Finance processes are procedures and systems carried out by the finance office to help in data collection, preparation of financial statements, and budgeting.
Purposes
Finance processes bring business processes to life by planning for strategies, budgeting and sources of finance. Finance processes define how to manage cash and capital in any working environment. Finance processes also seek means to improve and manage profits, costs and reduce risky investments (Anderson, 2010).
How they start
Finance processes start from the need to have smooth operations that are cost effective which are in line with government requirements. Finance processes are critical in supporting other business units like accounting, procurement and human resource (Kokemuller, 2017). The need to adapt to technological procedures to reduce costs means any organization should employ sound financial policies to avoid risks associated with the adoption of technology in production (Öztürk, and KIYMAZ, 2016).
Subcomponents/ Activities involved
Finance processes are facilitated by other subcomponents like cashbook maintenance units which track all cash received or paid. Stock and inventory management center work to reduce wastage by reducing misuse or avoiding buying excess stock (Accounting Education, 2010).
Organizational elements involved
Finance processes require a coordinated effort which is an essential component as an organizational element. The component calls for individuals and groups to work together within a defined path for organization success. Logistics in finance processes involves a coordinated effort of other organizational elements (Aktan and Brownjohn, 2013). Diverse groups and individuals harmonize all their skills and capabilities to add value to the final product.
Enterprise Resource Planning (ERP) and finance processes
ERP work to organize and improve activities that involve inventories and complex accounting problems.
Procurement Processes
The procurement process is the process of obtaining goods, acquiring hiring services or engaging in contracts from external sources through a competitive ordering process (Pinto, and Morris, 2007). Procurement processes work to establish sourcing procedures and activities of goods. Procurement processes also involve conducting research, and analysis of every activity or contract in purchasing before goods are received. The process also works to promote integrity, transparency, and accountability in selecting suppliers (Seethamraju, 2015).
How procurement starts
Procurement starts when an organization is in need of a new or a reordered product. The need for a business to determine where to get the product gives rise to the procurement process. The next step is to choose suppliers of the commodity after reviewing all relevant information about them (Chimwani et al., 2013).
Activities involved
In the procurement process, several activities are involved. There are inspection sections to ensure goods supplied meet set standards. Transport is also involved to transport delivered goods to their final destination (Purchasing Insight, 2012). In organizations dealing with international trade, there are import and export units to ensure goods traded are within legal requirements of both countries (Ibem and Laryea, 2014).
Organizational elements involved
For the procurement process to be successful, several organizational elements need to be involved. Skilled procurement managers ensure professionalism that meets all customers’ requirements by providing valuable goods and services (Mosgaard, 2015). Proper policies need to be in place to define all the processes and procedures involved in every stage of the procurement process. Another element is proper documentation and financial reporting to enhance proper observation and control (Gardenal, 2013).
ERP and procurement
ERP in procurement helps the process to be more reliable by evaluating budget spending and tracking of expenditures. Development of an ERP software helps the business saves more money because the process is first and free of errors. Use of ERP automatically identifies an earlier and new customer which helps the relevant unit to handle potential or existing suppliers (Kurbel, 2016).
The Fulfilment Process
The process involves completion of an ordering process when goods are delivered to the customer by the seller. The process serves to meet the customers’ need by ensuring every customer requirements are met (Dumas et al., 2013). Also, the process ensures the customer gets information about the product from when the order is placed to the time the goods are delivered. In large businesses, involves organizing for shipping and looking for the warehouse for the customer to store the product in good shape (Hammer, 2015).
How they start
Fulfillment process starts from the need to ensure the product get to the customer at the right time, and in the best possible quality. Some customers also need to be briefed on every stage about the product from the time of order placing, packaging, shipping to the point of delivery (Chang, 2016).
Activities/subcomponents involved
The activities involved include receiving order requests from customers, responding to customers’ feedback, dealing with disputed orders. The process also involves collaborating with different departments like quality assurance to make sure all customer specifications are met. Finance department ensures the customer pays for the order according to the agreed terms (Espino-Rodríguez and Rodríguez-Díaz, 2014).
