Reference no: EM133234110

SS University (Purchasing Process)

SS University is a medium-sized academic institution. The university employs about 250 full-time faculty and 300 staff personnel. There are 12,000 students enrolled among the university's four colleges.

The Purchase Process

The university's budget for purchases of equipment and supplies is about $25 million annually. Peter Chan is in charge of the Purchasing Department. He reports directly to the Vice President of Finance for the university. Peter supervises four purchasing clerks and three receiving personnel. The office is responsible for purchases of all equipment and supplies except for computer equipment and software, and plant purchases or additions.

The Payment Process

The various departments across campus manually fill out two-copy purchase requisition forms when there is a need for equipment/supplies. Each department forwards these forms to the Purchasing Department. If the request is for computer equipment or software, the requisition is forwarded to the Department of Information Technology for action.

Purchase requisitions are assigned to one of the three purchasing clerks by department. For instance, one purchasing clerk makes purchases for all university departments beginning with the letters A through G (Accounting-Geology). Purchasing clerks check the requisition to make sure it is authorized and then consult the Approved Vendor Listing to find a supplier. The clerk may contact a supplier for pricing and product specification. Once this task is complete, the purchasing clerk enters the purchase requisition, as well as vendor and price information into the computer system, which prints out a multiple-part purchase order. Clerks send copies of the purchase order to the vendor, to Central Receiving, and to the Accounts Payable Department. (The university considered using EDI for its purchases, but chose not to adopt it owing to the large number of vendors used.)

When Central Receiving receives an order, a receiving clerk consults the Purchase Order file to make sure the correct product and quantity have been delivered. The clerk also checks the product for damage. Central receiving does not accept any over-shipments. Receiving clerks forward accepted shipments to the adjacent warehouse for distribution to the appropriate department. Clerks send one copy of the Receiving Report to the Purchasing Department, a second copy to Accounts Payable, and file the third copy.

George Vaughn is the supervisor of Accounts Payable. Two accounting clerks report to him. He assigns invoices to them for payment based on vendor name. One clerk processes payments for vendors A-M and the other clerk handles payments to all vendors with names beginning with letters N-Z. The clerks match each vendor invoice with a copy of the receiving report and purchase order before entering it into the computer for payment by due date. There are often discrepancies among the three documents. This requires frequent phone calls to the vendor, the Receiving Department, or Purchasing for resolution. As a result, the company frequently makes payments late and loses out on cash discounts.

Requirement:

Construct a document flowchart for the process described.