1 Study of Existing System

The current Inventory System is very complex. It was a manual system. There was no hard and

fast rule for preparing documents and records. The customer is to visit the office and workplace

where he places the order, and explains the requirement and demands.

2.1.1.1 Functions of the Existing System

Customer Inquiry

Customers were provided with the inquiry and customer’s requirements were also asked and

noted for the products to be manufactured. Cost and completion date is also discussed and noted.

Order Processing

Order processing was performed, by getting the raw material from the store and no special

receiving was given to the workers for the raw material provided to them. The production

process could take a week or so, and in this way completed product is delivered to store for

delivery to the customer.

Raw Material Purchase

This is an important function of QEMCO, after receiving the order for product manufacturing;

the related raw material is purchased.

Delivery of Finished Products

After the production is completed, the finished product is delivered to the customer, along with

the invoice and delivery chalan.

2.1.1.2 Data Maintained in the Existing System

Customer Records

At the time of inquiry the credentials of the customer are maintained. Different information

related to their name, address, contact numbers is maintained.

Stock Maintenance

Raw stocks as well as finished products are recorded and maintained in stock registers.

Order Processing Records

Order processing records were maintained, a clerk was responsible for maintenance of sale

orders.

Invoice Records

After completion of order and product manufacturing an invoice along with delivery chalan was

generated and sends to the customer.

2.1.2 Problems in Existing System:

In a thorough study of the company system there were many flaws in the system. First of all

there was no discipline in the record room. Files and files were piling on one another. Employees

were not well motivated and trained to handle the record and because of this miss-management

many problems may occur, resulting the short fall in the production which definitely affects the

profitability of the company as making the best results helps in achieving in the strategic and

tactical goals of the company. Actually the main problem is that the existing system does not

have the coherence and interrelation amongst its sub-systems. The staff is not totally motivated

to work therefore there are many little losses are incurring in different areas of the organization

which goes into a big amount of loss at the end of financial period. So it is proposed that the

computer aided management system is to be developed. In this way not completely but a lot of

problems can be solved. It is another fact that the capacity of improvements always exists.

Drawbacks of Existing system

(I) Uncontrolled Redundancy

Each department has its own files, an approach that inevitably leads to a high

level of data redundancy (that is, duplication of data). There are several disadvantages to

recording the same data item in multiple files, e.g.

(a) Valuable storage space is wasted.

Valuable storage space is wasted, as same data exists at number of locations. E.g.

product information exists in sales, accounts and purchase departments.

(b) The same data may have to be input several times to update all occurrences of a data item.

In this case data is to be input in all the departments, e.g. product data is to be

entered in sales, purchase and accounts departments.

(c) Inconsistencies of results.

Data was often inconsistent, if there is change in any product it must be made to

data at all departments, else data will be inconsistent.

(ii) Inconsistent Data

When the same data are stored in multiple locations, inconsistencies are

inevitable. For example several of the files at the QEMCO contain customer data. Suppose that

there is an address change for one of the customers. If the files are to be consistent, this change

must be made simultaneously and correctly to each of the files containing the customer address

data item. Since different users control the files, it is likely that some files will contain the old

address, while others contain the new address.

Inconsistencies undermine the confidence of the users. The outdated customer

address may cause an invoice to be mailed to the wrong location. As a result the invoice may be

returned, and the customer payment delayed or lost.

(iii) Inflexibility

The system at the QEMCO is quite inflexible. It cannot easily respond to requests

for a new or redesigned product. This often leads to considerable frustration on the part of the

users.

(iv) Limited Data Sharing

With the manual system at the QEMCO, the users have little opportunity to share

data outside their own applications. We can notice that users in the Accounting Department have

access to the invoicing system and its files, but they may not have access to the order filing

system files, which are used primarily by the Orders Department.

One consequence of limited data sharing is that the same data may have to be

entered several times to update files with duplicate data. For example, at the QEMCO, a change

in the description of an inventory item would have to be entered separately into both the order

filling and invoicing systems, since each contains its own version/design of an inventory file.

