Review the Robatelli's Pizzeria Case Study. Develop another internal controls system, but this time, in the purchases and fixed assets business areas. Prepare a 12- to 16-slide presentation describing the purchases and fixed assets business areas. Be sure to incorporate speaker notes as well as appropriate visuals, graphics, fonts, etc. Include any associated risk in these areas. Describe specific internal controls that include authorization of transactions, segregation of duties, adequate records and documentation, security of assets, and independent checks and reconciliation for each business area.
Case Study
Robatelli's Pizzeria Case Study
Introduction
On the morning of October 31st, Elaine Black, Chief Information
Officer at Robatelli's Pizzeria, was waiting for both Jim Saxton,
database administrator, and Peter Greyton, operations manager, to
come to her office for a meeting. While waiting, Elaine was
thinking about the surge of telephone and Internet orders expected
to be received through the company's customer order center within
the next 12 hours. Halloween had always been the most popular day
of the year for people in the greater Pittsburgh area to order
pizza from Robatelli's. There were 53 restaurant locations to serve
these customers, but only one location to receive all of the orders
and forward them to the right restaurant. Elaine's thoughts were
interrupted as Jim and Peter entered her office. The following
conversation took place:
ELAINE Well, guys, it's here again, our biggest day of the year.
Not only is Halloween a busy day, but we have the upcoming day
after Thanksgiving, the week before Christmas, and Super Bowl
Sunday. Can our current computer system's infrastructure and people
keep pace with the orders we expect? JIM I think our systems are
all running at peak performance. We shouldn't have any computer
concerns for today or those other busy days. PETER Everyone in the
customer order center is focused on making sure that our customers
get their pizzas as ordered. We have plenty of people scheduled to
work tonight, so we're good to go. ELAINE Terrific. But every time
we face one of these peak sales days, I start wondering about the
long-term capacity and effectiveness of our computer systems. Jim,
we need to think long term about our computer system. I was just
reading an article that I'd like you to take a look at. It's about
Anheuser-Busch Companies and their use of data mining. JIM I do
agree with you, Elaine; we should always be thinking about how
newer IT systems can help us. Could you e-mail me the link to the
article? ELAINE Sure, and I would like you to think about how we
might use the same approach in our business. Peter, your order
center people are doing a great job, but again there's something
I'd like us to think about in the long run. As you know, we now
have to manually enter all customer order center sales and store
sales into our general ledger (GL). I think we could improve a lot
of things if those sales are automatically fed into our GL
software. Why don't you think about any advantages you see for an
automatic interface, and we'll look at the costs compared to those
advantages. How's that sound?
PETER I'll do that. I'll give it some thought and work on a report
about an automatic interface between our GL software and the point
of sale systems in our restaurants as well as the phone and
Internet sales. How soon do you want to meet again to look at these
issues? ELAINE Let's say, in two weeks at the same time.
As Jim and Peter left her office, Elaine continued to think about
the features of the company's accounting information systems and
whether or not data extracted from these systems could facilitate
the multiple needs of the company. The focus had always been on
providing accurate financial accounting information from the
various locations; however, the company's aggressive growth
strategies meant increased emphasis on the system's ability to
analyze detailed customer information that could be translated into
increased sales opportunities.
Elaine knew the challenges they faced could very well affect the
company's ability to maintain its competitive advantage. She
realized that her department must continually improve the company's
information systems to help it achieve growth strategies. Operating
state-of-the-art systems was imperative to position the company to
execute those growth plans. However, she was concerned about the
possibility that restrictions of the current information systems
could actually prevent the company from doing what it wanted to do.
Allowing restrictive systems to prevent them from achieving
business strategies was a risk that Elaine would not
tolerate!
Background
Robatelli's Pizzeria is a great American success story. Started by
Dino Robatelli in the 1960s, the business impetus was a family
pizza recipe. Introduced to the public at a church festival in
Pittsburgh's Little Italy, Robatelli's pizzas are now a recognized
tradition in the Greater Pittsburgh area. A full menu and local
expansion have led to its growing popularity over the years and
have helped it achieve nearly 50 percent of the area market share.
Annual sales now exceed $100 million. Following is a timeline of
milestones in the company's history:
1962
Dino and Gloria Robatelli contributed $500 and the family pizza
recipe to a partnership that opened the first Robatelli's Pizzeria.
1965 The Robatellis bought out their business partners. 1967 The
first Robatelli's franchise opened. 1971– 77 Dozens of new
Robatelli's franchises opened throughout the surrounding region.
1983 Home delivery service began. 1992 A central, one-number
calling system for all restaurants was launched. 2003 Internet
ordering began. The first “prototype pizzeria” opened. Today A
total of 53 locations are in operation.
The company has been known for its ability to get ahead of national
trends. For instance, in the early 1980s, Robatelli's began
offering delivery service; however, while the competitors were
merely delivering pizzas, Robatelli's delivered many additional
items from its extensive menu. The company was also on the cutting
edge when it launched its one-number telephone ordering system
whereby a single telephone number was used to service sales orders
for the entire region. Additional conveniences became available
about 10 years later when Robatelli's introduced online ordering.
Recently, it has expanded its menu offerings and opened prototype
restaurants specially designed with new features (such as a
full-service bar and a retail counter) that appeal to various
customer groups. Each of these advancements has propelled
Robatelli's growth over the past four decades.
Dino Robatelli's name is also well known for its tradition of
supporting neighborhood organizations. Robatelli's promotes
schools, amateur athletics, and other community groups.
