List eight BPI process issues or BPR principles that need to be applied to the raw materials purchasing process. For each of these issues, describe a redesign that could be made to the raw materials purchasing process to improve efficiency, effectiveness, and/or internal controls?

Elizor's Raw Materials Purchasing Process

The manufacturing supervisor in Durham enters purchase requisitions into the EPT system, which triggers emails to the purchasing clerks. The purchasing clerks read the emails and decide whether the request is for a known or unknown part. If what is needed is a known part, and there is a preferred supplier for the material in the EPT system already, then a purchasing clerk emails a purchase order (PO) to the supplier for the item(s) requested. If what is needed is not a known part, then a purchasing clerk sets up a new part in the EPT system and performs traditional new vendor sourcing activities to determine an appropriate supplier for the material. Once these steps are complete, a purchasing clerk emails a PO to the chosen supplier. If no supplier exists for a known part, then a purchasing clerk must still perform sourcing activities and send the PO to the newly identified supplier.

When the raw materials arrive, they are inspected for quality by the receiving department. If the quality is deemed substandard, then the goods are immediately sent back to the supplier. The raw materials passing quality inspection are then sent to the warehouse employees who count them for accuracy and put together a receiving report. Warehouse employees then decide where a good place to store the materials in the warehouse might be and send the receiving report to the manufacturing supervisor as proof the raw materials have been received. The manufacturing supervisor will then sign the receiving report as confirmation the material has been received.

Purchasing clerks receive supplier invoices in a variety of ways, but the process after receipt is always the same. First, they check each invoice for accuracy against the PO and make sure the appropriate pre-negotiated discounts and payment terms are included (e.g., 2/10 n 30). If there are any issues, they consult the supplier and make the corrections. The clerks then send the corrected invoice and PO to the accounts payable clerks in the accounting department. If there are no issues, then the supplier's invoice is sent directly to the accounts payable clerks.

Next, accounts payable clerks will assign GL account numbers (to show the increase in inventory [debit] and the accounts payable [credit]) and the cost center number (e.g., what job the material should be charged to) for management accounting purposes. Accounts payable clerks will then enter the information into CODE and a voucher number will be automatically generated. Supporting documentation is printed and filed in the accounts payable file folders until payment is due.