DEVELOPMENT IN ORDERING AND MONITORING INVENTORY OF

MICHICO BOUTIQUES.

A. INTRODUCTION

Information systems are a combination of software, hardware, and telecommunication networks. In an

organization, an information system is used for communication, record keeping, decision-making, and data analysis.

The development of this system directly relates to the improvement of a process or operations of a business when

data processing and storage are managed properly. Information systems are flexible and can be applied to many

aspects of an organization. The implementation of ordering and monitoring models on information systems are a

method for controlling the collection, processing, and analyzing information regarding the product and service

availability. These models usually come with quantity, pricing, and budgeting. In small organizations, such as a local

retail store, ordering and monitoring models can be used for checking the availability of the stocks and deliver the

needed stocks in time based on the demand of the consumers. Currently, the biggest struggle of the company- as a

startup business, is the lack of system improvement in analyzing the data that should’ve helped to analyze data and

provide useful feedback are not available. The absence of the needed system affects the effectiveness and efficiency

of the business. Due to these factors, missed opportunities are not easily identified and inaccurate ordering occurs.

Upon developing an improved system, one must consider the factors that were observed to be affecting its

progressiveness. The researcher aims to propose an integrated system for the inventory ordering and monitoring

system for Michico. The proposed system is envisioned to be used by the custodian, owner and possible inventory

analyst/handler to allow them to determine when the store should be replenished when the safety stock is reached

while monitoring the condition of the current products. The objective of this study is to improve the availability and

accessibility of Michico boutiques by developing an integrated system that consists of the following specifications:

It can be easily used by custodians or any staff with basic training on encoding and can monitor the current condition

or number of the on-hand stocks.

Significance of the Study

Customers

To satisfy the needs of the customer especially during the upcoming holiday season wherein an increase in

demand are expected. Having sufficient stocks must be assured to not only secure possible sales but also satisfy the

needs of the customers, no missed opportunity or loss sales must occur through unavailability of stocks.

Boutique

Custodians will be able to determine if there are enough inventory level for a certain period. This will benefit

them by determining when to order new stocks. This study will be able to help the business in minimizing their

ordering costs and managing their supplies for efficient and effective inventory.

Future Researchers

This study will enlighten future researchers especially when inventory management is involved. The results

of this study would serve as a reference for future studies. The study would be a basis of continuous improvement

in inventory management systems not only applicable to the retail industry but to other fields as well.

Scope and Limitations

The study’s scope is only about the inventory management of Michico and does not include other activities

that are not related to inventory management.

 B. METHODOLOGY and DATA COLLECTION

Conceptual Framework

Improving the system leads first in identifying the dependent variables and independent variables of the

problem. The dependent variables are those elements that is being affected negatively or positively by the

independent variable. There are three independent variables considered in this study; the staff, merchandise, and

method of selling. These three elements greatly influence a reliable information. For example, if the staff is always

attentive and diligent in updating the inventory, then the resulting information would be complete. However, if the

staff is forgetful and careless, then the information would be wrong and incomplete. Same goes to the other two

factors. Age of the merchandise should be considered since non-moving stocks are already considered as opportunity

loss. Also, the methods and materials used to check the inventory triggers the information accuracy.

Figure 1. Conceptual Framework

A reliable information can help the store in planning their order with more than 100% service level and at

minimum loss. It is significant to provide reliable information in selling wherein custodians are expected to be both

diligent and mindful to provide correct and complete fast flow of information. Therefore, in order to improve the

system, changes to be made must be directed to either the custodian, inventory supply or method.
Data Gathering Procedures

To determine what particular area to focus on, the current state of the boutique should be evaluated first.

An observation on how the process of selling works, storage area and, how they monitor and order their inventory.

Questions such as if they are using management techniques on handling their inventory and the problem that they

encounter were asked, it is to determine where they are lacking. The records are also important to retrieve, to see if

their current methods are effective. The historical data can be used also for demand forecasting that will be used for

ordering.

C. Experimentation, Results and Analysis

In determination of which area to focus on, alternatives on how to improve the system are listed. A

prioritization matrix is to be performed to analyze which solution should be considered. Analyzation of these may

include cost-benefit to know on how much the project would cost with a given percentage of improvement. These

improvements are in terms of monetary or increase in reliability.

Table 1. Prioritized Attributes and Metrics

Score Range
Attributes Metrics Weight
1 2 3 4 5
Recorded /
Completeness 10 0-3 4-5 6-7 8-9 9-10 15
Transactions
Correct / 20
Accuracy ≥10 11-14 15-16 17-19 20 15
Total
Min / hr / 1.1 wk 3.1 days 3.1 hr 31 min ≥
Timeliness ≤ 30 min 15
wk ≥ 1 month ≥ 1 wk ≥ 3 days 3 hr
Difficulty
Accessibility Very Hard Hard Medium Average Easy 10
Level
Service
Reliability ≤91% 92 - 95% 96 - 97% 98 – 99% ≥100% 20
Level
Almost
Most of
Not Some are all of it
Infrastracture Availability it are Available 15
Available Available are
Available
available
PhP PhP
PhP 1-
Cost Monetary ≥10001 5001- 1001- PhP 0 10
1000
10,000 5000

In Table 1, the attributes and the metric used are listed. The score range is to be used as the basis of

determining which alternative is conclusive to implement. Completeness have a measurement in terms of how many

inventory transactions are being recorded. While the accuracy measures the correctness of data with regards to what
method they are using. Timeliness is about how fast is it to retrieve and convert the data into information.

