The control of inventory systems

The laterality of list arrangementsINTRODUCTIONIt could not be argued that the emmergence of development engineering has brought business its place present day. The Informatics revolutions view always brought new solutions that come up with new ch tout ensembleenges, which keep the deprivation for newer solutions continuous. Information Technology created new businesses being run and served on the cyberspace called e-business and developed another(prenominal) businesses internally and globally.Some businesses found that it is prerequisite to join the evolution which hireed them nigh effort to transform the comp all(prenominal) and convert it into an e-business. Others, who stayed where they were have soon discovered the importance of IT application in both major of its business. Using experts of IT to help the conversion, and by means of IT it includes Data base experts, net melt down professionals, accounting and wrinkle-take date bodys applications, web site desig ners and administrators,etc. Some businesses do hire some(prenominal) professionals from other IT solutions companies while others deputize their own.Managing of record for any business, weather it is small or big, is one of the around important, and often least tradeled, functions for a business owner. E rattlingthing revolves around it Sales, Customer Service, Accounting, Planning, Purchasing, etc.Barcodes Inc (2009) defines the catalogue control organisation as A set of hardware and software based tools that automate the dish out of get behinding scroll. The kinds of inventory tracked with an inventory control organisation can include al or so any type of quantifi able good, including food, clothing, books, equipment, and any other item that consumers, sellers, or wholesalers may secure.The overlay in hand is considering a general purpose of design and implementation of an Inventory System developed around the standards which then can be customized according to th e requirements of any guild. The organization would help companies overcome chief(prenominal) challenges that are facing them by managing the accommodate Stock activities such as selling, buying goods and reports handling.However, the main purpose of the system is to gull the items schooling as input entropy and produce the purchase get laidledge as an output. On the Other hand, the system depart support printing some functional reports according to the companys requirements.Therefore, when studied companies general requirements regarding control linage issues, it concluded that companies goals and satis pointions are achievable within the given clip limitations. However, control of inventory system, which typically represents 45% to 90% of all expenses for a business, is mandatory to ensure that the business has the right goods on hand to avoid line of descent-outs, also to pr hithertot shrinkage and timid accounting. Many businesses have fair enough of their limited resources, capital, fastened up in their major assets and inventory. Worse than that, they may have their capital tied up in the wrong kind of inventory. Inventory may be old, worn out, shop-worn, obsolete, or the wrong sizes or colours, or in that respect may be an instability among different product lines that reduces the guest appeal and concerns of the total operation.This project would spot the light upon common problems faced during the application of Inventory Control System and would evoke some solutions to overcome these problems. So we can say to any business Control it in the lead it controls you.As in this topic we are concerned roughly the inventory control systems, we are tone ending to investigate the role of inventory in general and inventory control systems in specific.In the literature brushup we are going to analyze some findings from journals, articles and web sites that mostly describe the role of inventory control systems and their problems.In the sec ond part which is Methodology the info collection and look methods which would be basically face-to-face interviews with three businesses that vary in run, size and needs but share the need to have an stiff inventory control system. As well as observing those companies to highlight the main issues to be addressed. We would also consider the findings from journals and some grapheme studies to help us understand the challenges in depth. We would also analyze the collected data in gear up to get the full view of the issue.Next, we are going to address the challenges that have immerged from data collection of these businesses. Those challenges would definitely vary as every company has its individual needs as they provide different services. But they do all meet at one point where there is a need for an legal inventory control system whether there is one theatrical roled before or not.The next section of this paper is concerned about the proposed system which would suggest a sy stem designed to ease the process of inventory control and prevent the problems that occurred before. This would be explained via a conceptual design as well as a data menses diagram which has three main actors provider, customer and bank.Later, we would explain the results of applying the proposed system, as some solutions would realize some businesses than the others as every company would be treated separately. This section would also include some findings from resources describing the benefit that some companies gained upon application of inventory control systems.Discussion is the next section which would concentrate on evaluating the findings from results and linking them with the previous findings from the literature review. One could say how beneficial the routine of applying the ICS and how many losses would be eliminated to be added to margins.LITREATURE REVIEWManuel L. Alcuaz Jr (2008) describes the inventory saying Inventory is a major headache for most retailers. S ome dont have any information on their inventory movement or trains. As a result they beat many and frequent stock outs, while millions of pesos are tied up in slow-moving or non-moving inventory. The problem can be due to the sheer turn of