Total Quality Plan Implementation

As companies continue to grow, they rely more on the use of computers to assist with the completion of most daily tasks. Today's computers have enabled businesses to use fax programs, e-mail, and the Internet. Digital storage and electronic mail have replaced filing cabinets and handwritten documents. Furthermore, time-consuming research that once required a field trip to the local library is now available at the touch of a button via the Internet. Although many of Damschroder's employees have computers and printers at their desks, each computer is limited to its own information and applications. Purchasing a computer network with an inventory and accounting system for Damschroder Sales and Distribution Company, will improve the efficiency of the employees, centralize and secure all of the company's software applications and workflow, and dramatically increase communication within and outside of the corporation.

Damschroder Distribution Company was established 27 years ago as a small distributor of ice skating blades. The small company employed only three employees and remained this way for the first eight years of its existence. The business was sold to its present owner, over twenty-five years ago, who envisioned the potential for expansion and growth, not only in the distribution of ice skating blades but also boots and accessories. Through hard work and determination, the company has grown and now services about roughly twelve hundred accounts nationwide and distributes over 2000 items.

Currently, the company has a staff of eleven people and generates over eleven million dollars in sales revenue annually. Although the business has grown very quickly and has become financially successful, technologically, they remain challenged. Damschroder has neglected to implement a computer networking system that includes an inventory and accounting system. The company currently utilizes the same manual system it was using when it was first established. Lack of communication and numerous errors with the current system has created much stress among the company's employees. Customers often make Damschroder the second place they call rather then the first because of the numerous mistakes made at all levels. Inventories are untrustworthy, cash flow is undependable, and sales analysis by item, vendor or person is impossible.

Damshroder Sales and Distribution Company currently do not have a computer network system or a computerized inventory, or accounting system. This causes many problems in communication between the sales side and the warehouse sides of the business.

Damschroder's current system requires employees manually log merchandise counts onto inventory sheets. This is a very time consuming and inaccurate method for tracking inventory. Employees often make mistakes in tabulating the total number and styles of items, which in turn creates incorrect inventory levels.

Because sales people cannot rely solely on these count sheets, they are required to physically check the warehouse for specific items requested by clients. Often times a customer is placed on hold for several minutes, which causes much frustration. In today's fast paced world, people want answers immediately. Once an item is found, it is pulled from the shelf, and a hand-written packing slip, with three carbon copies, is generated. Next, the packing slip is manually calculated and double-checked a few days later, just before an invoice is typed. This causes problems because the original copy sent to the customer is incorrect reflecting an inaccurate total due.

In order for Damschroder sales to continue growing at a fast pace and to be able to provide it's customers with good and accurate customer service, it is essential for an inventory system to be implemented with the following requirements:

* Maintain all product information, including unlimited descriptions, order entry reminders, substitute products, UPC codes, and user classification

* Turn around physical inventory counts quickly with count sheets

* Capture average cost, last cost, landed cost, and multiple user-defined costs basis

* Select products for cycle counting, based on rank, hits, and priority

* Define product kits or create them dynamically, as needed

* Rank products by multiple methods for each branch

* E-mail

* Monitor inventory investment with rolling 365-day gross margin return on investment analysis

* Track details for consignments, rentals, lot items

* Manage work orders and value-added processes, such as assembly

In addition to the lack of an inventory system, the company also does not have a computerized accounting system.

The current accounting process is a manual general-ledger system. This system is impacted by the errors that occur in the warehouse when the packing slips are generated. However, the invoicing being a separate entity is subject to its own errors, making the entire system that much more unreliable. For example, if an error happens due to a typographical error in typing of the invoice, it is typed over the top copy and rarely cleaned up through all layers. Someone double checks the invoices with a calculator and posts them to a ledger sheet. However, if the copy used to transfer this information is difficult to read, the original packing slip must be found in order to confirm the actual totals. The information on these ledger sheets is kept updated by a person in the office with a calculator, pencil, and eraser. Payments are received and deducted from the ledger sheets and statements of accounts for dealers are typed up and added by a calculator. These often have errors because several days may lapse from the time the statements are typed and payments are received. In addition, there is no set date for typing and mailing statements.

With the current system marketing communication, marketing research, sales-projection, and actual salesperson production, manufacturing production and service tracking, are virtually impossible. In order for Damschroder to dramatically improve productivity and operational efficiency the following is required:

* Real-time, up-to-the-second financial information

* No batch processing, which will eliminate end-of-day, end-of-month, and end-of-year accounting period closes

* General ledger support must be flexible and scalable

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