Development of an inventory management system Essay


This undertaking is on the design and development of an stock list direction system which is portion of the supply-chain Management.

This system will try to work out issues with current stock list direction systems in order to give concerns a better competitory border.The literature reappraisal will supply a elaborate overview about Inventory direction ; why concern demand to pull off their stock list, benefits and aims of stock list direction and best pattern in stock list direction. It will travel on to farther discourse what stock list direction system is all approximately, a elaborate account of the benefits, hereafter of stock list direction systems and speak about success of stock list direction system.In the reappraisal, assorted factors for implementing efficient stock list direction systems were listed in order to understand to the full how to plan and develop a package solution for a company that would supply the best services and effectual solution to their current jobs. The study besides discussed some challenges faced by most inventory direction system in supplying concerns with an effectual solution.As portion of the literature reappraisal, a instance survey was carried out on Sahad Stores, a distribution company in Nigeria and a elaborate probe into their bing system was accomplished foregrounding the jobs of the current system. Based on cognition gained from the literature reappraisal, a proposed solution was presented to decide the issues with the company ‘s current system of stock list direction.

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An stock list is fundamentally a elaborate list of all the points in stock.

Inventory consists of natural stuffs, work-in-process and finished goods. In today ‘s extremely competitory market, concerns need to keep an appropriate degree of stock to run into the client demands at any clip. Inventory direction is portion of the supply concatenation direction.Over the past old ages, the construct of supply concatenation direction SCM has been given a considerable attending.

This is an attack to see the supply concatenation as a whole instead than as a set of separate procedures ( Weele, 2002 ) . Mentzer, Dewitt, Keebler, Min, Nix, Smith and Zacharia defined Supply concatenation direction SCM “ as the systematic and strategic coordination of the traditional concern operations ” . The chief purpose of supply concatenation direction SCM is to better the long term public presentation of each house every bit good as the whole supply concatenation ( Mentzer, Dewitt, Keebler, Min, Nix, Smith and Zacharia, 2001 ) .Inventory direction involves “ system and procedures of keeping the appropriate degree of stock in a warehouse ” ( Barcodes, 2010 ) . These activities includes placing necessary stock list demands, and making refilling procedures, tracking and supervising the use of items/stock, accommodating stock list balances every bit good as describing stock list position. ( Barcodes, 2010 ) . It is fundamentally the procedure of expeditiously commanding the sum of stock in order to avoid extra stock list.

Reliable stock list direction will therefore understate the cost associated with stock list ( Barcodes, 2010 ) .Inventory direction involves a broad range of procedures runing from stock list prediction, refilling, demand prediction every bit good as quality direction ( Wikipedia, 2009 ) .

Aims and benefits of stock list direction

Harmonizing to Stylus Systems, The 3 chief aims in stock list direction are ( Stylus, 2008 ) :

  • To cut down stock list investing or cost which is one of the most of import ends of any concern. Balancing the cost of maintaining stock list with the benefits gained from it is critical to the successes of an administration
  • To supply improved client satisfaction
  • To increase gross revenues and net incomes realised from effectual stock list direction which hence improve overall concern productiveness

Benefits of stock list direction

In a study by Stylus, he highlighted the followers as some of the benefits of stock list direction ( Stylus, 2008 ) :

  • Inventory direction systems can assist cut down the clip to react to altering market demand of merchandises and can assist command extra stock
  • IMS provide a agency for concern to efficaciously pull off or command their stock list
  • IMS helps concerns to invariably analyze their concern procedures such as gross revenues and buying in order to do efficient stock list determinations
  • Stylus systems besides reported that stock list direction systems IMS can supply entire penetration on stock minutess
  • Stylus systems besides stated that IMS can supply custodies on cognition on stock list which might take to increased gross revenues and efficient client services.

Development in stock list direction

Soon, there are two major attacks to stock list direction

  • Materials demand planning ( MRP ) : MRP is merely a direction system in which gross revenues are converted into tonss by sub-unit and clip. In this system, orders are “ scheduled more closely thereby cut downing stock list and devising bringing times shorter and more predictable ” ( Hedrick, 2003 ) . MPR reappraisal order measures sporadically and as such allow telling merely what is presently needed.

    This helps maintain stock list degrees really low.

  • Just-in-Time ( JIT ) : JIT attack ensures that a concern should merely maintain stock list in the right measure at the right clip with the right quality ( David, 2004 ) .Most organisations adapt to this system to incorporate stock list direction for a more competitory advantage ( Kaynak, 2005 ) . It eliminates stock lists instead than optimise them.

