The Industrial Equipment Distribution

Published Date: 02 Nov 2017

ABSTRACT

This report represents the overall experience and tasks that I have been acquiring during the coop training program at Olayan Financing Company (OFC). The report is divided into two main parts. The first one is the company profile and the second one is the job activities that I have been doing during the Coop training program.

ACKNOWLEDGMENT

There are many important people who have contributed a lot in my COOP period and without them, it was not possible to finish such a period. Therefore, I would like to extend my greatest thanks to Dr. Mohammed Ramady who have helped me a lot. In addition, I would like to extend my thanks to Mr. Youssef Ali who was my advisor in the company.

TABLE OF CONTENTS

1. COMPANY PROFILE

1.1 History

1.2 Products and Services

1.3 Partners & Principals

1.4 Saudi Operations

2. JOB HISTORY

2.1. Job Discretion

2.2. Detailed Job Reporting and Tasks Carried Out

2.2.1. Accounting

Introduction

Team work

Individual assignments

Problems

Suggested solutions

2.2.2 Treasury

Introduction

Definition

Team work

Individual Assignments

Collection of Data

Risk Analysis

Management Risk

Competition in the Market:

Chances of Non-payment

Projected Profitability

2.2.3 Internal Auditing for Baxter

Introduction

Team work

Individual assignments

Problems

Suggested solutions

CONCLUSION

REFERENCES

APPENDIX

1. COMPANY PROFILE

1.1 History

The company was founded in 1969 in Riyadh. Olayan Financing Company W.L.L. is a subsidiary of Olayan Financing Company W.L.L. operates as an industrial, trading, services, and investment conglomerate. It distributes consumer goods, hospital supplies, office automation products, building supplies, telecommunications equipment, and industrial equipment. The company also involves in industrial services, project and construction management, real estate development, property management, financial and investment services, and food services. In addition, the company manufactures consumer, industrial, and medical products. It operates in Saudi Arabia and the Middle East. The company was founded in 1969 and is based in Riyadh, Saudi Arabia. Olayan Financing Company W.L.L. operates as a subsidiary.

1.2 Products and Services

Olayan Financing Company W.L.L. operates as an industrial, trading, services, and investment conglomerate. It distributes consumer goods, hospital supplies, office automation products, building supplies, telecommunications equipment, and industrial equipment. The company also involves in industrial services, project and construction management, real estate development, property management, financial and investment services, and food services. In addition, the company manufactures consumer, industrial, and medical products. It operates in Saudi Arabia and the Middle East.

Olayan Financing Company (OFC) holds and manages all of The Olayan Group’s businesses and investments in Saudi Arabia and the Middle East, including joint ventures with major multinationals. Established in 1969, OFC today is a fully diversified industrial, trading, services, and investment conglomerate.

With some 40 affiliated companies, it is ranked consistently in the Saudi top 10. OFC companies handle products from more than 200 suppliers and principals. As marketers of famous brand names, these companies work closely with their trading partners to maintain the quality, integrity, and visibility of each line. Distribution operations currently are concentrated in fast-moving consumer goods, hospital supplies, office automation products, building supplies, telecommunications equipment, and industrial equipment. Other OFC companies are engaged in industrial services, project and construction management, real estate development, property management, financial and investment services, and food services.

Still others manufacture consumer, industrial, and medical products. The management of Olayan Financing Company is progressive in outlook. It provides strategic direction to the operating companies; guides them in synergistic, integrated growth; provides a range of central business services; and maintains sound financial foundations for the enterprise as a whole.

