Master of Business Administration Executive
Faculty / School
Faculty of Business Administration (FBA)
Year of Award
MBA Executive Research Project
Inventory management | Inventory control | Inventory difference
Inventory Management system provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities and communicate with customers. Inventory Management does not make decisions or manage operations but provides the information to managers who make more accurate and timely decisions to manage their operations. The most important component from which lead acid batteries are manufactured is plates. On a daily basis about 400,000 grid plates are casted. These plates then pass through series of processes including pasting, charging, drying, cutting and finally to assembly shop. These processes are carried out at different shops, involving physical movement of plates to and from those shops. Due to enormous volume, 100% counting of plates at each work station is almost impossible. Every month, upon physical verification of plates inventory at different shops, we found difference of about 300,000 - 400,000 plates compared to the book balance. The reason could be over-stated production or under-stated rejection or both. Primary research was conducted on inventory difference issue, initially project team developed questionnaires on 5W IH analysis methodology basis for all shops to determine and define problem which increases inventory difference and monthly wastage of plant, this analysis consisted of questions like “why this problem occur?”, “at which process this problem occur most?”, “impact of problem on any process of this department?”, “impact of problems on other department?”, “what is the SOP to perform this process?”, “precautions to minimize inefficiency in this process?” and “benefits obtained if inventory difference problem is eliminated?”. These questions from all departments help in illustrating problem statement and the idea of how to carry out this project till the end to reduce difference in inventory at month end.
In secondary research analysis monthly wastage report was analyzed to find shop and store which contribute most in increasing inventory difference other than monthly wastage report “AS IS” and “TO BE” GAP analysis was also conducted on each shop to find gap between processes which contribute in increasing inventory difference. In “AS IS” and “TO BE” GAP analysis gaps/flaws in shop procedures and gaps in procedures between shops was highlighted which cause gradual increase in monthly inventory difference of plant, observations and suggestions to reduce inventory difference between shops. Wastage and inventory difference occurred throughout the year before the implementation of project was 2.42% and 1.38% respectively i.e. total wastage was 3.80% in the month of October - 15. After the implementation of above recommendations wastage and inventory difference reduced to 2.31% and 0.10% respectively i.e. total wastage is 2.41% in the month of April - 16, a decreasing trend in inventory difference and wastage can be observed.
Link to Catalog Record
Khan, M. J. (2016). Inventory difference problem creating high wastage and low profitability : (Unpublished graduate research project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/research-projects-emba/213
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