QUESTION 2 (65 marks) Skeem Saam is an innovative small retailer with a restaurant that is the brainchild of husband-and-wife duo Donald "Don" and Grace Bhengu. The store encompasses businesses prevalent in South African townships under one roof. There is a restaurant that sells fast food such as kotas and more wholesome foods such as pap and beef stew pap and chicken. A fresh produce section sells items individually instead of in packets, as evidenced by their gravy combo: two tomatoes and one onion for R5. They also have a retail convenience section that sells everyday grocery items like bread, milk and eggs. Below is a diagram of a typical Skeem Saam operation.

Source: https://www.anylogic.com/resources/case-studies/tackling-retail-out-of-stock-with-ai/ The company has grown from its humble beginnings of 1 shop in Diepkloof, Soweto, to more than 100 company and franchise operations in all nine provinces in South Africa. The company's head office and main distribution warehouse are in Crown Mines in the South of Johannesburg. The company also has distribution warehouses in Bloemfontein, Pinetown, Port Elizabeth and Cape Town. The distribution warehouses store non-perishable and prepared food items. The company utilises Enterprise Resource Planning ("ERP ")system called, LeruoERP for all its accounting, inventory management, supply chain and payroll processes. All Skeem Saam stores and warehouses connect to the LeruoERP through a wide-area network (WAN). Warehouse activities The warehouse, where most of the business inventory is kept, features separate holding areas for the non-perishable and prepared food items used in the cafes. The warehouses' receiving, storage and dispatch areas are separated by clear wire mesh fences with biometric access control between the sections. The LeruoERP system has a separate module for inventory management. The inventory management system is computerised, and all goods entering and leaving the warehouse are

6 scanned. All the processes and procedures regarding the inventory management system are documented in a procedures manual, which the warehouse management team reviews annually. Warehouse employees are required to attend compulsory ERP training before they can be allowed to work in the warehouse. Only approved supervisors have access to transactions across the system's different sections (receiving, storage and dispatch); the remainder of the employees have access only to their section of the system. All warehouse employees are issued mobile devices to scan barcodes, receive warehouse documents, update inventory levels, and indicate shortages and obsolete stock on the inventory module. The mobile warehouse devices can only be accessed via a unique username and password. Mobile warehouse devices are kept in a locked safe overnight. Mobile warehouse devices are serviced frequently to ensure their usability. The warehouse has backup power in the form of generators to mitigate power failures and load shedding. Temperature control is also essential to prolong the shelf life of the items stored in the warehouse. Smoke detectors and fire extinguishers are located throughout the warehouse as protection from fire. In addition, the items in the warehouse are stored above the ground to protect them from flooding. The company regularly pays the warehouse's insurance premiums, including the administration section. Skeem Saam has a disaster recovery and business continuity plans that are regularly assessed. Receiving1 The marketing department orders items from suppliers based on their demands forecast created from the different store's inventory holdings. Physical goods are matched to the receiving note such as the type and quantity. This document is called the receiving note. In the receiving note are barcodes, types, and quantities of goods. After matching the documents with the physical goods, employees scan the barcode on the receiving note, showing the type and quantity of goods. The warehouse management system automatically updates the goods received/invoices received reconciliation account. The goods have not been placed in the warehouse, are in the receiving staging area, and are not ready yet for customer orders. Storage After placing the goods in the receiving staging area, the system automatically prints an electronic storage form indicating the product, quantity and location. The first stage in the storage process is to scan the barcode on the storage form. Then scan the barcode on each product that will be stored; the system automatically indicates the location where the goods must be stored. Next, a warehouse staff member scans the barcode of the storage location. If the destination of the location can be scanned, it means that the location is already appropriate. After the storage is completed, the warehouse management system automatically updates the stock figures in the accounting records. The goods are then ready to be ordered. On the warehouse management system, the storage location for the item has already been determined based on the warehouse layout plan. Dispatch of items Stock is shipped directly from the warehouses to the different store locations. The warehouse manager logs on to the LeruoERP system with a unique username and password and assigns

1 Adapted from . Journal of Physics: Conference Series.

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7 the dispatch note to the first available dispatch clerk. At the same time, Skeem Saam's logistics division is automatically notified of the pending delivery via the LeruoERP system. The dispatch clerk selects the products (indicated on the mobile warehouse device) and takes them to a holding area for collection, where the dispatch note is printed and attached to the ordered products. Next, a dispatch controller checks the goods against the dispatch note, seals the order in a box if it is correct, and electronically marks it as ready for collection. If the goods do not match the dispatch note, the dispatch controller marks the dispatch note on the mobile warehouse device as "not matched", and the dispatch note is returned electronically to the dispatch clerk. The dispatch clerk then investigates and finds the correct goods, if possible. If a dispatch note remains unmatched to goods for more than 24 hours, the LeruoERP system generates an exception report automatically sent to the relevant warehouse manager. The warehouse manager investigates the exception reports, ensures that they are resolved and releases the dispatch notes electronically, with a note on how it was resolved. The system does not allow partial orders to be collected and delivered. Skeem Saam drivers collect the completed boxes from a specific area in the warehouse. Procedures for controlling access by people and vehicles are in place for entering and leaving the warehouse area. Drivers electronically sign the dispatch note on the dispatch controller's mobile device as evidence of receipt of the sealed box relating to such dispatch note. The dispatch note is allocated to the drivers and vehicle details during transit. After that, the drivers may load the goods for delivery. Once the store manager has signed the dispatch note, the invoice is flagged as executed. The LeruoERP system then processes the sales transaction in Skeem Saam's intercompany "accounts receivable" sub-ledger. This is done by multiplying the number of product items a customer purchases by the sales price. At the same time, the inventory sub-ledger is updated to reflect the sale of inventory based on the cost price per the product price master file. The cost price is automatically calculated on a first-in-first-out basis. PART A REQUIRED: (Students must refer to the above scenario when answering these questions.) 1. Discuss, with reference to the information provided above, the application "IT" controls around the inventory management process. (15 marks) 2. Discuss the general "IT" controls around the inventory management process regarding the information provided above. (10 marks) 3. Recommend actions Skeem Saam can take to secure their communication networks and devices against Man in The Middle attacks. (10 marks) 4. Analyse how Skeem Saam can use the Internet of Things ("IoT") and data analytics to optimise their fleet of delivery vehicles. (5 marks) 5. Advise Skeem Saam on how they should incorporate features of sound data management into their approach to the data in their systems.