events of items, the complexity of items, or having very many locations.This shows the consequences of having no reliable inventory systems, as the supplier would suffer from stock outs he would have to ship in much stock to cover the needs whereas there is enough stock but this all is due to system failures or errors.Rover Data Systems, Inc (2008) print a paper says Control it before it controls you. The paper discussed different points on the importance of inventory control system for different businesses. It addressed four types of businesses. First, manufacture to stock business that builds to stock according to a plan then waits for scores to come. Second, manufacture to order business that waits for orders to come, then builds a custo mer specific product. Third, distributers which purchases and stocks product, then sells to customer and finally the kitter that purchases and keeps detailed inventory on hand, then quickly assembles or packs to deliver to the customer when ordered.Inventories vary in the ways they are being managed, although we are considering the automate inventory control system, it is seemly to understand the problems of inventory in general. Weber (2008) explains these key symptoms of an inventory as followsA company has too many of the wrong items and production shortfalls.Frequent nightlong shipments.The perpetual levels on the computer are always wrong.Large end-of-the-year write-turneds.Congested plant floors.If someones looking for an item, the whole crew has to go out and search.Responsibility for inventory levels is unclear.Hence, they could be all categorized as management problems. I think that these problems could all have been prevented if they was a strict and organized managemen t that highlights the role of every single employee. Such as the problem of congestion of items, overnight shipments could have been eliminated if there was even one employee doing his job as should be. But, we cannot ignore the fact that use of an automated system would accelerate the pending jobs. In other words, the business would need to have foc utilise strategies considering the inventory levels.This leads us to Naples (2008) who claims the responsibility on the f managers to improve inventory not inventory employees who only have to perform certain jobs. He defines the managers role in inventory as followsMaintain the define staff level Make sure all discussion section personnel earn required training.Hold department meetings to discuss problems and ways to improve.Become as proficient as possible with the inventory-control system.Control and work to reduce unsold special order parts, non-stock parts and excess inventory.Control parts inventory obsolescence. This is the mo st volatile influence on holding expenses as obsolescence increases, the inventory holding expenses become more punitive. Any profits made from items that are selling impart be lost to holding costs for items that are not selling.Optimize settings to reduce inventory depth, build inventory width, and reduce the likelihood of excess stock and obsolescence.I would have to agree with Naples, especially that he was more precise than Weber. Because, even with the accessibility of an inventory Control system there needs to be the right application, control and planning of this system. So they have to be trained and listened to highlight their problems with the system and put together the suggested solutions.Mawson (2009) says retailers need to be focused more than ever on putting good stock control systems in place to ensure they do not overpay suppliers, and to reduce the risk of having items stolen off shelves. A report into loss prevention has found that too many retailers simply acc ept shrinkage as a fact of life, a fact that could cost them up to 3% of revenue, and all too many think that theft plays a bigger role than systems, a thought that could well be flawed.I believe that many retailers focus their efforts on internal and external theft by paying for CCTVs and security systems, where the main issue is often process failure which drags into leakage and shrinkage where nobody knows where these tots are gone. All what it needs from retailers and businesses is to focus on inventory control systems and consider them as an enthronement.Inventory Control Systems are -as any other systems- not error free. According to Sahin and Dallery (2009) considering the thousands of items may come in and go out the system in a working day the Possible errors such as defects that affect the physical flow and the associated information flow can therefore be crucial.A survey held by Hollinger and Davis (2001) shows that among errors causing perturbation on the physical flow , internal and external theft, administrative errors and fraud made by vendor accounted for 1.8% of sales in US retail industry in 2001 assuming an annual sales base of $1.8 trillion this costs US retailers $33 billion.In other words this huge tote up of cash can lost all around the world, it only is a crisis affecting retailers and is continuing to happen annually. This is due to either simply bad data or technical errors in the inventory systems that have been relying on worn-out systems thinking that they are saving money by keeping the same system. Whereas, fashioning the right decision by a strict system update policy can save more amounts than what is being lost.A paper published 2002 by SCORE (Counsellors to Americas Small Business) suggest that inventory control systems range from eyeball systems to reserve stock systems to perpetual computer-run systems. It concerned with three forms of inventory that is cranky materials, In-process or semi-finished goods, and Finished goods. The Eyeball System is the standard inventory control system for the vast majority of small retail and many small manufacturing operations and is very simple in application but in this approach the manager have to preventive the store and record any stock shortage which is very difficult. Reserve Stock (or Brown Bag) System is much more systematic than the eyeball system as it keeps full control over the stock and ensure that the new shipment should arrive