CASE STUDY

Building Buddy

Building Buddy (BB) is a small company that supplies building materials to the construction industry. BB purchases its goods from a variety of suppliers and resells them to its customers in convenient quantities. BB's ability to deliver goods to the customer's premises coupled with the wide selection of materials it holds has meant that in the last 5 years, the business has grown substantially to the extent that the administration of the business is barely keeping up with the current volume of trade.

In particular, sales and purchasing, which is currently operated manually, is under considerable pressure, and customer goodwill is low. The high number of business transactions that are handled manually increases the likelihood of data entry errors. Also, the lack of updated information is frustrating for BB and customers. Customers see BB staff as incompetent, and customers sometimes complain about the time it takes to fulfil orders. BB have lost some customers because of it. Management at BB has requested that its functions be computerised.

Michael Jones, a Systems Analyst from the IT consulting firm you work for, was asked to analyse and design an appropriate business information system for BB. After interviews with the appropriate departments, the following information was gathered by Michael.

Sales Order Processing

BB has about 500 customers, and information about customers is maintained by staff in the Sales Department. The majority of customers submit orders using their own company's purchase order form. Alternatively, they telephone or fax their order to the Sales Department of BB. BB's own standard sales order form is created either by copying the order details from the customer order form, or it is created interactively while the customer is on the telephone.

For credit customers, the sales staff sends the standard sales order form to Accounting staff that check a credit report to see whether the customer's credit is greater than the total value of the order. The credit report shows the customers current balance, credit limit and available balance. Where the value of an order is greater than the customer's current credit, the whole order is rejected and the customer is notified. As the credit report is prepared weekly, it might not show the payments made by customers since the report was prepared. This has caused some orders to be wrongly rejected due to outdated information in the credit report.

Sales orders are then sent to the Stock Control and Shipping area, where a delivery note (which contains data copied from the sales order) is produced for the staff to pick the ordered items from stock. The picked items are placed in a box for shipping, and a shipping label is printed and placed on the box.

At the end of each day, a stock report that shows the stock level for each material is sent by the staff to the Sales department. However, this sometimes results in BB not having enough stock to fulfil an order as the information in the stock file is not up to date when orders are placed.

Invoicing

Details of the sales order are then passed to the Accounting Department for invoicing three times a week. Standard invoice forms are used, and the details from the standard order form are transcribed onto the invoice by the staff.

Credit Notes

If a customer has paid for an order and the material delivered was defective in some way, credit notes are issued by the Accounting Department staff. As sales and invoicing are done manually, it is sometimes difficult to track which order and invoice the defective goods are linked to when the goods are returned.

Payments

Customer payments are recorded by the Accounts Department staff. If a customer does not pay an invoice within 30 days of the date on the invoice, that invoice becomes overdue. Around the middle of each month, a report is generated to show the invoices that have not been paid within the 30 day period. A reminder letter is created and sent to customers with overdue accounts. If a customer's account has not been credited by staff when the report is generated, the customer may receive a reminder letter in error or may appear to exceed the credit limit when placing a new order.

Purchasing

Purchase order clerks maintain information about suppliers and the material they supply. They also maintain details about purchase orders that are raised to replenish their inventory of materials. The stock control staff sends to the Purchasing department at the end of each day a stock report that shows the stock level for each material. The purchase order clerks raise purchase orders when the quantity for a material falls below the re-order point.

ACTUAL QUESTION

1. Output reports and input screen (for generating the reports) for parts a. and b. below. You must include example data in the output reports.

1. Management requires a monthly report about the overall sales performance of each stocked material item. The report should list the total dollar sales, total quantity of units sold, total profit for each material item, and a grand total for dollar sales and profit.
2. The Accounts Department require a report which shows invoices that have not been paid within the 30 day period so a reminder letter can be sent to the customers of those invoices.
3. The Accounts Department requires a monthly "Aged Debtors" report that provides information about how much debt each customer owes and how old (i.e. overdue) the debt is. For each customer, the report should show the total debt owed to date, how much is owed for the current month, how much is owed for each of the last three months and any amount owed that is more than three months old. In addition, the report should include a grand total row.