Design and Implementation of an Automated Inventory Control System for a Manufacturing Organisation (a Case Study of Nigerian Breweries Plc, Enugu)
Chapter One
OBJECTIVES OF THE STUDY
The main objective of this study is to develop a computerised inventory control management system. Others include;
It provides total asset visibility.
It allows reduced inventory stocking levels giving full inventory history.
iii. It reduces lead time, shelf space, and errors due to damage, fatigue of staff and overall cost of operations.
It facilitates “just in time” deliveries.
It provides full process control for products.
It provides higher level security as the system would be passworded to prevent unauthorised access.
It shortens cross docking time and speeds up sort/pick up rate.
It helps the management plan, monitor, optimize resources and ascertain their financial position at any time.
CHAPTER TWO
LITERATURE REVIEW
COMPREHENSIVE OVERVIEW
According to Microsoft Encarta (2009), Inventory is the quantity of goods and materials on hand that a manufacturer uses to represent those items that are ready and available for sale.
An inventory control system is a set of hardware and software based tools that automate the process of tracking inventory. The kinds of inventory tracked with an inventory control system can include almost any kind of quantifiable goods including food, clothing, books, equipment and other items that consumers, retailers, or wholesalers may purchase. Modern inventory control systems are exclusively based on using technology to track and control inventory. (Kotler, 2003)
Inventory control systems work in real time using technology to transmit information to a central computer system as inventory is monitored and as transactions occur to ensure an organised management system and generate detail-oriented records and reports that cover all aspects of the business. (Harry, 2005)
Purpose
Companies often use inventory control systems to reduce their carrying costs. The system is used to track products and parts as they are transported from a vendor to a warehouse, between warehouses, finally to a retailer or
directly to a customer. The purpose of a good inventory control system is to maintain a balance between too much and too little inventory. It provides the foundation for monitoring product sales and measuring inventor levels.
Inventory control systems acts as a blueprint for picking, packing and shipping items from a warehouse and receiving items into a warehouse or other storage locations to cut down product obsolescence and spoilage.
(Monzerka, 2002)
TYPES OF INVENTORY CONTROL SYSTEMS
Properly managing inventory requires a system of some sort. It does not matter if the system consists of writing inventory levels on the back of an envelope or using the most sophisticated radio frequency identification system. As the old saying goes, “there are many ways to skin a cat”, the different types of inventory control systems all have pros and cons. choosing the right one boils down to which system holds the most value for the company. (Rubin, 2007)
Basically, there are four types of inventory control systems: v Manual inventory management system
v Barcode technology
v Radio Frequency Identification (RFID)
v Warehouse Management System
Manual Inventory Management System
Many small business owners, especially if the business has very few products, keep track of inventory manually using a spreadsheet. Spreadsheets are set up to calculate when products need to be reordered. At
the start of each week, the owner manually counts products and materials that are on hand and enters the values in the spreadsheet and also enters expected usage based on existing orders. Using the appropriate spreadsheet formulas, the owner can determine if he has enough materials for the week or if purchases should be made. Manual systems allow the small business owner to manage inventory with very little investment in systems or training. Maintaining data integrity is a major downside to manual inventory management as a single data entry or formula error can cause major inaccuracies in the data output. (Lysons, 2001)
Barcode Technology
Barcodes consist of series of parallel vertical lines, or bars, used to assign a unique identification code to an item. The major use of barcode identification system is to track inventory automatically. A barcode combines several sequences to create a unique set of numbers or characters that identifies the item. (Encarta, 2009)
All major retailers use barcode technology as part of an overall inventory control system because it increases the accuracy and efficiency of managing inventory. When a barcode is read at the point of sale, inventory sales data is
immediately read and sent to a broader system that maintains usage statistics. Barcodes manage inventory at the warehouse level as it facilitates movement of inventory within the confines of the warehouse. (Kenneth,
2002)
Radio Frequency Identification (RFID)
This technology is relatively new and it works by having a tag that emits information that can be collected by a reader from a distance. RFID uses two types of technology to manage inventory movement; active and passive
technology. Active RFID technology uses fixed tag readers assigned throughout a warehouse such that anytime an item with an RFID tag passes the reader, the movement of the item is recorded in the inventory
management software. Active systems work best in environments that require real time inventory tracking or where inventory security problems exist. Passive RFID technology requires the use of handheld readers to
monitor inventory movement. Because RFID technology has a reading range
of up to 40 feet using passive technology and 300 feet using active technology, it greatly increases the accuracy of moving inventory around a warehouse. (Hamlett, 2006)
CHAPTER THREE
SYSTEM ANALYSIS AND DESIGN
METHODOLOGY
This involves the specification of procedures for collecting and analyzing data necessary to define or solve the problem for which the research is embarked upon. The scope of this research covers the Nigerian Breweries PLC, 9th mile corner, Enugu in particular.
DATA COLLECTION
The major source in data collections and facts findings used is primary source.
Primary Source
This involves oral interviews conducted with various personnel in the Nigerian Breweries PLC, Enugu, reviewing and sharing their experience about the difficulties they undergo in using the manual inventory control
system.
ANALYSIS OF THE EXISTING SYSTEM
The existing system is one that has been manually operated over the years. It is a system in which all the methods of controlling inventory is of a manual approach. Critical analysis of this system reveals that it is prone to errors.
