CASE A: Klassic Grocers, Inc.
Klassic Grocers is an online grocery service that provides home delivery of groceries purchased via the Internet. Klassic operates in the greater Tulsa area and provides delivery to precertified customers. Because of the perishable nature of many grocery products, the bulk of orders must be handled similarly to processes used for just-intime processes. To facilitate the process, Klassic uses a variation of vendor-managed inventory to monitor inventory levels closely. The purchasing process is triggered by a vendor (via an extranet portal) accessing Klassic’s inventory system to check current inventory levels of goods they provide. If additional grocery stocks (i.e., inventory) are needed, the vendor initiates a purchase requisition within Klassic’s purchasing system. The requisition is entered into the purchasing database. Periodically, throughout the day, Klassic’s purchasing manager accesses the purchasing database and reviews vendorinitiated purchase requisitions. The purchasing manager keys in either an acceptance or denial of the purchasing requisition (which is entered into the purchasing database) and the vendor is notified electronically through a transmission from the purchasing system. If the order is accepted, this transmission takes the form of an electronic purchase order; if it is rejected, the transmission is simply an electronic mail message of denial. When goods are received from the vendor, a printout of the authorized purchase order is attached. The receiving department keys in the purchase order information to retrieve electronic authorization from the purchasing database. Accepted goods are recorded in the purchasing database as received, bar codes are automatically printed in the receiving department to label the crates/boxes received, and the goods are stored in the warehouse. Rejected goods are returned to the vendor along with the purchase order stamped “unauthorized—shipment refused.”
At the beginning of the following day, the cash disbursements officer connects to the purchasing database to review the received goods that automatically update the accounts payable balances. Per agreement with suppliers, all payments are due within 10 days after receipt of shipped grocery stocks. Thus, the cash disbursements officer connects to Klassic’s electronic banking system via the bank’s Web site and initiates payments to all vendors via electronic transfers the day after receipt of goods, as the bank requires five business days to complete all transactions. The bank sends a confirmation number instantaneously in response to the transaction and the cash disbursements officer enters the confirmation number into the purchasing database, serving to confirm completion of the payment to the vendor.