Purchases & Accounts Payable/ Cash Disbursement (AP/CD)Purchasing ProcessProcess Definitions and FunctionsAn Internal Perspective of the Purchasing ProcessDescription of Information FlowsPossible Goal ConflictsPossible Goal Conflicts . . .Organization’s Supply Chain (A Value System)Supply ChainSupply Chain ManagementCategories of SCM SoftwareBenefits of SCMPotential Problems with SCM InitiativesMitigating Problems with SCM InitiativesCPFR ProcessPurchasing Process Context DiagramPurchasing Process Level - 0 DFDTriggering the Purchasing ProcessPurchasing Process Level-1 DFD for 1.0Determining RequirementsInventory Reorder MethodsPurchasing Process Level-1 DFD for 2.0Purchasing Process Level-1 DFD for 3.0Purchasing Inputs and OutputsPurchasing Inputs and Outputs . . .Purchasing Process Data StoresERD for the Purchasing ProcessSelected Relational Tables (Partial) for the Purchasing ProcessSelected Relational Tables (Partial) for the Purchasing Process . . .Technology and the Purchasing ProcessTechnology and the Purchasing Process . . .Purchasing Process Systems FlowchartPurchasing Process Systems Flowchart . . .Fraud and the Purchasing FunctionControl Matrix for the Purchasing Process ..Control Matrix for the Purchasing ProcessValidity of PO InputsValidity of Vendor Packing Slip InputsKey Controls for the Purchasing ProcessKey Controls for the Purchasing Process . . .Slide 41Slide 42Slide 43Accounts Payable / Cash Disbursement (AP/CD)Slide 45Horizontal Perspective of the AP/CD ProcessSlide 47Vertical Perspective of the Purchasing and AP/CD ProcessesAP/CD Process Level-0 DFDAP/CD Process Level-1 DFD for 1.0Process 1.1 : Validate InvoiceAP/CD Process Level-1 DFD for 2.0Non-Invoiced DisbursementsProcessing Non-invoiced DisbursementsLogical Data Descriptions for the AP/CD ProcessERD for AP/CD ProcessSelected Relational Tables (Partial) for the AP/CD ProcessSelected Relational Tables (Partial) for the AP/CD Process . . .Selected Relational Tables (Partial) for the AP/CD Process . . .Technology Trends and DevelopmentsTechnology Trends and Developments . . .Slide 62AP/CD Process Systems FlowchartPurchase Returns and AllowancesAP FraudCD FraudExposure to Loss and Destruction of ResourcesControl Matrix for the AP/CD ProcessValidity of AP/CD InputsKey Controls for the AP/CD ProcessKey Controls for the AP/CD Process . . .IS 630 : Accounting Information IS 630 : Accounting Information SystemsSystemshttp://www.csun.edu/~dn58412/IS 630/IS630_F1 4.htmPurchases &Purchases &Accounts Payable/Accounts Payable/Cash Disbursement (AP/CD)Cash Disbursement (AP/CD)Lecture 7Lecture 7Purchasing ProcessPurchasing ProcessRelationship between the purchasing process and its business environment, including the organization’s supply chain. Improve the effectiveness of the purchasing process with new technologies (enterprise systems, e-business …) Supply Chain Management (SCM) system in a global business environment.Logical and physical characteristics of a typical purchasing process.Control matrix for a typical purchasing process IS 630 : Lecture 7 2Process Definitions and Process Definitions and FunctionsFunctionsThe purchasing process is an interacting structure of people, equipment, activities, and controls that is designed to accomplish the following:•Handle the repetitive work routines of the purchasing department and the receiving department.•Support the decision needs of those who manage the purchasing and receiving departments.•Assist in the preparation of internal and external reports.IS 630 : Lecture 7 3An Internal PerspectiveAn Internal Perspectiveof the Purchasing Processof the Purchasing ProcessIS 630 : Lecture 7 4Description of Information Description of Information FlowsFlowsIS 630 : Lecture 7 5Possible Goal ConflictsPossible Goal ConflictsIndividual managers’ goals may not be in congruence with organizational objectives.•Purchasing may buy large quantities to reduce ordering costs and increase discounts leading to increased receiving, inspecting, and carrying costs.Ambiguity often exists in defining goals and success in meeting goals. •A purchasing goal might be to select a vendor who will provide the best quality at the lowest price by the promised delivery date. Realistically, one vendor may not satisfy all three conditions.IS 630 : Lecture 7 6Possible Goal Conflicts . . .Possible Goal Conflicts . . .Prioritization of goals is necessary in choosing the best solution given the various conflicts and constraints placed on the process.•Trade-offs are made in prioritizing among the goals that conflict.•If the market is sensitive to satisfying customer needs, the company may pay higher prices to ensure that it can obtain the highest quality goods on a timely basis.IS 630 : Lecture 7 7Organization’s Supply Chain (A Organization’s Supply Chain (A Value System)Value System)IS 630 : Lecture 7 8Supply ChainSupply ChainSupply chain: the connections from the suppliers of merchandise and raw materials through to an organization’s customers. These connections include the flow of information, materials, and services.Organizations manage links in their supply chains to get the right goods, in the right amount, at the right time, and at minimal cost (i.e., efficiency) to create maximum value for their customers (i.e., effectiveness).IS 630 : Lecture 7 9Supply Chain ManagementSupply Chain ManagementSupply chain management (SCM): the combination of processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing the highest value to the customers.SCM software helps an organization execute the steps in the supply chain.The multiplication of false orders up the supply chain can cause wild demand and supply fluctuations known as the bullwhip effect.IS 630 : Lecture 7 10Categories of SCM SoftwareCategories of SCM SoftwareSupply chain planning software •Accumulates data about orders from retail customers, sales from retail outlets, and data about manufacturing and delivery capability to assist in planning for each of the SCM steps.Supply chain execution software•Automates the SCM steps. •Includes ERP software that receives and routes orders, and executes invoices. •Many connections in the supply chain are B2B automated interfaces.IS 630 : Lecture 7 11Benefits of SCMBenefits of SCMLower costs to the customer.Higher availability of product.Higher response to customer