JOMO KENYATTA UNIVERSITY OF AGRICULTURETECHNOLOGY COLLEGE OF HUMAN RESOURCE DEVELOPMENT NAME: MUTUA DENNIS KIMATHI REG NO: HDB212-8013/2015 UNIT: RESEARCH METHODOLOGY CHALLENGES FACING INVENTORY MANAGEMENT SYSTEM FOR EASTMATT CHAIN STORES IN KENYA EASTMATT INVENTORY SYSTEM MANAGEMENTCHAPTER ONE1.1 BACKGROUND INFORMATION Eastmatt is the oldest supermarket chain in Kenya, currently celebrating 10 years. With their chain store in some towns. Currently they have a total of 8 stores and continue to grow steadily. The company was started in 2003 by several by several shareholders but after operating for about 5 years it started to experience financial and operational difficulties occasioned by a sub-optimal expansion strategy coupled with weak internal control systems.
As a result, on 31st May 2006, the Board of Directors resolved that the Company ceases operations. Simultaneously, the Capital Markets Authority suspended the Company’s listing on the Nairobi Securities Exchange. The management and staff have since worked tirelessly to redeem the company.
From a negative bottom line in 2006, the company has reported profits in the last three financial years. 1.2 PROBLEM STATEMENTEastmatt chain stores has faced lot of problems including the one of stock management which led them to experience operational difficulties. Since they began operating they have been using old techniques to record the delivered stocks or inventory. This include recording data manually on paper, pilling up those papers in files which makes the environment look untidy.
As we know the manual processing is quite tedious, time consuming, less accurate in comparison to computerized processing. Obviously the present system is not exception consultant encountering all the above problems. In manual recording of data all information is not placed separately therefore there is a lot of paper work.
The paper work does not have user friendly environment. 1.3 OBJECTIVES OF THE STUDY1.3.1 GENERAL OBJECTIVETo assess major challenges facing Eastmatt chain stores 1.
3.2 SPECIFIC OBJECTIVES1. To examine the inventory management systems used in Eastmatt supermarket. 2. To examine factors that affect profitability level of a firm.
3. To establish the relationship between inventory management and profitability level of a firm. 4.
To examine the awareness of the use of the system 5. To increase the level of productivity and improve storage space utilization 1.4 RESEARCH QUESTIONS In order to satisfy the above objectives, the project will focus on the following questions 1. What is the inventory management systems used in Eastmatt supermarket? 2. What are the factors that affect profitability of a firm? 3.
What is the relationship between inventory management and profitability level? 4. How to determine awareness for the use of the system 5. How will the storage space get utilized to reduce searching time? 1.5 SCOPE OF THE STUDYThe scope deals with identifying the requirement, order timing, minimizing product on hand, establishing storage and security procedure. An Inventory management is primarily about specifying the size and placement of stocked goods.
Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs are kept in check.
Systems and processes that identify inventory requirements, set targets, provide replenishment techniques and report actual and projected inventory status. Handles all functions related to the tracking and management of material. This would include the monitoring of material moved into and out of stockroom locations and the reconciling of the inventory balances.
1.6 JUSTIFICATIONThe solution to this problem is by using a computerized system on each and every chain store of Eastmatt. This can only happen if the staff dealing with the stock have a program that will input the stock data making the computer friendly user interface. The system will include: the item being delivered, quantity, time of delivery and the name of the person who delivered it. By using such a system in stock management will save time, paper work and also connecting to database so we use different type of queries. Data is easily approachable when it is computerized. All the stock purchased from different suppliers must be recorded in the inventory management system to account for all the goods.
The system will be able to record the supply brought in and the suppliers name must appear in the recorded data accompanied by the payment, the amount of supply and who received the supply. The main aim of using this system is to account for the supply and the goods that are being sold to customers. Comparison between the sales and purchases will be able to provide relevant information if the chain store is doing great or not.
If there will be any issues between the purchases and sales the system will be able to show the goods that are not accounted for. By determining this the system therefore allows the managers to counter check the store to see if there are goods that might have been stolen, destroyed during the movement period, or even misplaced during the process of allocating the in their right order.