Standard Metal Shaping Systems (SMSS) provides repair and maintenance services to companies that use large metal-shaping machinery to fold, bend, crease or otherwise shape aluminum, copper, steel, titanium, and other metals as part of a precision manufacturing process. These machines must be adjusted regularly, and they have hundreds of parts that can wear out gradually or fail suddenly. SMSS sells service contracts to cover most major metal shaping machines. A typical service contract provides for an SMSS technician to make regular visits to the customer site to perform preventive maintenance and includes a certain number of emergency repair visits per year. SMSS also will send out technicians to perform repairs for companies that do not have service contracts, charging a fee based on materials and labor hours used to make the repair.

SMSS 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. SMSS technicians are members of the United Machinists International (IMU), a labor union that negotiates pay rates and working conditions for the technicians. SMSS subtracts union dues from each technician’s weekly paycheck and submits the total dues collected each week to the IMU regional office. The union contract currently provides that SMSS technicians are covered by a medical and dental insurance plan underwritten by United Med Care. Although SMSS 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 online technology implementations for SMSS and you report to Carrie Liu, SMSS’s Chief Information Officer (CIO). Carrie asks for your help in developing specifications for a new automated system she wants to install, which would use EDI and EFTs to handle SMSS’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 tablet devices (the technicians already use these tablet devices 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 tablet device to SMSS’s Payroll Department. 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 IMU 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 SMSS accounting system to record payroll and the related tax expenses.

5. The Payroll Department will send electronic authorizations to SMSS’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 IMU’s account. Most of these accounts are at other banks.

6. The Payroll Department will send electronic notifications to United MedCare and the IMU regional office, notifying them of the transferred amounts each week. 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 SMSS union steward’s desktop computer. The union steward is an SMSS 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 SMSS management.

REQUIRED

1. Draw a diagram of the proposed payroll EDI and EFT system (you can use Figure 5-6 as a guide).

2. The technicians’ tablet devices, like most tablet devices available today, include built-in cameras. In about 100 words, explain how the technicians might use the cameras to work better or more efficiently. Be specific, and remember that the cameras can record and transmit video as well as still images

3. List and briefly describe any problems or issues that you think might arise in the design or implementation of the new system.

4. Provide a rationale and recommendation as to which elements of this system—if any—you think SMSS should hire an outside company to implement.

Transcribed Image Text:

Operating unit Purchasing 2 Department Accounting Department Receiving Department Buyer EDI translator computer FIGURE 5-6 EDI network Bank Vendor Manufacturing Department's production management system EDI translator computer G Sales Department's sales order system Accounting Department Shipping Department Information flows in an EDI purchasing process