Accounting System

Question : Discuss about the Accounting System ? Answer : Role of AIS in the value chain of a manufacturing organization Accounting Information system (AIS) refers to the process of collecting, accumulating and transferring the financial data that assists the management in taking business decisions. AIS deal with the resources of information technology to process and track the accounting information of the organizations and firms. The primary role of AIS is the collection and storage of financial data in an efficient and effective manner from the relevant source including documents, journals and ledgers. As value chain refers o the activities that the organizations undertake to produce valuable goods or service for the consumer market. Accordingly, AIS plays essential role in the value chain of manufacturing companies to deliver the valuable products (Said, 2016). Another role of AIS in the value chain of manufacturing companies involves the supply of useful information with respect to the manufacturing expenses and use of resources that helps in taking production decision. Further, the function of Accounting Information System is to provide assurance on appropriate internal control in terms of accurate recognition and processing of data. Properly designed AIS add value to the manufacturing organization by improving the product quality as well as reduction in manufacturing costs that eventually improves the organizational efficiency (Kothari, Mizik Roychowdhury, 2015). The role of AIS involves the sharing of knowledge to improve the efficiency of organizational supply chain so that the production cost and quantity can be parallel to the consumer demand. The manufacturing organizations primary concern is the management of inventory, which affects the organizational profitability hence the role of AIS includes the appropriate requirement of inv entory as per the demand and supply chain of the manufactured products. Further, AIS provides assistance in improving the effectiveness of the manufacturing company for the process of producing goods in terms of quality and presentation including the improvement in corporate strategy (Christensen, Nikolaev Wittenberg?Moerman, 2016). Assistance of AIS with decision making in a contemporary manufacturing organization The objective of implementing the system of accounting information by the organizations is to get useful information for the purpose of taking business decisions that adds value to the products and services. Contemporary manufacturing organizations involve several structures related to production, organizational team, organizational matrix and marketing that requires effective system for making decisions. Accordingly, well-designed AIS system provides assistance in taking appropriate decisions with respect to the production structure, various teams of the organization and marketing structure. The AIS provides assistance for making business decision by using the model of accounting by collecting, storing and processing the relevant data for the production cost and quantity. Additionally, AIS uses the model of simulation to assist the management in making decision for marketing structure to improve the sales of organizational products. It helps in taking decision on rational basis for the required amount of advertising or promotions concerning the level of sales price of the products (Vasarhelyi, Kogan Tuttle, 2015). One of the most significant assistance that AIS provides to the contemporary manufacturing organization is the proposing decisions for the purpose optimum use of raw materials. Many organizations experience the issues on supply of raw material that are not sufficient for the production or over supply of raw materials that involves high value of inventory affecting the revenue and profitability. Therefore, AIS provide assistance in developing the information in optimum use of raw materials sufficient to meet the requirements of production by incorporating the accounting data for raw materials. The AIS also provide assistance in making decision for renewal of insurance system for outgrowing of development system in the organization. Incorporation of AIS assists organizations to determine and measure the renewal rates of the insurance disclosing the accurate results. Therefore, well developed and designed AIS help organizations in taking various business decisions (Schmidt, Gtze Sygull a, 2015). Use of value chain to provide competitive advantage The system or activities of value chain assist the organization to develop the valuable products and services as well as to provide the competitive advantage. It has been stated by Michael Porter that the competitive advantage for organizations are of two types, one of which relates to the product differentiation while the other is cost leadership position. In order to create the competitive advantage in the manufacturing organizations, the management is required to form value chain analysis that considers primary and support value activities. In order to develop the competitive advantage for product differentiation or cost leadership the organization is required to identify the value activities based on the current manufacturing process and market demand level of such products (Herrera, 2015). The organization is required to identify the optimum process for manufacturing products, level of raw materials supply as well as cost of materials including the identification of inventory le vel. Further, the organization is required to allocate such costs to the activities of value chain based on the assumptions to evaluate the organizational performance for individual activities. Differentiation of products in competitive advantage for the organization can be achieved by using the value chain activities with respect to the infrastructure, technology, manufacturing process and human resources. In order to provide competitive advantage for cost leadership, the manufacturing organization can use the value chain activities by identifying the manufacturing costs, marketing costs and administrative costs. After the identification, the organization can allocate such costs to each of the value chain activities to determine the most valuable area of managing the organizational costs. Moreover, if the organization conducts manufacturing of different products then the allocation of costs can be done for each of the different products measuring the most valuable product for the organization (Prajogo, Oke Olhager, 2016). Further, determination of value for the products as per brand level or quality, the organization can use the value chain analysis based on the consumer demands and product market. To identify the valuable products or services, the organization can use the method of value chain model by bifurcating the core activities to measure the impact on the unit of business. Mor eover, the organization can use the strategic planning model to determine the competitive advantage for manufacturing and marketing of valuable products at reasonable cost along with the improved quality (Sharan et al., 2015). Reference List Christensen, H. B., Nikolaev, V. V., Wittenberg?Moerman, R. (2016). 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