Organizational elements involved
The sales department is responsible for negotiating terms and conditions of product delivery. Distribution unit researches about the best distribution channel by collaborating with the sales section to create a reliable distribution chain. The sales area work closely with distribution and sales divisions to ensure all shipping requirements are fulfilled. Credit control ensures the customer is creditworthy by analyzing previous contracts (Becker et al., 2013).
ERP and fulfillment process
ERP works with the fulfillment process to reduce mistakes that can cost business brand from unsatisfied customers. ERP software provides up to date information easier and faster. Up to date information boost customer trust and increases customer loyalty in the business (Reaidy et al., 2015).
Inventory and Warehousing Management Process (IWM)
IWM refers to all procedures and actions to maintain stock levels, and requirements according to customer demands and specifications.
Purposes of IWM
IWM helps the organization focus on inventory handling, packaging and guaranteed timely order delivery. The process ensures complex distribution channels are simplified by use of inventory management software from when the goods are dispatched to the point of collection by the customer (Shmula, 2012). Also, IWM works to reduce labor expenses, improving flexibility in product delivery while improving accuracy in every process of product delivery.
IWM starts to fulfill the need of monitoring goods from the time they are dispatched by the seller to the point they are delivered to the warehouse at the customer collection point.
Organization activities involved
First, inventory is received in the warehouse and recorded in the system in terms of types, quality, and quantity. Secondly, is put-way which indicates the goods are ready to be transported to the next storing site. Picking involves delivering goods to the final packing area or to further repacking processes. Packed goods are dispatched on a timely basis to avoid delay or overloading at the delivery points (Christopher, 2016). Value adding ensures products are ready for sale.
Organizational elements involved
Under the Functional structure, inventory unit works together with the storage or warehouse units to ensure goods are recorded for clearance to the next destination. Finance department facilitates the proper recording of all transactions involved. Divisional structure element group together company workers depending on whether the customer wants the product rebranded or packaged. The group works together to enhance efficiency and more output. Logistics combines a matrix structure that incorporates different departmental personnel. Workers are then divided into groups to ensure the tastes and preferences of different customers are met (Ahi and Searcy, 2013).
ERP and IWM
ERP integrates all inventory and warehouse operations in one system. Organizations can manage all finance, logistics and inventory operations all at one place. ERP facilitates order purchasing and management, managing stock movement in the warehouse and integrating e-commerce activities in accounting, shipping and financial reporting (Zhong et al., 2013).
The Manufacturing Process (MP)
Manufacturing processes turn raw materials into finished products.
Purposes
Manufacturing process defines the plant structure and giving details of every production process. Also, the process set out standards required in operating procedures. MP processes plan how production will take place using the quality equipment. The process also involves research, designing and developing procedures and systems in production (Yang, and Zhao, 2015).
The processes start due to the need for applying professionalism in engineering processes. MPs require tools and equipment that are integrated at different points. Therefore, MP starts from the need to carry out research on the best tools and equipment to use (Strano et al., 2013).
Activities/ Subcomponents involved
Production starts with procuring materials from the best supplier either using manual or E-purchasing means. Manufacturing also involves inventory control to check stock levels to avoid the company run out of raw materials. Planning for raw material required to avoid stock out and facilitates Just in time delivery (Karim, and Arif-Uz-Zaman, 2013).
Organizational elements and Manufacturing
Before manufacturing begins logistics design helps in to determine the path of the company’s product from origin to customer destination. Designing determines the division of labor and specialization in purchasing, transportation, sales, accountability and number of employees. Finance deals with reporting of all transactions in manufacturing processes to the relevant parties. Operations define every major activity in sales and purchases activities followed by proper recording (Nagano et al., 2014).
ERP and Manufacturing Process
ERP helps companies achieve synchronization in manufacturing, delivering and managing fluctuating demand, and supply chain challenges. ERP also helps in managing product and inventory within acceptable levels to avoid excesses or shortages. Also, ERP helps companies avoid manual tracking of inventory by incorporating analysis of current- future trends and accounting for deviations (Ptak and Schragenheim, 2016).
References
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