Why maintain Inventory

Inventory refers to a elaborate list of all the points in shop or warehouse.

Harmonizing to Inman, Inventory refers to the points that are stored in warehouses or distribution Centres in surplus of what the shop demands ( Inman, 2010 ) .The followers are the ground why concern keeps more stock list than they presently need ( Inventory Management, 2010 ) .

  1. Fitting Demand: this ensures that clients get the merchandise or point that they want when they want it.
  2. Keep Operationss running: When for illustration makers run out of stock to fabricate certain merchandise, the whole production procedure or operations will be halted and therefore industry of the finished merchandise. In order to forestall this, most makers purchase extra stock list.

  3. Lead clip: When a store or a mill places an order for a peculiar point, the period of clip between the order arrangements and when the order is received is known as lead clip. Business hence should hold custodies on stock list during the lead clip in order to maintain its operations running.
  4. Hedge: This involves maintaining stock list against rising prices in monetary value of merchandises. This allows the purchaser to purchase at a lower monetary value than when the monetary value additions.
  5. Measure Discount: Quantity price reduction refers to decrease in monetary value of an point when buying in majority. This ever influences most concerns to purchase more than it needs which might take to extra stock list.
  6. Smoothing Requirements: concerns sometimes get entree stock list for merchandises that have unpredictable demands in order to run into demand.

Harmonizing to Edwars Silver ( Silver, 2008 ) , inventory direction involves cognizing the undermentioned Questions:

  • The size of refilling order that will be required
  • The clip this order will be placed
  • And eventually how frequent stock list records should be analysed

Best pattern in stock list direction

In an attempt to maximize their return on investing ( ROI ) and avoid extra stock list, many concerns invest a luck in stock list direction systems.In a study by Philip Slater ( Slater, 2009 ) , he stated that most of these systems fails to render expected services and instead consequence in extra stock list. This is because package can merely optimize the values it has and non what it could be and as a consequence, it neglects some of import external influences like alterations in the direction procedure. He stated that “ World ‘s best pattern stock list direction demands that the stock list direction system is optimised non merely the stock list ” . Inventory direction therefore goes beyond package system and as stated by Philip Slater ( Slater, 2009 ) stock list direction involves combination of ‘know-how, procedure and describing ‘ that jointly provide a agency of maximising handiness while minimising hard currency investing. In the study, he stated five degree of universe ‘s best pattern stock list direction that when to the full implemented, can enable concerns to cut down their stock list investing or cost. These degrees are:

  1. Ad Hoc: this degree necessitate less control as stock list is expensed when purchased on an ‘as needed ‘ footing and used instantly.

  2. Storage: this degree involves the storage of points for usage and non purely controlled. Here, stock list is expensed when purchased. This attack tends to increase entire outgo as points are purchased in ‘economic measures ‘ and deter reappraisal and development due to miss of control
  3. Capitalization: This attack entails the usage of package solution to command stock list and supply good handiness. Unfortunately, most concerns use their package largely for numeration and accounting.
  4. Software Optimization: at this degree, stock list is capitalised and the degrees of stock are optimised based on a risk/return algorithm. Software solution can automatically set stock degrees based on the history of demand and supply but these degree are non trusted by most concern because they believe the supply and demand may non stand for existent use
  5. System Optimization: At this degree, all factors act uponing stock list investing are reviewed sporadically. The chief intent of stock list direction is to understate overall hard currency investing without increasing hazard.

    This harmonizing to Philip Slater is the universe ‘s best pattern in stock list direction ( Slater, 2009 ) .

Capitalization and system optimization goes hand-in-hand. For an effectual system, the direction is hence required to possess the “ know-how ” , steps, policy development, and coverage required to take the concern to level 5 ( System Optimization ) and non merely the package entirely ( Slater, 2009 ) .

Inventory CONTROL

Harmonizing to concern nexus in an article, an administration has an efficient stock list control merely when they have the “ right sum of stock in the right topographic point and at the right clip ” ( Business nexus, 2006 ) . Inefficient Inventory control can take slower gross revenues and defeated clients.Inventory control fundamentally trades with cut downing the entire cost of stock list. Inventory control is really relevant for concerns, particularly concerns covering with a big assortment of merchandises. As site by Hossein Arsham, Inventory direction or control can be used to streamline warehouse procedures in order to track orders and cargo ( Arsham, 2006 ) .

