Effectiveness Of Inventory Management System Business Essay

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Operations Management is an important part of any organization because it refers to the way organizations produce goods and services. It is one of the mechanisms that generates revenue and goodwill which is the essence of survival in a global world of fierce competition and recessing economies depending on which part of the world the organization is set. Operations Managers are expected to produce the desired goods and services at the right standards in the right quantity at the right time and at the minimum cost. The main issue of an organization is to satisfy customers' needs and wants and this happens when the perceived goods sought are equal to what is expected. This therefore arise the need of quality which is also an important attribute to a company's operational success, though it is to be noted that quality is perceived rather subjectively because it depends largely on customers perception. There are many principles, tools and techniques in Operations Management that have been developed over the years so as to optimize the available resources and thus come out with a better output. The need to demarcate from competitors is a must therefore conformity of the product along with the best service can be used as a strategic tool to differentiate and gain market share. This can be achieved through constant monitoring, evaluating and using proper operations techniques and principles. The limelight of this study will be on the use of these techniques in KN manufacturing Ltd.

Company Profile

Founded in 1984 by the late beloved Mr. Kestven Naidoo, Metex Trading Co Ltd was since its existence, a company dealing in UPVC,HDPE & hardware materials and Metex was recognized to be the first company to have contributed in the breaking of the monopole which existed in this sector. However unfortunately Mr. Kestven Naidoo died in the year 2000, a gap which can never be filled thus leaving the succession of the business to his younger son Mr. Raveesen Naidoo. Determined to fulfill his dad's dreams and although the task was enormous he didn't leave any stone unturned, he took the challenge and due to his good management and leadership qualities he had propelled Metex Trading Co ltd today to the top in the sector of plumbing. The company is nowadays being recognized as the specialist in the field of plumbing and the field of water technology. Mr.Raveesen Naidoo had not only restructured the company but he had also restructured all the settings and the profile of the company. Thus in this view they will be moving to their own building (Metex Tower) at corner Arsenal & Dr. Sin Yat Sun street Port Louis shortly where a personalized customer care will be provided to each clients. In view to satisfy the needs of the clients Metex Ltd has diversified their services and split their business in three groups namely: KN Manufacturing Co Ltd which is situated in the industrial zone of phoenix, the production plant of the UPVC fittings. There is also Iritech Contracting Ltd, the contracting department dealing in all civil works including electro fusion, groove firefighting &Land fragmentation works and finally Metex Co Ltd the main company. KN Manufacturing Co Ltd produce all their UPVC fittings following the British Standard and all their products are ISO 3633 certified. Furthermore all the production is approved and tested by the Mauritius Standard Bureau.

Background Of the problem

In any business entity Operations Management is a functional field with clear responsibilities like Marketing or Finance. Therefore the use of operations management principles is a must to be effective and efficient so as to achieve the strategic goals and objectives, one of which is profit maximization. Operations are sequential that is they consist of steps, and Operation Principles helps to define those steps so as the production goes well. Operation Principles help to monitor the production process from the input which is the raw materials, the process consisting of the steps to make the final product and output that is final product and the service. It is important to fulfill the customer's specifications; this is achieved through constant monitoring using Statistical Process Control (SPC) models so as to regulate the level of conformity in the product. This is an important step to minimize wastage to zero and produce the best quality standardized product and service to the customers. After production storage is necessary, this also includes the storage of raw materials; this includes a storage cost which can be minimized further by using the Inventory Management techniques, the Economic Order Quantity (EOQ) and Production Order Quantity (POQ) models which enables to order the right amount of raw materials and produce the right quantity on demand. Operations Managers must be in a position to foresee and anticipate the barriers to production and eliminate them or the future production rate and for this purpose forecasting models are used, both quantitative and qualitative. Time factor is important and every process must be done within the predicted time frame, the principle of Short Term Scheduling is used to assign tasks and workforce and is concerned with the timing of the operations. These principles will help KN Manufacturing Ltd to be more competitive and help to gain a greater market share and credibility among customers and suppliers. These Operation Principles will enable to restructure the whole production process in the firm

