order to achieve efficiency and effectiveness. The new system has to eliminate time lapses from one activity to another. The time from when an order is placed to when an invoice is sent to the customer has to be reduced. The activities in the business have to be coordinated to avoid errors like underpricing or overpricing of items in the Price Book. The new system has to lead to quick price determination as soon as the customer places the order and not when the work is completed. The requirements of a task have to be predetermined so that the technicians avoid carrying an assortment of equipment to the companies’ sites in case of a task. The work to be accomplished has to be established early at the price quoted instead of waiting for the technicians to take the report to the foremen who later report to the office assistant to write an invoice. The manually and sluggish updating of the Price Book has to cease and quoting of prices verbally to customers has to stop. Discrepancies between the prices quoted to the customers and the price in the Price Book have to cease. The new system has to achieve synchronizing of functions in order to avoid back and forth movements that are time consuming. Allan has to monitor the operations from one center without having to travel to all the centers to coordinate and supervise work (Sharma, 2007). The new system has to ensure there is effectiveness and efficiency between functions and departments in the organization. Constraints There are several constraints that will define how much of the new system can be implemented at the Allan’s company. The number of workers available is the first constraints. The new system has to work with the number of workers available at the company and there will be no recruitment for new workers of creation of new positions (Marshall & Steinbart, 2009). The workers available have to be deployed effectively throughout the service centers. The budget available is also a constraint. Implementation of a new system will mean adjustment of the current system and automation of some activities to remove repetition that cause boredom and vulnerability to errors by workers. The new system has also to consider the training and skills of the current employees. The available training and skills will dictate how much of the old system can be demolished to create room for the new system (Bidgoli, 2004). Retraining of staff will mean additional costs to the company and more time needed to implement the new system. The fourth constraint is time available to effect the changes on the prevailing system. Changes to fix problems of the current systems can effected within the time provided because the operations of the company does not have to be interfered with. The resources available in the company will determine how far changes can be done in order to achieve effectiveness and efficiency. What can be achieved can only be determined by the resources available like time, skills and training, budget allocation, and number of workers available. Development plans The objective of a management information system is to provide timely and accurate information when is needed in the company. A grand plan is needed to overhaul the existing system in order to design a new system that will meet the needs of customers and enhance efficiency and productivity. Speed of attending to customers’ orders has to be enhanced in order to improve productivity (Reynolds & Stair, 2011). A management accounting information system can assist a business run better through offering timely information regarding internal operations. Allan has to be provided information on certain information regarding the functions Proper records of components used and the requirements of the next order have to be predetermined to avoid delays (Taylor, 2011). The actions implemented to create an information system for solving an organizational problem is referred to as system development. The old system has to be changed into a new system through the conversion process. The development plans will consider the resources available and enumerate what is needed to achieve an efficient system that will meet the customers’ needs and support effectively the achievement of the organizational objectives of the company. Strategic planning is needed to plan the how long term plans of the company will be achieved (Gelinas, Dull & Wheeler 2014). The new system has to be introduced gradually until it covers the entire service centers. Allan has to have certain information about the processes happening in the company. The kind of information required has also to be considered at this stage. Potential solutions It is not effective for Toronto, Maitland and Newcastle service centers to operate independently from each other since this leads to fragmentation and forces Allan to travel around to monitor business. Allan can act as the director or president of the company and allow office assistants in each service center to act as heads of service centers. The office assistants have to update Allan on the operations going on in the service centers where they are in charge and state what has been accomplished and what is yet to be accomplished. Allan should only be involved in the strategic planning for the service centers and not the daily operations. Automation can be good since it will allow Allan to access the records online and be updated on phone about the details with the office assistants who will be heads of service centers (Trevathan, 2006). The time that he used to spend travelling between service centers can be used in expansion of the business to Coffs Harbour and Gosford. Heads of service centers will be in charge of operations and only meet with Allan for change of strategy or strategic planning meetings. The Price Book can also be maintained online and price catalogues send to the clients every time there is change in price. Let it be that the catalogue kept online can be accessed by the customer hence there is not quoting of prices verbally over the phone. There will be no discrepancies between the prices (Shajahan, 2007). Predetermination of the price of a job and updating prices in the online Price Book will lead to elimination of errors or discrepancies. Furthermore, the customers can email their orders and a catalogue emailed to them specifying the cost of the order. Having to receive phone calls from all clients and quoting the prices verbally is cumbersome. Cancellation or change of date by a customer can be updated online and a new catalogue emailed to him showing the impact of the changes on the cost of the order (Laudon & Laudon, 2009). There will be no confirmation from the Price Book when the customer comes to the service center since the catalogue showing the prices would