Consider the following scenario:
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You are an independent technology consultant working with Margaret Smith, owner of JavaBooks, a bookstore and coffee shop. You initially met her at a networking meeting and had some great ideas about how she could improve her business with a more strategic approach to investing in information technology. Margaret was ecstatic to meet with you.
Her office is situated in the back of the retail floor and was covered in books and loose papers—invoices and packing slips, tax notices and announcements, city planning advisories, inventory charts and schedules. Post-it notes were used to remind Margaret of upcoming appointments and meetings. A clipboard full of paper was apparently used as a store catalog and inventory item master. Margaret’s personal computer is buried under four separate binders.
To get started, you asked a couple of questions concerning how the company kept track of its sales and inventory. Margaret said the company uses a manual cash register and carbon receipt process, writing down inventory items and prices by hand as listed on the item schedule—the large clipboard with all of the inventory costs. Inventory totals are also subtracted by hand from the clipboard.
You confirmed the following points about JavaBooks business processes with Margaret:
- All sales are done by hand.
- All inventory issues and receipts are done by hand.
- The cash register is a basic manual drawer.
- All invoice records are carbons.
- Inventory is not manually recognized until it is manually entered into a spreadsheet.
- Purchase orders are created manually by the business owner in Excel.
You were not surprised to learn that inventory counts were completely inaccurate, supplier orders were always late, and stock-outs were very frequent. Invoicing was erroneous, often reflecting inaccurate costs or extended pricing to the customer. Margaret frequently reordered obsolete books and supplies or completed purchase orders with retired SKUs (stock keeping units). Management had no comprehension of the business’ current financial position because all of those reports would need to be manually compiled.