Jasmine Tea- Background Info and the Sales Order Entry Process

Jasmine Tea distributes specialty tea leaves to coffee shops, cafes, and restaurants across the country. Established in 1995, the company’s first warehouse was in Kennesaw, GA. Jasmine began by purchasing and distributing from one Chinese tea supplier. Within 2 years, sales had doubled and the company was seeking more varieties of tea. Jasmine Tea now has dozens of suppliers and over 50 varieties of tea. Jasmine Tea’s sales begin when a customer places an order with a sales representative by phone. A sales clerk enters the customer order using a preformatted screen. The computer checks inventory availability and obtains the unit price from the inventory master file. The clerk reads back the order to the customer to confirm the details and provides an expected ship date. The computer captures the data and prints a copy of the sales order in the billing department, a copy in the warehouse to be used for picking goods, a copy in the shipping department to use as a packing slip. A warehouse employee picks the goods and transfers the picking ticket along with the goods to the shipping clerk where the shipping clerk signs the picking ticket. The shipping clerk compares the picking ticket, packing slip, and goods and then prepares a two-part bill of lading. The goods with the packing slip and a copy of the bill of lading are sent to the customer on the truck. A copy of the bill of lading is sent to the billing department. When the sales order was received in the billing department it was filed in a pending sales orders file. When the copy of the bill of lading is received the billing clerk compares the quantities on the bill of lading to the ordered quantities and then keys in the shipment data. The computer updates the appropriate files and creates a prenumbered sales invoice which is mailed to the customer. Jasmine Tea: Cash Receipts: The mailroom has 5 employees who open and sort all mail. Each employee has two bins: one for remittance advices (RA) and one for checks. The mail clerk reconciles the amount on the check and the RA then separates the 2 documents by putting them into their corresponding bins The RAs are sent to AR. The AR clerk records each RA on a list and then sends a copy of the list to cash receipts department. The AR clerk enters the data into the computer system where it is used to update the customer’s balance. The clerk files the RAs by customer name. The checks are sent to the cash receipts department, which endorses them “for Deposit Only”. The checks are compared to the list of receipts received from the AR clerk. Then a deposit slip is prepared and sent to the bank. A copy of the deposit slip is sent to the Treasurer who files it until the bank reconciliation is prepared at the end of the month.

Required

You have been hired as a business process improvement consultant for Jasmine Tea (see the next page for a description of Jasmine Tea’s Business Processes that are in scope for this assignment.) Jasmine Tea has experienced considerable growth over the last few years and they know their business processes have not kept up with their increased level of sales and customers. Although they have a limited budget to dedicate to process improvement changes, Jasmine Tea is interested in making some improvements in key areas. You have been asked to prepare a request for proposal letter that describes the following:

1. Four changes that Jasmine Tea should consider for their business process. a. Describe how the process should be modified. b. Describe the benefit of making the change. c. Describe the risk of not making the change. d. Include which objectives will be met or improved by making the change (effectiveness, efficiency, security of resources, input/update completeness, input/update accuracy, input validity.)

2. Two components of their business process that appear to be effective and should not be changed. a. Describe the process that should remain in place and why.

3. Of the 4 changes that Jasmine Tea should consider, which two are the highest priority and why are they the highest priority. Conclude your letter by explaining why you agree with their decision to review their business processes and focus on improving the Revenue Cycle. Be sure to thank Jasmine Tea for the opportunity to work with them.