Snyder’s of Hanover had a big problem of managing and analyzing financial data. Although Snyder’s sells more than 80 million bags of pretzels, chips, and organic snack items each year, its core systems of collecting data were entered manually and written down. Snyder’s financial department was collecting spreadsheets from all departments to bring the financial analyst together.
Their financial analyst would spend the entire final week of each month collecting the spreadsheets from the heads of more than 50 departments worldwide. Then the spreadsheets would be consolidated and reentered into another spreadsheet. This consolidated sheet would be the company’s monthly P&L or profit-and-loss statement. The financial data were harvested and consolidated the same way for years. If one department needed to update its data with last-minute information after submitting its spreadsheet to the financial department, the head analyst had to return the original spreadsheet, and then wait for the department to resubmit its data. After the resubmission, the head analyst would have to enter the updated data into the consolidated spreadsheet.
This way of gathering the company’s financial statistics at the end of each month was irregular and sporadic. All of the financials were being collected but not on a regular basis. Financials should be collected as soon as possible. This important data should be available to track daily, weekly, monthly, quarterly and yearly sales. With the way that Snyder’s had been collecting this data, it meant that all of this important information was not available as often as needed. Snyder’s wasn’t able to react fast enough to demand or popularity to a certain product.
Due to the fact that they didn’t have a regularly updated collection of cash flow, certain events would not be predicted. If there was a regular cash forecasting system that was implemented, there would not be an issue of unpredicted events. Having the necessary data also affected shipping schedules, pricing schedules, or delivery counts. They were only able to account for the gross profits of business but not the performance of each product.
Snyder’s should implement a system in which electronic spreadsheets are used, with a portal system so everyone in the company is connected. The financial analyst should have a cash forecasting spreadsheet which predicts cash flow for the future. The analyst should also require daily cash from each department. If these basic functions were implemented into Snyder’s financial department, they would be up to date and running smooth.
Question 2, Dollar General Corporation
Dollar General Corporation is a discount store that offers necessary items for the public. Products such as houseware, cleaning supplies, clothing, health and beauty aids, and food all sold for around one dollar. With competition high due to company’s like Walmart or Target, Dollar General Corporation’s business model is to keep costs as low as possible. Because Dollar General Corp isn’t one of the top businesses in this industry, they lack the basic functions of an automated method for keeping track of inventory. This is a major problem when it comes to sales or revenue, and even theft.
The way that Dollar General Corporation keeps track of inventory at each store, is by the use of their managers. Managers know approximately how many cases of a certain item are being delivered to the store. When the truck arrives with the delivery, the manager should manually count each item to have an exact number of each item delivered. This is not an efficient way to run a store with big competition. Not having exact numbers could lead to loss of inventory, items being stolen by employees or customers, and it could lead to falsifying numbers. Because of merchandise being stolen, lost or from other unfortunate happenings, 3 percent of total sales are being lost. From an auditing standpoint, this is very poor internal controls.
Many decisions should be made before implementing an information system solution. Employers need to discuss with their employees the importance behind ethics when it comes to business. Stealing is not only illegal, but it is very immoral and could damage a business. Management needs a better grasp on inventory, shipping dates, and databases. Investing in a security system to catch shoplifters or employees stealing wouldn’t be a bad idea either. An automated inventory scanner should also come into play, so all items are accounted for properly and management has a better sense of products in the store, on its way to be delivered, what is needed for the next delivery and can also be used to track theft and other mishaps that happen along the way.
If Dollar General Corporation implements ethics, security, an automated scanner, and a more effective way to collect data, they will lessen the 3 percent profit loss. They will have more revenue to strive as a business and become successful. They will not have the brand name like Walmart or Target has, they probably will not even come close to their profit margin, however, they will come together as a business and will be successful in the deep-discount retail industry.
Courtney from Study Moose