Other of import applications of stock list direction systems are in fabrication, transportation, and having. As stated by Arsham, there are three chief factors in stock list control determination doing procedure ( Arsham, 2006 ) .

  1. The cost of keeping the stock: this is the cost associated transporting stock list over clip and involves holding points in storage. This includes involvement, revenue enhancements, insurance, spoilage, breakage and warehousing cost like visible radiation, rent.
  2. The cost of puting an order: this is the cost of telling and having stock list which include transporting cost, fixing bills, find how much is needed and traveling goods.
  3. The cost of deficit: this cost involves what is lost if the stock is deficient to run into all demand.

    This usually happens when demand exceeds the supply of stock list on manus.

MerchantOS argued that “ the easiest manner to pull off stock list is with a computing machine stock list direction s ystem ” ( Merchant, 2010 ) . The systems below aid to cut down the clip spent in pull offing stock list:

  • Point-of-sale terminuss: this system updates stock degree automatically and supply a more error free gross revenues dealing
  • Barcodes and barcode readers which proved a manner to efficaciously input stock list and “ stock takes ” faster into the system
  • Job costing and stock list systems which are systems that besides automatically update stock counts as orders are being made.
  • Electronic Supplier merchandise catalogs: allows the usage of electronic devices like CD/DVDs to enter stock list informations.

These systems guarantee accurate stock list records through the usage of electronic and wireless engineerings that provide error free informations. These systems are really efficient in that they:

  • Keep merely up-to-date records of points and take all sold points from the system
  • It is possible to Review stock studies sporadically to look into the merchandises position and place low demand merchandises.
  • Sporadically look into record to guarantee the degree of truth of the system and to look into against physical stock measures.

Methods of Inventory Control

There are several method of stock list control which include ( Hedrick, 2010 ) :

  • Ocular control: this is used to find if extra stock list is required through ocular scrutiny.

    This method is largely used in little concerns and may non necessitate any records.

  • Tickler control: this is the physical numeration of little part of the stock list on a regular footing.
  • Click Sheet Control: this involves the recording of points as they are used on a sheet of paper and used for reorder intents
  • Stub control: largely used by retail merchants and allow directors have certain control of monetary values.

Today, the growing of concerns has provided a necessity to develop a more complicated and extremely analytical signifier of stock list direction. The above stock list direction systems became hard and inefficient.

As a consequence, computing machine systems to command stock list was introduced. These systems include:

  • Point-of-sale terminuss: this shops information of each point that is used or sold.
  • Off-line point-of-sale terminuss: this transmits gross revenues information straight to the provider ‘s computing machine system. The provider so uses this information to transport necessary points automatically to the retail merchants

The last method for stock list control is carried out by an external bureau. As sited by Floyd Hedrick, it involves remotion of unwanted merchandises from stock which can be returned to the industry. This nevertheless has to happen after an understanding and frequent scheduled visit by the maker ‘s representative to the big retail merchant in order to enter stock count and writes the reorder ( Hedrick, 2010 ) .The chief purpose of the above systems was to supply a more efficient system that will be able to place the cost of each stock list ( Hedrick, 2010 ) . Harmonizing to the study, two chief control values are used:

  1. The Economic order measure ( EOQ ) that is the size of the order
  2. The reorder point which is the lowest measure that a stock or an point can be before more measure is ordered.

The Economic Order Quantity ( EOQ ) is a expression that is used chiefly for ciphering the one-year cost for telling an point. It is widely used by most concerns and involves the existent cost of puting an order, the cost of transporting stock list every bit good as the one-year gross revenues rate. ( Hedrick, 2010 ) .


An Inventory direction system is a system that automates all the procedures involved in stock list direction. These system are a critical portion of any successful concern and is fundamentally used to expeditiously track stock list utilizing both hardware and package tools. The types of stock list tracked with an stock list direction system includes about any type of quantifiable merchandises like vesture, family merchandises, nutrient, every bit good as equipment ( Barcodes inc, 2010 ) . These inventory direction systems can act upon the overall efficiency of a company ‘s public presentation resulting in net incomes. An overview of the whole system is every bit shown in the diagram below:The diagram above show an over position of the whole stock list direction system indicant how legion subdivisions.