Careful analysis also shows that due to the complexities of the manual system, records of inventory kept are inaccurate and manually operated in such a way that requires the clerk to register sales on a book, thereby making
a staff handle two or three jobs at a time. An example is a staff trying to register sales and at the same time rushing back to face a queue of impatient retailers waiting to be attended to. This makes the place so crowded with
customers with just one person attending to them. Sometimes, due to unavailability of staff, customers who have other things to do, end up missing their various appointments. As a result of this, the attendant finds it
very difficult to have an accurate record as pressure is being mounted on him. The attendant might end up writing an order meant for another customer and have it delivered to the wrong person.
CHAPTER FOUR
IMPLEMENTATION, TESTING AND PACKAGING
CHOICE OF DEVELOPMENT TOOLS
To ensure as standardized object oriented in this entire ramification, Visual Basic (VB) 6.0, Microsoft Access and Font page was used.
SYSTEM REQUIREMENTS
The requirements for the implementation of this system are as follows;
Software requirement.
Hardware requirement.
Software Requirements
The following specification is needed:
- a)Operating system- Certified distribution of Windows.
- b)Front end- Visual Basic 6.0 Professional edition.
- c)Back end- Microsoft Access 2007
Some additional features of VB like Data grind, Data Report.
CHAPTER FIVE
SUMMARY, LIMITATIONS, RECOMMENDATIONS, BEME AND CONCLUSION
SUMMARY
Inventory proportionality is the goal of demand-driven inventory management. The primary optimal outcome is to have the same number of days’ (or hours’, etc.) worth of inventory on hand across all products so that the time of runout of all products would be simultaneous. In such a case, there is no “excess inventory,” that is, inventory that would be left over of another product when the first product runs out. Excess inventory is suboptimal because the money spent to obtain it could have been utilized better elsewhere, i.e. to the product that just ran out.
The secondary goal of inventory proportionality is inventory minimization. By integrating accurate demand forecasting with inventory management, replenishment inventories can be scheduled to arrive just in time to replenish the product destined to run out first, while at the same time balancing out the inventory supply of all products to make their inventories more proportional, and thereby closer to achieving the primary goal. Accurate demand
forecasting also allows the desired inventory proportions to be dynamic by determining expected sales out into the future; this allows for inventory to be in proportion to expected short-term sales or consumption rather than to
past averages, a much more accurate and optimal outcome. With this new system, the difficulties encountered with the manual inventory control system are overcome. The automated inventory control system reduces the
workload of the staff, saves time and increases efficiency. The records of the company are safe and secure, distribution process is well managed, errors are minimized, and reports generated for management are accurate thereby
increasing the profit margin.
LIMITATION
In this project, it is only restricted to the stock department of Nigeria bottling company Enugu depot. There are some limitations they encountered in the updating of some finished product supply into store house and are delivered to the customer who depends on demand and supply as a method of stock control the recorder stock level and economics order quantity.
Also, the administrative department orders materials for the production of the required product these materials could be gotten through local purchasing order. In addition, the project cannot run on its own without human involvement.
RECOMMENDATION
Having carefully examined the usefulness of computer in eliminating most of the errors and hindrances that ensue from paper work, I recommend this automated inventory control system to Nigerian Breweries PLC, 9th mile corner, Enugu in order to enable them produce an efficient inventory management and likewise reduce the complexity of manual work.
Research and development being continuous processes; is the same in computer and software development. This system will be useful since it is computerized and will promote effective, efficient and improve service delivery thereby promoting profit oriented manufacturing. The employment of computer personnel for an effective maintenance of the system will enhance a maximum output of this package and the use of computer in inventory system.
Adopting this system, the following should be taken into consideration, training of staff, security measures, and the provision of dependable real time processing system for speedy responses.
Finally, the project work is likewise recommended to different sections in an organization and every other manufacturing organization that still carry out their operation manually because automated inventory control system handles the problem of time constraints and errors that arises when jobs are carried out manually.
BILL OF ENGINEERING MEASUREMENT AND EVALUATION (BEME)
The total expenses made at the cause of the design and implementation of this new software is analysed as follows:
TABLE 5.1: BEME TABLE
Item Quantity Unit price Total amount (Naira)
VB software 1 N5,500 N5,500
Avast antivirus 1 N5000 N5000
Designing of the 1 N15,000 N15,000 new software
Internet browsing 12 N12,000 N12,000
Phone calls – N4500 N4500
Transportation – N5000 N5000
Printing – N10,000 N10,000
Total – N61,500 N61,500
CONCLUSION
Having carried out the required study of the design and implementation of an automated inventory control system for Nigerian Breweries, the organisation can now comfortably eliminate the manual method which have
been proved inefficient, tedious, time consuming and prone to errors
The new automated system is the major target of this project. So the computerization activity depends on the maturity and honesty of the staff. Implementing the new system enables the worker to be well trained and creates new jobs for them.
REFERENCES
- Kotler, I.C. (2003). Inventory Control Management in the 21st Century. Charlotte (USA): Mac-Williams and Capital Publishers Inc.
- Harry, E.G. (2005). Tracking Inventory. London: Underwood Pitman.
- Monzerka, J.G. (2002). Sales Management: Theory and Practice. London: Paul Chapman Publication.
- Rubin, K. (2007). Computer Applications for Inventory Control Systems.
Boston: McGraw Hill. - Lysons, M.C. (2001). Systematic Planning for Change. Palo Alto, California: Mayfield Publishing Company.
- Kenneth. D.C. (2002). Contemporary Inventory Management Systems. New ork: McGraw Go Spot.
- Hamlet, J. (2006). Cultivating Alliances with Customers. International Journal of Organizational Management, New York. Vol. 7. Issue 3, pp. 255-287.
- Sande, O.F. (2003). Automated Warehouse Management Systems. Journal of Information Technology, Massachusetts. Vol. 2, pp. 35-43.