Accessibility is about the standard procedure to monitor and control the inventory. It is also the ease of use which

measures the difficulty in adaptation to change after implementing. Reliability assures that the target service level is

being met. It is measured by percentage of demand met/supply.

As observed in the process in Michico, one of the main problem of the store is the absence of information

systems and lack of training in information systems, wherein all sales data and inventory data are manually created

that greatly affects the buying system of merchandise, data discrepancies may continuously occurring without being

noticed.

Alternative Course of Actions

Alternative 1: Inventory Management Database

The proposed solution is to create a database created in MS excel(Macro). The database will include entry forms

wherein custodians could enter the data manually. When the stocks enter the facility, it will be counted manually.

The counted items are then inputted into Excel to record all the data. The data is then saved into the database and

records will be shown on tables. Then, monthly reports are generated to determine the number of stocks received,

number of items with no available stocks, number of items to order, and other reports from the given data. The

advantages of this alternative include the removal of manual recording and generation of reports. Another advantage

is the use of excel without internet connection and most can easily be accessed since it is available as long as a

Microsoft software is installed. However, manual labor in counting the stock may still lead to inaccurate counting.

Moving forward, as the company grows, counting the inventory through barcode may be used and a more advanced

inventory management technique aside from the use of excel file can be developed. The cost of this alternative will

only be the purchasing of MS office that is worth 2,000 PHP that includes all Microsoft office products and outlook

email that can be a bridge for easier communication between vendors, owners, and custodians.

Table 2. Alternative 1 Metric Score

Attributes
Alternative Completeness Accuracy Timeliness Accessibility Reliability Infrastructure Cost
Inventory
17 out of Almost all of it PhP
Management 9 out of 10 < 3 hours Average 98%
20 are available 2000
Database
 Alternative 2: RFID Programming

Integrated RFID solutions can minimize out-of-stock situations and provide real-time merchandise location

data. The technology allows to track the inventory level from the stock room to the sales floor. RFIDs are just like

barcodes, but the tags include radio frequency. Each merchandise will be tagged with RFID. The data collected by

the sensor will directly store it to a database with little human intervention. The purpose of this alternative is to

reduce manual labor which accurately counts the number of items entering the facility. One advantage of this

alternative is an efficient and accurate recording of data since manual labor is minimal. The workers would only

have to attach RFID tags to each item. The disadvantage is that it is more costly compared to the first alternative.

RFIDs would require a software and scanners with radio waves that are slightly expensive. Another disadvantage

would be the requirement of an internet connection since RFID scanners and the database need it.

Table 3. Alternative 1 Metric Score

Attributes
Alternative Completeness Accuracy Timeliness Accessibility Reliability Infrastracture Cost
RFID 19 out of Some are PhP >60,000
Programming 10 out of 10 <30 mins Medium 99%
20 Available

Applying the method of prioritizing the factor through metrics, the following results were analyzed. Based

on the analysis in Table 4, Alternative 1 has the highest score. Therefore, in terms of attributes priority, creating

database using excel for inventory management would have more improvements for the system than the option of

RFID programming. The attributes and weights can be change based on the priority of the business.

Table 4. Prioritization Matrix

Alternative Alternative
Attrributes Weight Alternative 1 Alternative 2
1 Rating 2 Rating
Completeness 15 5 5 75 75
Accuracy 15 4 4 60 60
Timeliness 15 4 5 60 75
Accessibility 10 4 3 60 45
Reliability 20 4 4 60 60
Infrastracture 15 4 2 60 30
Cost 10 3 2 45 30
TOTAL 100 60.00 53.57
 CONCLUSION and RECOMMENDATION

One of the frequent and main problem in the retail industry is inventory management, may it be start up or

a big company. In the chosen company, Michico a startup fashion retail business, it was found out that one of the

causes of these problems in inventory management is the manual inputs of data that results to inaccurate and delays

in buying/ordering of merchandise, loss and discrepancies in the data are commonly occurring. It was then found out

that the root causes of this issue are the lack of system from ordering the merchandise to the selling to customers.

With these findings, the objective of the study shifted to developing a system that will help the custodians and

owners to easily monitor sales and inventory level. Conducting a basic training on encoding data’s, reading outcomes

to monitor the current condition will be needed for the improvement to push through. Through creating a

prioritization matrix, it was found out that the best alternative is to develop an Inventory Management Database for

the store to keep track and manage their inventory. With the implementation of this alternative, the problem of

inaccurate ordering and buying merchandise and correct reordering point will be applied can be resolved.
 APPENDICES
DISCLAIMER: The attached excel files are what I am currently using in my work as an inventory analyst that I’m
still developing for improvements, since I’m also in a fashion retail company this can be used for the company
used in the study after some iterations until it is fit for use.