e commerce chapter 5 case 2 American Packaging Machinery American Packaging Mach
ID: 448448 • Letter: E
Question
e commerce chapter 5 case 2
American Packaging Machinery
American Packaging Machinery (APM) is a company that provides repair and maintenance services to companies that operate large packaging systems. Packaging systems are arrangements of machinery that place items in containers such as boxes or bags and apply plastic shrink wrap to the containers. These machines must be adjusted regularly, and they have hundreds of parts that can wear out or fail. APM offers service contracts on most major packaging systems.
A typical service contract provides for an APM technician to make regular visits to the customer site to perform preventive maintenance. The service contract also includes a certain number of emergency repair visits per year. APM also sends technicians to perform repairs for companies that do not have service contracts.
APM technicians are paid by the hour, with additional pay for overtime hours and time they work outside of standard working hours, such as weekends and holidays. APM technicians are members of a labor union, the International Brotherhood of Electrical Workers (IBEW), which negotiates pay rates and working conditions for the technicians. APM subtracts union dues from each technician’s weekly paycheck and submits the total dues collected each week to the IBEW regional office. The union contract currently provides that APM technicians are covered by a medical insurance plan underwritten by the Prudential Trust Insurance Company. Although APM pays most of the insurance premium, technicians do pay a part of the premium cost. This contribution to the premium is withheld from their paychecks each week.
You are the director of electronic commerce for APM and you report to Laura Adams, APM’s CIO. Laura asks for your help in outlining a new automated system she wants to install, which would use EDI and EFTs to handle APM’s technician payroll and related transactions. She has provided the following narrative that describes how the system will work:
1. Technicians will record their time worked by entering the start and stop times for each job into a program that runs on their handheld computers (the technicians already use these handheld computers to look up wiring and mechanical diagrams for the machinery on which they work and to receive their job assignments). The time worked information will be transmitted from the handheld computer to APM’s Payroll Department.
2. The Payroll Department will summarize the time worked information and send it to supervisors’ desktop computers. Each supervisor will indicate an authorization for each technician’s time worked, overtime, and holiday/weekend hours. That authorization will be returned by the system each day to the Payroll Department.
3. The Payroll Department will summarize the time worked information each week and calculate gross pay, deductions, and net pay for each employee. The deductions include the federal and state taxes that must be withheld by law, the contribution to the medical insurance premium, and the union dues that are withheld under the IBEW union contract.
4. The Payroll Department will send an electronic summary of the payroll information, including deductions, to the Accounting Department, which will prepare payroll tax returns and make the necessary entries in the APM accounting system to record payroll and the related tax expenses.
5. The Payroll Department will send electronic authorizations to APM’s bank to make the necessary EFTs to deposit: the amount of each technician’s net pay to that technician’s bank account; the amount of each tax withheld to the account of the appropriate government agency; the amount of the total contributions to the medical insurance premium to the insurance company’s account; and the amount of the union dues withheld to the IBEW’s account.
Most of these accounts are at other banks.
6. The Payroll Department will send electronic notifications to Prudential Trust and the IBEW regional office, notifying them of the transferred amounts each week.
7. The Payroll Department will send an electronic summary of the hours worked by each technician and the amount of gross pay, including overtime and holiday/weekend pay, to the APM union steward’s desktop computer. The union steward is an APM technician who is elected by the technicians to monitor the terms of the union contract and handle any grievances that arise between the technicians and APM management.
Required:
Draw a diagram of the proposed payroll EDI and EFT system (you can use Figure 5-8 as a guide).
Explanation / Answer
Information technologies used to support business-to-business e-commerce include email, EDI and EFT, Electronic data interchange (EDI) involves the electronic exchange of business transaction documents over computer networks, between organisations and their customers or suppliers. Value-added networks provided by third parties are frequently used for this purpose. Documents such as purchase orders, invoices and requests for quotations are electronically interchanged using standard message formats, which are specified by international protocols. EDI eliminates printing, postage and manual handling of documents, reducing time delays and errors, and thus increasing productivity. It also provides support for implementing a Just- in-Time approach, which reduces lead time, lowers inventory levels, and frees capital for the business Electronic funds transfer Electronic payment systems can be used to transfer funds between the bank accounts of a business and its suppliers, or from a customer to the business. In retail stores, wide area networks may connect POS terminals in retail stores to bank EFT systems. In most cases, an intermediary organisation acts as an automated clearinghouse, which debits and credits the relevant accounts The most popular payment method used by individual consumers is the credit card, whichrequires the merchant to pay a commission to the bank on each transaction. For transactions involving small amounts that do not justify the payment of commission, merchants may accept electronic money in the form of digital cash. In this case, the customer "buys" money from the bank in the form of a unique cash number, which is transmitted to the merchant at the time of purchase and "deposited" in an account at a participating bank. EDI PROCESS DIAGRAM E.g. Communication Computer 1 Computer 2 1 This data is translated by the EDI software into x 12 EDI Shipment notice format 2 The EDI shipment notice is transmitted through a Value added network to the company. 3 The co. receives the EDI shipment notice . 4 The Edi shipement notice is translated into a format that can be used to update the database of the company. Customers and suppliers were interested in sending and receiving electronic documents; however, each company had different documents need and different computer and communication medium. The effort to maintain different document formats and different communications hookups became time consuming and costly. Electronic transactions started becoming standardize. Different standards for different industries still exist. The Accredited Standards Committee (ASC) X12 of the ANSI was created to support the national standards of EDI. Transaction sets (standard business transaction formats) are developed and maintained by the ASC X1 DIAGRAM Time In Input output time card info Time Out Inout out information INPUT OUTPUT TRANFER of funds
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