Some more Scenerios to be tested in ERP Systems

Please arrange to check the following:

(i) Payable creation at Head Office level but payment and adjustment (if receiver is absent in case of separation/transfer) at depot level

(ii) In case of Cheque/DD dishonor how the specific A/R will be returned back to previous position in the system basically at depot level

(iii) AR amount recovered from final settlement bill at HO to be adjusted in depot AR

(iv) Accounting for advance against sales and adjustment after delivery at depot level

(v) Data captured for determination of gap between material required as per recipe and actual use

(vi) Process of capturing LP-3 data

(vii) Data capturing and adjustment for MDR

(viii) Creation of new depot by splitting and AR balance transfer

(ix) Collection of one depot received by another depot/HO and adjustment

Stages involved in the process of Benchmarking

Process of Benchmarking: The process of benchmarking requires a Company to identify the areas i.e. processes, activity etc. which are central to its business and then selects the top-performing companies in those areas.
The benchmarking process is comprised of following stages. These stages are:
1. Planning:
(i) Determination of benchmarking goal statement: This requires identification of areas to be benchmarked. In practice, one should start with the identification of those areas which have to be really good to be really
successful.
(ii) Identification of best performance: Once the benchmarked goal statement are defined, the step is seeking the best of the breed of best of the best.
(iii) Establishment of the benchmarking or process improvement team: Ideally this should include the persons who are most knowledgeable about the internal operations and will be directly affected by changes due to
benchmarking.
(iv) Defining the relevant benchmarking measurement: Relevant measures will not include the measures used by the organisation today but they will be refined measures that comprehend the true performance differences.
2. Collection of data and information:
The data gathering for benchmarking could be done through national/international clearing houses, mail surveys, suppliers, company visits, telephone, interviews etc.In recent years national and international clearing houses have been set up.
3. Analysing the findings: The analysing of finding of step (2) requires following:
(i) Review the findings and produce tables, charts and graphs to support the analysts.
(ii) Identify gaps in performance between our organisation and better performers.
(iii) Seek explanations for the gaps in performance. The performance gaps can be positive, negative or zero.
(iv) Ensure that comparisons are meaningful and credible.

(v) Communicate the findings to those who are affected.
(vi) Identify realistic opportunities for improvements.
4. Recommendations: This involves:
Making recommendation: This requires: (i) Deciding the feasibility of making the improvements in the light of the conditions that apply within own organisation.
(ii) Agreement of the improvements that are likely to be feasible.
(iii) Producing a report on the Benchmarking in which the recommendations are included.
(iv) Obtaining the support of key stakeholder groups for making the changes needed.
(v) Developing action plan(s) for implementation.
5. Monitoring and reviewing: This involves:
(i) Evaluating the benchmarking process undertaken and the results of the improvements against objectives and success criteria plus overall efficiency and effectiveness.
(ii) Documenting the lessons learnt and make them available to others.
(iii) Periodically re-considering the benchmarks

Benchmarking code of conduct

Bench marking is the process of identifying and learning from the best practices anywhere in the world. It is a powerful tool for continuous improvement. To contribute to efficient, effective and ethical bench marking, individuals agree for themselves and their organisation to be abided by the following principles for the
benchmarking with other organisations. 

Suggested benchmarking code of conduct:

(i) Principle of legality
(ii) Principle of exchange
(iii) Principle of confidentiality
(iv) Principle of use
(v) Principle of first party contact
(vi) Principle of third party contact
(vii) Principle of preparation

4 types of benchmarking of critical success factors.

The Benchmarking is of following types:
(i) Competitive benchmarking: It involves the comparison of competitors products, processes and business results with own.
(ii) Strategic benchmarking: It is similar to the process benchmarking in nature but differs in its scope and depth.
(iii) Global benchmarking: It is a benchmarking through which distinction in international culture, business processes and trade practices across companies are bridged and their ramification for business process improvement are understood and utilized.
(iv) Process benchmarking: It involves the comparison of an organisation critical business processes and operations against best practice organization that performs similar work or deliver similar services.
(v) Functional Benchmarking or Generic Benchmarking: This type of benchmarking is used when organisations look to benchmark with partners drawn from different business sectors or areas of activity to find ways of improving similar functions or work processes.
(vi) Internal Benchmarking: It involves seeking partners from within the same organization, for example, from business units located in different areas.
(vii) External Benchmarking: It involves seeking help of outside organisations that are known to be best in class. External benchmarking provides opportunities of learning from those who are at the leading edge, although it must be remembered that not every best practice solution can be transferred to others.

What are Budget Ratios ?

These ratios provide information about the performance level, i.e., the extent of deviation of actual performance from the budgeted performance and whether the actual performance is favourable or unfavorable. If the ratio is 100% or more, the performance is considered as favourable and if ratios is less than 100% the performance is considered as unfavourable.

The following ratios are usually used by the management to measure development from budget.

Capacity usage ratio: This relationship between the budgeted number of working hours and the maximum possible number of working hours in a budget period.

Standard capacity employed ratio: this ratio indicates the extent to which facilities were actually utilized during the budget period.
Level of activity ratio: This may be defined as the number of standard hours equivalent to work produced expressed as a percentage of the budget of standard hours.
Efficiency ratio: this ratio may be defined as standard hours equivalent of work produced expressed as a percentage of the actual hours spent in producing the work.
Calendar ratio: This ratio may be defined as the relationship between the number of working days in a period and the number of working das in the relative budget period.

Budget Ratios :

1. Efficiency Ratio = (Standard hours ÷ Actual hours) × 100
2. Activity Ratio = (Standard hours ÷ Budgeted hours) × 100

3. Calendar Ratio = (Available working days ÷ budgeted working days) × 100
4. Standard Capacity Usage Ratio = (Budgeted hours ÷ Max. possible hours in the budgeted period) × 100
5. Actual Capacity Usage Ratio = (Actual hours worked ÷ Maximum possible working hours in a period) × 100
6. Actual Usage of Budgeted Capacity Ratio = (Actual working hours ÷ Budgeted hours) × 100

Advantages and disadvantages of Zero-base budgeting

The advantages of zero-base budgeting are as follows:

1. It provides a systematic approach for the evaluation of different activities and rank them in order of preference for the allocation of scarce resources.
2. It ensures that the various functions undertaken by the organization are critical for the achievement of its objectives and are being performed in the best possible way.
3. It provides an opportunity to the management to allocate resources for various activities only after having a thorough cost-benefit-analysis. The chances of arbitrary cuts and enhancement are thus avoided.
4. The areas of wasteful expenditure can be easily identified and eliminated.
5. Departmental budgets are closely linked with corporation objectives.
6. The technique can also be used for the introduction and implementation of the system of ‘management by objective.’ Thus, it cannot only be used for fulfillment of the objectives of traditional budgeting but it can also be used for a variety of other purposes.

Disadvantage of ZBB:

1. The work involves in the creation of decision-making and their subsequent ranking has to be made on the basis of new data. This process is very tedious to management.
2. The activity selected for the purpose of ZBB are on the basis of the traditional functional departments. So the consideration scheme may not be implemented properly.