A Grocery Store

1. Introduction

1. The Business

A grocery store is a retail store that primarily sells food and other basic necessities. Grocery stores often offer non-perishable food that is packaged in bottles, boxes, and cans; some also have bakeries, butchers, delis, and fresh produce. Large grocery stores that stock significant amounts of non-food products, such as clothing and household items, are called supermarkets. Some large supermarkets also include a pharmacy, and customer service, redemption, and electronics sections.

The Supermarkets and Grocery Stores industry makes up the largest food retail channel in the world. Establishments in this industry retail general lines of food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables and various dairy products.

Central Enterprises is a small medium enterprise located at North Poblacion, Maramag, Bukidnon near the Maramag Integrated Terminal. The entity started its operations in the year 1990 with the initial investment of Php100,000. The payback period of the initial investment is only 3.5 years. They are investing capital every now and then if there have available cash. Presently, the entity has a total net worth of around 200 million and there are total of 25 employees in the entity.        

Organizations utilize various types of information systems to help run their daily operations. These systems are primarily transactional systems that concentrate on the management and flow of low-level data items pertaining to basic business processes such as purchasing and order delivery. This data is often rolled-up and summarized into higher-level decision support systems to help firms understand what is happening in their organizations and how best to respond. In order to achieve seamless handling of this data, organizations must ensure that their business information systems are tightly integrated across the enterprise. Doing so allows organizations to manage and process basic business processes as efficiently and effectively as possible and to make better informed decisions.

The entity uses a POS (Point of Sale) system in tracking down inventory movements. However, they do not conduct physical count at the year end, thus, they cannot identify loss on inventory due to theft internally or by the customer.

1. The Problem and its Limitations

1. The Problems

Owner of Central Enterprises are keen to build sales and profits. They constantly strive to offer quality products that customers demand at reasonable prices. However, many challenges hinder the chance of achieving these objectives.

• Frequent Inventory Loss

Inventory management and control is essential to survive the risky journey of grocery stores manufacturer to the store to the shelves to the hands of the consumer. All of which leave goods open to expiration, theft, loss and harm.  In this instance, the business does not implement physical inventory count wherein they cannot trace the amount of inventory loss. This will be a great impact in keeping inventory safeguarded and financial reporting accurate. Inaccurate financial reporting results in poor decision-making as the owner relies on the information contained in the financial reports.

• Increasing Competition

Due to the emergence of grocery store chains and supermarkets in Maramag, its becoming more difficult for the grocery owners to survive in the competitive environment. One of its major competitor is Centro Enterprises, a bigger grocery store which is located near at the place of business.

• Inadequate Internal Control

In grocery stores, perishable merchandise must be stored properly to ensure salability. Many products are small enough to fit in a consumer's pocket. Cashiers work directly with cash, and the bookkeeper determines which vendors to pay. Internal control procedures limit the opportunity for employees or customers to misuse or steal the store's assets and minimize the ability to misstate financial records. Yet, they are mainly relying on the CCTV footage to capture misappropriation of assets committed by customers and employees.

1. Limitations

The study shall focus only on the system of Central Enterprises, particularly its accounting information system and operations. The study is limited only on identifying key processes of the business, determination risks and major problems and managements internal control processes, as well as its impact on the profitability of the business. The study is conducted through interview and gathered data are based on estimates provided by the owners. Financial information gathered includes sales, profit and net worth for the year 2014 2016.

1. Significance of the Study

This case study is conducted to explain the current operation of the business and its external environment, identify loopholes in the operations and current control measures used by the entity. Through these, recommendations will be provided in order to improve the current operation, minimize risks exposures and increase profitability through sound internal control.

1. Methodology

The qualitative and quantitative research methods was used for this case study. The data were taken from primary sources and secondary sources to support the discussion and analysis of the objectives. The main technique applied to gather data was interview to the owners of Central Enterprises. The proper interview etiquette was followed, including asking questions for clarifications. Additional sources of information were obtained from books, journals, articles, etc. which served as secondary sources.

1. Results and Discussion

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Figure 1. CONTEXT DIAGRAM

The figure shows the context diagram of the current business operations of the business enterprise. It shows how information flows throughout the whole system.

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Figure 2. LEVEL O

        The figure shows the detailed flow of information and the current process flow of the entity. It shows how items purchased are processed in the system and the process on acquiring new inventories from suppliers. The figure also shows how inventories are updated and the flow of generating reports to the owners. Their current process flow has only one inventory database for both the warehouse inventory and the store inventory which resulted to less control over inventory that goes in and out of the warehouse. This makes it high risk in inventory loss which affects profitability of the business.