Problem Statement

The production floor of KN Manufacturing has three Injection Molding machines along with different moulds which produce fittings according to the requirement of the customers. The whole process is automated. The machines are left to be preheated for around thirty minutes prior production and everyday two to five pieces come as rejects due to the fact that bits and pieces of molten plastic that remained in the machine from previous production, it also happens due to installation of new molds. These defective pieces are reground and added to the raw material. It must be noted that there is a degree of reground plastic which is allowed otherwise it will not conform to the standards. Oven testing and Vicat softening temperature testing are used to check the conformance of the finished product. A production control sheet is used to record production on a daily basis which include the number of defects, good pieces, the amount of raw material used, starting time and finishing production time which is then input on excel sheet. The plastic granules which is the raw material comes in bags of twenty five kilograms which are kept in KN's store, the plant may use about eight hundred bags which are imported over a period of sixteen month depending on production. Customer complaints on the product is rare but present, there is also late deliveries. Most of the customer complaints come from the service of customers in the hardware shop, sometimes the have to wait for a long time to be served because sometimes they come with long lists from worksites. This pressure creates some kind of conflicts between the workers there. The warehouses are located far away, if an item is not available in the hardware shop it takes time to go to the there and return. Sometimes the people working at the warehouse do not bother to look for an item well and just tell that the item is not available and later it is found that the item was there so there is unnecessary expense. Forecasting models are not used in the company to generate variables for future demand.

Research Objectives

To assess the effectiveness of Inventory Management System.

To investigate the awareness of Operations Management tools & techniques among staff.

To analyze the Quality Management practice of the organization.

To evaluate the use of forecasting techniques.

To identify operations related problems and recommend an appropriate mechanism to cater for them.

Research Questions

How do inventory costs impact on the organization's investment?

To what extent are Operations tools and techniques followed in the organization?

What are the causes of poor quality?

Does forecasting models play an important role in the operations strategies?

What are the difficulties that are usually encountered on Operational level?

Aims Of The Study

The aim of the study is to assess whether the technique of Inventory Management System is applied effectively, to develop the awareness of the Operations Management tools and techniques among the staff and also to analyze the Quality Management practice of the organization. This study will also help to evaluate the use of forecasting techniques and thus identify operational problems and provide an appropriate solution to counter them.

Significance Of The Study

This study will help the organization to achieve competitive advantage which is essential to go a step further from competitors. External environment is unpredictable and the number of competitors tend to increase, so by the means of appropriate Operational tools and techniques in the production and service of goods, the organization will ensure survival as well as fulfill its primary objectives which is profit making along with the earning of good reputation in the market and credibility towards customers and suppliers. The organization will also be able to optimize on resources with these principles. The employees will learn the use and application of Operations Management principles and tools which will help them to do their work efficiently and effectively. This will enable them to work towards international standards and make them quality oriented where more emphasis will be made on the input and the processes which will result in a better output. The good result will induce motivation amongst employees which is good for organizational health. Customers will also benefit greatly not only due to the fact that their requirements will be fulfilled but they will get a standard and conform product of the best quality along with a good service at the right time, this arise customer satisfaction which is good for the business relationships.

Phases Of The Dissertation

The dissertation will consist of the following chapters:

Chapter 1 - Introduction

This part of the study will consist of a brief perspective of the subject. It also includes the organization's profile and the problems encountered which will trigger the research. The aims and objectives are also covered.

Chapter 2 - Literature Review

Literature review covers the research and findings of other authors on the subject of study, it also emphasizes on its limitations and methodology used. This will help to refine the research ideas that have been discussed in chapter 1. It also helps in understanding the philosophies and approaches of the study.

Chapter 3 - Methodology

The methodology part defines the types of research methods that can be used; the two types are mainly qualitative and quantitative research. There will be a survey which will be filled by respondents of the organization. A good methodology is what will bring this study on the right track.

Chapter 4 - Presentation of Findings

The presentation of findings will be the results of the survey that has been conducted in the organization. The variables of the study will be grouped and sorted using statistical software. There will also be a brief overview of the respondents' responsiveness and reaction to the survey.

Chapter 5 - Presentation of Analysis

This chapter is focused on the interpretation of the findings from the statistics that has been performed in the organization and assumptions will be made based on it which will give another dimension to the study.

Chapter 6 - Conclusion and Recommendations

The last chapter will conclude the research and a theory will be formed in relation to the problem. Solutions will be provided and new methods may be implemented according to the requirements of the organization.


Chapter 1 provided an overview of the subject in general and the need of this study. This is followed by the profile of the organization where the research will be conducted and the problems which will lead to the research. The aims and objectives of the study has also been discussed and the different stages of the dissertation. The next phase that will follow will shed light on the research and work of other researchers in the field and philosophies of the subject.