Information Requirements for Inventory Management

Part 1 B

Introduction

This report will focus on the information requirements for inventory management and stock taking system of Survival Recovery and Development(SUREAD) and highlight the importance aspect of the inventory system of the organisation. The main focus will be the issues surrounding inventory management and stock taking.  Reference will be made to the level 0 DFD diagram in the report.

Inventory Management

Bragg (2015) describe inventory management as the supervision of non-capitalised assets (inventory) and stock items and a component of supply chain management. Effective management enables the flow of goods from manufacturers to warehouses and from these facilities to the point of sale. In the context of SUREAD, the inventory management does not have a reliable forecast of demand, including forecast error, knowledge of lead times and variability as well as a reliable system to keep track of the inventory on hand and on order.  In Appendix A, level 0 DFD diagram, the decision of the system (DSS) sitting inside the organisation will be hampered by some of the external elements such as the threat field staff are under and the fact that most NGO depends on the public purse to fund their operations. The internal problem such as the issues with the ability of the management to forecast demand, including forecast error is one of the reasons why good are not checked properly before they are dispatched. The DSS report w and the finding from the SWOT analysis will enable the (SUREAD) to forecast and make decisions about their operations and how quickly they can get required equipment and packages to the staff on the field.

One of the strengths of the organisation is that one of their field staff has experience of using Lean technique. The management SUREAD can get more employees on board by providing training and development to acquire lean techniques of inventory management. This will facilitate the internal organisation proficiency and help to cut waste. According to Chapman and Ward (2010), the application of Lean technique can help to identify all the steps in the value stream for each product family, eliminating steps that do not create value, make the value-creating steps occur in tight sequence so that product will flow smoothly toward the customers. This will enable  customers to pull value from the next upstream activity and value streams are identified while wasted steps are removed. By applying this process simultaneously until a state of perfection is reached, a perfect value can be created for SUREAD to cut wastage. In order to effectively meet the operations requirement SUREAD of built packs ready for out load within 2 hours from a formal requirement, the company can  adopt the ABC analysis approach to inventory management. ABC analysis Inventory optimises supply chain, it is an inventory categorisation approach that consists and divide items into three categories, A, B and C, while A being essential items, C being the least valuable ones (Slack and Chambers, 2007). Level 0 DPD diagram indicated that the organisation relies on the public purse to fund most their operation and getting the most necessary items to the staff in the field is essential. In addition, this will help to save cost and help reduce the issues with inventory.

Stocktaking

Stock taking is the act or process of making a complete list of the items or things that are in a place (Pinto, 2014). It is the process of recording the amount of stock held by a business. According to Park and Park (2014), stock taking is the process of counting and recording the amount and value of stock held by a business. It is implemented to order fresh and replacement stock more accurately, minimise wastage of stock lines going past their use by date or being damaged by poor storage, identify how much cash is tied up in stock and assess if by reducing stock levels to get more cash flow for business and supply information for key financial figure that is necessary to calculate the gross margin and business performance (Muhammad Barwa, 2015).

In the context of SUREAD’s operations, the SWOT analysis identifies some flaws in the inventory system such as the “use by date” of item that was passed and noticed when boxes were already unpacked for use. Most of the boxes are noticed when they have already been set by sea to their destination. The internal management of the Level 0 DFD needs to select and train the counting teams on how to conduct counts and fill out the relevant paperwork. This will help to establish a cut-off time, after which no further inventory in the receiving area is allowed in the warehouse, and no items are shipped out. It is helpful if there is no production, receiving, or shipping activity on the day of the count. However, the NGO organisation have the opportunity to improve process and systems by investing in management information system that will effectively help SUREAD to gather data and information that will help the organisation to make informed decision, meet the requirement of their field staff in a timely manner and improve overall performance of the firm. The main areas for investment should be the supply chain and inventory management. This seems to be the main and pressing issues facing SUREAD in terms of meet their operations and overall objectives.

Conclusions

Inventory management is a component of the supply chain, effective inventory will facilitate the good process of supply chain vice versa. One of the issues with SUREAD operations is lack of appropriate inventory system that can accurately meet the demand with timely supply. The use of Level 0 DFD will enables the SUREAD management to compare, contrast internal and external report in order to make an informed decision. According to Mentzer, Stank and Esper (2008), DFD is a useful technique for modelling a system’s high-level detail by showing how input data is transformed to output results through a sequence of functional transformations.   The application of Level 0 DFD would enable SUREAD to identify and define the information requirements for their Inventory Management and Stock Taking system. This will enable the organisation to keep track of the inventory on hand and on order, forecast realistic and reliable demand, forecasting most likely error and adequate knowledge of lead times and variability (Park and Park, 2014).

References

Bragg, S. (2015). Inventory management. 1st ed. Centennial, Colo.: AccountingTools, Inc.

Chapman, C. and Ward, S. (2010). Project risk management. 1st ed. Chichester: John Wiley & sons.

Mentzer, J., Stank, T. and Esper, T. (2008). SUPPLY CHAIN MANAGEMENT AND ITS RELATIONSHIP TO LOGISTICS, MARKETING, PRODUCTION, AND OPERATIONS MANAGEMENT. Journal of Business Logistics, 29(1), pp.31-46.

Muhammad Barwa, T. (2015). Inventory Control as an Effective Decision-Making Model and Implementations for Company’s Growth. International Journal of Economics, Finance and Management Sciences, 3(5), p.465.

Nasiri, P., Davoudpour, H. and Karimi, B. (2010). The Impact of Integrated Analysis on Supply chain Management: A Coordinated Approach for Inventory Control Policy. Supply Chain Management: An International Journal, 15(4).

Park, T. and Park, J. (2014). “Managing Stock and Flow of Human Capital: Inflow, Outflow, and Stock Stability”. Academy of Management Proceedings, 2014(1), pp.14251-14251.

Pinto, J. (2014). Project management, governance, and the normalization of deviance. International Journal of Project Management, 32(3), pp.376-387.

Slack, N. and Chambers, S. (2007). Operations management. 1st ed. Harlow, England: Prentice Hall/Financial Times.

Stair, R., Reynolds, G. and Chesney, T. (2008). Principles of business information systems. 1st ed. London: Cengage Learning.