To: Jessica Newman, Account Manager
From: Sarah Bennett, IMA Ethics Counselor
Date: February 4, 2017
Subject: Lean Production Can Solve Ethical Dilemma and Cash Shortages
This memo is in response to your concerns regarding Software Technology Associates of Raleigh’s financial situation. The purpose of this memo is to address the ethical dilemma as well as the issue of cash flow of Software Technology Associates of Raleigh presented by you, Jessica Newman.
In this memo, I will discuss lean production and how implementing this process can solve STAR’s cash shortages; this implementation would increase cash flow, which in turn, would help make payments to Chapel Hill Graphics. I will discuss the problems within GAAP that may have related to overhead …show more content…
As stated earlier, if you were to inform CHG of STAR’s issue with cash shortages, it would be a violation of the IMA’s Statement of Ethical Practices. If you were to violate one of those practices, there would be consequences. However, lean production will alleviate stress within the company, as well as your personal dilemma regarding CHG. It will increase profits and business, which then in return, will increase cash flows. By increasing cash flows, STAR’s will then be able to make payments to its suppliers, such as CHG, in a timely manner with no conflicts.
If lean production is implemented, STAR will be able to make payments to its suppliers at its usually rate and even be improved. You mentioned you were concerned about making payments to CHG that could take up to 75 days, when it usually only takes 30 days to make payments to vendors. With the implementation of lean production, there will be no late payments made to CHG or any other suppliers if all goes well. Lean production will benefit both STAR and the rest of its suppliers. It will enable STAR to make payments with no issues and strengthen the relationship with those