1.3 Partners & Principals

These enduring partnerships range in industries as diverse as confectionery and heavy machinery. Many of them date back to the beginnings of the Group itself, while others are relatively new. All help set the standards in their industries. Examples of the well-known partners are:

Acer

Coca-Cola

Kraft

Burger King

Australian Rice Growers

 Colgate-Palmolive

Kimberly-Clark

Exel

1.4 Saudi Operations

Consumer Products Distribution

Bottling and distribution in association with Coca-Cola, Kraft Foods, Nestle, Kimberly-Clark, Colgate-Palmolive, SunRice, Energizer, Nabisco, Pillsbury and others. Partner brands range from Coca-Cola to Kraft Cheese, KitKat to Tang

Consumer Products Manufacturing

Light manufacture and marketing of personal care products, biscuits, and paper cups in association with Kimberly-Clark, Colgate-Palmolive, Nabisco and Huhtamaki. Partner brands range from Kleenex to Ritz, Colgate toothpaste to Huggies diapers

Financial & Investment Services

 Investment in Saudi and Middle East public equities

Food Service

Burger King franchisee for Saudi Arabia and master franchisee for the Arab Middle East. Texas Chicken master franchisee in Oman, Bahrain and Qatar and franchise operator for the UAE and Egypt

Health Care Supplies & Services

Medical products from Baxter, Cardinal Health, Edwards Lifesciences, and others, plus local manufacture with Kimberly-Clark of disposable surgical coverings.

Industrial Equipment Distribution

Sales and support of powerful products such as Kenworth and Scania trucks, Cummins-Onan engines and generator sets, Case farm equipment, Pierce pivot sprinkler systems and Atlas Copco industrial compressors and tools.

Industrial Services & Fabrication

Oil industry testing, inspection and repair, drilling materials and services, industrial engineering, total complex turnarounds, machining and re-manufacturing, precision parts fabrication, hazardous waste processing. International partners or technology providers include Descon, Weir, and Tuboscope/Varco

Manufacturing

Aluminum extrusion and building products fabrication, solar panels, stretch film wrap, PVC pipe, reinforcing steel and soft drink cans

Office Automation

Sales and support of high-tech equipment from industry leaders, including Xerox, Toshiba, NEC, Thermedics, Fichet-Bauche, and Acer. Also the AlphaGraphics Printshops franchisee for Saudi Arabia

Project Management

In association with CH2M Hill, planning and management of major infrastructure projects

Real Estate & Property Management

Property investment and development Kingdomwide and operation of a residential and office complex in the Eastern province

Supply Chain Management

Logistics and supply chain management operations, in joint venture with Exel Overseas Limited (United Kingdom), one of the world's leading logistics services providers. Exel supports the Olayan companies in Saudi Arabia and offers a broad range of contracted logistics services to other companies in the Kingdom

2. JOB HISTORY

2.1. Job Discretion

Introduction to the company

Accounting

Treasury

Internal Audit

week

2 months

2 months

2 months

2.2. Detailed Job Reporting and Tasks Carried Out

2.2.1. Accounting

Introduction

The purpose of the department is for invoices payment and registrations

The work done:

Invoices payment by cheques or money transfer

Performing cash position at the end of each month for the company at all banks that it deals with and monitoring the money transfer and ensuring its origin and finalizing the checking of the company

Performing bank re-cancelation at the end of each month to check that the company has correct records consistence with the banks

Team work

The work that is done in the department is as follows:

1- Bank reconciliation

2- Expense report

3- Petty cash

4- Cash position

The accounting department is composed of 8 members. These 8 employees are:

1-

2-

3-

4-

5-

6-

7-

8-

Individual assignments

Bank reconciliation

I’ve been given information about this procedure of doing the bank reconciliation of different banks. I have prepared bank reconciliation between SABB and OLAYAN FINANCING COMPANY which is done by taking the accounts that is not found in the other part and record these accounts as outstanding checks.

Petty cash

It is a way to save time and money by giving an employee the authority to handle the small internal expenses and keep a receipt for every individual expense to prove that this amount of money has been paid to this expense and I’ve been given a petty cash to calculate all the expenses.

One of the tasks that I’ve been given was preparing some project folders by collecting the accounts that belong to this project. Also, I’ve done some payables booking through Microsoft Dynamics GP and print out some PV papers.

