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INTRODUCTION The matter started on February 08 when the fresh appointed Controlling Director of PCI Sdn Bhd, Sobre Ghani analyzed 2007 Financial Report and located out there were recent improves in costs of goods distributed and stocks. The rate of increase in costs of goods offered had been disproportionate with regarding sales. En Ghani was informed that one of the reasons for the increase in cost was because of the current purchasing system that plays a role in redundant purchasing and substantial inventory holding costs.

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Siti Aminah, the Chief of economic Officer was asked to examine the current getting system and suggested the necessity to implement a fresh computerized purchasing system that would help ease some of it is manual businesses and at the same time might ensure they have the proper settings in place. Sobre Ghani requested a formal record on current purchasing program and suggestion for a fresh system prior to next managing meeting which in turn would be in two weeks time. En Ghani assigned Siti Aminah within the special task instead of the older Chief Creation Officer and she would not have any experience in system and technology.

The brand new system has to be able to reduce costs, enhance control and provide easy management of users and services in qualitative and quantitative ways. CHARACTERS Sobre Ghani: as the new hired Managing Movie director of Penda Cable Industry Berhad, who have reviewed earlier year Financial Report and asked for formal report by Siti Aminah. Siti Aminah: the Chief of economic Officer that being asked to make formal report rather than the Senior Key of Financial Official. CURRENT GETTING SYSTEM IN PCI

Goal: to ensure the acquiring raw materials (exclude exterior Aluminium cable television scap) that was required for the making of cable television, conductors and associated goods. 1) Monthly Raw Materials Summary Cik Lim Standard Manager of fabric Resources and Planning En Razi Assistant Purchasing Supervisor (MRMS) Review 1st week of Forecasted Monthly Every month Material Necessity En Mike General Director Purchasing (MMR)MRMS Planning Section En Razi 2) Cik Anne Getting Clerk &gt, RM100 500 En Ghani Filing Sobre Min Natural Material Storekeeper &lt, RM 100 000 Cik Lim PURCHASE ORDER COCORDER CONFIRMATION CompetitiveNot

En Mike En Razi Vendors Competitive Quotation Offer 3 ) Suppliers Bills Cik Lim Cik Anne Coded, Batched and Examined Invoices Delivery Store Received a) Confirmation Order Records b) Account Payable Guide No . Sobre Min c) Update Bank account Payable list in Helper Finance Administrator the computer. 4) Enclosed together with the return invoice of check / TT for notice of payment DO, COC Vendors MaterialRAW MATERIAL RETAIL STORE RMRR VCAR Financial Section (for payment)

InvoicePURCHASING SECTIONShipping Document Shipping PCI LENDER Document COUPON Voucher Accepted Delivery Buy RMS 2 Form Getting Clerk En Min Associate Finance Director & Fixed QUANTITATIVE DECISION | 2006| 2007| GROSS PROFIT MARGIN(Gross Profit/Revenue)| (12086851/176877312) = zero. 07| (48053370/298146915) =0. 16| OPERATING INCOME MARGIN(Operating Profit/Revenue)| (6386819)/176877312 =(0. 03)| 35657392/298146915 =0. 12| INVENTORY TURNOVER(COGS/Inventories)| (164, 790, 461)/27434751=(6) | (250, 093, 545)/45, 575, 893=(5. 48)| AVERAGE COLLECTION PERIOD(Debtors/(Revenue/360))| 12-15, 506, 128/(176, 877, 312/360) =31. days| 8, 453, 275/(298, 146, 915/360) =10 days| Low Profit Perimeter When the business shows the larger GPM, it indicates that the business is better in controlling their particular cost of sales. PCI major profit margin in 3 years ago is higher than 2006. It implies that the company can take care of their cost of sales. To get becoming years they need to call and make an agreement using their suppliers to avoid raw materials price increase. Operating Revenue Margin When the company shows higher working profit perimeter ratio, what this means is that the business is successful. Based on the calculation, PCI current 12 months shows a noticable difference from the prior year.

Intended for becoming years, operating expenditures in terms of administrative and providing expenses need to be avoided coming from getting enhance to maintain the money. Average Collection Period (Debtor) The short the period to collect payment coming from debtors, the more efficient the company is in managing their borrowers. CONCLUSION For conclusion, Siti Aminah can suggest just to maintain their particular old program instead of new purchasing program. This is because, the existing situation would not incurred excessive damage to the organization, the company nonetheless can preserve even though they have to buy the unprocessed trash in larger price.

PCI is not really the only organization that have injury in purchasing their raw materials yet all the purchasing departments throughout the industry experienced similar dilemma. Their main dilemma included establishing and maintaining profitable supplier relationships, confronting the challenge of price increases and ensuring source quantity. The actual need actually do is to pressure suppliers to keep prices low when the cost of raw materials reduces. They can better do this keeping their own tabs on the unprocessed trash market.

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