Interestingly, some local student athletes were a tremendous help
to Robatelli's in 1971 when the business was in trouble. A fire had
destroyed much of the building containing Robatelli's original
pizzeria and commissary. The commissary made menu ingredients for
all of the Robatelli's pizzerias, so the entire business was in
jeopardy when this facility became inoperable. Area students and
coaches helped with the clean-up and rebuilding efforts that made
it possible for the facility to be reopened in a fraction of the
anticipated time. Dino Robatelli thanked them by establishing a
hall of fame that has become a fixture of Greater Pittsburgh high
school athletics.
Robatelli's reputation for great Italian food and innovations in
both customer service and community service have contributed to the
company's ability to grow into the most popular pizzeria in the
Greater Pittsburgh region. Robatelli's sales include an average of
110,000 pizzas per week. It has managed to stay ahead of the
national competitors, which is an unusual feat. In fact, many
people in and around Pittsburgh believe that pizza can only be
Robatelli's!
Multiple Systems, Multiple Functions, Multiple Uses of
Information
There are three ways to place an order at Robatelli's: in-store,
via telephone, or online. The order processing systems are
illustrated in Figure 1.1. Here's how they work:
In-Store Orders
In-store orders are taken by restaurant staff serving patrons
dining in one of Robatelli's restaurants or walking in to place an
order. Servers manually complete an order ticket at the tableside
and input the information into the company's point of sales system
through computer terminals located in the food preparation
stations. Walk-in orders are typically entered directly into the
system by staff using the computer terminal located at the
counter.
Telephone Orders
Approximately two-thirds of the company's business is processed via
the telephone. Robatelli's phone ordering system is called a
one-number system, referring to the convenience of ordering through
a single phone number, regardless of the restaurant location
nearest the customer.
Most phone orders are received by an operator, who enters the order
directly into a computer terminal while speaking with the customer.
Customer phone numbers are used to present the customer with a
choice of the nearest pizzeria for preparation and carry-out or
delivery. The software in the system references a street database
to verify that the street address exists. Credit card numbers are
obtained from customers paying by credit card. The customer service
representative verifies the order and credit card number before
ending the call.
Upon confirmation of an order, the order is sent directly to the
restaurant, where it is processed through the company's transaction
processing system and printed at the appropriate food preparation
station(s). Credit card numbers are included in the transmission,
and all credit card transactions are processed at the restaurants
at the time the order is received.
There are several advantages of handling phone orders through a
customer order center rather than at individual restaurant
locations. Above all, the reduction in background noise improves
the accuracy of the order-taking process. In addition, the
customer's wait time is greatly reduced. Before Robatelli's
implemented its one-number system, customers' wait time at peak
could be up to 15 minutes. The order center's average wait time
goal is now one minute or less.
Internet Orders
To place an online order, a customer must be registered.
Registration is a simple process that can occur anytime during
business hours. Customers are asked to provide identifying
information that will be retained in the system. Repeat customers
will not have to go through the registration process again.
Web-based ordering is tied to the company's one-number system. When
a customer enters an order online, customer information is pulled
from the onenumber system. Identifying data such as phone number
and address do not have to be entered. Menu offerings are presented
on the screen in various drop-down boxes so that any combination of
items can be ordered with many different choices of toppings or
accompaniments. A customer must answer a series of questions
regarding the order, similar to the questions that would be asked
if the customer had been speaking with a telephone operator.
Online orders also require confirmation of the menu items and
restaurant location before the call is ended. Credit card
information may be entered online, and the transaction will be
processed at the restaurant filling the order (as is done for
telephone orders). Two firewalls protect the security of customer
information submitted online.
Customer Service
Up to 135 customer service representatives may be on hand at the
customer order center to process orders coming in to the business
at peak times. In addition, Robatelli's employs approximately 10
home-based agents to handle incoming orders. Home-based agents may
perform any of the customer service functions from a computer
terminal located within their homes.
All operators are required to undergo a one-week training program
before they begin serving customers. After the training program,
operators are subject to one week of supervised on-the-job
training, followed by ongoing performance evaluations. Supervisors
at the customer order center perform order scanning, whereby orders
are randomly reviewed for reasonableness. Order scanning is
performed more frequently for orders taken by new operators.
Supervisors also follow up on errors and customer complaints, and
may listen in on calls to review the operator's performance.
If customers are in need of customer service, they may call or
e-mail the company. Supervisors handle these types of calls and
e-mail messages, and will respond either via telephone or reply
e-mail. Restaurant managers can also print customer complaints at
their respective locations.
Accounting Functions
Robatelli's ordering systems and transaction processing systems are
the source of all sales information sent to the accounting
department. Restaurant managers prepare daily sales summaries and
submit them to the company's administrative offices on the
following day. These summaries are transmitted electronically via
the intranet and are received in the accounting department.
Accounting staff prepare general ledger entries based upon these
sales summaries and key the information into the company's
accounting software. The transaction processing system provides
sales by restaurant for call-in and Internet orders, which are
reconciled to the restaurant summaries on a daily basis. Once the
accounting system is updated and the daily reconciliations are
performed, the data are stored in an on-site server.
Although a lot of accounting information comes from many different
locations, the capacity of the system is nearly 25 times its
current load.
Information Technology
The information technology staff at Robatelli's is continuously
engaged in system maintenance activities. Because the business
changes so frequently, systems maintenance is an ongoing process.
Every time a new coupon is offered, a price is changed, or a new
menu item becomes available, the related information must be
integrated into the transaction processing system.
Each menu addition has its own level of complexity, and many of the
items include options to customize to individual tastes in a
plethora of combinations. This poses a challenge in ordering;
however, the menu presentation continues to be improved to
eliminate chances of an incomplete or incorrect order. The options
are available online and to customer service representatives via
dropdown boxes on their computer screens. Most screens require an
entry, even if it is “none,” in order to ensure that no part of the
order is forgotten.
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