Furthermore, I’ve done some deposit issuance by filling the deposit slips with the needed information and attach them with the original checks.

Cash position

In doing cash position we put all the numbers in ‘000 and we round any number exceeds 500 and if the number is 500 we balance the numbers by rounding the half and leave the other half as it is. If the number is below 500 we cancel it out.

Also, for:

Transfers to banks

Time deposits

Buying or selling of foreign currencies

loans

We balance the account by putting the opposite amount (-/+) in the bank account.

After that, we deduct all these accounts by all the payrolls.

I’ve set with Mr. Cheringal Balagopal (treasury administrator) to discuss some treasury functions such as:

Money transfers.

Foreign exchange.

Facility agreements.

Internal transfer voucher

I’ve learnt how to do internal transfer voucher which is simply that if an employee spent money on any expense that the company should cover we credit his account and we debit this expense and the employee will ask the company to pay this expense so we debit the employee account and credit the company account and we issue the internal transfer voucher.

Extension report

Every employee in the company has an extension number and all the calls that been made are divided into two things:

1- Business calls: all the calls that related to the business and these calls cost are paid by the company.

2- Personal calls: all the calls have nothing to do with the business and the cost of these calls are paid by the employee who made that call.

All calls are booked in Excel Sheet.

Problems

The only problem in this period of time was the time. Of course, I had to understand and know the procedures of the company first, but then the time needed for completing the daily work was short because of the many activities needed. These daily activities besides the ones mentioned above were:

1- To check and balance revenues of all operating departments and generate and submit reports to accounts on daily basis and the accountant review the information.

Balances all revenue reports with individual outlet reports

Balances adjustment vouchers with the system reports

Transfers all cash check out folios with supporting to accounts as per system report

Performs system back up prior to release of the computer for next day transactions

2- To perform all aspects of revenue control of all operating departments and keep the management well informed by producing daily revenue report.

Verifies cash transactions

Prepare daily reports

Calculates and verifies other operating department revenue on daily basis

Performs surprise spot checks

Collecting all outstanding accounts receivables

Ensures customers invoices are prepared

Ensures accounts receivable over 60 days are promptly pursued for collection

Prepares monthly statements and reminders monthly and when ever needed

Suggested solutions

The use of advanced information Technology center will generate better output and it will be useful for all employees and trainees to complete their work. The system can use different rights for different trainees, employees, supervisors and managers. The rights of each user will enable the company to maintain high level of security for its information and in the same time, trainees will be able to benefit from the system fully o complete their work and to reduce the time needed and the effort spent.

2.2.2 Treasury

Introduction

The work done:

Transferring money from the main account of the company to its minor accounts according to the need and based on the system of the company

Registering these accounts and their payment methods

Trying to find the best offer from banks for time deposit and register it in the company’s system

Buying foreign currencies according to the need of the company

Seeking the best offers for loans

Definition

The typical job of a treasury department includes managing currency risks and raising debt apart from playing in the bond and equity markets if the company has enough funds to invest.

1. General financial oversight

Oversee and present budgets, accounts and financial statements to the management committee

Liaise with designated staff about financial matters

Ensure that appropriate financial systems and controls are in place

Ensure that record-keeping and accounts meet the conditions of funders or statutory bodies

Ensure compliance with relevant legislation.

2. Funding, fundraising and sales

Advise on the organization's fundraising strategy

Ensure use of funds complies with conditions set by funding bodies

Ensure fundraising and sales complies with relevant legislation and is bound by effective financial systems and controls

Ensure effective monitoring and reporting

3. Financial planning and budgeting

Prepare and present budgets for new or ongoing work

Advise on financial implications of strategic and operational plans

Present revised financial forecasts based on actual spend.

4. Financial reporting;

Present regular reports on the organization’s financial position

Prepare accounts for audit and liaising with the auditor, as required

Advise on the organization’s reserves and investment policy.