It shows how the stock list direction system manages stock list, gross revenues every bit good as Employee information.Through the terminal of 1980 ‘s, gross revenues and accounting related faculties were the chief focal point of bulk of package solution for retail merchant, makers, and jobbers. During the early 1990 ‘s, many distributers began to detect the relevancy of an effectual manner of commanding and pull offing their largest investing of corporate assets which is stock list. This lead to the development of comprehensive stock list direction faculties and systems by several package companies ( Schreibfeder, 2009 ) .Soon, many concerns rely on modern stock list direction systems to automatize and incorporate all facets their concern operations from order direction, transporting direction, charging systems, to take stock control all in one package bundle ( Schreibfeder, 2009 ) .

Tim Cosby reported that, inventory direction systems must hold ability to “ track gross revenues and handiness, communicate with providers in close real-time and receive and integrate other informations like seasonal demand ” ( Cosby, 2007 ) . This means that the system must state the storeowner for illustration when its stock degree is low so as to reorder and how much to buy.Information engineering provided a manner to change over gross revenues and buying into a strategic concern operation. Businesss now are faced with the challenge of happening out how to utilize these engineerings to derive value and competitory advantage. Inventory direction system can present these advantages ( Stylus Systems, 2008 ) .Modern stock list direction systems now depend on barcodes, and potentially RFID systems to enable automatic designation of objects.

Harmonizing to a instance survey at Wal-Mart, for merchandises selling between 1 and 15 units a twenty-four hours, RFID was able to cut down Out of Stockss by up to 30 % ( Mathieu, 2007 ) .In order to enter an inventory dealing accurately, “ the stock list direction system uses abarcode scanneror RFID reader to place merchandises automatically, and so collects extra information on the specific merchandise from the operators via fixedwireless terminuss, or nomadic computing machines ” ( Mathieu, 2007 ) . Mathieu defined RFID ( RadioFrequencyIdentification ) as ” a information aggregation engineering that uses electronic tickets besides known as electronic label to hive away informations and can be used to place points merely like saloon codifications ” .The chief difference between RFID and saloon codifications is that RFID uses wireless engineering to convey information into the system and can be inserted within bundles and does non hold to be near to the scanner. On the other manus, barcodes require line of sight and closing to the scanner for information to be read.As stated by Mathieu, RFID tagged cartons turn overing on a conveyor belt can be read many times faster than bar-coded boxes ( Mathieu, 2007 ) .Large package companies like IBM, Microsoft, SAP, and Oracle have already designed effectual stock list direction systems for big concerns. These package solutions cost 1000s to 1000000s of dollars.

They have now turned to concentrate on smaller concerns. Some of the popular stock list ( supply concatenation ) direction systems produced by Microsoft include Great Plains and Solomon, which are now joined together and called Microsoft Dynamics GP ( Quittner, 2008 ) .

Implementing effectual stock list direction systems

Inventory direction is really relevant for today ‘s concerns in order to guarantee quality control in concerns which soon is centred largely on client satisfaction. Inefficient stock list control or direction can therefore cause client dissatisfaction when they run out of stock of an point the client demands. In order to avoid this, most concerns are willing to put big sum of money in geting an effectual and efficient stock list direction systems.A good stock list direction system will be able to alarm the retail merchant when it is clip to reorder.

It is besides an of import manner automatically tracking traveling stock list.An efficient stock list direction system helps to minimise the hazard of mistake. For illustration, if a concern orders big measure of goods, and say 10,000 are losing. Manual numbering each goods is likely to ensue in mistake but these mistakes can be avoided utilizing an machine-controlled stock list direction system. In retail shops, an stock list direction system can besides be used to track larceny of retail ware, supplying valuable information about shop activities ( Schreibfeder, 2009 ) .

Inventory direction systems must be designed to reflect and back up company ‘s strategic program every bit good as adapt to market alterations due to worldwide selling or new engineering. It should besides supply relevant information to expeditiously supervise stock list motions, co-ordinate and integrate internal procedures like accounting or charge, manage people and equipment and communicate with clients.Harmonizing to Invatol, stock list direction system must be able to incorporate the undermentioned procedures in order to guarantee continuity between maps ( Invatol, 2003 ) :

  • Gross saless Forecasting: this requires the system to supply necessary information to organize concern operations efficaciously and pull off equipment and people. It should let directors to do accurate and existent clip determinations.
  • Gross saless and Operationss planning: stock list direction should command or manage fluctuations in market demands and lead clip
  • Company ‘s Strategic ends: Alliance with company scheme is an of import facet of the concern and necessary for its success and hence inventory direction should be designed to aline with the company ‘s strategic end and market demand.
  • Production and stuffs requirement planning: stock list system s should supply a balance of demand and supply at a minimised cost, stock list degree and work burden to accomplish client satisfaction.

