Process and Activity to Iimplement the New System

Question: Discuss about theProcess and Activity to Iimplement the New System. Answer: Introduction The main purpose of the report is to design the process and activity to implement the new system for organization. The level 0 data flow diagram is design to identify and ensure the entire process of the organization. The current report is aimed to provide the business owners with the current business performance for the month of December. The business report will be focusing on the profitability by taking into the consideration the profitability ratios. To begin with, the current report analyses three types of products produced by the company and the profitability for each of the segment is taken into the consideration while reporting the financial obligations. The objective of this report is to provide lay down necessary recommendations to the management for future growth and expansion. Level 0 DFD The level 0 data flow diagram is a process to describe the entire data flow of a system. Data flow diagram have many level. But in this case only level 0 is used. The level 0 data flow diagram is used for produce the entire data flow and the communication system between the entities and process. The logical data flow diagram is focused on the main business process and its activities. Main activities and sub-activities of the Data Flow diagram Main activities Check status Issue status message Generate shipping order Manage account receivable Produce report Sub activities Place order Check stock Order confirmation Shipping order Payment process Invoice generate process Level 0 Diagram Figure 1: Level 0 DFD (Source: Created by Author) In the above level 0 dataflow diagram describe the dataflow process of the organization. The process or activities are denoted by round figure and the entities are denoted by rectangle. Total five process are present in the level 0 diagram. The customers place and order and this process is gone to the check status process. After placing order the check status process check the warehouse for availability of the ordered product. After that the order status is stored in the order database. When order is confirmed a confirmation message is send to the customer. The shipping process ready the product for shipping. Then customer make the payment and get the invoice. This process is handled by the account receivable process. All the information related account is stored in the account database. After all this the account department generate an inventory report. Level 1 Data Flow Diagram Figure 2: Level 1 Data Flow Diagram of Check status (Source: Created by author) Figure 3: Level 1 data flow diagram of Manage account receivable process (Source: Created by author) Inefficiencies in the current system The current system is very much inefficient. Most of the process are manual. Such as ordering process, order confirmation process, phone call process, and, and many more. The discount process and payment process also manual. This caused for data lose. Recommendations Create a new database system to manage all orders. Create a new system to automatically check the warehouse that which product is out of stock. Install a new database system for managing all process Create a new database system for managing all customer records. Create a system for new customers to register their self. Create a new information system for handling the entire process. These are the recommendation to improve the efficiency. Saasu Task Assessment of financial performance: To have an in depth performance analysis of the three components financial report for the succeeding year has been taken into the consideration. This will help in predicting the profitability for each of the segment reported during the year ended 2016 by the managers. For each of the component undertaken for evaluation a distinct selling amount with market demand is emphasised (Reimers, 2014). The profit and loss summary states that the total income derived from each of the three component is $40,681 with Product Train being the highest contributor in terms of sales revenue. Product race contributes only $1819.30 of the total income whereas other product represents $8,700. Cost of sales on the other hand significantly increased for product train where as component Other incurred cost of sales of $3,528. Recommendations: The above stated analysis undertaken to evaluate the three products represents different rate of gross profit despite having lowest rate of net profit margin. Below stated are the recommendations that the company should increase the degree of profitability by enhancing the efficiency. These includes; Improving the efficiency: Financial report states that organisation has the highest amount of sales for unit Race. Hence, it is recommended to the management of the organisations that they must focus on increasing the efficiency during the production of product Race instead of making further investment on the two products, Implementation of new strategy: From the analysis, it is evident that the gross profit for the product train is on the lower side. Hence, it is recommended that the managers should implement new strategy with the objective to reduce the cost of sales so that the business can cope up with the gross profit of other products as well. Robust resource planning: The managers need to decide on how to turn the new ideas into reality. This could be implemented through successful project deliverable or by implementing ERP system as this will help in keeping a track of the units produced through key attributes such as cost materials, fixed cost incurred etc. This will help in putting together a team of managers so that they can work within the budget line as key to maintain profitability. Improving liquidity: The current liquidity state can be improved by cutting down the number of days taken by debtors to make payment, as this will help in reducing the bad debt. Consequently, this will lead to generation profit within the shorter span of time. Reducing the instances of direct expenses: Direct expenses consist of cost of sales incurred during the production process of the three products. The managers are recommended that cutting down the cost of sales would help the organisation to earn higher rate of gross reporting. Additional reporting: Recommendations are also provided that the organisations should generate the following report which are as follows; Gross margin report: The managers are further advised to generate product based gross margin report for each of the produced product (Hoskin et al., 2014). Thus, reports can be generated by combining the cost price with the purchase price and can select the exceptional transactions, which is required to be included in the report. Statement of cash flow: The statement of cash flow forms one of the main source of financial reporting which helps in providing the information based on each of the segment used during the specified time interval (Weil et al, 2013). Such statements would help the management in ascertaining the changes made in the balance sheet accounts from cash and cash equivalent. Segmentation of profitability: As noted that the company is reporting under three segments thus, implementing segmentation based reporting will help in identifying the profit based on each of the segments. Variable income statements: A variable income statement is one of those statements where a company can keep a record for all the variable expenses that are deducted from the revenue generated to arrive at the stated contribution margin (Macve, 2015). In addition to this, such statement helps in covering the fixed cost in order to arrive at the net profit for the concerned period. References Reimers, J. L. (2014).Financial Accounting: Business Process Approach. Pearson Higher Ed. Hoskin, R. E., Fizzell, M. R., Cherry, D. C. (2014).Financial accounting: a user perspective. Wiley Global Education. Weil, R. L., Schipper, K., Francis, J. (2013).Financial accounting: an introduction to concepts, methods and uses. Cengage Learning. Macve, R. (2015).A Conceptual Framework for Financial Accounting and Reporting: Vision, Tool, Or Threat?. Routledge.