Team work

Quality: We work hard to earn and maintain our clients’ trust and confidence. So that we can provide quality professional services in an independent, objective, and ethical manner, we have implemented a number of global professional development initiatives and quality and compliance safeguards.

Services Offered: the company provides a range of services, including accounting and auditing, operations, advisory, business risk services, technology and security risk services, transaction advisory, and human capital services.

Industry Focus: The Centers are dedicated to bringing insights to clients, sponsoring dialogue among industry stakeholders and linking our professionals to facilitate collaboration and knowledge sharing. Our member firms provide specific services for industries on a country-by-country basis.

Culture: the company would not be such a successful organization without great people and strong teamwork. We provide our people with solid career growth opportunities and a people-oriented workplace environment. Our philosophy, quite simply, is that when our people achieve their best, so do our clients and our business prosper.

Individual Assignments

One of the projects that I was assigned to do was the make a risk analysis for the company to be used for searching for loans. The analysis that I performed based on four points that are important for any banks. The purpose was to locate the weaknesses that the company has from the point of view of banks to solve it to get the best terms of loans possible from the Saudi banks.

Collection of Data

During this project, I have used the two methods. The first one is to collect information about the company from the media to assess the company’s position. Based on that, the second one is to conduct meeting with the key people in the departments that I can access. I had to take prior permission before each meeting. The analysis that I made was as the following:

1- Risk Analysis

Management Risk

The future management of the company is very important for the prompt repayment of the loan. Unless the company properly, it is very difficult for the company to succeed in the new business. The various long term polices relating to the operation of the company are decided by the management. If there are any wrong decisions taken by the management, then that will affect the profitability of the company and in worst case the survival of the company. But the company is managed directly by the owners with the support of professional employees. They have managed the company very well for the last so many years and their business of paint cans is increase steadily. Hence, the chances of any major management risk are very minimal.

Competition in the Market:

The performance of the company depends on how effectively it competes with its competitors in the industry. There are lots of competitors in market. However, the company is ranked very high in this competition and the market needs the services that are provided for other companies especially with the strong performance of the Saudi private sector and the high oil prices. Because of that, the company can withstand in the market, even though there is lots of competition.

Chances of Non-payment

The chances of non-payment of the loan are a very dangerous risk which no bank wants to happen. The company is a profit making company and is financial position is very good profit. In addition, its relationship with the SABB which is the main banks that the company deals with is very good because of that, there is no need to worry about the repaying capacity of the company to pay the installments in time.

Projected Profitability

The company has projected very good profits for the coming years. Since, the demand for finance services is increasing. The sales and profit margin of the company will also increase. The company is having very good customer base and good distribution channels. This will definitely help the company to increase the sales levels at a faster speed.

2.2.3 Internal Auditing for Baxter

Introduction

During the Coop report, one of the projects that I have participated was the internal auditing of a company called Baxter for medical supplies. The work done was as the following:

Internal audit for Baxter company which is located in the second Industrial city in Dammam

Checking some types of assets and their status

Checking purchasing orders

Reviewing balance sheet and income statement

Comparing it with the income statement provided by an international Auditing company.

Team work

This project was done by a team of four people. The rest of team is regular employees and I was the only COOP training student in the team. The names of the teams are as the following:

1-

2-

3-

4-

Individual assignments

I was assigned for the check of the existing assets and that was done by checking the type of inventory that the company has. First the inventory process divided into two main categories:

Physical inventory: were the accountants and salesmen go to the warehouse and allocate the available products, the good and defected items.

Books inventory: were each item or product goes in or out of the warehouse is recorded in "Stock Card". These cards are revised at the same time of actual inventory by other accountants or salesmen.

After finishing physical and books inventory, a comparison is made between them to see any difference or gap between them:

if the physical inventory > books inventory, then that stands for one of two:

Some items were not registered at the books when the items received, and this solved by re-enter these items to the system.

