Page 269 - Accounting Information Systems

240 PART II Transaction Cycles and Business Processes

REENGINEERING THE PURCHASES/CASH DISBURSEMENTS SYSTEM
The automated system described in the previous section simply replicates many of the procedures in a
manual system. In particular, the AP task of reconciling supporting documents with supplier invoices is
labor-intensive and costly. The following example shows how reengineering this activity can produce
considerable savings.
The Ford Motor Company employed more than 500 clerks in its North American AP department.
Analysis of the function showed that a large part of the clerks’ time was devoted to reconciling discrepan-
cies among supplier invoices, receiving reports, and POs. The first step in solving the problem was to
change the business environment. Ford initiated trading partner agreements with suppliers in which they
agreed in advance to terms of trade such as price, quantities to be shipped, discounts, and lead times. With
these sources of discrepancy eliminated, Ford reengineered the work flow to take advantage of the new
environment. The flowchart in Figure 5-17 depicts the key features of a reengineered system.

Data Processing
The following tasks are performed automatically.

1. The inventory file is searched for items that have fallen to their reorder points.
2. A record is entered in the purchase requisition file for each item to be replenished.
3. Requisitions are consolidated according to vendor number.

FI G U R E
5-17 REENGINEERED PURCHASES/CASH DISBURSEMENTS SYSTEM

Data Processing Receiving Accounts Payable

Inventory

Scan Inventory Goods
Valid and Prepare Arrive
Vendors Purchase Orders
Inventory Packing
Purchase File Slip
Orders Purch. Req.
File
Vendor
Update Inventory File
and Flag Items Received
Transaction in the Open PO File. Prepare
Listing Open PO Rec Report
File Update GL File.
Purchasing Transfer the Closed PO
to the Open AP file.
Receiving
Report
File
GL Receiving
Control Report File
GL Control
Accts
Open AP
Closed AP File
File Print Report
A Batch Program at
Check the End of the Day Transaction
Register Selects AP Due, Writes Listing Transaction
Checks, and Records Listing
These in Register
Vendor Checks
Cash
Disbursements
File