V) Poor Enforcement of Standards

Enforcement of standard procedures is a must if an organization wants to operate

effectively. Within information systems, standards are required for data names, formats, and

access restrictions. In manual information system the enforcement of these standards is not

possible mainly because of decentralization.

At QEMCO the various departments often use different names and formats for the same

data items, which make modifications more difficult and preclude data sharing.

(vi) Excessive Program Maintenance

The process of modifying existing programs is referred to as program

maintenance. In manual information system, descriptions of files, records and data items are

generally differently mentioned in different departments. Therefore any modification to a data

file requires that the program (or programs) also be modified. This excessive program

maintenance is causing a lot of hurdle to the management of the QEMCO. Many organizations

today devote 80% or /more of their programming effort to this activity. This requires that the

QEMCO should adopt data base approach in order to overcome the obstacles of traditional

manual information system.

Proposed Solution

QEMCO was proposed a Computerized Inventory and Stock Management System. This

proposed system is specially developed as to eliminate the problems countered in the old way of

managing stocks and record keeping.

Some tools for Proposed Solution:

Staff Training:

The staff may well train in different departments of the organization specifically foreign trade,

quality control and production department. The training may be arranged in organization and

other institutions. Similarly the foreign engineers may invite to visit the production department in

order to keep update of latest technology and research.

Environment Change:

Environment may change gradually because it will be harmful to change the environment at

once. By changing the environment means that the company may follow more professional

techniques for running its operations For example all policies and procedures should be clear in

black and white so that the employees will be more aware of their reward policies which

encourages them to achieve their specific tasks and. goals well in time. All the departments

(production department) are to be computerized and staff should be trained in this regard to run

the operations of the company in a more effective and efficient manner.

Decision Making Power:

The decision making authorities may disburse at the operational level of the management

regarding their assigned job. In this way they will be able to take quick decisions and ultimately

the quality of production can be improved. Besides decision making at the tactical and

operational level generate more ideas as this level has direct effect on the operations of the

company.

Motivation of Personnel:

The staff is not totally motivated with the overall behavior of the management. The motivation

reforms needs to be implemented. To motivate the employees different reward plans may be

designed and these plans may be directly linked with the performance of employees so that the

employees can evaluate their performance and make amendments in their procedures where

required. There is a need to improve the confidence level of staff.

IT manager work as a coordinator among the staff member as long as they become familiar with

the new system.

Parallel conversion can also be implemented for some time to avoid the critical situation.

All the above mentioned suggestions may be implemented in all the departments so as a positive

consistent change can take place in every department and it also avoids the interdepartmental

conflicts.

For Example all the staff may be trained for the effective execution of the new system so that

they may follow the required changes and may understand the chain of command.

Autonomy may be given in all the departments so that some one should be responsible for the

outcomes whether positive or negative so that necessary steps can be taken.

QEMCO was facing some problems related to stock maintenance and it current status, it

was also having problems to access the receivables and payables. Therefore a stock

management system was developed and introduced to keep complete and accurate

records and process and generate rapid outputs as and when required. This was also

important as to deliver best services to the customer and could compete to the

competitors in the market.

QEMCO is also proposed an accurate description of the environment in which the

solution will reside and its corresponding variables. The Inventory and Stock

Management System provides will be managed and maintained in accordance to the

management requirements.

QEMCO is also proposed an MIS department, which could manage the records for the

organization and would take it to the peek of information world.

QEMCO is proposed to hire staff for the proposed MIS department, a database

administrator, Network Administrator, and Data Entry Operators.

2.1.5 System Improvement Objectives

Maintain Records and History

One of the main objective of this system is to improve the record maintenance. These records

include customer records, vendor records, sales order records, receivable records and payables

records.

Rapid Processing (Speedy)

QEMCO is keen to process records in rapid manner. The managers require information timely so

that they could make decisions based on it.

Reliability

Every organization’s primary objective is to have reliable information. QEMCO is an

organization that is having less but large amounted transactions, so reliability is one of the key

objectives of QEMCO.

Accuracy

In manual system of working and record keeping there are many chances of erroneous

information, therefore the objective of accurate data and information is kept in to the priority.

