chicken run case study g3

8/19/2019 Chicken Run Case Study G3

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Chicken Run Case Study

GROUP: AC220 8E

Group Members :

Nur Fariesya Binti Zambry 2012410308

Nurul Farhana Binti Jasni 2012858436

Rawiah Abu Naim 2013886334

Siti Nurhaliah Bt Sulaiman 2012254!38


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The development of the company in late 2008 had puzzled Encik Selamat. He was especially

concerned to note a report, which indicated that the operating cash was systematically

running low .

He was also especially worried on the severity of the matter, in which the company had to resort

to significant increase in the short term borrowing in order to meet operating obligations .

This may in turn increase its financial obligation in terms of interest payments.

n the meantime, !redit !ontroller, Ms Choy discovered from the aging analysis of

customers that the credit limit of Cold Gold Sdn Bhd one of its major customers had gone

into its level and yet the marketing department continued to supply products to the

company .

• "#w li$uiity #% &ash %l#w in '(&el )#ultry *+eat ,')+-

Challenges


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Recommendations


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1. /eel# m#re&hi&en r#u&ts

2. %%er in&entiet# &ust#mers

buyers

3. '(#rt &hi&enr#u&ts t#

an#theruntries

Recommendations

Establish new marketing strategy toincrease operating cash


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1. Develop more chicken products.

')+ &an e(an #r eel# m#re &hi&en r#u&ts t# sale. Sin&e the

main a&tiity #% ')+ is sulyin the wh#le &hi&en t# &ust#mers it is

aisable t# eel# m#re r#u&ts t# in&rease the sales.

F#r e(amle 7 Ayamas F## #r#rati#n


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Types Purpose

Eggs

')+ &an raise the &hi&en es either %#r

nsumti#n #r t# bree m#re &hi&en t# sell.

Feathers9he &hi&en %eathers als# &an be use t# sell t#

the hani&ra%t maers.

Livestock ')+ &an sell the &hi&ens n#t #nly %#r

nsumti#n but als# t# &ust#mers wh# w#ullie t# buy &hi&en as et.

Forexample;


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ust#mer in&entie r#rams #%%er bene%its t# l#yal buyers. S#me businesses #%%er%re$uent:sh#er isunts #r #ints:base rewar systems that all#w &ust#merst# a&&umulate bene%its with eery ur&hase.

. !""er incentive to customers# $uyers

Offer discount benefit

Offer more

cheaper price.

Offer discount if

buy in bulk.

Early payment incentives

Offer discounts

for the early

payment of

borrowing.

Pay in different

schedules

Establishbusiness

agreement to

pay in agreed

intervals.

Buy now, pay

later.

Reduc

e cost

Increas

e sale

To help EPM:


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%. E&port chicken products to anothercountries

Singapore#nsumti#n #% all tyes #% meat has r#e #wn in Sina#re e(&et %#r&hi&en. hi&en ntinues t# be the #minant &h#i&e %#r meat een with thenew trens %#r %## in the untry. 9here hae been many swit&hin an&h##sin healthier #ti#ns %#r meals su&h as eetarian alternaties. nly&hi&en remains un&hane.

'ong (ong+eat ntinue t# be #ular as nsumti#n is still #n the rise %#r all tyes#% meat in Asia. F#r ;#n


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EP) still continued to supply the chicken to Cold *old Sdn +hd eventhough the customer credit limit has e&ceeded

The marketing department didn,t "ollo- the procedure on credit salesterm

Procedure on credit sales term to ensure the customer didn’texceed the credit limit

• Significant increase in the tradereceivables, also cash collection

ssue

!perating cash runninglo-


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/ell0designed policies governing its

verage

CollectionPeriod

Credit Policyand Credit

Term

Sales !rderEntry

CollectionProcedures

Recommendations


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Particular#2ear 334 5R)million6

337 5R)million6

338 5R)million6

Revenue 9:.73 99.31 7:.;3

TradeReceiva$les

1.73 14.3 4.33

Days to Collect ccountReceiva$le

8: days

5< % months6

137 days

5 = % months6

14 days

5 = : months6

9here%#re possessing alower average collection period is seen as #timal t#turn its re&eiables int# &ash$ui&ly