These processes nevertheless vary from concern to concern depending on how the concerns carry out its procedures, and on the market demand.

Benefits of utilizing Inventory direction systems

As cited by David Essex ( Essex, 2009 ) , he stated that the followers are some of the advantages that concerns achieve while utilizing stock list direction package:

  • Businesss get quicker return on investing ( ROI ) which is as a consequence of lower carrying cost.

  • Inventory package can supply accurate up-to-date information about stock list thereby bettering gross revenues prognosiss.
  • Replenishment Planning. This means that Inventory direction package can advise concerns the safest clip to detain order without impacting client satisfaction and cost.
  • It besides proved the ability to divide safety stock harmonizing to client satisfaction and profitableness.
  • Increased gross revenues
  • It can besides promote gross revenues staff to advance merchandises without running out of stock by bettering stock list visibleness ( Essex, 2009 ) .

Successful Inventory direction systems

For any successful concern, stock list direction must be a critical facet of its concern. The most of import facet of an efficient stock list direction is to accomplish accurate informations in footings of figures and facts and to implement policies to protect this information ( Inventory Management, 2007 ) .A successful stock list direction system will provided concerns with proper stock list control that reduces overall operating cost taking to client satisfaction every bit good as give a competitory advantage. As sited by Alan Smith, a well-structured stock list direction system should be able to set to an bing system ( Smith, 2009 )Success in fabricating industry entails bring forthing the right merchandises, in the right measures, at the right clip, with good quality, and at a monetary value the client is willing to pay.Success in the fabrication industry requires bring forthing the right merchandises, in the right measures, at the right clip, with good quality, and at a monetary value the client is willing to pay. The flexibleness to react to compliance criterions and the ever-changing demands of clients, such as supplying real-time visibleness into planetary operations, is besides imperative for success.

Meeting these demands requires the ability to do speedy determinations based on accurate informations.Successful stock list direction has to make with equilibrating the cost of maintaining stock list with the benefits gained from stock list. Some of the grounds for stock list direction include ( Hedrick, 2003 ) :

  • Obtaining lower monetary values by buying merchandises in majority
  • Keeping stock depression merely plenty to run into demand and avoid extra stock list
  • Keeping a broad scope of stock
  • Increasing stock list turnover or return on investing
  • Having equal stock list on manus so as to supply dependable client services

However, the grade of success in turn toing these issues varies within the functionality of stock list every bit good as the type of concern.

A successful stock list direction system will speed up the procedure of tracking and taking from stock list those points that needed by client. This procedure minimises the lead-time for order fulfillment ( Merchantos, 2010 ) .Ideally, in order to avoid late re-order times, stock list package should be able to set the order measure and bringing lead clip to fit that of the provider ‘s public presentation.

Future of Inventory Management Systems

During the late 1990s, there was a big sum of concerns puting in incorporate order and stock list system which were fundamentally designed to cut down the sum of stock lists every bit good as manage stock degree ( replenish stock ) . There were a broad scope of system integrating options based on the concern demands and fiscal ability ( Gale Group, 2002 ) .

However, these “ stand-alone ” systems do non incorporate good with each other. In 1996, a survey by the International Mass Retail Association ( IMRA ) , concluded that stand entirely warehouse Management System ( WMS ) for illustration which perform merely single concern operations will go disused because of their deficiency of integrating good with other systems ( Gale Group, 2002 ) .Soon, administrations can no longer vie efficaciously in isolation of their providers and other entities. The future success of many concerns depends on the co-ordination and co-operation of attempts, thereby doing supply Chain direction of import. JIT and VMI are the two of the doctrines that have been used to update supply concatenation relationships and direction ( David, 2004 ) .

The tendency now in stock list direction is to strives to better non merely specific facet of the supply concatenation but system-wide ( the full supply concatenation ) efficiency through automatic refilling plans ( ARPs ) like the seller managed stock list ( VMI ) . In this system, the sellers are responsible for stock list refilling or restocking of stock list for their retail merchants. They get retail merchants warehouse or point of sale information and usage it to track retail merchant ‘s stock list thereby puting the whole duty for inventory direction of the shoulders of the sellers ( Gale Group, 2002 ) . Popular Automatic refilling plans ( ARP ) includes uninterrupted refilling planning ( CRP ) and vendor managed stock list ( VMI ) . CRP and VMI are similar but differ in the sense that VMI besides decides what and when to transport.

