Proposal for redesign of Inventory tracking system
Inventory is the heart of any business process. The right management of the inventory builds the sales with correct estimation of time bound sales and supply of material. An organization will be on profit side, if it has an accurate count of that inventory, procedures for changing it, and an organization scheme that allows fast and efficient access to it. But many organizations are not much ensured on their inventory level all the time and up to the minute satisfaction. Buying and selling are interlinked with the inventory organization.
Many organizations push sales to stock out the inventory to give way to the new products, eg: perishable goods. Some products with their increased ...
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...shelf life will have more value in terms of currency eg: wine. So keeping optimum size of inventory is necessary even for different kinds of product organizations. And retail industry is one such sector that holds the fast moving products and need to reorganize its inventory levels from time to time. The forecast of sales and product shelf life will be very difficult to estimate in such scenario.
The key challenges of inventory tracking for any retailer include; unnecessary costs with too much of inventory or loss of sales for delayed stock arrival and daily information updates for frequent deliveries, etc. , So different segments adopt different kinds of inventory tracking mechanisms to keep their optimum inventory levels. Hence the current paper tries to examine the inventory tracking of ABZ retail outlet and tries to propose a new alternative system to enhance the activities.
Statement of problem: and description of existing system ABZ is a chain of retail stores that sell readymade clothing for Men, women and children. The retail outlet stores variety of fashion clothing like ethnic wear, formal wear, casual wear, clothing winter wear, summer collection for Men, women, and kids. The company has 3 warehouses in which the clothing material will be designed and made distributed to the 4 sales outlets. The sales outlets carries inventory for 15 days period and makes an order at the end of the 15th day to the warehouse.
The current order entry system is being run through an automated system, where the store manager raises request for each clothing section separately. The requests are posted to the warehouse automatically, to get the order prepared within a week. Everyday the storekeeper of the section has to report the stock in and stock out to the store manager. Collecting the stock data from different sections, the store manger is forecasting the next day, weekly and monthly sales. The seasonal sales are also being calculated in the similar manner depending on the last seasonal sales count.
The sales projections and forecasts are based on assumptions, and stock maintenance is becoming a cumbersome delayed process. Due to this ABZ is facing problem of non-availability of customer-required product on the shelf. However, the current system is well able to generate reports like, Inventory flag reports, Inventory history reports, Receiving scan reports, Physical Scan report, Physical Inventory Recap, Stocking report, Item list for specific location, restocking report etc. , But the automated ERP system is lacking an immediate data input from sales store to warehouse to make an immediate order placement.
So the company is looking for an immediate communication solution between the sales outlet and warehouse to keep the products on shelf all the time to maintain the Economic order quantity The database of current automated system lacks the following features: Lack of alerting system of material shortages and excessive inventories Needs manual specification for every item in the database. There is no target level at which a re-order should be made. At reorder time, there is no check to see that the items are being sold out in expected time or faster than the expected time.
There is no MIS to make a decision on quantity levels to double or re-order the inventory in a quick manner. Lack of procedure to check-in and check-out. Lack of direct entry of the items that enter or leave the system database. There is no reflection of accurate inventory at a single point of time. Manual double check for the current day stock outs resulting in errors and delayed process. The movement and tracking of goods through shelf has no data support. Alternatives Considered ABZ Company has the following alternatives to enhance the current inventory tracking 1.
Updating the centralized database system for sales stores and warehouse: This will enable the ware-house to recognize the order entry as and when the store raises a request. The stores department can also raise request even at the end of the day. This will reduce the delay in order supplies from warehouse to sales stores. The centralized database integrates the databases like, user database, location database, item database, Relationship database and Transaction database. And the challenges of inventory tracking can be reduced for planning, organization, and consistency.
But this process needs daily manual entry of the stock status to the central database. ABZ needs a simple, consistent, and accurate inventory tracking procedure. The monthly, quarterly and annual inventory has to be compared to the inventory database. This process still needs double-check of inventory at shelf level and at store level. In doing so, mistakes and errors may creep in to the records. There will be still a gap between what it reflected in the electronic database and what sits on the physical warehouse. 2.
So the suggested another alternative scenario for ABZ inventory is implementation of RFID technology in the storehouse and integrating the stock-in and stock-out data with the warehouse. So as and when a product moves out of shelf the replacement request will be automatically generated from store house to the warehouse. There will be no delay in the stock replacement. Information will be very accurate from shelf to store and from store to warehouse. The delivery request can be raised at any point of time, depending on the pre defined EOQ from warehouse.
RFID technology facilitates the flow of inventory information like what stock is on shelf, what went out, when it happened, and what kind of customers are preferring the product.. The proposed functionality of RFID technology is like this: The RFID tag of the product on shelf will contain a chip inside it to store product details. These chips broadcast the product in and out details as pertinent information and then print the tags out for affixing the tracking information. Readers are the associated devices to pick up the signals that are broadcasted by chips within a specific proximity.
The readers then transmit the inventory information to an edge server, that runs through a middle ware application and consolidates the data sent by the readers. The edge server transmits the inventory data from store to the database of warehouse on a regular basis to track the inventory. RFID solution for inventory can update the real time data on product movement, scanning and the human involvement. This offers an fully automated system to determine the inventory status at any point of time and shipping & receiving documents to be generated automatically.
Such system will also trigger automatic orders for products that are low in inventory. The proposed RFID system will offer the ABZ the following benefits: • Clear total asset visibility • Complete picture of full inventory history • Reduced inventory-stock levels • “Just-in-Time” deliveries • Full process control for products on shelf • Reduction in lead-time • Shortened cross docking time • Quick sort/pick rate • More shelf space to accommodate new varieties • Higher control • Error reduction • Reduced cost of operations