;iher alue #% aeraelle&ti#n eri# isun%a#rable whereaslower value is favorable

#marin the timeallocation %#r themany t# lle&t its traere&eiable

Formula>9rae Re&eiables

Reenue 365ays

Aerae lle&ti#n eri#= reit term

reit #li&y t## lenient

Aerae lle&ti#n eri#> reit term

reit #li&y t##restri&tie

EP) should>

16 (eep customer in"ormation upto date

6 Send out reminders during the -eek prior to a contractually due

payment date

1. verage Collection Period


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EP) allo-s theircustomers to

purchase theirproducts $y

credit

+e"ore applyingCredit Policy? EP)should set Credit

DepartmentGuidelines

To screen outtheir potential

and e&isting

customer

To protectsEP) "rom the

"raudulent

applicant

1 !ind

customersthat afordto pay intimely

manner

2. Conduct abackground

check ontheir

customer’scredit

account

3. Prepare a

specificcontractthat includes

the creditterm

4 Send

remindersto customerswith

outstandingbalances

. Setting Credit Policy


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Credit Terms9he &reit terms #%%ere t# &ust#mers %#r early ayment nee t# be su%%i&ientlylu&ratie %#r them t# want t# ay early

Conditions included -ithin credit terms

The amount of credit extended tothe customer

The time period within which paymentsmust be made by the customer

Early payment discount terms

The penalty to be charged if payments arelate

')+ sh#ul use &reitterms su&h as 30 ayssu&h as state in the

ntra&t

“the customer must paywithin 10 days to obtain a

2% discount, or can make a

normal payment in 30days, then the terms arestated as "2/10 net 30"”


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Customer1. Take!rder

. pproveCredit

%. Checknventory

vaila$ility

!rder

pprove!rders

Re@ected!rders

ckno-ledgement

Marketin department continued t#supply their r#u&t een the &reit

limit #% #l ?#l Sn Bh had one intoits limit

')+ sh#ul tae alert #ntheir reenue &y&le ese&ially

sales order entry.

9# mitiate #tential riss

%. Sales !rder Entry


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@mlementati#n#% closed"loopverification t#

ensure thatr#er a&unt

is bein &reite

Documenting lle&ti#n #%

ayment mae by &ust#mers

!ield checkonto thenumeric

values must be#ne %re$uently%#r the ayment

am#unts

#econcile the

subsiiarya&unt

re&eiables ineneral whi&h

sh#ul be #neby another

person

CustomerCash

Collection+ank

Payments Deposits

Cash Receipts Statements

Closed0loop Aeri"ication !n input alidation method that uses data entered into the system to retriee and displayother related in#ormation so the accuracy o# the input data can be eri#ied

:. Collection Procedure


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EP) improving the operating cash>

Aly banin

%a&ilities *%inan&ial

assistan&e@mr#e%inan&ial

#siti#n an%inan&ial

er%#rman&e

hane #rmi(e

&hi&en %ee @nterate the

r#u&ti#nlanninan ntr#l

system

Recommendations


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1. pply other "inancial assistances

@n&rease insh#rt term

b#rr#win

@n&reaseinterestayment

eratin&ashrunnin

l#w

• nsists #% l#ans an %inan&ial #bliati#ns lastin#er #ne year ,l#ner ayba& eri#-.• i.e.7 +ARA )NB

"#n terml#ans

ash%l#w minimie timesent sain

%#r inestment

uses %uns %#r&aital

imr#ementsa&$uire

e$uiment #rur&hasesulies

@nterestrate%i(e interest

rates,nsistent

m#nthlyayments anhih

rei&tability-

easy t# buetthe #erati#nal

inme

Stabilit y n# nee t#sear&h %#r

%inan&in #%ten

easier r#Ce&tearnins an&ash %l#ws as

what intereste(enses will

be ea&h m#nth

ssue>


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. mprove "inancial position and "inancialper"ormance

)arti&ular Dear2006

,R+ milli#n-200E

,R+ milli#n-2008

,R+ milli#n-

#st #% Sales 51.E0 54.10 E4.0!

St#& 3.10 1.50 2.60

@nent#ry 9urn#erRati# ,times-

16.68 36.0E 28.50

• sh#win h#w many times amanys inent#ry is s#l anrela&e #er a eri#.

nventoryTurnover RatioB

#st #% ?## S#l

@nent#ry

Better turn#er rati#


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Turnover Ratio

;ihturn#er

rati#sh#ws str#n sales er%#rman&e

ability t# ee u with near:termebt #bliati#ns

result by buy t## little inent#ry t#

ee u with &ust#mer emans

buyin smaller inent#ry am#untsreularly

nee t# reiew the inent#ry buyinra&ti&es

"#w turn#errati#

means n#t sellin thr#uh r#u&tse%%i&iently

buyin t## mu&h inent#ry %#reman

thr#win #ut e(ire #r erisher#u&ts

&ause t# sell r#u&ts at isuntst# &lear them #ut

result %r#m inent#ry buil uintene t# meet enin sies in

eman


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%. Change or mi&ed chicken "eed

Conclusion7

9he lo-liuidity o" cash

"lo- in ')+ isthe in&rease in the

st #% &hi&en

%ee.

