CHAPTER ONE INTRODUCTION Technology is the present world. Due to the rapidness of research and development, technology has emerged and is continuously growing. This advancement progress makes our society more convenient and safe -- turning impossible things possible, making life better and quicker. Technology plays a vital role in society. May it be in education sector, industrial sector and the like. However, the contribution of modern technology to society should be distributed evenly. Globalization gives way business environment and labor markets with both challenges and opportunities. Major forces are changing at its fast rate, thus, creating new challenges for business system worldwide. Now, this 21 st century, technology is considered a key to success for most companies here and abroad. To stay competitive and ensure viability, businesses are relentlessly pursuing adaptation on modernization. 1
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CHAPTER ONE
INTRODUCTION
Technology is the present world. Due to the rapidness of research and development,
technology has emerged and is continuously growing. This advancement progress makes our
society more convenient and safe -- turning impossible things possible, making life better and
quicker. Technology plays a vital role in society. May it be in education sector, industrial sector
and the like. However, the contribution of modern technology to society should be distributed
evenly.
Globalization gives way business environment and labor markets with both challenges
and opportunities. Major forces are changing at its fast rate, thus, creating new challenges for
business system worldwide. Now, this 21st century, technology is considered a key to success for
most companies here and abroad. To stay competitive and ensure viability, businesses are
relentlessly pursuing adaptation on modernization.
Automated System is a current trend in the business world; eradicating manual processes,
improving operations and the welfare of the business as a whole. The proponents observe that
only several companies, mostly large scale businesses, are inhibiting this kind of system.
Considering its cost alone, instead of the benefits associated to it.
Inventory is one of the most dynamic aspects of a business operation. A company has to
assure that it keeps track of inventory accurately, because failure to do so, will have
repercussions on the company’s financial stability as well as the level of customer satisfaction.
Especially for a manufacturing type of business like Sta.Maria Dairy Farmers MPCI, having a
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proper inventory management system is a must. SMDFMPCI has been in the industry for more
than 50 years and the system they are using is not that efficient anymore for their growing
business. They are finding a hard time checking and updating their inventory. That is why the
proponents have introduced the use of an automated system. Through this, lots of effort and time
will be used effectively and accurate and updated reports of inventory could be assured.
BACKGROUND OF THE STUDY
The researchers were tasked to find a company that might need improvements on the
processes or systems they are currently using. These improvements can be done through
implementing a more effective system in their day to day operations. They were able to find Sta.
Maria Dairy Farmers Multi-Purpose Cooperative, Inc. (SMDFMPCI). The researchers visited the
location of the cooperative and conducted an interview with Mr. Jay-R Pascual, Production
Head.
SMDFMPCI was organized in early 1950’s. It is located at KM37 PulongBuhangin Sta.
Maria, Bulacan and is considered as the oldest dairy cooperative in the Philippines. It was
established through Sta. Maria Dairy Development Project that was then initiated by the Bureau
of Animal Industry (BAI). During those times, the BAI had initially dispersed Murrah Buffalo
Cows and Bulls to qualified farmer-participants in the area.
In the 1956, the Sta. Maria Farmers Marketing Cooperative (FACOMA) commenced
operation of Sta. Maria Dairy Plant. The commencement of operations was hastened with the
Australian government’s donation of milk pasteurizing equipment.
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Due to lack of operating capital and inadequate milk processing technology, the
FACOMA was forced to sub-lease its property to BAI in 1967. The succeeding years witnessed
the transfer of plant management from the BAI to the Cooperative Marketing System of the
Philippines (CMSP) in 1975; then returned to BAI in 1984.
On April 16, 1989, through a Memorandum of Agreement (MOA) with the Department
of Agriculture (DA), the operation and management of the Sta. Maria Dairy Plant was turned
over to the Sta. Maria Dairy Farmers’ Association, Inc. All plant operations were handled by the
SMDFMPCI while the BAI provided manpower and technical assistance. In 1997, the National
Dairy Authority (NDA) took turn in handling the SMDFMPCI.
SMDFMPCI markets its products in Metro Manila under the brand name “Sta. Maria
Dairy”. It processes various dairy products such as fresh milk, chocolate milk, and soft white
cheese.
SMDFMPCI is still using manual process in most of their operations and encountering
several problems. These problems include loss of data, inaccurate information, unsecured files
and time consuming processes. Through the use of automated system, the company can ensure
that files and information they need are accurate, secured and updated. It can also make
monitoring of their inventories easier than manual process.
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SYSTEM OVERVIEW
Sta. Maria Dairy Farmers is currently using manual process on their inventory
management system. The officer in charge receives the orders through personal
communications, like phone calls, text messages, and email, two days before shipment. They
also accept immediate purchases as long as they have excess or stocks available. They always
assure that the details and terms such as specification of products, mode of payment and
shipment are agreed by both parties upon purchase. Subsequently, the officer in charge would
give the orders to the production department.
At the end of the day, through physical count, the supervisor will use an inventory sheet
in recording the ingredients still on the warehouse, in process, and those that are already finished.
The sheet will be given to the production head and he will transfer the data to the computer using
MS EXCEL. They are doing this every day and that’s how their inventory management system
works. Though this process was used by their company for many years, they are still
encountering difficulties and problems. But through the use of automated system that the
researchers would provide, these problems will be reduced or probably be eliminated.
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INQUIRE WITH OFFICER IN CHARGE
PERSONAL CONVERSATION
PHONE CALLSMESSAGES
DAILY PHYSICAL COUNT USING
INVENTORY SHEETS
TRANSFER OF ORDERS TO THE
PRODUCTION DEPARTMENT
AGREE WITH THE TERMS AND
CONDITIONS OF THE PURCHASE
COMPLETE THE ORDERS AND ITS
DELIVERY
UPDATE INVENTORIES ON MS
EXCEL
The figure below shows the existing system of SMDFMPCI.
