Enterprise Resources & Fitter Snacker Case Study – IT Computer Science Assignment Help

Assignment Task

Task 

Enterprise Resources

This assessment consists of two parts on ERP Concepts and Implementation. You are required to complete your work and show to the tutor to gain assessment marks.
Read the following case study from your text book and answer the questions given as a classroom activity.

CASE STUDY – FITTER SNACKER
In this session, you will begin learning about the operations of Fitter Snacker (FS), a fictitious company that makes healthy snack bars. As you will see, the company’s current information systems are not integrated, which causes problems in all of the functional areas. Throughout the remainder of this book, we will use Fitter Snacker to illustrate information systems concepts in general and ERP concepts in particular.
As with many companies, Marketing and Sales is the focal point of many of Fitter’s activities. Why? Because Marketing and Sales is responsible for selling the company’s product, and those sales are the company’s only source of revenue. That means marketing personnel often guide the company’s key strategies and tactics by making decisions regarding such critical questions as:
• What products should we produce?
• How much of each product should we produce?
• How can we best promote and advertise our products?
• How should we distribute our products for maximum customer satisfaction?
• What price should we charge for our products?

On a day-to-day basis, Marketing and Sales is involved in generating key transaction data (including data for recording sales), creating customers’ invoices, and allocating credit to customers. As you learned in previous chapters, the availability of a common database is one of the advantages of having an integrated information system, because the data in the system are consistent across the different modules. Integration can lead to problems, however. If the data are not correct, the error will carry over into all modules. As noted above, Fitter’s Marketing and Sales information systems are currently not well integrated with the company’s other information systems. Because of this, company-wide use of transaction data is inefficient, as you will see later in this chapter. You will also learn how Fitter’s Marketing and Sales information systems could be improved by using ERP software. We begin by looking at an overview of the company’s operations.

OVERVIEW OF FITTER SNACKER
Fitter Snacker manufactures and sells two types of nutritious snack bars: NRG-A and NRG-B. The NRG-A bar touts “advanced energy,” and NRG-B boasts “body-building proteins.” Each bar contains a mix of the following ingredients:
• Dry base mixture: oats, wheat germ, protein powder, and spices
• Wet base mixture: honey and canola oil
• Vitamins and minerals

Each type of bar contains additional unique ingredients: NRG-A contains carob chips and raisins, and NRG-B contains hazelnuts and dates.

Fitter’s sales force is organized into two groups: the Wholesale Division and the Direct Sales Division. The Wholesale Division sells to intermediaries that distribute the bars to small shops, vending machine operators, and health food stores. The Direct Sales Division sells directly to large grocery stores, sporting goods stores, and other large chain stores. The two divisions operate separately from one another, in effect breaking the Marketing and Sales functional area into two pieces. Each division has an organizational structure that interacts with Fitter’s other functional areas, such as Accounting and Finance and Supply Chain Management.

The two sales divisions differ primarily in terms of order volume and pricing terms. The Direct Sales Division offers customers volume discounts to encourage larger sales orders, which are more efficient to process. The Wholesale Division charges customers a lower fixed price because the orders are usually large. Each order—regardless of size—generates costs related to the paperwork, shipping, and handling of the order. Thus, an order of 500 cases of snack bars incurs the same handling costs as an order of 10 cases. However, the large order might generate $5,000 in profit, while the small order might generate only $100. Both divisions sendtheir customers invoices requesting the total balance within 30 days and offering a 2 percent discount if the customer pays within 10 days (2–10/net 30).In addition to selling snack bars under the Fitter Snacker brand name, the company also packages the bars in store-brand wrappers for some chain stores.

Problems With Fitter Snacker’s Sales Process
Many of Fitter’s sales orders have some sort of problem, such as incorrect pricing, excessive calls to the customer for information, order-processing delays, missed delivery dates, and so on. These problems occur because Fitter has three separate information systems: the sales order system, the warehouse system, and the accounting system. Information from each system is shared either electronically through periodic file transfers (sales order system to accounting system) or manually by paper printout (credit status from the Accounting Department to sales clerks). The high number of manual transactions creates many pportunities for data entry errors. Further, not all the information stored in the three systems is available in real time, resulting in incorrect prices and credit information. 