just as the last of the reserve stock is being used. In Perpetual Inventory Systems a programmed information referred to commonly as a trigger, automatically transmits an order to the appropriate vendor once supplies fall below a prescribed level.Floyd D. Hedrick (2006) suggests several proven methods for inventory control, which used for small business. The methods from simplest to most complex are Visual control, Tickler control, Click sheet control, and Stub control. Today as business grows computer-based system is used and is enhanced by the fact that company accounting and billing procedures can also be handled on the computer. Point-of-sale terminals relay information on each item used or sold. The manager receives information printouts at regular intervals for review and action. Off-line point-of-sale terminals relay information directly to the suppliers computer who uses the information to ship additional items automatically to the buyer/inventory manager.Large businesses nowadays are obliged to depend on accurate and up-to-date inventory systems by means of installing the RFID (Radio Frequency Identification) so they can have accurate inventory counts and to avoid the massive loss. The Freightliner-Western track Trucks as the leading heavy-duty motortruck manufacturer in North America in a published case study (2008) has proven the reliability of the Motorola RFID. As a result the company quotes The installed solution has already proven itself at the Portland plant. Labor costs associated with inventory control have been reduced significantly, as have data errors and mis-ships. (Motorola Inc, 2008).Tracking the case study- considering the uniqueness of each corporate- by installing the RFID system can prevent the errors and avoid several problems that where found in businesses and specially considering small businesses that lack the experience of decision making knowing their priorities in investment.Jon Schreibfeder (2008) wrote Effective Inventory Management allows a distributor to meet or exceed customers expectations of product availability with the amount of each item that forget maximize net profits. He thinks that there is a relationship between the inventory management and the distribution of goods and of course on the customer. Indeed he sees that customers may depend on you to have some of your slow-moving products always on the shelf just in case they need them. The availability of these products contributes to your reputation as a reliable supplier and h elps to differentiate you from your competitors. It is true that this view shows the importance of having an effective inventory control system, but there are many other important views. For example in assembly line industry any shortage in the row material will cause shutting down the whole line, which means losing season, effort, and money.A paper published by Claudio, Zhang and Zhang (2007) proposed a hybrid system, which combines a make-to-order push system with a make-to-stock pull system in food industry. The paper suggests The make-to-stock strategy will be applied to those customers who come in requesting a product at the quantify of arrival, and the make-to-order will be applied to those customers who can give information in advance about their needs. The hybrid system is designed to overcome the most important problems that faced food industry which is competition and how to deliver the service to the customer fast and in a good quality.Edward A. Silver, (2005) published a paper with the title Inventory Management A Tutorial, Canadian Publications, Practical Applications and Suggestion for Future Research. This paper first presents a tutorial overview of inventory management. This includes a categorization, by a number of dimensions, of inventory problems and associated models. Relevant Canadian contributions to fundamental and applied theory are listed within the dimensions. Then substantial evidence is provided of general Canadian applications of inventory management. The paper points out the continuing gap between theory and practice, followed by a number of suggested research topics to help bridge the gap.Zipkin, P.H. had published his book Foundations of Inventory Management McGraw-Hill, (2000). In this book he says that all organizations in any sector of the economy, Supply Chain Management, i.e., the control of the material flow from suppliers of raw material to final customers, is a crucial problem. The strategic importance of this area is today fully recognized by top management. The total investment in inventories is enormous, and the control of capital tied up in raw material, work-in-progress, and finished goods offers a very important potential for improvement. This book suggests a widely range of different inventory models that can be used when developing inventory control systems to give a significant competitive advantage.METHODOLOGYThe aims of this research experiment is to spot the light on the most common problems that face small businesses in keeping track of their inventories for a better resource management. It is going to highlight the reasons behind not applying inventory systems and gathering needed information about the business goals and resources to apply a suitable inventory system. Data compendium methodsInterviewsThe research would conduct a live interview with a small business owner Eng. Ali Al-Asfoor from ARC manufacturing and welding services. Which is a small insane asylum started 2008 providing fabrication and welding services for individuals and corporate.Another interview would be held with Mr. Adel Al-Shaer an inventory manager at Hajji Hassan Al-Aali business group. It is considered one of the largest business groups in Bahrain providing building and pre-cast services.The third interview would take place with Mr. Hassan Ali an inventory manager at Al Jabiria Technical School, which is a public school as an example of inventory systems in the general sector.ObservationA full working day was held at Al-Jabiria Technical school by the assistance of one of the teachers there to report the process of inventory tracking system.JournalsSeveral web published journals