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Explain the issues for Big Hammer Inc. and provide a solution. Event#3 Alana also observed a curious exchange between Franklin, the accounting manager, and Carmen, the billing clerk. While attempting to create an invoice for an item, Carmen’s computer screen flashed an error message indicating that she was trying to bill for something that had a zero stock balance in the system. The software would not let her bill for an item it did not reflect as being available for the subject sale. Carmen called Franklin over. She showed him the signed delivery slip indicating that the item had, in fact, been delivered. Franklin stated, “Those people in the warehouse can’t get anything right.” He then proceeded to manually override the system and entered the SKU (SKU #4567) and quantity. Franklin then directed Carmen to try again. The invoice was created without any further problems.

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Big Hammer Inc., a company involved in manufacturing and distributing widgets, faces several operational challenges that threaten the efficiency and integrity of its warehousing and sales processes. These issues are particularly pronounced in its New York distribution location, which is a recent acquisition of Paulex Co. The integration of newly acquired assets often results in discrepancies and inefficiencies, especially in inventory management systems and internal communication channels, which appear to be the core issues in this scenario.

One of the primary issues is the discrepancy between the actual inventory and the system-recorded stock levels, as exemplified by Carmen’s inability to generate an invoice due to a zero stock balance despite having a signed delivery slip confirming the item’s receipt. This disconnect indicates a failure in real-time inventory update practices, which is critical for accurate order fulfillment and customer satisfaction. Incorrect inventory data can lead to lost sales opportunities, increased manual interventions, and potential financial inaccuracies.

The incident involving Franklin’s manual override reveals another critical concern: the lack of robust internal controls and reliance on manual interventions to resolve system issues. While overrides may sometimes be necessary, their frequent use points to underlying deficiencies in the inventory management system or process. Overriding system data without proper validation can create inconsistencies, potentially leading to inventory discrepancies, financial misstatements, and audit challenges. Franklin’s comment about warehouse staff “not getting anything right” also hints at possible communication issues, human errors, or process inefficiencies that undermine system reliance.

The root causes of these issues include poorly integrated systems following the acquisition, inadequate inventory reconciliation processes, and a possible culture that permits or even encourages manual overrides without strict oversight. These deficiencies not only compromise operational accuracy but also risk regulatory compliance and erode trust among stakeholders.

Addressing these issues requires a multi-faceted approach centered on technological, procedural, and cultural reforms. Firstly, Big Hammer Inc. should invest in an integrated Enterprise Resource Planning (ERP) system that consolidates inventory management, sales, and warehouse operations for both locations. Implementing real-time data synchronization will ensure that inventory levels reflect actual stock, minimizing discrepancies. ERP systems also support automated alerts for stockouts and overstock situations, reducing reliance on manual adjustments.

Secondly, the company should establish standard operating procedures (SOPs) for inventory reconciliation and adjustments. Any manual override should require proper documentation, approval, and audit trails to prevent misuse or unintentional errors. Regular audits and inventory cycle counts should be mandatory to verify system accuracy and reconcile inventory records with physical stock.

Moreover, enhancing communication and training among warehouse, sales, and accounting staff is vital. Improved training programs should emphasize the importance of accurate data entry, proper handling of discrepancies, and the risks associated with manual overrides. A culture that encourages transparency, accountability, and cross-departmental collaboration can help mitigate human errors and foster confidence in system processes.

Finally, leadership should focus on change management initiatives to foster a culture valuing data integrity and operational efficiency. Implementing performance metrics linked to inventory accuracy and timely reconciliation can reinforce these priorities across all levels of staff.

In conclusion, Big Hammer Inc. faces significant operational risks stemming from inventory discrepancies and reliance on manual system overrides. By investing in integrated technology solutions, establishing rigorous processes, and cultivating a culture of accuracy and accountability, the company can enhance its supply chain efficiency, reduce errors, and improve overall business performance. These strategic steps are essential to achieving sustainable growth and maintaining a competitive edge in the dynamic widget manufacturing and distribution industry.

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