9he in&rease in%eein st has

ultimatelyincreased the

company,sproduction cost

t# ab#ut 56.5G.

ncreasedchicken "eedcost whi&h hasrisen t# R+88

%r#m R+54.50 ,anin&rease in alm#st

61.5G-.

ssue>


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Chicken Feed>

/heat• #ne #% the best rains %#r #ultry %eein sh#ul be r#un an %e in mashes an less in

the s&rat&h %ee

!ats• ary nsierably in %eein alue ue t# i%%eren&e in hull &an be %e wh#le as art #% a

s&rat&h %ee #r in mashes in the &rushe r#lle #r %inely r#un %#rm

+arley • w#r well as art #% the s&rat&h %ee an in mashes in &rushe r#lle #r %inely r#un %#rm

Corn• a ery esirable rain that &an %ee as wh#le &ra&e #r r#un. Shell rn may be use

with #ther rains as s&rat&h %ee an rn &h# &an be in&lue in any #% the ry mashrati#ns


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:. ntegrate production planning control system

Productionplanning

is re$uire %#r7:s&heulin

:isat&h

:inse&ti#n

:$uality manaement

:inent#ry manaement:suly manaement

:an e$uiment manaement

Productioncontrol

ensures that r#u&ti#n team&an7

:a&hiee re$uire r#u&ti#ntaret

:#timum utiliati#n #%

res#ur&es:$uality manaement

:an st sains


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/ays to integrate>

@nterate ther#u&ti#nlannin *

ntr#lsystem

ensures that #ptimum utiliation o"production capacity is achieved by

r#er s&heulin #% the ma&hine items whi&hreu&es the ile time as well as #er use

ensures that inventorylevel are maintainedat #timum leels at all

time i.e. there is n##er:st#&in #r uner:

st#&in

ensures that production time iset at #timum leel an thereby

in&reasin the turn#er time

overlooks allaspects #%

r#u&ti#n $uality#% %inal r#u&t is

always maintaine


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Esta$lish Policies For Clear Ethical Conducts? o$Scopes )anagement !" EP)>

Recommendations

#n%li&t #%interest

Hhistle bl#wer'stablishe

internalr#&eures

?##mmuni&ati#na&r#ss leel #%

manaement


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1. Con"lict o" interest

ssue7 'n. Aman was 'n&i SelamatIs best %rien urin llee ays .

!$@ectivity> A&untantIs relian&e #n eri%iable eien&e ,su&h as elieryn#tes in#i&es #rers hysi&al unts aer #r ele&tr#ni& trail- inthe measurement #% %inan&ial results.

Re"erence7 9he #e #% 'thi&s an #nu&t Se&ti#n 3 #% the AA Ruleb##

'n. Selamat

'n. Aman


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. /histle $lo-er

Re"erence7 J. "ister ,2016-. 'thi&al @ssues Fa&in the A&untin )r#%essi#n.

Hhistle Bl#wer ,)n. Aura-

• a ers#n wh# in%#rms #n a ers#n #r #raniati#n enae in an• illi&it a&tiity

sh#ul eel# -histle

$lo-ing policy

%#r &lear ethi&alnu&ts C#b

ses anmanaement #%

')+ t# s#le theethi&al r#blems

ensure anenurae the

members #% ')+t# is&l#se any

n%li&t #%interest issues #r

irreularities


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%. Esta$lished internal procedures

ssue7 'n.Selamat ha a meetin with #ne #% the e(e&utie ire&t#rs #% #l ?#l Sn Bh'n. Aman t# #ssibly ay art #% the aymnet i% n#t %ull settlement #% the #erue a&unt.

'n Selamat eals with ?#l #l Sn Bh A&unt e(e&utie eals t# lle&t ayment

Re"erence7 #e % 'thi&s F#r )r#%essi#nal A&untants

@nternal ntr#l7

• is a process %#r assurin a&hieement #% an #raniati#ns #bCe&ties in #erati#nal

e%%e&tieness an e%%i&ien&y reliable %inan&ial re#rtin an mlian&e with lawsreulati#ns an #li&ies.

@nternal r#&eures7

• #li&ies r#ie a %ramew#r within whi&h an #ranisati#n maes &h#i&es ab#ut h#w it#erates an s# &an either hel #r hiner the imlementati#n #% the stratei& lan


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:. *ood communication across level o" management

Re"erence> /. /ra. ,2011 +ar&h 28-. Frau reenti#n7 @mr#in internalntr#ls. Retriee +ar&h 20 2016.

#mmuni&ati#n r#t#ls

A#i mismmuni&ati#n

Abs#rb them int# ')+Is r#rate &ulture t# beshare within the #raniati#n.

chicken run case study g3

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