Another widely used ARP is the efficient consumer response ( ECR ) used within the food market industry and speedy response ( QR ) plans which are common in the dress industry ( Daugherty, Myers, Matthew, Autry and Chad, 1999 ) .Future stock list direction systems will be able to incorporate all concern procedures for the whole supply concatenation. Another hereafter development would be the usage of RFID with GPRS to track stock list.


Inventory Adjustment as the name implies is implemented as a stock adjustor with the chief aim of synchronizing the system with the existent stock on manus.Harmonizing to Jon Schreibfeder, in a instance survey with a big nutrient distributer, he stated that the company began a plan to accomplish effectual stock list direction. As portion of the plan, they were rhythm numeration merchandises and come ining stock list accommodations as they find any miss lucifer between the quality of a merchandise in their warehouse and the stock list maintained by their computing machine system ( Schreibfeder, 2009 ) . In his analysis, Schreibfeder stated that the company was able to follow a system that improved their future stock list truth that is methods of managing stock in order to forestall extra stock disagreements. They did this by carefully analyzing the grounds for stock list accommodations ( Schreibfeder, 2009 ) .

This I believe was because most inventory accommodations are the consequence of jobs encountered in the normal handling of stuffs.The ground to do stock list Adjustments are fundamentally the same for most concerns irrespective of the systems and operative methodological analysiss they are utilizing but the manner these stock list accommodations are made will impact the stock list cost otherwise. The chief grounds why stock list accommodations are required are ( Schreibfeder, 2009 ) :

  • Some of the merchandises in stock list are damaged or spoiled and hence can non be sold
  • Material is losing from stock list
  • Merchandise in stock list might be out-dated or can non be sold because it has been in stock list for excessively long
  • More merchandises available in the stock list than is recorded in the system
  • The staying stock list in stock is less than the measure a client will usually purchase

Some stock list direction system like FoodConnex implement stock list accommodation faculties. Harmonizing to FoodConnex, stock list accommodation can be categorized as follows ( Solutions, 2009 ) :

  • Stock Quantity Adjustments as a consequence of spoilage, harm, larceny, samples. These are accommodations made when stock in a shop or warehouse is removed from the warehouse or shop for a known ground ( Solutions, 2009 ) .
  • Quality Adjustment due to a Receiving Error. The accommodations are made when the measure entered as received into the system was wrong.

    This will ensue in the re-calculation of the mean cost of that point ( Solutions, 2009 ) .

  • Cost Adjustment due to a Receiving Mistake: when the cost of an point is entered falsely this will necessitate stock list accommodation. This will besides do the mean cost of the point to be re-calculated ( Solutions, 2009 ) .

Based on the information presented, every stock list accommodation should be considered as an chance for concerns to better which can ensue to greater corporate profitableness.

Challenges of Inventory direction systems

Several stock list direction systems now include many new characteristics designed to assist distributers efficaciously manage their stock list.

However, after implementing such systems, many concerns still continue to confront the same challenges they experience with their old system. These challenges include ( Schreibfeder, 2000 ) :

  • Stock-out and lost gross revenues
  • Inaccurate On-hand and available-for-sale measures in their systems
  • Unsatisfactory return on investings from stock list

Others jobs might be due to the stock list direction system like ( Schreibfeder, 2009 ) :

  • Software is excessively complicated for the users
  • Software does non incorporate necessary characteristics for effectual stock list direction

The most common ground that most concerns do non accomplish their stock list direction ends nevertheless nil to make with the computing machine system has they are utilizing.Harmonizing to Jon Schreibfeder, “ computing machines do non supply solution to stock list direction jobs. Computers are tools ” ( Schreibfeder, 2009 ) .

Inventory direction systems nevertheless, “ are merely every bit good as those people who that use the system ” ( Quittner, 2008 ) . It means that stock list direction system will non do up for a failure to aline concerns with scheme, inefficiency, or hapless penetration into the concern supply and demand. Harmonizing to Mark Ferguson, “ The major misinterpretation that a batch of concerns faced with inventory direction systems is believing that the package itself is adequate to work out their stock list jobs ” . Steven A.