Returnable from customers also signed out but not signed in when they returned in.

If the physical inventory < books inventory, a physical revision must be made. If the difference occurs again, then the possibilities are as follows:

Misallocation for the physical inventory.

Some damaged products; these items should be reported and marked by the head warehouses manager to put a specific percentage for the amount damaged.

Accidents of stealing from inside the warehouse, which is almost impossible to happen because the heavy weight of the building materials.

From doing the inventory and comparing it with the result of the records of the company, we found that the inventory has no problem and there are no missing items of the company. Full description of the inventory is shown in the Appendix

Problems

There are many problems that I have faced during this process. One of the biggest problems is that the company does not have organized shelves for its inventory and the process took very long because of this point. In addition, there are no index cards that show the status of the inventory and its location. Because of these problems, the number of damaged inventory is listed in the table below and they are considered to be high.

DMC #

PART Number

Issued Date

Quantity defected

Material Type

QA Disposition

Defected Reason

Value (SR)

12-106FD

AKSB9408

3-Apr-12

2812 EA

Finished goods

expired

Expired Materials

88,296.00

12-129

231667158

3-Apr-12

288

Raw Material

discarded

received outside the carton

2,302.78

12-125

KS3001017

3-Apr-12

5000 EA

Raw Material

discarded

no longer be produced

1,265.00

12-124

232501300

3-Apr-12

400 EA

Raw Material

discarded

received outside the carton

866.56

12-123

232501073

3-Apr-12

2500 EA

Raw Material

discarded

received outside the carton

338.10

12-122

AKSB2322

3-Apr-12

1120 EA

Finished goods

expired

Expired Materials

4,531.37

12-121

AKSB4957

3-Apr-12

240 EA

Finished goods

expired

Expired Materials

7,403.72

12-120

AKSB4954

3-Apr-12

235 EA

Finished goods

expired

Expired Materials

6,595.73

12-119

AKSB5709

3-Apr-12

4 EA

Finished goods

expired

Expired Materials

154.49

12-118

AKSB5707

3-Apr-12

18 EA

Finished goods

expired

Expired Materials

499.51

12-117

AKSB4956

3-Apr-12

240 EA

Finished goods

expired

Expired Materials

7,348.90

12-116

AKSB5620

3-Apr-12

98 EA

Finished goods

expired

Expired Materials

3,992.89

12-115

AKSB5621

3-Apr-12

98 EA

Finished goods

expired

Expired Materials

4,046.61

12-114

AKSB5347

3-Apr-12

24 EA

Finished goods

expired

Expired Materials

659.40

12-113FD

AKSB4955

3-Apr-12

825 EA

Finished goods

expired

Expired Materials

23,420.00

12-112FD

AKSB4953

3-Apr-12

1420 EA

Finished goods

expired

Expired Materials

39,596.00

12-111

220201144

3-Apr-12

1300 Kg

Raw Material

discarded

plastic sealer was broken

12-110Fd

20204051

3-Apr-12

75 Kg

Raw Material

discarded

received with cut

669.00

12-109FD

220201135

3-Apr-12

50 kg

Raw Material

discarded

Bags damage in the container

119.60

12-108

220201144

3-Apr-12

1300 Kg

Raw Material

discarded

plastic sealer was broken

12-107FD

20204051

3-Apr-12

25 Kg

Raw Material

discarded

plastic bag is cut / open

223.00

12-104FD

AKSB9408

13-Apr-12

1448 EA

Finished goods

expired

near expiry date 26-3-12

45,467.00

12-105FD

AKSB9408

13-Apr-12

1016 EA

Finished goods

expired

near expiry date 24-3-12

31,902.00

12-103FD

AKSB5215

13-Apr-12

768 Bages

Finished goods

discarded

Load 4 trucks failed during sterilization due to sudden droped of power supply

29,301.35

12-101FD

232501567

30-Nov-11

17000

Raw Material

discarded

carton found wet also inside injection site was wet

5,651.14

12-100FD

KS3001004

30-Nov-11

2000

Raw Material

discarded

old materials obseleted

6,401.00

12-099FD

KS3001003

30-Nov-11

1907

Raw Material

discarded

old materials obseleted

461.49

12-098FD

220201135

30-Nov-11

25 Kg

Raw Material

discarded

received with cut

59.80

12-097FD

AKSB1062

30-Nov-11

1080 EA

Finished goods

expired

near expiry date 4-4-12

4,498.00

12-096FD

221101007

30-Nov-11

14 Rolls

Raw Material

discarded

Adhesive not as per standard

185.00

12-095FD

AKSB0163