The inventory and stock management system shall be error free.

Timely and effective Decision Making

The accurate and reliable objectives will definitely help QEMCO to make timely and effective

decision making.

Flexibility

Computerized systems are most flexible in all aspects. The proposed system will be flexible in a

way to convert information to graphic type or send information to other location through email.

Proper Record:

Stock Management System is being maintained for all the entities in the business e.g.

Customers, Vendors, and Products. No transactions could be made without the proper records for

these entities.

Stock Maintenance:

Stock Management System also keeps the record of stock of both raw materials which are used

for the issuance to the production department and the finished goods.

Financial Record:

All financial transactions that are taking place are computerized. All the accounts payable and

receivables, and also amount received in advance and paid in advance are also recorded. A

comprehensive type of history for financial transactions and their mode is also maintained.

Feasibility of the new system

There are four types of feasibilities: economic feasibility, operational feasibility, technical

feasibility and schedule feasibility

Economic Feasibility: The economic feasibility as the name suggest is that whether the new

system will be more cost effective or not and also how much cost will be occurred in developing

and implementing the new system. Economic feasibility also involves the availability of funds

for the development of new system. A complete SWOT analysis is required in economic terms

before making the feasibility. If the new system is economically feasible then we must ensure

further two feasibilities. For QEMCO (Pvt.) Ltd. we check the economic feasibility by estimating

total cost of the new computerized management information system. This includes costs of

computer hardware with all the accessories, software required, computer furniture and fixtures

and the cost of expertise like programmer etc. After calculating the estimated cost the company

has decided to go ahead with their plans as the company has sufficient funds for this plan.

Costing for Inventory and Stock Management System

Sr. # Accessory Qty Rate (Rs.) Amount(Rs.)

1Computer Systems with AccessoriesCore 2 Duo

3 =45,000/- =135000/-

2 Laser Printers 2 =8000/- =16000/-3 Office Furniture =150000/- =150000/-

4Microsoft Windows Xp 2007 (Service Pack 2)

1 =15000/- =15000/-

5Software Development Cost(Inventory and Stock Management System)

1 =0/- =0/-

Total =316000/-

The Estimated cost of initiating the new computerized Inventory & Sales information system

was Three Lakhs and Sixteen Thousand rupees (Rs316, 000) which includes the cost of

computer hardware with all the accessories including the furniture and UPS.

With the implementation of the new computerized Inventory & Sales Information system.

QEMCO (Pvt.) Ltd will get following benefits.

Processing will become fast.

Management will get timely and accurate information.

Computer based system will help the managers to make quick decisions.

Labor cost will reduce due to computer based system.

Electronic record keeping will reduce the chances of errors.

It will be helpful for top level management in long term planning.

Operational Feasibility: It involves the feasibility of the system in relation to the operations of

the new system. It consists of personnel training and machinery required for implementing the

new system and also checks that enough space is available for the hardware accessories. As far

as personnel training will be made after developing the system and it is the responsibility of

software developers to train the personnel and organization has the sufficient computer hardware

equipment to run the new system.

End users were reluctant to use the new system in start as they were using the manual system for

so many years but when the software developer trained them, they find the software more users’

friendly and less time consuming.

Technical Feasibility: This feasibility primarily deals with the technical manpower available to

use the new system as there are many workers which are reluctant to adopt the new system.

QEMCO needs to setup an MIS Department and emphasis on an environment that is truly

Information System (IS) Based. QEMCO has complete resources to improve the technology at

any stage of the software development. The company purchases computer hardware with all

accessories and software necessary as to makeup a reliable and good platform.

Necessary Hardware Needed

Pentium Core 2 Duo 1.7 Computer Systems

512 MB Random Access Memory (RAM)

DVD Writer (For Backups)

Laser Printer (for Reports / Outputs)

Necessary Software Needed

Windows Xp 2007 Version (Service Pack 2)

System Hardware Drivers

Printer Drivers

Nero Burning version 7

Schedule Feasibility: Schedule Feasibility means that the project can be implemented in an

acceptable time frame. When accessing schedule feasibility the analyst must consider the

interaction between time and costs. For example, speeding up a project might make a project

feasible, but much more expensive.