, a Professor of Technology and Management at Georgia Institute of Technology in Atlanta besides stated that most concerns buy “ truly, supply concatenation package suite are sophisticated package that merely automate basic concern processes irrelevant of conditions they are good or bad ( Quittner, 2008 ) . However, there are jobs associating to the stock list direction system as discussed below.

Accurately tracking a traveling stock list

One of the common issues with inventory direction systems is accurately tracking a traveling stock list. Large concern with 100s and 1000s of points, pull offing stock list is a hard undertaking.

The challenge now has shifted from pull offing on-site physical stock list to pull offing stock list information anyplace in the supply concatenation ( Oracle, 2009 ) . Complicating the issue is that most concerns have really complex supply ironss where stock list inside informations are recorded across multiple channels and consist of other distinguishable system.

Inaccurate informations

Inaccurate informations entry can take to extra stock thereby taking to inefficient stock list direction or control. This can besides ensue to undependable client services.Harmonizing to a study cited by Tony Wild ( 2002 ) , “ an norm of 30 % of information in retail merchant system is wrong and every bit much as 60 % in jobber and provider systems ” .

Jon Schreibfeder, “ Inventory Accuracy involves holding the available measure of an point in the computing machine system hold with what is really on the shelf in your warehouse ” ( Schreibfeder, 2009 ) . This shows that stock list direction system is responsible for guaranting stock list truth. Harmonizing to Tony Wild ( Wild, 2002 ) , keeping accurate stock list records is really of import to concern and can be achieved through the undermentioned techniques:

  • Barcoding
  • Automatic recording and checking
  • Batch control
  • Shop authorization
  • Ageless stock list checking ( Wild, 2002 )

When stock list truth does n’t go out, it might take to:

  • Waste of valuable company clip
  • Waste of money and resources
  • Defeated clients

Good stock list policies are hence irrelevant if direction are unaware of what stock list they have on manus. This might be due to inventory inaccuracy as such ; truth of records should be critical facet in stock list systems.

Microsoft Dynamics noted that, “ increased mechanization and point tracking capablenesss help better stock list truth and better fit the goods on manus with client demand ” . A portion from cut downing stock list costs, stock list direction system besides connects stock list control, gross revenues order procedures and buying with demand. Better hard currency flow every bit good as guarantee that stocks are available when needed ( Microsoft, 2010 ) .

Erratic ( altering ) demand

The demand for unpredictable merchandises can all of a sudden go high and retail merchants can later go out of stock for that peculiar point. This is because the stock list direction system strives to maintain minimal degree of stock in shops ( Crosby, 2007 ) .

Integrating with other systems

Integrating stock list direction package with bing supply concatenation direction ( SCM ) systems and other related systems like ERP is a challenge for most package companies.

Software Failure

Inventory direction systems, merely like all engineering, are capable to the consequence of package failure or computing machine clang ( Crosby, 2007 ) . This will take to loss of relevant informations and as a consequence will impact the whole concern. Software failure can be due to miss of care of the system either through updates or virus protection. This nevertheless can be solved with informations backup.

High cost of care

Inventory direction systems are usually really expensive and cost of care is normally high. As a consequence, most little concerns are unable to acquire good systems.


Sahad Stores is a sweeping distributer of a assortment merchandises runing from house-hold merchandises to electronics. It besides deals with export and import of these merchandises.

It was established in 1990 in the northern portion of Nigeria, Kano province. It started with merely one subdivision and soon owns more than 10 retail shops and warehouse all over Nigeria. Based on their experience as an efficient retail merchant, Sahad knew the type of quality services their distribution system needed to give their clients and they were able to supply these services to run into their client ‘s demands. However, due to the rapid growing of the company, there were challenges they faced in supplying quality services.

Business challenges:

Sahad shop had a concern end to be Nigerian biggest distributer and to make this, they had to happen a manner to cut down their stock list cost.

One of the most of import challenges was to cut down operation times and to understate disbursals. Due to their turning client base, they needed package that would streamline their multiple warehouse processes and accurately track stock monetary values and location. Inventory direction system is good scheme to accomplish this. This undertaking would hence be about the design and development of an effectual stock list direction system for Sahad shops.