STATEMENT OF THE PROBLEM
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The proponents aim to proposed solutions for the following:
In general:
The major problem in the entity’s day to day operation is the inefficiency of their
inventory management.
Sta. Maria Dairy Farmers is using a manual process for their inventory. Through physical
count they are using an inventory sheet to record the status of their inventory. The sheet will be
passed to the office for the data to be recorded in their computer. The entry allots so much time
doing this everyday yet still not safe from chances of errors. These errors could be mitigated if an
automated inventory management system will be inhibited.
To be specific:
Low quality information due to high risk of human error. The current system mostly
relies on the actions of people, which increases the possibility of human error. People
might forget to record a transaction or simply miscount the number of goods.
Multiple processes involved thus requiring a large allotment of time and human
intervention. Manual system requires continuous monitoring to ensure that each
transaction is accounted for and that products are maintained at the appropriate stocking
levels. The time spent monitoring inventory levels could be used on more productive
activities for the business.
Lack of security. Use of authentications such as passwords is not present in their current
system. Everyone can easily have an access on their records.
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Problem of under-stocking or overstocking. Under-stocking may result to delays of
delivery which would affect customers’ satisfaction. On the other hand, excessive level of
inventories consumes the funds of business, which cannot be used for any other purpose
and thus involves an opportunity cost. The carrying cost, such as the cost of shortage,
handling insurance, recording and inspection, are also increased in proportion to the
volume of inventories.
Proposed Research Project
General objective
The main purpose of this study is to provide an automated system that would fit the
entity’s inventory management needs. The system software,Inventoria Stock Manager, could
help the organization’s handling of inventory that could result to operational efficiency.
Specific objective
The researchers have set specific goals to attain its main purpose.
1. Providing day to day updates without needing too much human intervention. The
proposed system would determine the stock levels of various items in the least possible
time thus more time and efforts will be used efficiently.
2. Prevent human errors that may lead the business to good decision making. Because staff
is no longer required to re-enter data and to make manual computations, clerical errors
are reduced.
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3. Prevent unauthorized access to the records. Only authorized persons will be permitted to
use and view the system.
4. Provide back-ups to ensure that files are safe and secured.Data backup is an insurance
plan. Important files are accidentally deleted all the time. Natural disasters might also
happen. With a solid backup and recovery plan, data loss would not be a problem.
SIGNIFICANCE OF STUDY
Business has to pay attention on how its underlying processes are being managed. Because if
not, several problems may arise that may affect the operations of the entity. For a business that
either sells or manufactures a product, having a proper inventory management system is
necessary. In this study, the researchers have come up to a proposal to eliminate and solve the
particular problems. The significance of this study will not limit itself on the business entity
alone; it may be substantial in many aspects.
To the company. This will save their time and effort in computing their sales and to have
close monitoring of their inventories.
To the customer. This will give them more details and information about the goods and
products of a particular business enterprise.
To the investors. This will enable them to know the operations of the company they used
to be part.
To the government.This will help the regulating bodies to execute their duties and
responsibilities since the information they are monitoring are properly recorded.
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To the academe. This study can be a reference material for future researchers and
students.
To the researcher. This will introduce to the researcher a system that will inspire the
reference of the researcher developing inventory system.
SCOPE AND DELIMITATION
Inventoria Stock Manager brings to your business the ability to control your inventory
with ease.
Its features are:
1. This inventory management system offers a user-friendly interface and easy-to-
understand navigation tools.
2. It also a simple way to save time entering and counting each item in a shipment.
3. This inventory software also allows the user to view a report of sold items as well as by
category listing. Having this information is important when reordering the company’s
own stock.
4. This inventory program also allows the user to view inventory by received history and
location. Having the ability to view these important details can help to better manage the
resources and make better judgment calls about what inventory is located at which
warehouse.
5. Transfer stock between locations
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6. Allowsthe user to store both customers and suppliers into a database that keeps the
information secure.
Inventoria Stock Manager limits itself as given;
1. Multi-user access requires an upgrade.
2. Restoration of deleted data is out of bounds, unless the user has created back up files
prior to the action
3. Can't release invoices; it is limited to orders.
4. The following is the recommended minimum system.
Microsoft Windows XP, Windows Vista, Windows 7 or Windows 8 (64 bit); MAC OS X 10.3 or above
1GB of RAM
30MB of available hard-disk space
Inventoria is professional inventory stock management software for Windows that allows
users to manage inventory in one or several locations. Manage company’s stock levels by
categories, locations, and vendors.
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DEFINITION OF TERMS
Automation -is the use of various control systems for operating equipment such as machinery,
processes in factories, boilers and heat treating ovens, switching in telephone networks, steering
and stabilization of ships, aircraft and other applications with minimal or reduced human
intervention.
Encryption - is the process of encoding messages or information in such a way that only
authorized parties can read it. Encryption doesn't prevent hacking but it reduces the likelihood
that the hacker will be able to read the data that is encrypted.
Globalization -is the process of integration across world-space arising from the interchange
of world views, products, ideas, and other aspects of culture. Advances
in transportation and telecommunications infrastructure, including the rise of the telegraph and
its posterity the Internet, are major factors in globalization, generating further interdependence of
economic and cultural activities.
Inventory management system - is a computer-based system for tracking inventory levels,
orders, sales and deliveries. It can also be used in the manufacturing industry to create a work
order, bill of materials and other production-related documents. Companies use inventory
management software to avoid product overstock and outages. It is a tool for organizing
inventory data that before was generally stored in hard-copy form or in spread sheets.