Other issues that relate to schedule feasibility include the following:

Can the company or IT team control the factors that affect schedule feasibility?

Has management established a firm timetable for the project?

What conditions must be satisfied during the development of the system?

Will a project manager be appointed?

REQUIREMENT ANALYSIS PHASE:

During the requirement analysis phase the focus is mainly on:

Determining the need of working personals.

Studying the current working processes in depth.

Assessing the strengths and weaknesses of present work method.

I performed the requirement analysis before start of system design and felt that the system

would largely benefit to its users. It was observed during the preliminary investigation that the

present system is too much slow and not fulfilling the in depth analysis of the requirements.

Tools used for Requirement Analysis:

Every system is built to meet some set of needs. Being an analyst I used the following four

sources of information for determining needs:

Written Documents

Questionnaires.

Interviews

Personal Observations.

Written Documents: The manual working of the organization was studies, and some of the

documents that were recorded in computer were also observed. Documents studies and analyzed

are enlisted below:-

1. Raw Product List

2. Stock Report of Raw Products

3. Customer Cards

4. Manual Customer Ledgers

5. Invoice Prints

6. Duplicate invoices

Questionnaire Form: In this form I designed a set of questions which are asked to the

concerned persons (executive chair person, managers, accountant and clerk) of the organization.

Questionnaire in any research has a great importance. The success of a good research greatly

depends upon the questionnaire format. The questionnaire format that I have used during my

research work is as under;

1-Are you following any method of inventory, if so narrate briefly?

2-What type of raw materials are used or stored?

3-What are the qualifications of your store keeper?

4-Do you follow just in time (JIT) method or any other method?

5-What method of inflows and outflows of stock are followed by your organization?

6-Do you maintain the movement of your stock manually?

7-How often the stock audit is carried out? i.e. weekly, monthly, annually?

8- Is storing capacity of stock sufficient?

9- What problems do you face in maintaining inventories in manual system?

10-What are the strong points of your inventory system?

11-What improvements would you suggest to make your inventory system more efficient

and effective?

12-What measure you have taken to preserve the stock from being obsolete?

13-Do you experience out of stock position, if yes then how often?

14-What are the procedures of order entry?

15-How you process new order?

16-Do you have any targets relating sales?

17-What are the strategies opted to enhance sales?

18-Do you feel any problem in Sales because of the current sale purchase and

inventory system?

19-Do you think that a new computerized system should be developed?

20-Will you feel comfortable in adopting a new system?

21-Do you like to attend training courses for using the new system?

22-Do you think that the new system will enhance the efficiency of the company?

23-What are the essential components that you want to have in the new system?

24-Are you satisfied with company’s innovation strategy?

Personal Interviews: Mr Abdul Qayum, Chairman QEMCO, was interviewed after getting an

appointment. I found him a very nice and cooperative person, and he was very keen for

innovations in his organizations. He emphasized on the reports and their formats for effective

decision making. He needed summary reports regarding the stock and receivables and payables

concerning to customers and vendors of the organization.

Mr. Muhammad Malik Tarrar, Production Manager, QEMCO, was the main person that guided

me through the entire working and flow of data as well as products within the organization.

Personal interviews are conducted from the head of every department. Because every

department is interlinked with each other so the discrepancies are recorded and in our new

system the efforts are made to minimize these problems.

Observations: I, during internship period visited each and every department of the organization

and observed their working very carefully. The Questionnaire Form and Personal Interviews

were also part of observations. I observed, that there were lots of problems while recording and

maintaining records and files for the organization. I observed nearly all the main problems that

could be found in any non- computerized and manual processing system therefore, I observed the

following:

Redundancy: Records were redundant, multiples registers contained same data. E.g. order file

and customer file both contained common data about customer name, contact

number, Sales Tax Number.

Inconsistency: QEMCO was facing a problem of inconsistent data. The records differ in

different departments related to same entity. Manipulation made in one file was

missing in other departments, that caused inconsistent records.

So these observations are very helpful to minimize the discrepancies of the traditional system.