Existing System:

Sahad Stores was utilizing a paper-based manual system to pull off their stock list utilizing Stock Book. This type of systems is usually used by little concerns to track and hive away stock received and stock released. This nevertheless resulted in a batch of jobs which includes:

  • The company has high cost for transit of stock list paperss between its subdivisions thereby subjecting of import papers to lost or damage. This is a job because most paperss such as goods reception, returns, and transportations are acknowledged, verified and signed at the caput office.
  • The bing system has a high hazard of informations inaccuracy associated with manual entry of stock. As mentioned earlier, the system that sahad shops were utilizing was a paper-based system and staffs enter inventory papers manually.
  • Sahad needs a system that would guarantee clients ever have what they want when they want it and at the same clip balance that with keeping merely plenty stock possible.

  • Lack of security. The bing system has no security step to curtail unauthorised user from accessing certain information. This can ensue to stealer.
  • No backup installation in instance of informations lost or damaged
  • Most concern procedures are non linked so a considerable sum of clip is wasted
  • Because of their legion warehouses, it was really hard to track stock list across these location.

    They needed a system that will back up multiple locations and transportation procedures.

  • With the bing system, a batch of clip is wasted to finish one dealing because the caput office has to wait for papers to be delivered from assorted subdivisions. This deficiency of centralized system frequently makes work feverish and clip consuming.
  • The company besides want a system that will supply automatic re-ordering of stock when their stock degree become low.

Proposed system:

Based on the literature reappraisal, developing an efficient stock list direction system is non every bit easy as merely making a information repositing solution. This is as a consequence of several types of uncertainness associating to stock list direction which varies depending on the type of concern. In add-on, the system needs to implement both inventory direction policy and prediction methods.

This undertaking will try to decide all the issues and jobs with the bing system every bit good as provide extra functionality to supply Sahad Stores with a competitory border in its industry. It will besides let the company to derive an effectual and efficient control over its stock list. The followers are some of the characteristic of the proposed system:

  1. The proposed stock list direction package solution will guarantee accurate merchandise measures and location and supply case entree to merchandise handiness information from any location.
  2. It will besides utilize web options to link multiple locations utilizing a individual database platform to hive away bringing site and vendor-managed stock list. The information base that will be used is the Microsoft SQL Server 2000 because it is the most popular relational database direction system from Microsoft with the ability to to the full back up any concern application.
  3. The system will streamline warehouse and sale procedures like buying, order processing to guarantee automatic update of stock balances and records as orders are being made. It will supply an option to the user to execute a specific undertaking like “ re-order ” and as the user chinks on it, the system will automatically bring forth the order.
  4. The system will supply enhanced security characteristic to curtail entree to merely authorized forces
  5. The system will be able to incorporate all the relevant concern operation systems like the accounting systems and the invoicing systems so that information can be entered one time into the system to be used by other systems.

  6. The system will supply automatic stock monitoring and will alarm user when the re-order degree is reached.
  7. The system will besides supply a web-based platform to link to multiple gross revenues points anyplace any clip to supply clients with first manus services. This web-based plat signifier would be designed utilizing JSP and servlet.

  8. Manage seller and client information in the easiest manner and will be able to propose valuable providers.
  9. The system will be able to incorporate with barcode system to read and publish barcodes to ease gross revenues minutess.
  10. The system will besides utilize Radio Frequency Identification ( RFID ) to track merchandises throughout the supply concatenation.
  11. The system will besides guarantee Data backup/ Recovery to supply maximal safety of records in instance of system failure
  12. The system will supply assorted signifiers of stock list coverage either through inactive signifiers or ad-hoc signifiers. Inactive studies will supply periodical sum-up of stock list minutess while ad-hoc study will supply study based on the standards specified by the user like based on merchandise type.

Undertaking Plan


  • Sahad Shops
  • Distribution concerns
  • Directors
  • Gross saless representatives


  • An efficient stock list direction system for Sahad Stores to efficaciously command and track Inventory across multiple locations
  • Documentation
  • Training

Evaluation Methodology

  • Interview
  • Check List
  • Document Sampling


Based on the literature reappraisal, it was rather apparent that most administrations strive to better their stock list operations without increasing stock list cost.

The chief thought nevertheless was to incorporate and automatize all of these procedures to accomplish a one individual cohesive package bundle. By puting in inventory direction systems, administrations can accomplish strategic concern aim and increase their return on investing ROI.The intent of this undertaking is to supply a more dependable solution to Sahad Stores to derive a competitory border and gain its aims through increased gross revenues and decreased cost.


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