Accounting Information Systems: The Processes and Controls, 2nd Edition

BUSINESS PROCESS LINKAGE THROUGHOUT THE SUPPLY CHAIN (STUDY OBJECTIVE 3)

The accounting information system and the reports generated by the system are intended to help management monitor and control the organization. However, any organization operates in an environment in which it has many interactive relationships with other organizations. For example, McDonald's could not operate without its relationships with the many suppliers that provide the ingredients for its menu selections. There is an entire set of activities (business processes) that culminate when McDonald's sells a Big Mac® to a customer. Consider the road that leads to this culminating sale—it stretches far back into many other organizations. To illustrate these activities, let's trace just a small part of that Big Mac sale back as far as we can reasonably go. In order to sell a Big Mac, McDonald's had to purchase and keep an inventory of hamburger meat. McDonald's would have purchased this meat from a meat supplier called a vendor. A vendor provides materials or operating supplies to an organization. The terms “vendor” and “supplier” are usually used interchangeably.

For the McDonald's meat vendor to supply meat, that vendor had to buy cattle to process into raw meat. Therefore, McDonald's meat supplier must have relationships with vendors that sell cattle. The cattle seller can be called a secondary supplier to McDonald's. To trace back one step farther, we could say that the cattle seller had to buy cattle from ...