Question

DURAPLAST Company Ltd.

DURAPLAST Company Ltd., opened its doors in 1979 as a wholesale supplier of plumbing equipment, tools, and parts to hardware stores, home-improvement centers, and professional plumbers in the Accra-Tema Metropolitan area. Over the years they have expanded their operations to serve customers across the nation and now employ over 200 people as technical representatives, buyers, warehouse workers, and sales and office staff. Most recently DURAPLAST has experienced fierce competition from the large online discount stores such as Qualiplast and Interplast. In addition, the company is suffering from operational inefficiencies related to its archaic information system. DURAPLAST’s revenue cycle procedures are described in the following paragraphs.

Revenue Cycle

DURAPLAST’s sales department consists of 17 full-time and part-time employees. They receive orders via traditional mail, e-mail, telephone, and the occasional walk-in. Because DURAPLAST is a wholesaler, the vast majority of its business is conducted on a credit basis. The process begins in the sales department, where the sales clerk enters the customer’s order into the centralized computer sales order system. The computer and file server are housed in DURAPLAST’s small data processing department. If the customer has done business with DURAPLAST in the past his or her data are already on file. If the customer is a first-time buyer, however, the clerk creates a new record in the customer file. The system then creates a record of the transaction in the open sales order file. When the order is entered, an electronic copy of it is sent to the customer’s e-mail address as confirmation.

A clerk in the warehouse department periodically reviews the open sales order file from a terminal and prints two copies of a stock release document for each new sale, which he uses to pick the items sold from the shelves. The warehouse clerk sends one copy of the stock release to the sales department and the second copy, along with the goods, to the shipping department.

The warehouse clerk then updates the inventory subsidiary file to reflect the items and quantities shipped. Upon receipt of the stock release document, the sales clerk accesses the open sales order file from a terminal, closes the sales order, and files the stock release document in the sales department. The sales order system automatically posts these transactions to the sales, inventory control, and cost-of-goods sold accounts in the general ledger file.

Upon receipt of the goods and the stock release, the shipping department clerk prepares the goods for shipment to the customer. The clerk prepares three copies of the bill of lading. Two of these go with the goods to the carrier and the third, along with the stock release document, is filed in the shipping department. The billing department clerk reviews the closed sales orders from a terminal and prepares two copies of the sales invoice. One copy is mailed to the customer and the other is filed in the billing department. The clerk then creates a new record in the account receivable subsidiary file. The sales order system automatically updates the account receivable control account in the general ledger file.

QUESTION: Identify and describe current strengths and inefficiencies that are present in the current system.

Answer 1

duraplast company ltd have more than 200 employees .they have sufficient human resources and have grwon across the nation and a major threat to its competitors in the industry.-strength

duraplast ltd is suffering from operational inefficiencies due to its archaic information system, so the company should consider investing in new technologies to improve its operational effficiency.-weakness.

majority of duraplast's sales is based on credits,and this can be both strength and weakness at times.

if the customers fails to pay on time, company may suffer on its liquidity position as this afffects its cash flow.

on the other hand, more customers will make purchase as there is availability of credit.and credit system can be stregth of the copmany as this increases the sales.

durapalst have good sales department with good number of employees of parttime working and fulltime

and the sales order sytem automatically posts all transactions.a good sales management system will be defenetly a strength to the business.

from the given information,duraplast ltd have good working sales department,shipping department,warehouse management, centralised computer sales order system . these all add value to the company and cabe said as stregnth of the company when properly managed as duraplast is a wholesaler in the industry.

the main weakness of the company is its data processing department.its small and may not cop up with duraplast company on its growing stage when sales and orders are increasing. this major weakness should be redressed immediatly for the reputation and future growth of the company.