In each sales division, Fitter has four salespeople who work on the road, plus two clerks who work in the sales office. Salespeople work on commission and have some leeway in offering customers “discretionary discounts” to make a sale. The entire sales process involves a series of steps that require coordination between Sales, Warehouse, Accounting, and Receiving, as shown in Figure 3-1. (Notice that Production is not directly involved in the sales process because Fitter plans production using a make-to-stock strategy, with product shipped to customers from warehouse inventory rather than being manufactured for specific orders.)

Sales Quotations and Orders
Giving a customer a price quotation and then taking the customer’s order should be a straightforward process, but at Fitter it is not. For a new customer, the sales process begins with a sales call, which might be over the telephone or in person. At the end of the sales call, the salesperson prepares a handwritten quotation on a form that generates two copies. The original quotation goes to the customer, and the middle copy is first faxed and then mailed to the sales office; the salesperson keeps the bottom copy for his or her records. On the quotation form is a toll-free number that the customer can call to place an order.

ORDER FILLING
Fitter’s process for filling an order is no more efficient than its sales order process. Packing lists and shipping labels are printed in the sales department twice a day—at noon and at the end of the day. These are carried by hand to the warehouse, where they are manually sorted into small orders and large orders. The Production Department produces and wraps the snack bars and packs them in display boxes, 24 bars to a box. The display boxes have promotional printing and are designed to serve as a display case. Fitter packs 12 display boxes together to form a standard shipping case. The warehouse stores both individual display boxes and shipping cases, organized by label type (Fitter brand and store brand), so depending on the inventory levels in the warehouse, Production personnel might transfer individual display boxes directly to the warehouse, or they might first pack the display boxes into shipping cases.

For small orders (less than a full shipping case), the order picker goes to the warehouse with a handcart and pulls the number of display boxes listed on the packing list. If there are not enough individual display boxes in the warehouse to fill the order, the picker might break open a shipping case to get the required number of display boxes. If he does this, he is supposed to advise the warehouse supervisor so she can update the inventory records—but sometimes this step is overlooked. The picker then brings the display boxes back to the small-order packing area, where they are packed into a labeled box—with the packing list enclosed—and prepared for shipping by a small package shipper.

For large orders (one or more shipping cases), the picker uses a forklift to move the appropriate number of shipping cases to the large-order packing area. Workers label them for shipping, load them on a pallet, and attach them to the pallet with shrink-wrap plastic for protection. These pallets are shipped either by one of Fitter’s two delivery trucks or by a less-thantruckload (LTL) common carrier. Fitter uses a PC database program to manage inventory levels in the warehouse. The program adjusts inventory level figures on a daily basis, using data from production records (showing what has been added to the warehouse), packing lists (showing what has been shipped from the warehouse), and any additional sources of data (such as shipping cases that have been opened to pull display boxes). 

Each month the warehouse staff conducts a physical inventory count to compare the actual inventory on hand with what the inventory records in the database show. Fitter’s monthly inventory counts show that inventory records are more than 95 percent accurate. Although 95 percent accuracy may not sound too bad, having 5 percent errors means that Fitter regularly has problems filling orders. Because snack bars are somewhat perishable, Fitter keeps inventory levels fairly low. Inventory levels change rapidly during the day, and Fitter’s current system does not provide a good method for checking inventory availability. As a result, a picker might go to the shelves to pick an order and discover that there are not enough snack bars to fill the order. 

Questions

Question 1: Describe the problems with Fitter Snacker’s sales quotations and orders, as illustrated in the accompanying figure.
Question 2: Describe the problems with Fitter Snacker’s order filling.
Question 3: In the Fitter Snacker sales system, as illustrated in the accompanying figure, ideally, how should returns be handled? What are the labels A, B, C and D? 
Question 4: Explain Fitter Snacker’s manufacturing process as shown in the accompanying figure:

Question 5: SAP can provide sophisticated tools to support sales and operations planning. Is that all that is necessary for a company to be successful? Support your answer by discussing the departments of marketing and manufacturing.

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