Business functions and processes
Processing new orders
Guardian Locks makes locks and latches after sales orders are received from customers. However, they have few standard products that are made to stock. New sales orders are received by the sales manager. The sales orders are sent by customers via fax. After receiving a sales order, the sales manager determines the price of the final products and sends the details to the finance department. The sales manager instructs the finance department to make and send an invoice to the customer with all details of the ordered products and their prices. The financial department checks the credit limit of the customer to determine his or her ability to make payment in time. If the finance department finds the customer to be capable of making payments in time, the sales order is formally accepted. The sales manager informs the customer that the order has been accepted and is being processed. The diagram below presents a flowchart of the process of processing new sales orders at Guardian Locks;
After formally accepting an order, the final assembly operators, with the help of sub-assembly operators, determine the number of items needed for the production of the items ordered by the customer. They determine the number of items that are out of stock. In case all the inputs needed are available in the store, the production process begins immediately. However, in case there are items that are out of stock, the final assembly operators send the information to the finance department in order to be allowed to make a purchase order. If the finance department declines to accept the details for any reason, the production process does not proceed. If the finance department approves the details and determines that there is enough money to purchase the inputs, the head of the final assembly department makes a purchase order which is sent to the supplier(s) through fax. A copy of the purchase order is sent to the finance department. The finance department receives an invoice or invoices from the supplier(s) and makes arrangement to make payment for the items. Usually, the inputs arrive one day after the purchase order is accepted by the suppliers. This process is describes by the following diagram.
The head of the final assembly department ensures that all materials needed for the production process are available and in good quality. In case the materials purchased are of lower quality than desired or they have defects, the production process does not proceed. Information about the poor quality items is sent to the managing director. The managing director informs the suppliers about the issue. In case of need, the defective of low quality inputs are replaced by the supplier(s). If the inputs have the desired quality, the head of the final assembly department informs the operators about the details of the items to be produced. He tells them about the number of items and the design, as per the customer’s request. The production process starts immediately. The time taken to complete the production process depends on the number of items needed and their design. Customers may make requests for special designs. This increases the period needed to produce items. After the production process ends, the final assembly operators carry out final packing of the items. The packed items are kept in the warehouse waiting to be shipped to the buyer. The production process is described in the following flow-chart;
Shipping the products to the customer
Once the items are in the warehouse, the warehouse manager informs the customer that the production process is complete and the products are ready for shipment. At the same time, the warehouse manager contacts the carrier and makes shipment arrangement. The warehouse manager makes a delivery note and gives it to the carrier to take to the customer during shipment. A copy of the delivery note is sent to the finance department. Once the products arrive to the customer, he verifies that they meet all the requirements. Any dispute about the products is sent to the managing director. However, the locks produced by the company are rarely defective. The company has a good reputation for producing quality products.
Credit Management process
As mentioned earlier, the finance department at Guardian Locks carries out a check on the customer’s credit limit every time a new sales order is received. The same department sets the maximum credit that each customer can have. If no issues arise after the delivery of the products, the customer is asked to make payment within 30 days after delivery. The head of the finance department takes the responsibility of making follow up until the customer clears the debt. In case the customer does not make payment within 30 days, the head of financial department determines the reason and takes the necessary action. The credit management process is described in the following diagram:
Areas of Improvement
In order to implement an effective enterprise resource planning system, there is need for improvement in certain areas of Guardian Locks. There is need to establish clear relationship between financial department and other departments. This relationship is described in the following flow-chart;
The above relationship can be easily presented in an ERP system. Guardian Locks also needs to employ an inventory manager who can have the records of inventory ready always. This will reduce the time taken by final assembly and sub-assemble operators in determining the stock of raw materials every time a customer makes a new order. This will help to reduce delays in production (Vilpola, 2008, p. 48). In case an inventory manager is hired, the role previously assigned to final assembly operators to determine the items that are out of stock would be given to the inventory manager. The flow chart would be as follows;
System Selection and Implementation
ERP plays the role of integrating the external and internal management information across all departments within an organization. It utilizes integrated software that helps to automate information management activities (Turban et al. 2008, p. 319). ERP systems facilitate flow of information across all departments within an organization and manage connections with external stakeholders such as customers and suppliers. There are many different forms of ERP systems that are designed to suit different types of companies. The following table presents ten types of ERP systems that can be applied in make-to-order processes such as in Guardian Locks;
Source: Thin (2013, p. 78)
In order to come up with the most suitable ERP system for Guardian Locks, there is need to eliminate systems that are too expensive to implement in the short and long-term (Thin, 2013, p. 78). Guardian Locks has 61 persons, including managers and directors. The company may not afford one-time deployment of ERP system. In consideration of those factors, there is need to eliminate Sage ERP X3 and Abas ERP because they are expensive to implement (Thin, 2013, p. 78). Microsoft Dynamics AX and Plex Systems are designed for a large number of users and may not be very suitable for Guardian Locks. The following table provides further analysis of the remaining four ERP systems in order to determine the best.
Although Guardian Locks can deploy any of the four ERP systems, the Global Shop Solutions is the most suitable option. It is designed in a way that helps to provide comprehensive enterprise management. Also, it can grow as the number of customers increases (Turban et al. 2008, p. 320).
In summary, Guardian Locks should consider deploying an ERP system in the organization. An ERP system will improve operations and prevent some of the problems that are encountered in the company. The major problem encountered in the company is delay in the production process. An ERP system can help to prevent such delays. Cases of bad stock will also be eliminated. The ERP system will help to improve customer relationship management and thus, cases of poor service or dissatisfaction will be minimal (Turban et al. 2008, p. 320).
- Thin, A. (2013). Enterprise Resource Planning (Third ed.). Thomson Course Technology, Boston
- Turban et al. (2008). Information Technology for Management, Transforming Organizations in the Digital Economy. John Wiley & Sons, Inc., Massachusetts
- Vilpola, I. H. (2008). “A method for improving ERP implementation success by the principles and process of user-centred design”. Enterprise Information Systems. Vol. 2, No. 1, pp. 47–76