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Usman. It was established in 1990 after the family owned general store, Regency, was converted in a book store, because at that it was a lucrative business venture than a general store. With profit margins on imported books being nearly at 30% and 10-50% on local books, the two brothers invested in a the book-selling business. Variety books was later merged into one mega book store when it swallowed Paradise book store and other shops next to it on the same floor as part of the organizational restructuring of the business . This was done to curb certain issues like theft and costs. The shop sales increased eight times in seven months it as it increased from Rs. 100,000 in November of 1992 to Rs. 800,000 in June of 1993. The shop is located on the busy road of liberty market Qualitative Analysis Core issues as per mentioned in the case study 1. Pilferage During the early years of the shop, pilferage was one the issues the store faced, to check this, and employee named Sabir was hired who would check physically count the number of books against that mentioned in the inventory report. This routine was time consuming where 10% of the inventory was checked in a month, the whole process was cumbersome and it took approximately 10 months to go through the entire inventory of both the shops (Variety and Paradise). After return back from a six month trip to America, Usman discovered that the problem of pilferage had increased to unacceptable levels, and immediately took corrective actions to curb the issue. During 1993 from February 1st to July 29th , the shortage was reported at Rs. 157,975. The solutions he adopted were to increase the frequency of checking, redesign the organizational structure and improve the computer systems used at both the shops. Alongside such changes, he merged both the books stores into one store, where it absorbed Paradise Books and became on big store under the Variety Books name. This was done to decrease staff and overhead costs of the business, and with the merger of both the stores and other empty shops which included shop 1,2,3,4 and 5 (Exhibit 1 B), reduced the number of exits to guard against shoplifters. The store main concern was employee pilferage, which influenced the new recruits easily. Usman with the slightest of suspicion would fire the employee because it was causing him to incur loses exponentially over the months. 2. Inefficiency and ineffectiveness In 1993, Variety Books was going through a transition of merging Paradise and Variety into one shop and this brought with it, its own set of challenges. Although the new computer entry system 386 SX was faster and reliable than the IBM TX, but the increase in the volume of inventory was another issue arising from the fusion of the two stores. There was a lack of understand the true usefulness of the PeachTree software by the accountant and some of its useful features weren’t being used such as the re-order quantity because of lack of standardization and large deficit in inventory due to theft. Other
rendering the whole process inefficient and time consuming. which could be developed by Absar of Dare Computer Services (DCS).975 in 5 months. And because there are few employees working during the day time. Another issue with the automation process was that the employees weren’t familiar with the system and neither did they have the technical knowledge of the whole system. And because there is no way of keeping tabs on the card. employees and supply chain management Store layout From the first look we can see that the store has some blind spots especially in the English and Urdu book sections. This has caused the store owner to loose almost Rs. Looking at the organizational structure we can see that the computer operator and the cashier both hold a B. There was an option of barcode and online sales data entry system.A degree. or managing the store. and employee stealing from the store is unacceptable.important features like return on investment. gross profit margin/earning ration and investment turnover were not included in the software. which by itself is troublesome because there is no account of the losses incurred. there is no estimate on how much has been lost . Store layout. 3. we can assume that most thefts happen during the day time when all the employees are busy tending to other customers. 157. which is fine for a cashier but inadequate for someone operating the key function of the computerized system of the business. The theft of stationary can be accredited to the employees themselves as it is next to the counters. cassettes and stationary items. and it is no surprise that most pilferage are happening in the English books followed by Urdu books as per the data available in Exhibit 14. This can be clearly seen done manually in Exhibit 8. .
the moment the item comes near the radio zones. which can be easily streamlined with automated inventory management system using barcodes and software. Recommendations to incorporate Information Technology 1. it will sound an alarm. if the product isn’t scanned and logged out. but the benefits are that it will streamline the whole process and with the flexibility of reducing the number of employees working at the store. The incorporation of Electronic Article Surveillance (EAS) will ensure no book leaves the premise of the store without being checked out at the counter. . The voucher system is a bump in the whole process where the customer is forced into unnecessary process and the whole system is based on manual transactions.Looking at the supply chain of the company we can see there are lot of unnecessary stops in the whole flow chart. To monitor pilferage by customers and employees. and with a large storage space to record the transmission on a maximum of a month worth of footage from at least 4 cameras. The EAS system is anti-theft system with radio zone at the entrance/exits of the shop and the customer has to check out the item purchased at the counter so it is logged out of the system. Even though implementation of the barcode scanner and automation of inventory and sales is going to be costly and time consuming. It reduces efficiency overall and might lead customer dissatisfaction. verification and correction. it can be used as a monitoring and hold accountable anyone caught stealing. preferably Closed Circuit Television Cameras which will be broadcasted directly to the Manager (Usman) and cashiers desk. The first recommendation is to install surveillance cameras.
But in the long will increase customer satisfaction as less time is consumed in the transaction of goods and automatic updating and editing of inventory systems will not only streamline the whole process of inventory database management but several other features as EOQ. where as it has only 8 suppliers for 1200 books. This automation will also include timely and accurate reports for the manager to look at daily. Installing of barcodes in the sales process to automatically update inventory and sales figures in the database. inventory turnover can be recorded and calculated with just a swipe of the barcode and the software provided with it. .2. The whole chain will also require only one computer expert to sit at the database to monitor. As per Exhibit 2(a). 3. Reducing the number of vendors and bulk buying from a few vendors will reduce their operating costs significantly. weekly. we see that Variety Book store has 12 suppliers for only 600 books. ROI. monthly and yearly as per his/her requirement. stationary and paper stationary have combined vendors of 13. Although downsizing is frowned upon by employees and may reduce employee moral. profit margins. The incorporation of barcode systems will eliminate the manual updating. correcting and recording of sales in the system and also eliminate the need to hire an extra employee for the voucher handling. spreading the fear of automation might cause them to lose their jobs. Looking at the number of suppliers of Variety Books we can see that they could make contracts with only a few vendors and reduce the costs of their merchandise through bulk buying and making long term relations with only a few vendors. calculate and take decisions timely and accurately.
. A lot of that money could be refunded at the end of the year.July 1993) which could have been recovered as sales or goods return to vendors. 363.636. the store has incurred loses worth Rs 157. It can been seen that Variety was making better sales than Paradise and the decision to absorb Paradise into Variety Books made sense. 80. 3. which means an average sales of a book store in a year in Lahore amounts to Rs.901 just in a span of 9 months (November 1992 – July 1993). But on closer inspection Varity Book made Rs. 4. while Paradise Book made Rs.000 in 1992 and 1993.Quantitative Analysis 1. According to the article the 220 book stores in Lahore made Rs. 3. Looking at the purchase category (Exhibit 2(a)).844 in 16 months.702 in 6 months(Feb.761. 2. we see a lot of items are 80 – 100 % returnable if sales is not made.350. because Variety carried a much stronger brand name and customer familiarity.000. And the issue of pilferage is causing them to incur sunk costs due to theft.