Supply Chaim Management

CHAPTER 11

THE EXPENDITURE CYCLE:
PURCHASING AND CASH DISBURSEMENTS

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

11.1 There are several reasons why accountants should be involved in decisions about investing in IT and not leave such decisions solely to IS professionals. First, the economic merits of proposed IT investments need to be subjected to the same kind of detailed analysis as any other major capital investment (e.g., plant expansions). Accountants are skilled in making such analyses. Second, the operational feasibility of IT investments must also be evaluated. How will the investment affect daily operating procedures? Will the system be able to adapt as the company changes the nature of its operations? As one of the major users of the information system, accountants need to participate in these analyses. Third, at what stage of the life cycle is the proposed system? In other words, will the system soon become obsolete? Fourth, what are the risks that either employees or customers will be unhappy with the new system? Finally, what is the long-run viability of the proposed supplier? Here again accountants can make a valuable contribution by analyzing the long-run economic viability of proposed vendors.

11.2 The advantage of JIT-II systems is they are more responsive to changing conditions and allow a vendor to tailor production schedules to meet customer needs. In addition, the supplier representatives known as “inplants” not only place orders to their respective companies, they also can pursue deeper involvement by virtue of their detailed and proprietary knowledge of the parts they supply.   These implants can provide value to the customer they serve by participating in new product development projects, manufacturing requirements planning, etc. Potential disadvantages include loss of confidential information to competitors served by the same vendor. In addition, competitive advantages in logistics may disappear over time as the vendor incorporates... [continues]

Read full essay