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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. Functions of the Existing System Customer Inquiry Customers were provided with the inquiry and customers 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. 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.


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.


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.


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.


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.


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 organizations 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. # 1 2 3 Accessory Computer Systems with Accessories Core 2 Duo Laser Printers Office Furniture Qty 3 Rate (Rs.) =45,000/Amount(Rs.) =135000/-



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Microsoft Windows Xp 2007 1 (Service Pack 2) Software Development Cost 1 (Inventory and Stock Management System) Total




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?


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 companys 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.