were used to find out the major problems that encountered businesses upon the application of inventory control systems.Case studiesThe Freightliner-Western Star Trucks as the leading heavy-duty truck manufacturer in North America, has enriched the research by monitoring their use of inventory control sy stems using the RFID engineering from Motorola. Data analysisIt has been recognized that Arc welding and fabrication do not have inventory system and they need one to keep track of their supplies which consist of metal bars of different sizes, accessories, paints, welding materials so it can save their time and money as if bulk orders were made it is cheaper.Alali group had an inventory system which is the bar code scanning but with some accuracy errors. The inventory manager at Alali group lead to identify three types of inventory row materials, products, and goods. It gave the research a clear view about the inventory path. The owner order new goods and kept in the store. When the customer made the order, the salesman would check the store if the goods are purchasable or not If not, the salesman would place an order again. Next, the customer would pay the money and salesman would give him a receipt, if the customer was not unforced to give a full payment, the salesman would sav e the debt to state the remaining money. At the end of the day, the salesman would collect the money and send it to the Bank. And in some situations, the customer capacity want to return the goods, thus the salesman will replace the goods and record it.Finally, the schools inventory system was complete manual which took time and effort from employees.By using work observation technique the research divided the system requirements into two groups, Functional Requirements and Non-Functional Requirements.Functional Requirements In this requirement category, the research considers the functional requirements within this task, it defines the system services and its functionalities. Furthermore, it provides a detailed description of the data.Non-Functional Requirements Regarding the non-functional requirements, the research defines system properties and constrains. Consequently, through this task, it tried to take in mind system constrains and restrictions that company requested in order to achieve the desired performance.CHALLENGESManaging inventory by implementing inventory software is an essential part of successful and well-organized business organization, to manage inventory in more effective and efficient manner. In Todays competitive business world, business managers should know the fundamental operations of the business better. Therefore powerful inventory software helps to easily manage total inventory and invoicing system to maximize the inventory management benefits. Powerful inventory tracking software allows you to access the relevant information of the products includingAccurate information of received goods.Movement of goods within or between locations.Total sales or purchase order of goods.Removal or other disposition of goods. experimental condition of remaining goods.Information of inventory items.If any organization does not implement an automated computerized system manage and monitor the activities of their stock-ins and out it cannot predict what items are available in stock and their precise quantities. Sometime, the working staff may forget or misplace the original price of the product causing them not to know the minimum allowed price to sell. This would definitely slow up the process of the business and this would affect other activities performance that cannot be controlled and lots of information that could not be clear or available, as the types of information listed above.As a result of business analysis and workflow observations, unfortunately, many companies are facing problems with their current systems whether it was a manual or a half automated system. Our main concern is to build the new system as a solution for these problems.Moreover, we had a number of meetings with some companies staff and representatives to discuss some ideas regarding the modifications and the improvements needed to be made. In addition, we had the chance to track the job workflow these companies, and at the same time we were able to take some notes while observing. As a result, we concluded that the major current problems areMany of the current manual systems contain some fond functions that were implemented manually, especially the calculation functions. As a result of this, accuracy leaking may appear during these mathematical processes. Consequently, using the mathematical functions in the designed system and turning all these manual process to an automated system will guarantee the desired accurate results. This case was obvious in Arc fabrication and welding services, which was relying on manual calculations that lead to data leakage which probably cause loss in amounts that would be increasing if an automated inventory system was not applied.Approximately, all of the current manual systems did not support printed documents where the reports are printed separately by employees who are in charge of HR activities. This process leads to little efficient performance and wastage in employees time. Actually, printed reports and other documents are one of the main functions in any inventory system. Regarding user satisfaction, the new designed system will support documents printing process in such a way that ensures simplicity, reliability and efficiency. Adel Alshaer head of inventory at Hajji Hassan AlAli group said We had to do the quantity surveying and register them into our system which is depending on spread sheets then deliver the calculations and then do reports upon the findings which needs extra effort and time from us.On the other hand, regarding the current automated systems, time is a critical limitation that faces both employees and managers. As a result of business analysis, many current automated systems contains some system debugs which need the system support team to be involved deeply in running the system functions. Thus, this involvement is a very time consuming task which may