30-Nov-11

156 units

Finished goods

expired

Expired

789.00

12-094FD

AKSB1092

30-Nov-11

200 units

Finished goods

expired

Expired product

832.00

12-093FD

AKSB1072

30-Nov-11

5240 units

Finished goods

expired

Expired product

21,809.00

12-092FD

AKSB0063

30-Nov-11

4602 units

Finished goods

expired

Expired product

21,925.00

361,610.44

47,843.82

The total amount of money lost because of the problems of inventory was found to be SR 361,610.44. This amount could be reduced or even eliminated if the warehouse was organized and connected with the IT in a professional way.

Suggested solutions

At the end of the project, there were many suggestions that were made for improving the assets monitoring in a more professional way. First of all, because of the large inventory of the company, the company should establish an inventory committee. The function of the committee will be as the following:

The committee of the inventory is divided for 4 different units:

Physical Inventory unit.

Revision unit.

Monitoring unit.

Supervision unit.

Physical Inventory Unit:

It includes the branches management from the outer regional area that the inventory is worked on it, and some of the salesmen and the workers. This unit will handle to count the tangible items which are available at the warehouse. Each two members will count a specific kind of materials; each member has to count independently. Their final count of the total should be equal to each other; otherwise they have to recount. They have also to check for the damages and the stood items.

Revision Unit:

This unit includes the financial management, the IT department, and the central head office. Their main objective is to mark all the last documents of (cash or credit sale invoice, internal receiving voucher, internal issue notes, branch transfer note, returnable, and material receiving note).

Monitoring Unit:

The main objective to this unit is to prepare and cooperating for dividing the team of the counting and setting the mission for each one. This unit include of the central head office and the internal control. They monitor the overall operation of the inventory counting and solving the variances if happened between the members of the other unit.

Supervision Unit:

This unit is the root of the other units. It includes of the Accounting manager, central warehouse manager, and the IT manager. Their objective is to set the guide of the process of the inventory and receive the last reports of the inventory to revise, process, and document the inventory report to send it to the general manager.

The company uses JDE software but it is not fully implemented in all departments and some of the work depends. The software should be used in all departments because of thse following reasons:

The coordination between the different departments of the company is necessary.

The process in which the inventory is handled is insufficient and it cases lots of wastes of time, money and human resources. The inventory which is the most important department of the company must be run effectively and in a manner that enables the company to take fast decisions about areas such as sales, exporting and marketing.

Even though the company is using JDE ERP, but the efficiency of the software is low because it is not integrating the core department of the company in one software package that can take care of marketing, sales, warehouses and inventory, management and decision making, finance and accounting.

CONCLUSION

I think I earned a good experience and learned more about the business and how most of the good companies are operating, the time has gone so fast and I really enjoyed working for Olayan Financing Company (OFC) and hopefully it would be my place of work after I graduate from KFUPM. Working with Olayan Financing Company (OFC) was a rich and important experience because this company works as an external auditor for many Saudi local companies.

There are many new concepts that I have learned during the coop program. These new concepts are the function of treasury and accountant skills. In addition to that, I have learned the different procedures done by the company for all of these functions and how to assess inventory and the procedure needed for doing that..