have been updated and the customer is aware of this. Placement of orders can be done online or over the phone and the price quotation send to the customer. The availability of a component can be done quickly if the customer’s order is sent in good time before the work begins. The cost of the work should not be done by the foreman after accomplishment of the task. The invoice can be prepared once the amount of work involved is determined during placement of the order (Hollender, 2010). Using job cards to determine stock replacement is old-fashioned. A batch stock keeping has to be maintained by a store keeper who records the movement of equipment. The re-order level has to be determined from these batch records. The work of the foreman will only be supervision of the task and not determining the cost and taking it to the service assistant. The new system will be tamper-proof due to avoidance of verbal passing on information from one person to the other. The technicians have to determine how much a job costs and inform the finance officer who writes out the invoice. The head of the service centers has to coordinate activities and functions within the service centers while the president of the company, Mr. Allan, has to coordinate functions between service centers and be involved in strategic planning. It is cumbersome for Allan to determine how much should be paid as salary to the employees. The foreman has to come up with a system where a worker keys in the time when he reports to work and when he leaves (Laudon & Laudon, 2010). It is easier to determine the number of hours an employee has worked in a month and a single cheque prepared by the finance officer and paid to the numerous accounts of employees instead of preparing a cheque for each employee. Recommendations The foreman can be charge of operations while the head of the service centers oversees functions of the entire service center. A store keep or stockiest have to be in charge of materials while the finance office will be in charge of payment to customers and payment of salaries to workers. Allan has to delegate duties and allow himself to be president of the company. Efficiency can be achieved if there is coordination of activities in the service centers and across service centers. Trying to supervise everything makes it cumbersome for him as he travels from one service center to another (Hall, 2012). Multiple duties for the service assistant and the workshop foreman only cause confusion and more vulnerability to mistakes. Allan has to implement an a management information system that will record scheduled reports on the summarized and data extracted from the underlying transaction processing system and operational officers to inform and identify semi-structured and structured decision problems. The decision support system will be important for the company since it can be used by heads of service centers to compile information from a variety of sources to support decision making and problem solving. Unstructured and semi-structured decision problem can be solved using a decision support system. The company needs a market information system to collect information about the market and market the services offered by the company (Girdhar, 2013). The business has to understand the needs of customers in advance and stock components that will be required in accomplishment of tasks. Predetermination of requirements immediately a customer places an order is very important. An executive information system is a tool for reporting that offers quick access to summarized reports coming from company departments and levels like operations, human resource and accounting. Mr. Allan needs this kind of system to enable him monitor activities from various service centers from a central place and offer suggestions for improvement after in-depth deliberations. Many things are being done manually and it is cumbersome for both workers and management at the service centers. An office automation system is needed to support productivity and communication in the service centers through eliminating bottlenecks and automating workflows like cataloguing, price determination, placement of order, and stock management (Effy, 2008). Enterprise resource planning ensures the flow of information between the business functions with the boundaries of the organization and ensures connections to external stakeholders. Conclusion Pressure Hydraulics has a vision to expand by creating other service centers at Gosford and Coffs Harbour. However, the commitment provided by the existing system offers very little chance for expansion. The challenges existing in the current system causes delays and determination of customers’ needs. Analysis of the problem has led to development of a possible new system that will deal with the challenges existing. Allan cannot expand his business in the current state where he is needed to be everywhere in person. A new system has to be adopted to give him time to concentrate on strategic planning. The challenges and possible solutions to them have been comprehensively discussed. References Bidgoli, Hossein, The Internet Encyclopedia, Volume 1, (2004), John Wiley & Sons, Inc. p. 707. Effy Oz, Management Information Systems, (New York: Cengage Learning, 2008). Gelinas, Ulric, Dull, Richard, and Wheeler Patrick, Accounting Information Systems, Cengage Learning, 2014. Hall, James, 2012, Accounting Information Systems, New York: Cengage Learning. Hollender, Martin, Collaborative Process Automation Systems, ISA, 2010. O’Brien, J. Management Information Systems – Managing Information Technology in the Internetworked Enterprise, Boston: Irwin McGraw-Hill, (1999). Girdhar, Joshi, Management Information Systems, (New Delhi: Oxford University Press, 2013). p. 328. Laudon, K., & Laudon, J. Management information systems: Managing the digital firm. (11th ed.). (Upper Saddle River, NJ: Pearson Prentice Hall, 2010). Laudon, Kenneth C.; Laudon, Jane P. Management Information Systems: Managing the Digital Firm (11 ed.), Prentice Hall/CourseSmart, 2009). p. 164. Reynolds, George & Stair, Ralph, Principles of Information Systems, (New York: Cengage Learning, 2011). Marshall, Romney, B., and Steinbart Paul John, Accounting Information Systems. Upper Saddle River, NJ: Pearson Prentice Hall, 2009. Shajahan S., Management Information Systems, New Age International, 2007. Sharma, K.L.S., Overview of Industrial Process Automation, Elsevier, 2011. Trevathan, Vernon L. (ed.) (2006), A Guide to the Automation Body of Knowledge (2nd ed.), Research Triangle Park, NC, USA: International Society of Automation. Taylor, Victoria. "Supply Chain Management: The Next Big Thing?". Sept. 12, 2011, Business Week. Appendix Components of Accounting Information System Read More