affect the system performance and cause some prohibited delays in the systems critical pro cesses. Therefore, there is an urgent and essential need for a dependable inventory system that would cost less time by being accurate with reduced technical debugs.PROPOSED SYSTEMThe main goal of the system is to make a business able to have a closer look onto their stock, have more control on activities concerning maintaining of inventory, and unconditional the related financial issues. This system is expected to solve the problems that any business may face while maintaining inventory. Plus, the system will assist the purchasing department to keep ideal level of stock and to avoid any financial expenses that may occur as result of implementing improper policy of maintaining inventory.Listed below, some points that explain the main objectives and features of this systemManage the company inventory system in effective manner.Facilitate to generate report to analysis total sales and purchase of the items.Facilitate to keep the total sale/purchase order of the products.Facilitate wi th customizable options that are easy to use.Display inventory data in a intimate user interface way.Keep track the customer records for customer relationship management (CRM).Save time with automatically calculating totals and doing tasks.Keep high level of security at shopping time, counting time and upon the display of information by providing accurate inventory quality information.Provide information on the availability of stock items and the status of stock requisition by creating a series of databases that will store product and/or item information effectively.Reduction of errors in transactions.Reducing manual system usage.Ability to run in different environments as a result of fast growing companies.Contextual DiagramThe consideration diagram of any system shows the external entities and the flow of data between those entities and the whole system. The following figure1 shows this regarding the designed Inventory System.The square is a representation of the system boundary . The system boundary defines what is inside and outside the system which is shown in Figure2.The system basically will work like thisFirst the supplier will receive an order. Any useful information about the order will be entered in the system by the user who will save it in the order database. Then the user should view the stock information which related to the order in hand by using a search engine work the purchasing department. The search technique could be modified to fit the organization. If the stock is not available the order will be cancelled. If the stock is available an circular will be created and give it or send it to the customer. Finally, when the customer pays the money, reports will be sent to the bank. The system also will have access to CRM database for customer relationship support. See figure3.The data flow diagram shows the relationship between the supplier, customer and the bank. The new system would propose that sequence operations could start with the sup plier that sends the orders to the company. Once the order is received it is being stored so if the stock is available in the required quantity the invoice is being proceeded, and if there is no stock available the inventory staff would have to contact the supplier until the process is being proceeded again until here. The invoice is being created and sent to the customer. The payment would either go directly to the bank via a cheque or by cash to the supplier.RESULTSThe system helps the organization to keep track on its suppliers, customers and the item movement be it stock-in or out, or between different branches, or to-from the customers. The ICS gives business the ability to have a closer look to their stock, have more control on the activities concerning maintaining of inventory, and controlling the related financial issues. Plus, it provides the business with asset management solution to increase warehouse and business productivity.ICS resolve also the following problemsWhat y ou sold?What you need to order?What should be left in stock?The impact of ICS use on the selected businessesAs three companies were chosen, had several problems with their inventory and stock management the problems were explained in the Challenges section. The proposed system suggested solutions upon the mentioned challenges and its suggested solutions should do as followsProvide a reliable and accurate inventory system to prevent data leakage. The proposed system suggests use of an integrated system that links the supplier, customer and bank. This starts from building data bases -if not available- using data warehouse. This would lead into more profit depending on the stock and supplies quantity as it is in Arc Fabrication and welding and AlAali group. Besides saving more items in stores to be used for the next years in the case of the schools inventory.Saving time and effort This would obviously affect businesses and time is also money in the business world. Reports would be gene rated automatically upon using an automated inventory system. This would save employees time and effort providing accurate reports so that employees would be busy following up with other chores. Hassan Ali, inventory manager at Aljaberya School We had to do summative reports per semester which needed a week at least to finish after doing all the calculations and data entry via spread sheets and creating the charts then data analysis and writing reports. We even find it difficult and some errors could occur due to lack of organization and experience in such subjects.Elimination of technical errors This would be clearly sight in the replacement of an inventory control system instead of using spreadsheets in the case of AlAali group while this solution does not apply the other two companies as they were not using an automated system basically.Other examples by effectively managing inventory using an ICSXerox eliminated $700 million inventory from its put up chain.GM has reduced parts inventory and transportation costs by 26% annually.Wal-Mart became the largest retail company utilizing efficient inventory