Business — Banking — Management — Marketing & Sales

Management reporting generated by the system

Category: Information Systems

The reporting of order progress is always related to a particular point in time of the period during which the order is in progress. Progress reporting requires a preset plan as to how the order should be manufactured. Otherwise no judgement can be made as to whether a reported completion date represents good or unsatisfactory performance. The same is true in relation to the work-in-progress inventory — in this proposal represented as planned direct material — which is frozen because orders have been launched.

The functioning of order progress control in using the proposed system is illustrated in the following using fictitious order data until delivery, displayed as picture 1 on page 7. The direct cost data are taken from the first order (xxxxx8500) on page 6.

The subject order has been started in week 2, 4, 6 for the manufacturing of the subassemblies 1 and 2, the housing, and the external component respectively. Completion was programmed for week 14. The actual execution of the order differed from the plan as follows (see table «Order tracking data total»):

  • the subassembly 1 was started in week 3 instead of week 2; it was completed in week 7 instead of week 6;
  • the subassembly 2 was started as planned in week 2, but finished one week early (week 5 instead of week 6);
  • the housing was started as planned in week 4, and finished one week late (week 7 instead of week 6);
  • the assembly 1 was started one week late in week 7 and delivered one week early in week 9;
  • the external component was started as planned in week 6, end delivered 2 weeks early in week 8;
  • the final assembling/testing started one week early in week 9; the delivery took place one week late in week 15.

On the basis of this performance data and the direct cost data stored in the system, the management information for this order as of week 9 and 14 would display the following information.

Order tracking reports

To illustrate the functioning of the system, fictitious management reports demonstrating the interactions between delivery performance and the cost involved have been compiled for the weeks 9 and 14.

In the report for week 9, all events after this point in time are not taken into account. The final assembling activity/testing having started one week early, all direct materials are already in final assembling/testing (184 i.e. the total direct material cost of the transformer of the orderxxxxx8500).

According to plan, at this point in time, they should still stand in assembling 1 (134) to be transferred to final assembling in week 10, and in the external component activity (20) to be transferred in week 10. The only material cost planned to be in final assembling/testing in week 9 is the direct material cost for the housing (20)- because the housing was planned to be completed week 6, with the housing at this point in time being transferred to final assembling. The total costs engaged in week 9 are 10 higher than planned because final assembling/testing (engaging direct material cost of 10) has started to work one week early. This advanced cost engagement would have been compensated if the finished product would have been delivered one week early because the total direct material cost of 184 would have left work-in-progress one week earlier than planned.

This, however, has not happened. The advantage achieved in the previous production stages (final assembling/testing could be launched one week early) was lost during final assembling (delivery one week late).

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